Raisner & Kells
[2023] FedCFamC2F 265
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Raisner & Kells [2023] FedCFamC2F 265
File number(s): CSC 645 of 2019 Judgment of: JUDGE COPE Date of judgment: 4 May 2023 Catchwords: FAMILY LAW – De facto property division – Where de facto husband alleges he does not discuss business with his current wife – Allegations the transfer of the business names out of the de facto husband’s name shortly prior to trial was done to defeat property claim – Where de facto husband is contracted to current wife’s business – Current wife billed husband a management fee of $130,000 – Where ownership of the businesses is a sham – De facto husband’s failure to disclose – Neither estimate of value of real property is reliable evidence – Debt to de facto wife’s parents – Debt from liquidated business – Sum remaining due to mortgagee sale – De facto husband prevented de facto wife from maintaining property – Addback – De facto husband unimpressive witness – Future needs consideration. Legislation: Family Law Act 1975 (Cth) Part VIIIAB ss 90AE, 90SF, 90SM, 90SL, 90TA Cases cited: Adamson & Korac (No 2) [2022] FedCFamC1F 638
Argyle & Argyle [2021] FCCA 505
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
C & C [1998] FamCA 143
C & C (2005) FLC 93-220; [2005] FamCA 429
Cahill & Cahill (2006) FLC 93-253; [2003] FamCA 172
Dellas & Halton [2022] FedCFamC1F 368
Dickons v Dickons (2012) 50 FamLR 244; [2012] FamCAFC 154
Fontana & Fontana [2018] FamCAFC 63
Hickey & Hickey (2003) FLC 93-143; [2003] FamCA 395
Jones v Dunkel [1959] 101 CLR 298; [1959] HCA 9
Lynch & Kershaw & Ors [2015] FCCA 2712
M & M [1998] FamCA 42
Mayhew & Fairweather (2022) 64 Fam LR 633; [2022] FedCFamC1A 53
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
AJO & GRO & AJO & GRO (2005) FLC 93-218; [2005] FamCA 195
Stanford & Stanford [2012] 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69
Yang & Gian and Ors [2014] FamCA 934
Zeidman & Godar [2021] FCCA 510
Division: Division 2 Family Law Number of paragraphs: 172 Date of hearing: 23 & 24 February 2023 Place: City B Counsel for the Applicant: Mr Newman of Counsel Solicitor for the Applicant: A P Hodgson & Associates Counsel for the Respondent: Mr Seewald of Counsel Solicitor for the Respondent: Sharma Lawyers ORDERS
CSC 645 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS RAISNER
Applicant
AND: MR KELLS
Respondent
order made by:
JUDGE COPE
DATE OF ORDER:
4 May 2023
THE COURT ORDERS THAT:
1.For the purpose of these orders IT IS DECLARED THAT:
(a)the parties’ matrimonial assets, liabilities and financial resources are as set out in “Annexure A” hereto;
(b)the assets, liabilities and financial resources are valued as stated in the Balance Sheet/Asset Distribution Schedule, other than if the property situate at C Street, Suburb D is sold then the value shall be the net sale price, being the sale price less costs of sale.
Transfer of Real Property
2.Within sixty (60) days of the date of this order, the respondent will do all acts and things and sign all such documents as are necessary to transfer to the applicant all of his right, title and interest in the property situate at C Street, Suburb D and more particularly described as Lot … on RP …, Title Reference … (“the C Street, Suburb D property”).
3.That simultaneously with the transfer of the C Street, Suburb D property in accordance with order 2 above, the applicant and the respondent will do all acts and things and sign all documents necessary to discharge the current mortgage secured to the C Street, Suburb D property.
4.That simultaneously with the transfer of the C Street, Suburb D property in accordance with order 2 above, the respondent will pay to the applicant the sum of $1,215.37.
5.That pending the transfer of the C Street, Suburb D property in accordance with Order 2 above the following provisions will apply:
(a)The respondent will be solely liable for all mortgage payments, insurances and outgoings associated with the C Street, Suburb D property;
(b)The respondent will maintain the C Street, Suburb D property in good condition and be solely responsible for the cost of any maintenance or repairs; and
(c)The respondent be restrained and an injunction issue restraining the respondent from further encumbering the C Street, Suburb D property.
6.That as of the date of the transfer of the C Street, Suburb D property to the applicant’s sole name, the applicant will have the sole use and occupation of that property.
Transfer of Real Property - Default Provisions
7.That in the event that the applicant fails or is unable to transfer the C Street, Suburb D property into her name on the settlement date (excepting any extension of the settlement date) or notifies the respondent that she will not retain the property (“the default”), then these default provisions shall apply.
8.That the respondent and the applicant will forthwith upon the default do all such acts and things and sign all such documents as may be required to effect a sale of the C Street, Suburb D property.
9.That the respondent will indemnify the applicant against all payments and liabilities pursuant to the mortgage registered on the C Street, Suburb D property and all rates, insurances and outgoings of or with respect to the C Street, Suburb D property of whatsoever nature and kind until the sale of the C Street, Suburb D property.
10.By way of consequential arrangement for the purposes of effecting a sale:-
(a)The C Street, Suburb D property will be listed for sale with a registered real estate agent as agreed to by the parties and failing agreement as nominated by the Chief Executive Officer of the Real Estate Institute of Queensland.
