Porto & Porto (No 3) - [2010] FamCA 1145

FAMILY COURT OF AUSTRALIA

PORTO & PORTO (NO. 3)

[2010] FamCA 1145

FAMILY LAW – PROPERTY – Transaction to defeat claims

Family Law Act 1975 (Cth)

Anstis & Anstis & Anor (No.1) (2000) FLC 93-013
Minister for Immigration & Ethnic Affairs v Teoh (1995) 183 CLR273
Khademollah & Khademollah (2000) FLC 93-050
Castles & Pesic [2008 FamCa] 1003
Brown & Brown (2007) FLC 93-316

APPLICANT:

Ms Porto

RESPONDENT:

Mr Porto

FILE NUMBER:

MLC

3219

2007

DATE DELIVERED:

8 December 2010

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

DESSAU J

HEARING DATE:

8, 9, 10, 11, 12 November 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Costello

SOLICITOR FOR THE APPLICANT:

Holding Redlich

COUNSEL FOR THE RESPONDENT:

Mr Glover

SOLICITOR FOR THE RESPONDENT:

Berry Family Law

Orders

That all existing applications shall be adjourned to 10.00am on 17 December 2010 before me for costs and interest argument and the pronouncement of final property orders.

IT IS NOTED that publication of this judgment under the pseudonym Porto & Porto is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3219 of 2007

MS PORTO

Applicant

And

MR PORTO

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

Mr and Mrs Porto married 37 years’ ago in Portugal. Shortly after, they moved to Australia. They worked hard, raised their two children, and grew substantial wealth of what was by 2005, the year of their separation, between about $4.5 and $5.5 million, depending whose account is accepted.
In about 2002, the parties started to “cash up” their Australian assets. Although they disagree as to the longer term plan they had at the time, they agree that between mid-2004 and mid-2005 they transferred the substantial part of the family wealth to Portugal.
On the husband’s version, he lost all the money there, in a fraud perpetrated against him just prior to his return to Australia and separation from his wife, in October 2005.
On the wife’s version, there was no such fraud. The husband simply secreted the monies to thwart her property settlement.
There are four steps for me in any property case. The first is to establish the pool of assets and liabilities. The second is to determine each party’s respective contributions. The third is to consider a range of factors including the parties’ respective future needs and responsibilities. The final step is to consider how to achieve a just and equitable result in a property division between them.
In this case, the question of the lost or hidden funds is at the heart of it all. The parties otherwise agree that they made different but equal contributions in the course of the marriage, and that taking into account s 75(2) of the Family Law Act and other matters, each would be entitled to half of any assets.

BACKGROUND

Mr Porto (“the husband”) was born in Portugal in 1947. He is now aged 63. Ms Porto (“the wife”) was born in Portugal in 1955 and is now aged 55.
They married in 1973 in Portugal and separated 32 years later at the end of October 2005. They had taken up permanent residence in Australia in 1974.
Their son was born in 1975. He is aged 35 and practices a profession. Their daughter was born in 1980. She is 30 and works as a marketing manager.
Throughout the marriage, the husband was the main breadwinner. Initially he worked in the building industry, working long hours for the family to get ahead financially. In 1977, he started part-time property development as well, buying, renovating and selling properties. In 1990, he became a full-time property developer. Thereafter, he bought, developed and sold many properties on behalf of the parties or their corporate entities.
From the time the children commenced school in 1985, the wife started work as a machinist. She continued in that employment until the end of 2002. She was also the primary home-maker and the one who had the primary responsibility for the care of the children.

MATERIAL RELIED UPON

The wife relied upon the following:
·Her Case Summary filed 3 November 2010
·Her Amended Initiating Application filed 3 November 2010
·Her affidavit filed 3 November 2010
·Her financial statement filed 4 November 2010
·The affidavit of her son filed 3 November 2010
·The affidavit of her daughter filed 3 November 2010
·The affidavits of NH filed 29 October and 4 November 2010
·The affidavit of LB filed 11 May 2010
·The affidavit of FE sworn 5 November 2010.
The witnesses NH, LB and FE related to an analysis of documents, or translations. None of them were required for cross-examination.
The husband relied upon:
·His Outline of Argument (Exhibit H1)
·His Minute of Orders sought filed 3 November 2010
·His Response to the Amended Initiating Application filed 3 November 2010
·His affidavit filed 13 October 2010
·His financial statement filed 13 October 2010.
Throughout the proceedings there was a Level 3 NAATI Portuguese interpreter available for the husband. He chose to use English but had the interpreter available if he required her assistance.