(b)The listing price for the C Street, Suburb D property will be as agreed between the parties and failing agreement as nominated by a valuer appointed by the real estate agent.
11.In the event that the C Street, Suburb D property has not been sold by or before a date two (2) months from the date of the default then the applicant and the respondent will reduce the list price as agreed or failing agreement as recommended by the real estate agent.
12.In the event that the C Street, Suburb D property has not been sold by or before a date of two (2) months from the date of the reduction of the list price, then the applicant and the respondent will make all such arrangements and do all such acts and sign all such documents to procure a sale by public auction of the C Street, Suburb D property upon the following terms:-
(a)The auctioneer will be as agreed between the parties and failing agreement as nominated by the registered real estate agents nominated by the Chief Executive Officer of the Real Estate Institute of Queensland.
(b)The respondent will pay to the auctioneer any sums requested for advertising expenses in relation to the auction.
(c)The parties will execute all documents requested by the auctioneer for the sale of the C Street, Suburb D property by auction.
(d)The parties will request the auctioneer to recommend a reserve price to be placed on the C Street, Suburb D property for the purpose of the auction sale and the applicant and the respondent will accept such recommended reserve price.
(e)The parties will give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract of sale to be made available to the auctioneer prior to the auction.
(f)The parties will attend at the auction sale of the C Street, Suburb D property and negotiate with the highest bidder in the event that the reserve price is not reached. The parties agree to accept the advice of the auctioneer as to the acceptance of a price less than the reserved price.
(g)The parties will execute the contract of sale.
(h)The respondent will co-operate in any way with the auctioneer in relation to the auction of the C Street, Suburb D property including making a key available, allowing inspection of the C Street, Suburb D property at all times requested by the auctioneer and ensuring that the C Street, Suburb D property is in a neat and clean condition at the time of inspection by prospective purchasers.
(i)The parties will execute all other documents necessary to complete the sale.
13.In the event that the C Street, Suburb D property is not sold at an auction, or within seven (7) days of the date of such auction by negotiation with the highest bidder at such auction, the parties will cause a further auction of the C Street, Suburb D property to be held three (3) months after the date of the first auction and every five (5) weeks thereafter until the C Street, Suburb D property is sold and the provisions above shall apply in relation to such further auctions.
14.Upon completion of the sale of the C Street, Suburb D property, the proceeds of sale be applied as follows and in the following priority:-
(a)To pay all costs, commissions and expenses of the sale.
(b)To discharge the current mortgage affecting the C Street, Suburb D property.
(c)To reimburse the parties for any expense agreed in writing and incurred by them to affect the sale of the C Street, Suburb D property.
(d)The balance shall be divided to achieve an overall 70:30 division of the asset pool in favour of the wife and Annexure A to these orders is the relevant asset pool, save that the value of the C Street, Suburb D property shall be the net sale price.
The Westpac loan
15.The respondent will be solely responsible for and will indemnify the applicant in relation to the joint loan with Westpac bank for the Trailer, being reference … with current amount owing in or about the sum of $58,841 (“the Westpac loan”)[1], and further the respondent will within sixty (60) days of the date of this order do all acts and things and sign all documents necessary to either discharge the Westpac loan in full or in the alternative to transfer the Westpac loan into his sole name.
[1] Exhibit W6
Other Asset Retention and Responsibility for Liabilities
16.The applicant will retain to the exclusion of the respondent and the respondent will forfeit all right, title and interest in the following assets:
(a)The applicant’s car;
(b)The applicant’s bank accounts;
(c)The applicant’s superannuation with Super Fund E (now known as Super Fund E); and
(d)The applicant’s household items.
17.The respondent will retain to the exclusion of the applicant and the applicant will forfeit all right, title and interest in the following assets:
(a)The respondent’s legal and/or equitable business interests in Company F, Company G, Company H, Company J and Company M;
(b)The respondent’s car;
(c)The respondent’s bank accounts;
(d)The respondent’s household items;
(e)The respondent’s Motorcycle;
(f)The respondent’s superannuation interest with Super Fund E (now known as Super Fund E).
18.The applicant will be solely responsible for and will do all acts and things and sign all documents necessary to indemnify the respondent in relation to the loan from her parents in the sum of $17,350.
19.The respondent will be solely responsible for the following liabilities and will do all acts and things and sign all documents necessary to indemnify the applicant in relation to the following liabilities:
(a)The shortfall on the K Street Mortgage to Bank L (loan account …20) with a current payout figure in or about the sum of $16,126.07;
(b)The respondent’s credit card debts; and
(c)The respondent’s tax liabilities and the tax liabilities of any entities in which he has a legal or equitable interest.
Miscellaneous orders
20.Each party will do all acts and things and sign all documents necessary, including providing all consents, to give meaning and effect to these orders in the time limits prescribed in these orders.
21.In the event that a party refuses or neglects to execute any deed or instrument necessary to give effect to any order within fourteen (14) days of service of any documents upon him or her, then a Registrar of the Federal Circuit and Family Court of Australia is authorised and directed by this order to execute it in the name of the party in default and to do all such things as to give validity and operation to the document upon receipt of an affidavit as to the said default.
22.The parties have liberty to apply with respect to any machinery orders required to give meaning and effect to these orders.
23.All outstanding applications be otherwise dismissed and the matter removed from the pending cases list.
THE COURT NOTES THAT:
A.That pursuant to s 81 of the Family Law Act 1975 (Cth) it is intended that these orders shall finally determine the financial relationship between the parties and avoid the need for further proceedings between them.
ANNEXURE A
Ownership
(Legal and/or Equitable)Description Value ASSETS 1 Respondent C Street, Suburb D $400,000.00 2 Respondent Company F business Unknown 3 Respondent Company G $74,800.00 4 Respondent Company H Unknown 5 Respondent Company J Unknown 6 Respondent Company M Unknown 7 Respondent Car $5,000.00 8 Respondent Bank Account $69,586.00 9 Respondent Household items $5,000.00 10 Respondent Motorcycle $5,000.00 11 Respondent NAB Account funds $10,006.00 12 Applicant Car $5,000.00 13 Applicant Household items $5,000.00 Total $579,392.00 ADDBACKS 14 Applicant Superannuation withdrawal NIL 15 Respondent Neglect of K Street property prior to sale $16,126.07 Total $16,126.07 LIABILITIES 16 Respondent Mortgage (K Street) $16,126.07 17 Respondent Mortgage (C Street) $293,000.00 18 Respondent Loan to Husband’s grandparents $NIL 19 Respondent Credit Card debt $20,000.00 20 Respondent Income tax liability $3,203.91 21 Respondent Tax liability further as per accounts summary $60,000.00 22 Joint Loan to Applicant’s parents $17,350.00 23 Joint Loan funds from Westpac Bank $58,841.00 Total $468,520.98 SUPERANNUATION Member Name of Fund Type of Interest Applicants value 24 Applicant Super Fund E Accumulation $11,123.22 25 Respondent Super Fund E Unknown $21,863.39 Total $32,986.61 Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Raisner & Kells has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE COPE
These are de facto property proceedings under Part VIIIAB of the Family Law Act 1975 (Cth).
The parties commenced cohabitation in in 2008 and separated on 11 June 2019 being a relationship of almost 11 years.
There are two children of the relationship:
(a)X born in 2010 who is 12 years of age; and
(b)Y born in 2013 who is 9 years of age.
Final parenting orders were made on 16 May 2022. In accordance with those orders, the children live primarily with the de facto wife and spend alternate weekends and half holidays with the de facto husband. The parties agree that the children spend additional time in the de facto husband’s care particularly during school holidays.
The de facto husband has re-partnered and is now married (“the current wife”). They have a young child.
BACKGROUND
At the commencement of the relationship the de facto husband’s evidence is that he had assets to the value of $120,000 in the form of cash and vehicles. It is not disputed that he had received a WorkCover payout prior to the commencement of the relationship.
The parties purchased two real properties during the relationship, buying the K Street property in February 2016 for $281,740 with the benefit of a loan from the de facto wife’s parents. The de facto husband’s evidence is that he also contributed $30,000 from his savings. That property has since been sold at a shortfall.
The C Street property was purchased in January 2019. The purchase price was $330,000 and funds were borrowed from the K Street property to fund that purchase. Post separation the de facto husband has lived in the C Street property with his new family. That property is registered in his sole name.
During the relationship the parties had established a business, Company N, operated through a company called O Pty Ltd. The de facto wife did some of the office work (the extent is disputed) while the de facto husband did the hands on side of the business. Post separation the vehicles owned by the business were sold and that business went into voluntary liquidation. The de facto wife’s evidence is that $58,841 remains owing to Westpac as of 27 July 2022 and that she is a guarantor for that loan. That said the document reflects that she signed the loan document. Regardless of how she characterised it, she conceded that she was equally responsible for that debt.
The de facto wife’s evidence is that during the relationship the de facto husband had two other businesses being a Business and Company G - which was run through the business O Pty Ltd. He continues to operate Company G as a sole trader.
Business searches conducted by the de facto wife show that the de facto husband previously had four registered business names as follows:
(a)Company H;
(b)Company F;
(c)Company J; and
(d)Company G.
The only business registered to the de facto husband’s name at the time of trial was Company G which he operated as a sole trader. A change of ownership to his current wife of the other businesses occurred in or about November 2022.
Issues
The following issues require determination
(a)The asset pool – what assets and liabilities are in the pool and the values to be attributed to many of those assets and liabilities;
(b)The value of the de facto husband’s initial contributions;
(c)What adjustment, if any, is to be made for contributions;
(d)What adjustment, if any, is to be made for future needs; and
(e)What, if any, property and/or cash and/or super should change hands in order to give meaning and effect to the court’s determination.
Orders sought
In the Amended Initiating Application filed 4 December 2019, the de facto wife seeks a 70:30 division of the asset pool in her favour however does not specify how that is to be achieved.
In the Further Amended Response to the Initiating Application filed on 3 February 2023, the de facto husband seeks a 50:50 division of the asset pool however does not specify how that is to be achieved.
Each party was required to file draft orders particularising how their preferred outcome was to be achieved, noting however that each party wishes to retain the C Street property.
THE EVIDENCE
I have read the parties’ Outlines of Case documents, material relied on and documents tendered. I have heard the cross examination and submissions and considered the evidence in these proceedings.
Where I have made statements of fact or expressed a view, those are to be read as findings. Where I have made findings, those findings are clear on the face of these Reasons and have been made on the balance of probabilities as required by s 140 of the Evidence Act 1995 (Cth).
Witnesses
The Applicant De facto wife
The de facto wife was overall an honest and straightforward witness.