THE ASSETS AND LIABILITIES

Ultimately there was agreement about many of the smaller assets and I shall set them out below. They amounted to just over $300,000.
Although there had been a very substantial disparity between the parties as to the total sum received by them or their entities when they cashed-up all their real properties between 2002 and 2005, ultimately there was agreement as to the net proceeds reaped from those sales. The agreed sum was just over $5.130 million. However, the evidence persuaded me (and counsel could not disagree) that the total should be reduced to just under $4.380 million, taking into account that two properties included in the list did not fit into the relevant time-frame.
The first was a property at R, sold in 2001 with a net receipt to the parties of $509,464. It settled only a few days into 2002. Unlike the other properties, it was not sold to cash up the parties’ assets, but in the ordinary course of the property development business, whereby more than $400,000 of the proceeds was re-invested in the purchase of another property.
The second property to be omitted from the agreed list was the former matrimonial home, sold in July 2006, well after separation. The net proceeds of sale of the home, being $242,626, shall be included in the asset pool, but not as part of the money received between 2002 and 2005 that was then sent off-shore. These funds remained in Australia.
There was disagreement then as to how much money was sent to Portugal. When the husband swore in his affidavit that the net proceeds of sale of the properties was approximately $4.5 million, he was very much closer to the mark than the wife. In her affidavit, she had sworn that the total funds retained from sales was more than $8 million. It was simply an unrealistic assessment, failing to take into account the various mortgages and expenses associated with the sales.
It was unfortunate that the wife had failed to consider the monies paid out to repay loans and the expenses of sale. She attempted to explain her failure on the basis that her former solicitor had retained a lien over her file, including the relevant conveyancing documents, until just a week before trial, so the documents were not to hand when she prepared her affidavit. As to whether or not that was a good excuse was not fully explored, because the issue of the net proceeds was quickly resolved when the documents were at court on the first day of the hearing. It did not unduly prolong the case, and was not in itself the impediment to any prospect of settlement between the parties.
In any event, the parties do agree that $AUD 4.5 million was sent from Australia to Portugal in three tranches as follows:
·$AUD 1.5 million on 16 July 2004
·$AUD 2 million on 23 February 2005
·$AUD 1 million on 14 July 2005.
There is however no agreement as to:
(a)Whether the husband took a further cheque in the sum of $850,000 to Portugal
(b)The purpose of taking the money to Portugal – the husband saying that the parties agreed it was to invest for their retirement, the wife saying that it was always intended as a temporary measure, to attract higher interest and lower taxation, in order to increase it before investing in one last large-scale project in Australia
(c)What happened to the monies in Portugal.
At the start of the case, the wife alleged the husband took another $AUD 700,000 to Portugal. During the case, she reduced that to $AUD 500,000. By the end of the case, a concession was made that the assertion could not be sustained on the evidence.
(a)Whether the husband took a further cheque in the sum of $850,000 to Portugal
It is agreed that in July 2005 the husband travelled to Portugal. It is agreed that he took the cheque for $AUD 1 million with him. The wife said he took an additional cheque.
Initially she said the additional cheque was in the sum of $850,000, but later that it was possibly $870,000. She said that she saw it on the day he was leaving for Portugal, when a yellow folder holding the $1 million cheque blew open on the table at home. She said she never discussed the cheque with him, as she “did not have a chance”. Later in her evidence, she agreed that she did have the opportunity, as she and her daughter took him to the airport that day. Her evidence then was that she thought there was “no use” in raising the topic with him.
The husband denied that there was a second cheque, whether for $850,000 or $870,000. He thought the wife may have confused it with another cheque for $780,000, which had been part of the various transactions rounding out the parties’ affairs at around that time.
For reasons that will become apparent, in most respects where there is a conflict in the evidence of the parties, I accept the wife’s evidence as the more honest. In this instance though, I accept the husband’s evidence. He was the one handling the finances, and his evidence on this topic was supported in other parts of the evidence tracing the transactions at the time.
There is substantial material to support the various property transactions that the parties agree occurred between 2002 and 2005. Between that material, and various bank records, no additional available sum of $850,000 or $870,000 could be traced. Whilst that does not preclude the possibility of cash transactions, or funds held outside bank accounts, no such suggestions were put to the husband to support such a finding.
I do not find that there was an additional sum of $850,000 sent or taken to Portugal. With many transactions occurring within a relatively short time-frame, it is probable however that the wife was confused rather than deliberately lying. And she was endeavouring to reconstruct events of five years ago through a prism now of profound distrust of her ex-husband.
(b)The purpose of taking the money to Portugal
The husband has consistently said that the money was sent to Portugal to be invested for the parties’ retirement. The wife has consistently said that it was sent there temporarily, upon the husband’s advice to her that it would be beneficial in terms of higher interest and lower taxation, with the intent to later return it to Australia for a last large-scale project.
It is clear that there was agreement about selling the properties. It is clear that it was with a view to laying the foundations for retirement. There also appears to be some common ground that there was an intention for one last large-scale project.
Of the two accounts, I accept the wife’s. It was supported by the parties’ eldest son. Although the parties retained Portuguese citizenship, they had lived the substantial portion of their adult lives in Australia, and their children and their families were in Australia. It is likely that they did intend to continue living in Australia, and even the husband said the intention was to live half the year in Australia.
Overall though, this is a small issue, about which a definitive finding would add very little. Whether the intention was to invest the parties’ money temporarily or permanently in Portugal in itself does not matter. It impacts to a small degree on the credibility or otherwise of the husband’s account as to what happened to the monies in Portugal, but it pales against other more significant parts of the evidence.
(c)What happened to the monies in Portugal
Since this case started before me in 2007, it has been the husband’s consistent claim that he lost the family wealth in Portugal. On his account, he was defrauded by a man called Mr D (no relation to the parties’ daughter Ms D).
In his affidavit, the husband said that when he and his wife were in Portugal in March 2005, he was making enquiries of various real estate agents as to possible property development opportunities. He said that he noticed a small advertisement in a magazine there, seeking investors to fund large property developments in northern Portugal and southern Spain. He called the mobile telephone number in the advertisement and met Mr D.
He said that he met Mr D at a local coffee shop and discussed the developments. He described a lengthy conversation between them about the prospect of investment. He said that Mr D gave him details of the developments and the potential return on investment, and that together they looked at some buildings under construction. He became interested in two developments close to the beach.
The husband swore that he met Mr D on another two occasions. He said that the wife also met him, something she strenuously denies. He said that in late-April 2005 he visited Mr D’s home, “located on a farm across the border in Spain”, but he could not recall the address. He said they discussed the developments and the prospect of the husband investing. He believed that Mr D was a genuine property developer.
The parties returned to Australia in April 2005. The husband went back to Portugal in July 2005. He swore that he again met with Mr D, and began negotiations in relation to investing in his developments. He said that Mr D took him to visit building sites in southern Spain, and again in Portugal. The husband was keen to invest in four developments, two located in southern Spain and two located in Portugal. He said Mr E presented him with plans of the developments, and he was very impressed. The husband did not produce plans or other documents about the purported developments.
The husband swore that his negotiations with Mr D extended over the period July to October 2005. Mr D then told the husband that he needed to make a prompt payment, or risk being excluded from the investment. Mr D told him that his lawyer would in the meantime prepare the relevant contracts, and that the husband could collect them from his farmhouse in four days’ time.
The husband claims that he immediately withdrew funds from the Millennium Bank accounts in the parties’ joint names, in the sum of about $AUD 4.380 million. Bank records show that four cheques, each for €500,000, were drawn in favour of the husband on 13 October 2005. It is agreed that on the relevant exchange rate at the time, the total of €2 million was equivalent to approximately $AUD 3.2 million. On 21 October 2005, another cheque, this time for $AUD 1,005,902.35 was also drawn from the parties’ joint funds in favour of the husband.
That left €120,000 in the Millennium Bank. The husband said that was retained for his living expenses.
The husband swore that he telephoned Mr D to make arrangements to meet him. He gave him the cheques endorsed on the back as he had requested. He said that he asked Mr D for a receipt, but he said he did not have a receipt book with him and a receipt would be available when he collected the contracts.
The husband swore that when he went to Mr D’s home four days’ later, there seemed to be no one at home. He said he called Mr D on his mobile telephone, but was told that he had been held up, and that the husband should visit the following week to collect the contracts.
The husband claims that when he attended the farmhouse the following week, it appeared to have been abandoned. He said that Mr D’s mobile telephone number had been disconnected. He said he went to the police in Spain, and in Portugal, who told him they could do nothing as he had no proof that Mr D had the funds. He said he returned to Australia, distraught that he had lost the family’s savings.
I reject the husband’s account.
It is fanciful and improbable in light of all the surrounding circumstances. First, he is an astute and experienced property developer. It is most unlikely that he would simply hand the parties’ hard-earned life savings to a stranger in the circumstances described by him. Secondly, specific factual aspects of his account are not supported by documentary evidence. Thirdly, his account is contrary to the account I accept he gave his children, specifically that he had hidden the money to ensure that his wife would not obtain a share. Fourthly, there were documents later found by the wife which also suggested a deliberate fraud on his part.
I also take into account the husband’s conduct throughout the long history of these proceedings, during which on a number of occasions, in a number of ways, he failed to co-operate with the wife’s attempts to obtain information first from Portugal, later from Spain. It was not the conduct of a wronged man who dearly wanted to find genuinely missing funds.
Where the husband’s account on the topic of losing the funds differs from his former wife’s, or his children’s, I accept their account and not his. His evidence and behaviour in these proceedings has been unimpressive. Overall, theirs’ has been impressive.
I was particularly impressed by the evidence of the parties’ adult son. He showed balance, even though he was clearly deeply hurt on his mother’s behalf that his father had ensured that the parties’ assets were beyond her reach. He did not hesitate in agreeing that overall his father had been a good father, that they had been close, and that his father had in the past extended financial support for both children to buy their homes.
I place particular weight upon the son’s account of the personal characteristics that his father took into his business life. He spoke of how meticulously his father conducted his affairs. One comment – almost an aside – graphically portrayed how the husband, a self-made man, looked after his money. Referring to how well his father cared for his money, the son volunteered that his father would even shop late at the supermarket to ensure that he obtained discount donuts.
It would be completely out of character for the husband to naively hand away the family fortunes in the manner that he has claimed. His ex-wife and his children each described what was clear on the evidence, that he had shown long-standing prowess and success as a property developer. He was astute, and had never acted imprudently or been duped in his many years of property investment that included repeated dealings with agents, sellers, buyers, authorities, tradesmen and suppliers. It is simply implausible that he would naively hand over millions of dollars to a man in Portugal, without proper documentation, not even a handwritten receipt.
The husband’s own account of how little he knew of Mr D adds to the implausibility. And anything he did know, he appears to have made little effort to pursue as a lead in order to locate the man and the funds. He appears to have made even less effort to disclose any leads or useful information in the course of these proceedings. Many lines of enquiry that he could have followed, to pursue the family wealth, were never followed. In fact, it became clear in cross-examination, that he had left Portugal for Australia within only days of supposedly having discovered that a man to whom he had given all his money had simply disappeared with it.