She clearly has a poor opinion of the de facto husband saying at one point “whatever he says could be a lie”. Given her poor opinion of the de facto husband, I am of the view that she tended to exaggerate his lack of contributions. For example, the sweeping statements she made in her affidavit that the de facto husband made no contributions to the care of the children or to mowing lawns softened under cross examination to acknowledge that he did indeed make some minor contributions.
I accept the submission that at times her evidence changed but I am of the view that was because of her tendency to completely discount any positive contributions by the de facto husband. When pressed however she did concede those in the witness box.
I also accept that conversely she exaggerated her own non-financial contributions to the C Street, Suburb D property. She did however make concessions to this effect under cross examination. I am satisfied, for example, that whilst she painted the house she did not do all of it without any assistance.
I formed the view that financially she was not a sophisticated witness based upon her inability to distinguish between being a guarantor of a loan and a co-borrower. I am satisfied that her confusion here was genuine.
I am satisfied that the de facto wife genuinely believes that the de facto husband is the true owner of the businesses now registered in the name of his current wife, including Company F, and that she genuinely believes the transfer of the business names out of the de facto husband’s name shortly prior to trial was done to defeat her de facto property claim. The de facto wife had no evidence to support this. Her belief is based upon the timing of the transfers of the business names, her belief that the de facto husband is dishonest, that he is routinely at the Company F premises and runs his own business from there and that she had heard “talk” that he remained in reality the owner.
I accept the de facto wife’s evidence as to her difficulties in obtaining information and documents from the de facto husband and from the financiers post separation.
I accept the de facto wife’s evidence that the de facto husband threatened to stop paying the C Street mortgage and misled her about the existence of outstanding debt for the rates on the K Street property, and that in fact there was no such debt in July 2022.
The Respondent De facto husband
The de facto husband was an unimpressive witness. He was at various times condescending, sarcastic, disrespectful and snide. At times he answered a question with a question. He commonly said that he could not recall basic details that would be common knowledge to a business owner, such as roughly when a business was registered or what assets were sold by his business in 2021 to bring in the sum of $45,000. He came to court dressed in dirty work gear and paid scant attention to the proceedings save for when he was in the witness box. He sniggered and raised his hands from time to time during the course of submissions by counsel for the de facto wife.
In relation to the businesses, the de facto husband’s evidence was as follows:
(a)When his company O Pty Ltd went into liquidation post separation, he retained only the trading name, Company G;
(b)The business operated by Company G today is completely different from the business operations during the course of the relationship. He now only has “mum and dad” clients whereas previously he had commercial clients and worked in transport;
(c)He no longer does service, he just contracts his services to Company F (“Company F”) for $1,400 per week;
(d)Company F now belongs to his current wife “100%”. He is not Company F anymore;
(e)His current wife does not choose how much he gets paid. That is between him and the “management” of Company F;
(f)He does not choose how much he is paid;
(g)He registered the three business names, Company J, Company F and Company G, all under the same ABN;
(h)Looking at the documents, he acknowledged that on the same day that he registered his businesses, the company J Pty Ltd was created by his current wife;
(i)His evidence was that he could see from the document, and implied that he did not know from any other source, that Company J Pty Ltd was created by an accountant, and said that it was “nothing to do with me, not my company” that it was “just her, creating her own company”;
(j)He confirmed that by saying “her”, he meant his current wife;
(k)That he had nothing to do with his current wife registering that company using the same name that he had previously registered a business name;
(l)That he and his current wife did not discuss her registering that company, that the barrister asking the questions had “as much information as I have”;
(m)That it was just a coincidence that he registered a business name and his current wife created a company using the same name on the same day;
(n)That he does not answer to his current wife when working for Company F; that he answers to “management”; and
(o)That he and his current wife do not discuss business matters.
The de facto husband gave similar evidence about the other businesses now registered in his current wife’s name. He denied that they were shams, and denied that he was in effect the true owner of the businesses.
I do not accept the de facto husband’s evidence that there is no similarity between the business he runs as Company G today and the business that he ran during the relationship. They bear the same name, he continues to work in the service industry. No evidence was provided and I simply do not believe his evidence that the customers are completely different. If I am wrong about that then I am satisfied that he retained the name in order to attract the same or similar customers. A break of 3 – 4 months, if indeed one occurred as I have only the de facto husband’s evidence about that, is not definitive evidence that it is a separate business. I am satisfied that if that break occurred, it occurred for the purpose of attempting to establish distance from the relationship and to prevent the de facto wife having any claim against that business.
I do not accept the de facto husband’s evidence about any aspect of the ownership or management of the businesses in his current wife’s name. It is extraordinary and completely unbelievable that he and his current wife registered the same name by coincidence. I do not accept that they never discuss business, particularly in circumstances where she is the registered owner of and he is contracted to Company F on an ongoing basis. To suggest that she would not even ask a passing question about her own business is ludicrous.
Then there was the issue of the de facto husband’s tax returns. In 2019 and 2020 his taxable income was NIL and no actual returns were produced to the court. In 2021 his taxable income was $14,164. However his total business income was in excess of $1 million and the expenses included a management fee of $130,000. Under cross examination he disclosed that his current wife had assisted him, initially saying that she did so free of charge but subsequently saying that she presented him with an invoice for $130,000 at the end of the year so he paid it. If that was true he must be the most obliging husband in the world.
I do not accept his evidence about his taxable income and the management fee for the following reasons:
(a)His current wife’s background is in administration, not the service industry or business management.
(b)It is ludicrous to suggest that someone would receive an invoice for $130,000, and simply pay it without question when it leaves their own taxable income at $14,164. It is so disproportionate as to be simply unbelievable.
(c)His financial statement reflects that his current wife’s income is $800 per week, which is $41,600 per year. To bill her husband such a significant amount is out of all proportion to his evidence about her usual income, and disproportionate to what either of their expectations would reasonably have been for some management assistance.
(d)It is pretty poor business management advice that leaves him with such a low income. I cannot see it as anything other than a blatant step to reduce his own income. And this all in a year where his business turnover was over $1 million.
I accept that his taxable income increased the following year to $43,180.
The suggestion that the de facto husband works for the business Company F owned by his current wife but has no involvement in or knowledge of management or business procedure is absurd. This is particularly so when he did not bring his current wife to court to confirm that allegation.
He advised the court that his current wife was on maternity leave but usually worked for Employer P describing her role there as “business”, “administration” and “hospitality”.
As cross examination progressed, his tendency to make what I term “smart” remarks to counsel increased. This included saying “now we’re getting somewhere” and “you’d know that”, “you’d have that in front of you” in what I can only term a condescending tone.
The de facto husband’s evidence was extraordinary and completely unbelievable. I did not believe one word of the de facto husband’s evidence around these business interests. I do not accept that he and his current wife, by coincidence, registered a business and a company using the same name. I do not accept that they never talk about the business that he works for and which she owns. I do not accept that he has nothing to do with the business Company F other than supplying services.
I found the de facto husband’s evidence so unsatisfactory, as was his demeanour and behaviour in the witness box, that where his evidence is contradicted by the de facto wife I will always prefer the evidence of the de facto wife.
Mr Q - The de facto wife’s father
This witness was not required for cross examination and his evidence is therefore unchallenged as regards the loan to the parties and the amount outstanding.
Findings
It is unchallenged evidence that the de facto husband failed in his obligation to make full and frank disclosure. It is unchallenged evidence that the de facto wife repeatedly sought disclosure and that the de facto husband failed in his obligations to comply, requiring the de facto wife to undertake searches and attempt to source information in other ways. As a consequence, the de facto wife sought to issue subpoenas however documents were not produced in time for the trial, noting the parties were the recipient of s 102NA funding and the limitations that entails.
The de facto husband annexed some disclosure to his trial affidavit filed on 28 January 2023 including an MRI Scan of his spine dated 6 April 2022, less than five months of his home loan statement (noting that separation occurred in June 2019, more than three years prior to the trial date), an email confirming the amount currently outstanding after the sale of the K Street property and tax documents for 2019 – 2022. Disclosure remained far from complete. On the day of the trial the de facto husband finally produced six months of recent bank statements but credit card statements were not made available.
This is overall inadequate and unacceptable disclosure. The parties had separated in 2019 and the obligation to disclose documents goes far beyond that provided by the de facto husband.
Where there is a dispute about financial matters then that obligation to disclose is increased. For example the mortgage secured to the C Street property has increased rather than decreased post separation, and the de facto husband fails or refuses to provide an explanation for same, claiming ignorance. I do not accept that the de facto husband has no idea why his mortgage has not decreased post separation. I formed the view that the de facto husband has deliberately avoided doing anything to increase the asset pool. I go so far as to find that the de facto husband has done everything he can to minimise the asset pool.
I have already made findings that I do not accept the de facto husband’s evidence around his business interests. I am of the view that he lied under oath to this court and that he did so in order to reduce the asset pool and to avoid making a payout to the de facto wife.
My view as to the de facto husband’s dishonesty was shared by the Magistrate who heard the Protection Order application and made findings in those proceedings that the de facto husband had committed acts of family violence including physical violence and threats[2].
[2] Exhibit ICL 2 – Sentencing remarks dated 30 September 2019
I accept the de facto wife’s evidence that the de facto husband was the primary financial contributor during the relationship.
I accept the de facto wife’s evidence that she was the primary carer for the children, that while the de facto husband made some minor contributions she undertook the majority of hands on parenting.
I accept the de facto wife’s evidence that during the relationship she worked in the business registered to the de facto husband.
I accept the de facto wife’s evidence that she made non-financial contributions in the form of housework, mowing lawns and painting and that her contributions exceeded those of the de facto husband.
Under cross examination the de facto husband gave evidence that he offered the de facto wife the option to live in the C Street property. I was uncertain what he expected me to make of that in circumstances where the de facto wife had no income and was applying for a Protection Order against him.
I do not accept either party’s evidence as to the extent of the de facto husband’s non-financial contributions. I am of the view that the de facto wife has made sweeping generalisations as to his minimal contributions. I am of the view that the de facto husband has made some non-financial contributions but that he has exaggerated them, again in an effort to minimise the de facto wife’s entitlement to a property settlement.
Because the de facto wife made concessions that the de facto husband had indeed made some non-financial contributions, I am satisfied that her evidence is more reliable than that of the de facto husband.
THE LAW
These proceedings are governed by provisions of Part VIIIAB of the Family Law Act (Cth) (“The Act”) and will be determined in accordance with an approach laid down by the Full Court in Hickey & Hickey (2003) FLC 93-143 (“Hickey”).