He made no effort for example to try to trace Mr D from the original magazine article that he had seen. In evidence he said that he may still have the article in Portugal, amongst the belongings he left there in a locked suitcase. He said he had not been able to check, as the Court had restrained him from returning to Portugal since March 2007. That failed to explain why he had not pursued it whilst he was in Portugal, or why he had not arranged since then for a family member, friend, contact, or lawyer in Portugal to pursue it on his behalf. He has access to family and others there who could have looked through his belongings while he has been in Australia. He could have sent a key to the case if it were needed, or even instructed them to break open the case, sacrificing it for the sake of possibly finding millions of dollars.
Apart from saying he went to the property at which he had visited Mr D, he seemed to make no other enquiries from local authorities or neighbours as to the identity of the man or his movements. He could not recite an address. He said he knew where it was, but apparently he had made no arrangements for anyone in Portugal to go there or to make any further enquiries on his behalf. He had not even searched any telephone records in Portugal or Spain.
The husband said that he went to the police in both Portugal and Spain but they said they could do nothing.
He did not go to his bank, to stop the cheques, or to make any other enquiries. He said he believed the cheques could not be stopped and no enquiry could be made. It appears from endorsements on the back of the cheques that some days passed before the banks finally processed the cheques. The husband’s experience as a businessman must have informed him that cheques were likely to take some time to process. Even if he feared it was too late, any genuine sense of loss would have prompted him to enquire in any event.
Quite simply, the husband did not pursue the obvious leads that an experienced businessman who had genuinely been swindled of their life-savings would have pursued. It was clear enough in the course of this case that he is an intense and hot-blooded man. It is inconceivable that he would have simply accepted this loss, and immediately returned to Australia, without every effort to locate the man who had taken off with his fortune. When that was put to him, he exhibited the ultimate in nonchalance with a response to the effect, “I should have chased what? Butterflies?”
The husband’s version was also seriously undermined by independent documentary proof.
He claimed that he gave Mr D all the money (in five cheques) on about 14 or 15 October 2005, arranged to pick up the contracts about four days’ later, but was then told by Mr D over the telephone on about 18 or 19 October that the contracts would not be ready until “next week”. The husband said that at that point he had become “concerned”.
However, the bank records show that although four cheques, each for €500,000, were drawn in the husband’s favour on 13 October, the fifth cheque, for more than $AUD 1.005 million, was not drawn until 21 October 2005.
A number of things do not add up. First, it would have been odd for the husband to pay Mr D in any part in Australian dollars. Secondly, it is improbable that the husband would have drawn this cheque for Mr D at the very time when he said he was already concerned that he had not received contracts. Thirdly, his account that he only met the man once to hand him all the money before he disappeared, was in conflict with this evidence of withdrawal of funds on different days, evidence that was only later discovered from the wife’s enquiries in Portugal.
What happened thereafter was particularly significant. It was only uncovered by the wife in March 2010, following painstaking processes through this Court – processes with which for the most part the husband failed to co-operate – leading to the discovery that after the monies were withdrawn from the Portuguese bank accounts, Spanish bank accounts were then opened in the husband’s name.
It is apparent from stamps on the Millennium Bank cheques (Exhibit “L” to the wife’s affidavit), endorsed by the husband on the back, and purportedly handed to Mr D, that those cheques found their way into the following Spanish banks:
·Banco Santander Central Hispano S.A.
·BBVA – Banco Bilbao Vizcaya Argentaria S.A.
·“Caixa” – Caja de Ahorros Y Pensiones de Barcelona S.A.
Although the husband had refused to sign a Spanish Power of Attorney to obtain information from the Spanish banks, (a contempt of court for which he was sentenced to three months’ imprisonment on 17 December 2009), the wife was ultimately able to obtain some relevant information from Banco Santander and La Caixa.
A letter from Banco Santander (dated 21 March 2010) showed that “[Mr Porto], holder of Identity Document No. […]54” held two accounts with the bank. On 20 December 2005, a cheque for €500,000 was issued in his name from one account, and both accounts were then cancelled.
On 18 March 2010, the bank La Caixa advised the wife’s solicitors that an account in the name of “[Mr Porto]”, with an I.D document “[…]54” and an address of “Rua da […]” (the husband’s sister’s address), was opened on 14 October 2005 (one day after he withdrew €2 million in cheques in his name from the Portuguese bank). It showed the balance at March 2010 as nil.
When cross-examined about these accounts, the husband appeared to be saying that Mr D must have opened the accounts using his name. It was a graphic example of how he made up evidence to suit his purpose as required.
There could be no sensible explanation as to why Mr D, trying to make off with the husband’s money, with cheques already endorsed by the husband, would have put money into accounts in the husband’s name. Further, it makes no sense at all that he would have bank statements addressed to the husband’s sister’s address. It is unlikely that is what a swindler would want to do. It is however likely to be precisely what the husband would want to do, as the first step in removing the money from the parties’ joint account in Portugal, and from the wife’s reach.
The husband’s attempts to explain away the identity numbers supplied to the Spanish banks failed. He said that he and Mr D had exchanged such information. He prevaricated about that once he realised it would mean that he should have had Mr D’s identification number to help track him down. Again, it is unlikely that the husband would have handed such personal details to someone, along with the funds, with no reciprocity, particularly when he received no documents or receipt.
The husband’s efforts to persuade me that the identity card numbers used for the Spanish accounts did not accord with his own, also failed. The actual number on his identity card is …47, with a zero set in a box separate from the rest of the number. The “La Caixa” bank showed the identity card number as T0…54. “Banco Santander” showed it as …47.
I do not know the intricacies of how Portuguese identity card numbers are cited. I am satisfied however that any attempt by the husband to distance himself from these bank accounts was not credible. There was no reason for Mr D to have the identity card number wrong if, as the husband said, he gave him the full number. I cannot speculate as to whether the bank made an error, or the recording of the numbers differed slightly between banks. It seems though that the banks had sufficient details to open the accounts in the husband’s name.
The evidence of the parties’ two adult children, as to what their father told them about the purportedly lost funds, is important. It puts a lie to the whole Mr D story. First, the circumstances of the separation provide relevant context.
In 2002, the husband formed the view that his wife was having an affair with a man at her place of employment. She denied it, but it was clearly a view that he either retained or later rekindled, as was apparent in his conversations with his children when he returned to Australia in late-October 2005, and the parties separated.
The husband said that the wife ended the marriage. She said that she and her daughter returned home on a day when she believed the husband would not yet be back from overseas, to find that he had broken into the home and removed his possessions. I accept the wife as the more truthful of the two witnesses, and her evidence is supported by the two adult children.
Both the parties’ son and their daughter have consistently given an account of their father telling them on Cup Day 2005, at a “family meeting” at the son’s home, that their mother was having an affair, that he had removed all his personal money and company funds from Australia, he would make sure that their mother never received any money, if he were asked where the money was he would say that he had “gambled it away”, and that he did not have to explain what he had done with the money.
They also swore that he told them that if anything happened to him, that is if he died, they should “let Portugal know”, and they would receive a document letting them know where they could find the money. They understood that to mean to contact the village from where he came, a small village where everybody knew each other well.
The parties’ son described that at that Cup Day meeting, his sister presented their father with a “barrage” of criticism about his conduct in relation to their mother, and his accusations that she was having an affair. He was forthright about how upset his sister was with their father that day, and that was her area of emphasis.