The relevant principles are set out in the High Court’s decision in Stanford & Stanford [2012] 247 CLR 108 (“Stanford’s case”), noting subsequent Full Court decisions. In following the required pathway, the just and equitable requirement is “one permeating the entire process”; Bevan & Bevan (2013) FLC 93-545 at [86].
In Wallis & Manning (2017) FLC 93-759, the Full Court referred to and approved the Court in Dickons v Dickons (2012) 50 FamLR 244 at [24] where the Full Court said:
… the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applied, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79.
The de facto husband had previously owned a number of business names which are now registered in the name of his current wife. It was raised during the trial that the de facto husband’s current wife, Ms R, had not been called to give evidence. It was submitted on behalf of the de facto husband that as the applicant had failed to require her attendance that a Jones v Dunkel argument applied in favour of the respondent.
This is the position, the defendant having called no evidence it is a matter of common sense that you should accept the plaintiff's evidence with respect to the facts as being accurate. The fact that the defendant Hegedus has not gone into the box and offered any explanation leaves you in this position, that you can accept the facts given by the plaintiff as proved, but the question then is whether you should find negligence against him as a matter of inference to be drawn from those facts, and that is the question for you, whether you think from the proved facts an inference of negligence ought to be drawn. If you think so, the plaintiff is entitled to your verdict. If, on the other hand, you think no such inference can be drawn then the verdict must go against the plaintiff and in favour of the defendant.[3]
[3] Jones v Dunkel [1959] 101 CLR 298 at [12]
The asset pool formulated by the de facto wife includes a number of “unknown” values being the value of four businesses she alleges are in reality the property of the de facto husband although they are registered in the name of his current wife. She points to the failure of the de facto husband to disclose the transfer of those assets to his current wife until under cross examination and his failures to disclose generally.
Although submissions were not made about the relevant legislative powers, consideration was given to s. 90SL, which allows the court to make declarations in relation to de facto property, and also to s. 90AE, which allows the court to make orders binding on a third party and which has been extended by s. 90TA to apply to de facto property matters. However as with Lynch & Kershaw & Ors [2015] FCCA 2712 no evidence was given at trial which would allow the necessary findings to be made.
In the event that this court makes findings that those are indeed the property of the de facto husband, then there are two ways of dealing with those assets. This was recently confirmed by the Appeal Division in Mayhew & Fairweather (2022) 64 Fam LR 633 at [14]:
The usual way in which defective disclosure is taken into account is either by adding a sum to the pool, reflective of an estimate of the value of undisclosed property …, or under s 75(2)(o) of the Act. …
In this case the equivalent provision for de facto property matters is s 90SF(3)(r) being “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
In the case of Weir & Weir (1993) FLC 92-338 at 79,590, the Full Court expressed the view that “the court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her asset.” The court further propounded that there is no requirement to place a value or amount on the assets that were not disclosed.
I am also assisted by the case of Yang & Gian and Ors [2014] FamCA 934 – where Justice Aldridge stated at [143]:
Finally, and of great significance, is the husband’s non-disclosure of his financial position. It is substantial. It would appear that the husband’s business dealings in China involve sums of money greatly in excess of the assets presently in Australia. He appears to have under his control significantly large (in terms of the assets in Australia) sums of cash which he lends out for profit. At least until late 2012 he carried on a substantial and significant business in Australia under the name Bao Qing Ding with a gross income of hundreds of thousands of dollars a year.
Where there has been deliberate non-disclosure the court should not be unduly cautious about making findings in favour of the innocent party. It may well be appropriate to err on the side of generosity. Black & Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Kannis & Kannis (2002) 172 FLR 464.
The husband’s non-disclosure is deliberate and extensive. The evidence suggests that he has earned a substantial income and holds assets that exceed the assets the subject of these proceedings. The appropriate adjustment, therefore, is one that would see the wife receive all, or nearly all, of the available assets in Australia.
CONSIDERATION AND DETERMINATION
Determining the assets and liabilities
A joint Balance Sheet was provided at the conclusion of the trial. The below balance sheet reflects each party’s view as to the asset pool and value of each asset and the issues for determination as to values:
Ownership Description Applicants value Respondents value ASSETS 1 Respondent C Street, Suburb D $410,000.00 $370,000.00 2 Respondent’s Wife Company F business Unknown NA 3 Respondent Company G $74,800.00 $2,000.00 4 Respondent’s Wife Company H Unknown NA 5 Respondent’s Wife Company J Unknown NA 6 Respondent’s Wife Company M Unknown NA 7 Respondent Car $5,000.00 $5,000.00 8 Respondent Bank Account $69,586.00 $69,586.00 9 Respondent Household items $5,000.00 $5,000.00 10 Respondent Motorcycle $5,000.00 $0.00 11 Respondent NAB Account funds $10,000.00 $0.00 12 Applicant Car $5,000.00 $5,000.00 13 Applicant Household items $5,000.00 $5,000.00 Total $589,386.00 $461,586.00 ADDBACKS 14 Applicant Superannuation withdrawal $3,000.00 $5,000.00 15 Respondent Neglect of K Street property prior to sale $16,126.07 $0 Total $19,126.07 $5,000.00 LIABILITIES 16 Respondent Mortgage (K Street) $16,126.07 $16,126.07 17 Respondent Mortgage (C Street) $293,000.00 $293,000.00 18 Respondent Loan to resp grandparents $0 $6,000.00 19 Respondent Credit Card debt $20,000.00 $20,000.00 20 Respondent Income tax liability $3,203.91 $3,203.91 21 Respondent Tax liability further as per accounts summary $60,000.00 $60,000.00 22 Joint Loan to Applicant’s parents $17,350.00 $17,350.00 23 Joint Loan funds from Westpac Bank $58,841.00 $58,841.00 Total $468,520.98 $474,520.98 SUPERANNUATION Member Name of Fund Type of Interest Applicants value Respondents value 24 Applicant Super Fund E Accumulation $11,123.22 $11,123.22 25 Respondent Unknown Unknown $21,863.39 $21,863.39 Total $32,986.61 $32,986.61
The values that are in dispute are dealt with individually below.