The son’s focus on the other hand became – as he said – on how to salvage assets on his mother’s behalf, and that the reason for that focus was the husband’s repeated statements to him that he would ensure that the wife received nothing at all.
The husband spent a week in regional Victoria at a motel near his son’s home, and then spent a week in the home, in those first two weeks of the separation. I accept the son’s evidence that upon leaving his home, the husband signed over the two motor vehicles (the Mercedes and the Hyundai) to him, saying that if his mother tried to take possession of either of the vehicles he should immediately transfer the vehicles “to someone we trust to protect the assets.” That conduct was consistent with the husband’s determined effort to keep assets from the wife.
Both of the children said that the husband never mentioned Mr D, nor that the family savings had been “lost” to him. I accept the son’s evidence that the first he heard of Mr D was in the course of these legal proceedings.
Both the husband and the parties’ son agree they were close. It is obvious that they were sufficiently close that at a time of need, the husband turned to his son for accommodation and comfort. Had there been a Mr D, or a fraud as he claimed, I am satisfied he would have told his son about it. To the contrary, what he made clear to his son, and to his daughter, was that he would do whatever was necessary, and say whatever was necessary, to ensure that their mother would not get any money.
There were two other significant documents in this case. The wife claims to have found them in June 2007. Each contained potentially incriminating evidence against the husband in relation to hiding the funds.
The first was a note (translated from Portuguese) as follows:
(1) 3 years ago I discovered that my …
(2)I would like to know how I can hide the money here
3I would like to know if I can
9[Mr CS]
The second was an imprint on a notepad (translated from Portuguese), as follows:
If anything happens to me there are 3 bank accounts in Spain of which I attach all the details and through this letter I give you, [my son] and [my daughter], the right to draw all the money from those accounts.
The wife swore that she found the documents when cleaning the Mercedes car boot on 16 June 2007. The car had been kept at the parties’ son’s home until about August 2006. The daughter said that she was shown it when the discovery was made. The son believed he was shown it at around that time.
The wife and the son both said it looked like the husband’s handwriting. He denied it. He had ample opportunity to dispute it when he received, through his lawyers, a Notice to Admit. He did not do so, and accordingly I proceed on the basis that it was his handwriting.
There were inconsistencies in the accounts of the wife and the son in relation to the bag in which the wife says she found the note and the notepad. There were aspects of the wife’s evidence too that were vague, as to where she was when she opened the bag and as to whether her daughter was actually present at that moment or not.
The wife said that she found these papers in a small business-like suitcase in the boot of the car, separate from the larger suitcase containing clothing and other possessions belonging to the husband. The son believed he only ever placed the larger suitcase in the boot and did not recall seeing any other bag or case at the time, although he thought he may have seen it later at his sister’s home.
The only reasonable inference from the husband’s attempts to reject the document, is that he suggests that the document was concocted by his ex-wife, either alone, or with the assistance of his children or one of them.
Such a concoction is not likely on the evidence. I have already noted that overall I found the wife and the children to be honest witnesses. Moreover, were evidence to be concocted, one would expect a document less cryptic and fragmented, and more coherent, accompanied by a story that was also more precise and well rehearsed. To the contrary, the conflicting accounts had a ring of truth of genuinely different perspectives of events several years’ ago now, the document being the focus, rather than how the luggage was configured, with either one suitcase with another business case inside it, or beside it.
I also accept the wife’s account as to how she found the impression on the notepad. Her evidence was that she put the notepad in her room. Except for a couple of words on one page, it appeared to contain empty pages. She said that one night she reached for the notepad to write a note, and under a certain light saw what she thought was an imprint of words that she could not distinguish. When she told her son about it, he advised that an expert should be consulted.
In January 2008, a forensic document examiner, Mr NH, gave a report, enhancing the imprint so that the Portuguese statement (quoted above in its English translation) was visible.
Again, there was uncertainty as to the date upon which it was found. The wife said she thought it might have been last year, although she was not sure because it was a long time ago. When she said it was last year, she was clearly wrong. Mr NH had analysed the document at the start of 2008. It was a strong indication that rather than lying, the wife was obviously mistaken as to some of the details surrounding the documents.
Mr Glover for the husband tried to make something of the fact that the wife was unable to see any imprint whilst in the witness box, although she claimed to have seen it at night under lights in her bedroom. That did not undermine her account. I cannot be confident that identical lighting conditions were replicated in the court room.
What is clear is that the reference picked up by Mr NH’s analysis at the start of 2008, as to bank accounts in Spain, was something not known to the wife at that time. It was only much later in 2008 that the Millennium Bank provided cheques that showed stamps of three Spanish banks on the back. And it was considerably later again (in 2010) that there was any information from Spanish banks to show accounts there.
I find that both the note and the notepad are genuine, and add further evidence that the husband deliberately set out to hide the monies.
It also appears that the husband has enjoyed unexplained “enrichment” in that he admits that he has spent more than $187,000 on legal fees in the course of these proceedings, when he claims to have been earning only $200 per week on average.
When asked about how he had managed to meet the legal fees, he said that in addition to the $60,000 that it was agreed he brought back from Portugal, (being the balance of the €120,000 he retained in an account there), he had also borrowed $82,000 from a friend in Switzerland, a Mr G. He said there was no contract, no documents, and no security of any sort. There was also no affidavit from Mr G.
He said that he had borrowed another $35,000 from the Portuguese Consul in Australia. He was not called. When asked about any documentation for this loan, the husband said that his nephew in Portugal had acted as guarantor and he produced a letter in Portuguese to that effect, dated 29 October 2010. There was little explanation as to why a nephew would be guaranteeing the loan, or why the Portuguese Consul would be extending a loan. The nephew was also not a witness.
In the light of the scant evidence about both purported loans, I find that it is more probable that the husband has had access to his own funds than borrowed sums.
Finally, I return to the fact that the husband has been unco-operative throughout the proceedings in the quest for documents overseas, and the wife’s efforts to trace the monies. Her affidavit sets out the relevant history at paragraphs 80 to 125.
In the 3½ years of at times tortuous interim proceedings, mainly directed towards obtaining information from Portuguese and Spanish banks, the husband has been mostly obstructive. Ultimately, after a great deal of delay and prevarication, he signed a Portuguese Power of Attorney. The wife was then able to ascertain that the monies from Portugal had gone into Spanish bank accounts. A Spanish Power of Attorney was requested, in order to investigate those or other Spanish accounts. The husband refused to sign it. He was imprisoned for three months on 17 December 2009, having been found guilty of a contempt of court for his refusal.
In the witness box during this hearing, he showed no remorse, and no change in that intransigent attitude. He said that he would not sign the Spanish Power of Attorney “as a matter of principle”. What “principle” was left unclear.
From the start of these proceedings, the husband has been insistent that the property issues should be dealt with in the Portuguese court. His depth of feeling in that regard, coupled with what he told his son, suggest that he has always believed there would be less probing there about the lost funds, and therefore a more favourable outcome for him.
The evidence satisfies me that the husband, believing that his wife was having an affair, decided to hide their life-savings to prevent her from obtaining a fair property settlement. His story is fanciful. His lack of vigour in searching for the monies, his lack of co-operation with the wife’s attempts to locate the money, and the impressive evidence of his children as to his admissions to them about hiding the money, are all particularly persuasive in leading to a positive finding that the only fraud in this case is the fraud that the husband has attempted, in an effort to hide the monies, and that those monies remain available in a location known to him.