The C Street, Suburb D property
The estimated value of the C Street, Suburb D property at $410,000 as relied upon by the de facto wife is based upon a registered valuation dated 23 November 2021, over a year ago.
The estimate of $370,000 provided by the de facto husband is based upon advice from a real estate agent however no documentary evidence of same has been provided.
The de facto wife obtained a curb side market appraisal from a real estate agent on 21 January 2023 which placed the value between $380,000 and $400,000. The average of that is $390,000. Whilst this is a curb side market appraisal, the report does consider the property details, sales history, nearby planning and development, the sales statistics for the area and comparable sales in the area. In short I am of the view that it is as good as a curbside market appraisal can get and that significant thought was put into the estimate. It was unchallenged evidence that the de facto husband had denied access to the real estate agent.
I was urged by counsel for the de facto husband that in the event that the court was not prepared to accept the estimate of $370,000, then the court should pick a figure in the range of the curbside appraisal. The submission was made that the property market had dropped since the registered valuation was obtained.
So the court is faced with three different values for this property. First is a registered valuation that is over a year old, the second is a curbside market appraisal from a real estate agent that is more recent but where the agent has not seen the inside or indeed back yard of the property and lastly there is the de facto husband’s evidence of what he was told by a real estate agent.
I have already made findings that the de facto husband’s evidence is far from satisfactory. I simply did not accept that some of what he told me was true. In those circumstances I completely discount his hearsay evidence of value from an unnamed real estate agent.
That leaves me with the valuation and market appraisal – one older but more reliable in that it involved an inspection of the entire property, included a review of comparable sales and was undertaken by a registered valuer. The other is more recent but did not involve the inspection of the property that would normally be inspected and was undertaken by a real estate agent.
In short neither estimate of value is reliable evidence as at the date of trial, but it is the only evidence. I intend therefore to take the average of those two values for the purpose of the property settlement calculations. I therefore fix the value of this asset at $400,000.
Company F City B – business
An ABN search undertaken by the de facto wife ascertained that this business name, along with four others which were previously registered in the de facto husband’s name, were registered to the ownership of Company J Pty Ltd on 2 November 2022. The de facto husband’s current wife is the sole director of that company.
I was asked to consider that the de facto husband’s current wife’s ownership of those assets was a sham. In Adamson & Korac (No 2) [2022] FedCfamC1F 638, a helpful exploration of the relevant law was undertaken by Campton J at [30]. A “sham” transaction is defined as follows
(a) a mere façade, behind which activities may be carried on which were not to be really directed to the stated purposes but to other ends (Scott v Commissioner of Taxation (No 2) (1966) 40 ALJR 265, 279 per Windeyer J) ;
(b) is something that intended to be mistaken for something else or that is not really what it purports to be (Hadjiloucas v Crean [1988] 1 WLR 1006, 1019)
(c) steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences (Sharment Pty Ltd v Official Trustee in Bankruptcy (1998) 18 FCR 449, per Shephard);
(d) an agreement or series of agreements which are deliberately framed with the object of deceiving third parties as to the true nature and effect of the legal relations between the parties (Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471, 486).
His Honour goes on to state:
31. Once established, a finding of sham permits the Court to ignore what might be described as the “primary material regarding the transaction” and enables it to look through the artifice created by the scheme to uncover the reality of the ownership of the enterprise.
32. The declaration as to a sham is serious in that it is akin to fraud. An allegation of sham ought not be made in the absence of sufficient evidentiary foundation. To establish her claim, the wife will be required at final hearing to discharge the onus identified in s 140(2) of the Evidence Act. That section directs the Court to consider the seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding when considering whether a fact has been proved to the Court’s reasonable satisfaction. Such reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–2).
Cross examination established that the de facto husband is contracted to work for Company F City B, his current wife’s business. His current wife was not called to give evidence.
In relation to a possible Jones v Dunkel inference[4], counsel for the de facto husband submitted that the inference should be applied in their client’s favour. It was submitted that it was a matter for the de facto wife to subpoena their client’s current wife. It was further submitted that the de facto husband was unaware that the de facto wife argued that the de facto husband remained the true owner of this and the other businesses until the last minute. That argument is not convincing. The de facto husband was the first to know that his current wife is the registered owner of those businesses.
[4] Jones v Dunkel (1959) 101 CLR 298 especially at 308, 312 and 320-21
I accept that this fact was discovered by the de facto wife much closer to the trial date, noting the transfers took place on 2 November 2022 and the trial was on 24 February 2023. Further it cannot be unexpected that the de facto wife would be most suspicious that the de facto husband’s business interests now belong to his current wife. It was incumbent upon the de facto husband to bring this evidence if he wants the court to exclude those assets from the pool.