Conclusion Re Asset Pool

I find the asset pool as follows:
·The funds taken to Portugal but concealed
by the husband   $4,500,000
·Proceeds of sale from the former matrimonial
Home (already received by the wife)  $    210,000
·The balance of proceeds of sale of the
former matrimonial home held in the trust
account of Birch Ross and Barlow  $      6,016
·The further proceeds of sale of the
former matrimonial home that may be recovered
from Birch Ross and Barlow   $     44,000
·The 1997 Mercedes Benz retained by the wife               $      6,500
·The 2002 Hyundai retained by the husband   $      2,500
·The husband’s superannuation entitlement   $     12,371
·The wife’s superannuation entitlement
estimated at  $     25,000
Total$4,806,387

CONTRIBUTIONS

As noted, it was agreed that the parties’ respective contributions should be treated as equal.

SECTION 75(2) AND OTHER FACTORS

It was not suggested that there should be any adjustment arising from these factors.
The wife is 55 and in good health. Her only source of income is $150 per week as a casual part-time cleaner. She is dependent on her children. She lives with her daughter without paying rent or board. She has used the monies this far distributed to her, largely for legal expenses, and in small part for day-to-day expenses. As the firm of Birch Ross and Barlow, where the net proceeds of sale of the former matrimonial home were held, is in receivership, it is uncertain as to whether an outstanding balance of $44,000 will be realised.
The husband is 63 years’ of age. He says that he is not in good health. In his affidavit he claims a number of medical issues, although there is no independent medical evidence. He says that his ability to work is limited and he can only earn income as a handyman. He says that he does casual work and averages about $200 per week.
He swears that he would be homeless but for the generosity of a friend who, since July 2010, has allowed him to live at this home rent-free, contributing to living expenses only when he can. Prior to that, he lived with another friend, paying what he called “a nominal rent” of $150 per week.
He says that the wife has taken action to freeze assets in Portugal. He says he has no access to money. He does own a property in Portugal. That is not a property that the wife has sought orders against.