These are family law proceedings and the parties are in hot dispute. Whilst the asset pool is modest in terms of some matters that come before the court they are significant to these parties. The allegation that the ownership of businesses are a sham is a serious one indeed. The de facto wife suggests that the husband’s determination to exclude her from an entitlement to a property settlement is so great that he will perjure himself, destroy assets and in effect cut off his nose to spite his own face in order to achieve that aim. Having seen the de facto husband in the witness box findings have been made about his dishonesty and his failures as regards disclosure, and as a consequence I have no trouble believing that he would do so.
If I am wrong in the findings made including the refusal to accept that the de facto husband and his current wife do not discuss her business interests, then I am firmly of the view that it is because the businesses are not in reality her property but rather that the de facto husband alone manages the decisions in relation to the business.
In reaching those views I had also considered the de facto husband’s evidence that his current wife is on maternity leave from Employer P where she works in administration. Whilst he gave evidence that her role had some connection to business he also said hospitality. There was no evidence that she had previously had any experience as the owner of a services business, and no evidence that experience in administration is a training ground for ownership of a services business.
I have already made findings that I do not believe that the de facto husband’s current wife decided that she was suddenly going to be an owner of business names previously registered in the de facto husband’s name without discussion with him and without having any experience in managing a services business, or businesses; or that the de facto husband solely deals with the “management” team for Company F City B and never his current wife. How could she know who would be a good manager for such a business when it is entirely outside her field of expertise? How could the de facto husband work for his current wife without ever discussing it with her? This was extraordinary evidence and I simply did not believe him.
Based on those reasons and my findings as to the husband’s evidence, I am satisfied that this is an asset that is properly the property of the de facto husband, that he has an equitable interest in and is the true owner of Company F City B, and that the purported ownership by his current wife is a sham.
There is no evidence before the court as to the value of the business such that I propose to address it through my considerations as to future needs.
Company G - The de facto husband’s acknowledged business
The de facto husband describes himself as self-employed, the only business currently registered in his name being Mr Kells trading as Company G. He conceded under cross examination that the business was first established in 2016/2017 during the course of the relationship and was operated under the ownership of the company O Pty Ltd. He was the sole director and shareholder of that company which has since gone into voluntary liquidation.
The de facto husband says the business is worth $2,000 being a “generous” estimate of the value of his tools. The de facto wife estimates the value at $74,800, being one year of the salary or contract fee that is paid to the de facto husband together with his estimated value of the tools. I was reminded during submissions of the de facto husband’s evidence that he paid his current wife “management fees” of $130,000 in 2021 when his own taxable income was $14,164. All these matters are persuasive that the business has a far greater value than that estimated by the de facto husband.
In setting the value of this business, the court can only do the best it can with the evidence to hand. Given the findings as to the de facto husband’s dishonesty, the extent of management fees paid, and the husband’s lack of disclosure, the court does not accept his estimate. The court finds that the value of this business is as estimated by the de facto wife, being the best evidence available.
Company H, Company J & Company M
Documents tendered established that the de facto husband was previously the registered owner of these business names. Now they are registered to the name of his current wife. There is no evidence at all as to how or why that occurred.
For the same reasons that the court found the de facto husband to be the true owner of Company F City B, I am satisfied that these businesses are assets that are properly the property of the de facto husband, that he has an equitable interest in and is the true owner of those businesses, and that the purported ownership by his current wife is sham.
There is no evidence before the court as to the value of the businesses such that I propose to address it through my considerations as to future needs.
Motorcycle
The de facto husband’s evidence is that this motorbike was purchased for $9,000 - $10,000, but that he fell off it into a creek, that it “drowned” and is now a worthless piece of metal. His evidence is that the bike was uninsured. In confirming that he still had the bike, he offered to counsel “you can have it”.
The de facto husband’s evidence about this asset was unsatisfactory. His attitude towards counsel was challenging and patronising. I also have considered that the de facto husband failed to make disclosure of documents or provide a valuation of this asset.
I do not accept his evidence that the bike has no value and prefer the estimate of the de facto wife of $5,000 which sensibly allows for depreciation in value from the purchase price.
NAB Funds
The de facto wife seeks to include the amount of $10,006 which the de facto husband disclosed in his Financial Statement filed on 18 October 2019 but not in his recent Financial Statement. The de facto husband’s evidence was that this account was closed but again no disclosure was provided by him.
He initially gave evidence that because the account was closed there were no documents that he could provide. He then conceded under cross examination that he could have obtained the statements.
Based on the de facto husband’s failure to disclose and my findings as to his evidence, I propose to retain this asset in the asset pool to the value of $10,006.
Addbacks
Addbacks are the exception rather than the rule. They are often sought but rarely granted. The court is in effect asked to notionally add to the asset pool the value of an asset which no longer exists and whether the court chooses to do so is a discretionary exercise.
In AJO & GRO (2005) FLC 93-218 at [30] the Full Court identified three clear categories where it may be appropriate to notionally add back assets that no longer exist to the pool of assets:
(a)where the parties have expended money on legal fees;
(b)where there has been a premature distribution of matrimonial assets; and
(c)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Normal living expenses and necessary costs do not usually fall within a category of acceptable addbacks. Parties are not expected to “go into a state of suspended economic animation” after separation,[5] and are “entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives”.[6]
[5] M & M [