A JUST AND EQUITABLE PROPERTY SETTLEMENT

The parties agree on a 50/50 distribution of their assets.
Obviously, I find the asset pool to be very significantly higher than that claimed by the husband. The most pressing question in this case is how to configure orders to achieve a just and equitable settlement.
Upon my finding that the husband has concealed and continues to conceal the substantial portion of the family’s wealth, in a place unknown to the wife, it is just that she should receive the benefit of all available assets in Australia towards her share of the property settlement. Although Mr Glover for the husband could not argue against that proposition, he submitted that the husband should be able to retain the Hyundai motor vehicle, as he is dependent upon it for transport, and its value is very low.
I disagree. I cannot be persuaded that it is a harsh result for the husband to lose the motor vehicle, when I am satisfied that he has access to some millions of dollars. The wife, on the other hand, having worked hard over an adult lifetime to make her own contributions towards the building of substantial family wealth, has been locked out from enjoying its benefit for the last five years, and at this point still faces bleak prospects in that regard. In that context it is just for her to receive all available assets, including the Hyundai motor vehicle.
The husband’s small superannuation entitlement in Australia should also be directed in the wife’s favour. At the time of the hearing, it was estimated at $10,000. The trustee had not received notice of the proposed splitting order. By agreement, I allowed the wife’s solicitor to advise the trustee and forward the response to the Court and the other party. A letter dated 18 November 2010 showed there balance of the husband’s account at $12,371. No objection was made to the wife’s proposed orders.
Once the wife retains the assets available in Australia, and subject to costs orders, she should receive $2,096,807 to reflect 50% of the assets.
I note a number of outstanding costs orders made against the husband in the wife’s favour. They are as follows:
·25 March 2009: The wife’s costs of and incidental to that day’s hearing, fixed at $4,178
·14 December 2007: The wife’s costs of and incidental to an application determined that day, such costs to be agreed within 28 days and failing agreement to be taxed.
·20 March 2008: The wife’s costs of and incidental to the hearings conducted on 14 December 2007, 12 March 2008, 18 March 2008 and 20 March 2008, such costs to be on an indemnity basis, to be agreed within 14 days, and failing agreement to be taxed.
·17 December 2009: The wife’s costs of proceedings concluded that day, on an indemnity basis, the sum to be agreed between the solicitors by 29 January 2010, and failing agreement to be taxed.
Those costs should come from the husband’s 50% share of the assets. How that should occur, so far as costs that are not fixed are concerned, is something about which counsel may address me.
Counsel for the wife heralded that if successful in the final property settlement orders, she would seek indemnity costs against the husband. That is a matter to be pursued after these Reasons for Judgment.
I shall not make any costs orders at all until there has been the opportunity for further submissions.
Pending this hearing, I made an order on 22 March 2007, restraining the husband from leaving Australia until further order. The order was extended by consent on 8 June 2007, again until further order. The parties also consented to an order that day for the husband to deliver to the Court all Australian and Portuguese passports held by him.
The wife now seeks an order that the husband be restrained from leaving Australia until she has received full payment to effect her property settlement under these orders. The husband resists that order, wanting to be free to leave Australia.
Counsel for the husband conceded that s 114(3) of the Family Law Act provides the power for such a restraint. It provides for an “interlocutory order or otherwise” and includes “an injunction in aid of the enforcement of a decree”. It specifies that a court exercising jurisdiction under the Act may grant an injunction “…in any case in which it appears to the court to be just or convenient to do so”, either “unconditionally or upon such terms and conditions as the court considers appropriate”.
Mr Glover submitted that restraining a person from leaving the country was not an order that should be made lightly. Further, although the husband has lived in Australia as a permanent resident for more than 30 years, he is not an Australian citizen. The effect of an order would thus be to keep a foreign national in Australia against his wishes. He argued that the husband would be kept here when there was no specific compliance ordered in this country, and no evidence as to what would be required for enforcement of the orders overseas. Mr Glover argued that it was tantamount to imprisonment.
He referred me to a decision of Anstis and Anstis and Anor (No. 1) (2000) FLC 93-013, in which Mullane J discharged a Judicial Registrar’s order that restrained the husband from leaving Australia and provided for both his Australian and British passports to be held in the Court. The Judicial Registrar’s reasoning had been that the majority of the husband’s assets were located in the United Kingdom, and that the property available in the Australian jurisdiction was significantly less than the wife’s entitlement as proposed by either party.
Mullane J considered the International Covenant on Civil and Human Rights, The International Covenant on Civil and Political Rights, and The Universal Declaration of Human Rights, all ratified by Australia, in particular insofar as they related to a person’s freedom of movement and freedom to leave a country. His Honour referred to the High Court’s decision in Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273, to the effect that ratification by Australia of those international covenants or conventions gave rise to a legitimate expectation that in exercising the power under s 114(3) of the Family Law Act, the Court would act in accordance with them.
Mullane J noted that quite apart from the covenants, the Court should not lightly exercise the power to restrain a party’s freedom to leave the jurisdiction, “as to do so is a serious restraint on any citizen” (see para 35). His Honour also found that the onus was on the applicant to establish “a likelihood” that she would be “denied a remedy” if the respondent’s freedom to leave the jurisdiction was not limited or suspended.
Mullane J held that the injunction restraining the husband from leaving the country should be discharged, and that his passports should be returned.
I agree with Mullane J’s re-stating of the principles in Teoh, of the importance of an applicant establishing a likelihood that she would be denied a remedy if the respondent leaves the country, and that the Court should not lightly exercise a power to restrain a party’s freedom to leave the jurisdiction. I am satisfied however that the single-judge decision does not help me further.
Anstis related to an injunction pending final hearing. His Honour found that the husband showed no intention to leave Australia “for anything but temporary purposes”, and that he had no present intention to leave very significant ties including a business, his children, a lady friend, customers, friends and his adopted nation. Accordingly, the case turned on its own facts, different from the facts in this case in which the husband’s conduct has led to a finding that he has deliberately hidden most of the parties’ assets overseas and that he will endeavour to avoid compliance with an order of this Court.
Like this case, the Full Court’s decision in Khademollah and Khademollah (2000) FLC 93-050 dealt with orders restraining a party from leaving the country, as part of final property orders.
In Khademollah, the Full Court considered, amongst other orders, a restraining order made by Brown J. The parties were both Iranian-born. They migrated to Australia in 1989 and became Australian citizens. The trial Judge determined that the pool of assets included assets in both Australia and Iran and that, contrary to the husband’s evidence, he had real estate in Iran as well as significant sums in bank accounts in Iran and other countries. Her Honour made orders for the husband to pay the wife a specified sum, plus capitalised child support. Her Honour ordered that until payment of all outstanding monies, the husband was to be restrained from leaving Australia, and his Australian passport was to remain in the possession of the Court.
At paragraph 171 of their judgment, Kay and Holden JJ said they saw no justification for the Court to interfere with the restraining order, particularly when her Honour had provided a mechanism for the case to be listed before herself.
Although there was little discussion by the Full Court of that part of Brown J’s orders, I note her Honour’s reasoning at paragraph 173 of her Reasons for Judgment (see Khademollah & Khademollah [1999] FamCA 2078). As in the case before me, there had been an order restraining the husband from leaving Australia pending the trial, and her Honour was considering whether it should remain on foot pending compliance with final orders.
Brown J acknowledged that any curtailment of personal liberty was serious, and not to be undertaken lightly. As she said, “Debtors’ prisons are a thing of the past.” She did note however that the order proposed would not restrict the husband’s liberty within Australia, a country he had lived in most of the time since 1989.
Brown J referred to her finding that the husband had the capacity to access funds to comply with the orders, but she had “no doubt that he will not comply if given the opportunity to avoid that responsibility.” She then provided that he be restrained from leaving Australia for a period of six months, or payment in full, which ever occurred first. If he had not complied at the expiration of six months, the matter was to be listed before her for further orders.
The evidence in this case supports a similar level of doubt as to the husband’s preparedness to comply with orders. I am satisfied that as in Khademollah, the justification exists in this case for a restraining order. The only distinction is that Mr Khademollah was an Australian citizen. In his more than 30 years in this country, Mr Porto has not taken Australian citizenship, rather he has remained on a permanent residence visa. I do not take lightly the fact that he remains a citizen of another country, but take into account the fact of his very long-term residency in this country, as well as the fact that he would have the comfort and protection of Portuguese citizenship, if he chose, as is likely, to leave Australia.
Khademollah was followed by Watt J in Castles and Pesic [2008] FamCA 1003. In that case, the husband was found to have substantial undisclosed monies in overseas bank accounts which he had been ordered to transfer to Australia. He had failed to comply. Pending a property settlement, he had left Australia for a very substantial period. Orders for a part-property settlement had not been satisfied. Upon making final property orders, Watt J ordered that the injunction restraining the husband from leaving the country be discharged after three months, unless earlier extended by the Court.
Watt J referred to the Full Court’s decision in Brown and Brown (2007) FLC 93-316. In that case the Full Court acknowledged (at para 195) that the power to restrain freedom of international movement in financial cases was at least impliedly accepted in several single-judge decisions and Full Court decisions, including Khademollah, noting that the High Court had rejected an application by the husband for special leave in Khademollah.
At paragraph 68 of his judgment, Watt J noted that if he did not make an order restraining the husband from leaving the jurisdiction, it would be “tantamount to condoning the husband’s actions.” He referred to the significant injustice to the wife if the husband were permitted to avoid his responsibilities (in that case in relation to an order for costs), and noted that the “inconvenience” to the husband was outweighed by “considerations of justice” that weighed heavily in favour of granting the order.
My conclusion in this case can be put on a similar basis. The situation is clear. The husband took the opportunity on a previous visit to his country of birth to hide the substantial portion of the family’s assets in that country, and/or in neighbouring Spain. He has already refused to comply with orders, and has told his children that he shall refuse to comply with any orders that would see any money being paid to the wife. That conduct and attitude cannot be condoned by the Court.
It was argued strenuously on the husband’s behalf that he should be able to leave Australia. To restrict someone’s freedom of movement is not a decision taken lightly, but the justice of this case, and the enforcement of the wife’s rights under these orders, leads me on balance to make an order restraining the husband from leaving the country. Of course he should not be restrained once he has complied with the orders.
That brings me to the form of the orders. An order that he be restrained from leaving the country until he has complied with the orders, would not give sufficient certainty for immigration officers to determine whether a Watch List order that I will make to support the injunction, is or is not still in place. The better course is for a restraint and a Watch List order to remain clearly in force until specifically varied by this Court.
That then brings me to the length of time of the restraint. Although it is hard to imagine that the wife will be dilatory in pursuing the funds overseas, to ensure she is not, I propose making a specified time for the restraint to expire, unless it is extended by the Court. In Castles and Pesic I note the period was three months, but that case related only to the compliance in relation to costs. In Khademollah the period was six months.
In this case I propose 12 months from the date of the orders. I am conscious of the enormous expense of these proceedings so far, and that the wife should not be forced back to Court too soon, taking into account how slowly matters have proceeded this far in Portugal and/or Spain, and how difficult it will be for her to pursue the monies overseas, if the husband does not comply with the orders. Of course, if he does comply, he should have liberty to apply to bring the matter before the Court for the restraint to be lifted. Equally, the wife may apply to extend the restraint beyond 12 months.
That leaves the issue of any passports held by the husband.
Mr Glover submitted that this Court does not have the power to order the husband to deliver to the Court a Portuguese passport, the property of the Portuguese government. He produced no authorities to that effect.
If the husband does hold a Portuguese passport, I am satisfied that I can make an order that he deliver it to the Registrar of the Family Court, to be held until the restraint against him leaving Australia and the Watch List order are lifted. That order in no way seeks to interfere with the ownership of the passport. It deals only with the possession of it. It is an order I will make in an effort to secure the prospect of compliance with these orders. It is not a significant order in the scheme of things, in the sense that I was presented with a shared understanding that the husband has lost his current passport.
I am also satisfied that I can and should make an order restraining the husband from applying for any Portuguese passport at this point. That is not an order against any Portuguese authority. It is against the husband. Were he to make an application, it would be in breach of this Court’s restraint against him.

THE ORDERS

The orders that I propose, subject to submissions as to form, costs, and interest, are as follows:
1.That until 5.00pm on 6 December 2011, the husband MR PORTO born … shall be and is hereby restrained from leaving the Commonwealth of Australia and that his name shall be placed on the AIRPORT WATCHLIST and it is REQUESTED that the Marshal of the Family Court of Australia and the Australian Federal Police shall give effect to this order and it is noted that the husband may hold both Portuguese and Australian passports.
2.That for the purposes of Order 1, the wife’s solicitor shall forthwith arrange service of a sealed copy of this order on the Marshal of the Family Court of Australia and the Australian Federal Police.
3.That within 21 days from the date of these orders, the husband shall:
(a)    Pay to the wife’s solicitors Messrs Holding Redlich on behalf of the wife the sum of $2,096,807; and
(b) Sign and forward to the wife’s solicitors an authority to Messrs Birch, Ross and Barlow for all monies held in trust on behalf of the parties from the proceeds of sale of the former matrimonial home, and any further proceeds of such sale that may at any time be recovered from Messrs Birch, Ross and Barlow, to be paid directly to the wife’s solicitors on behalf of the wife, and in the event that the husband fails to sign such authority, then a Registrar of the Family Court of Australia shall, pursuant to s 106A of the Family Law Act 1975 (as amended), sign the authority on his behalf.
4.That at 5.00pm on 17 December 2010 the husband shall deliver the 2002 Hyundai motor vehicle registration number … to outside his son’s home together with the keys and all necessary signed documents required to transfer the motor vehicle to the wife at her expense, and in the event that the husband fails to sign such documents, then a Registrar of the Family Court of Australia shall, pursuant to s 106A of the Family Law Act 1975 (as amended), sign them on his behalf.
5.That paragraphs 6 to 9 of these orders are binding on the trustee of the CBus Superannuation Fund.
6.That pursuant to s 90MT(1)(b) of the Family Law Act1975 (Cth) whenever a splittable payment becomes payable in respect of the husband’s interest in the CBus Superannuation Fund (membership number …), then the wife shall be entitled to be paid an amount calculated at the operative time as 100% of the husband’s entitlements in the CBus Superannuation Fund and that there be a corresponding reduction in the entitlement the husband would have had in the CBus Superannuation Fund, but for these orders.
7.That paragraph 6 has effect from the operative time. The operative time for this agreement is 4 days after service of a copy of the sealed Orders on the trustee of the CBus Superannuation Fund.
8.That until the happening of any of:
(a)    The transfer or “rolling over’ into another superannuation fund of the payment split created by paragraph 6 hereof;
(b)    The wife satisfies a condition of release and is paid the payment split which was created by paragraph 6 hereof; or
(c)    The wife executing a waiver of rights within the meaning of section 90MZA of the Family Law Act 1975 (Commonwealth) in relation to the payment split created by paragraph 6 hereof;
the husband is hereby restrained from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the CBus Superannuation Fund a “not splittable payment” within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001.
9.That having been accorded procedural fairness, Orders 5-9 and this Order bind the trustee of the CBus Superannuation Fund to observe the requirements of the Family Law Act1975 and the Family Law (Superannuation) Regulations 2001.
10.That the husband shall be responsible for any debts or liabilities currently outstanding or incurred by A Constructions Pty Ltd (ACN …) and V Investments Pty Ltd (ACN …) to the exclusion of the wife, and the husband shall indemnify and keep the wife indemnified in relation to any such debts or liabilities.
11.That unless otherwise specified in these Orders, and save for the purposes of enforcing any monies due under these or any subsequent Orders:
(a)    Each party shall be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b)    Monies standing to the credit of the parties in any joint bank account shall be paid to the wife;
(c)    Each party forego any claims they may have to any holiday, long-service leave, superannuation and like benefits belonging to or earned by the other;
(d)    Insurance policies remain the sole property of the owner named thereon;
(e)    Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(f)     Any joint tenancy of the parties in any real or personal property is hereby expressly severed.
12.That each party shall have liberty to apply upon short written notice to the other party in relation to the enforcement of these orders, and in relation to the lifting or extension of the restraining order set out in paragraph one of these orders.
13.That all other existing applications shall be otherwise dismissed and the case removed from the list of cases awaiting finalisation.
14.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.

I certify that the preceding one hundred and fifty-three (153) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau delivered on 8 December 2010

Associate:

Date: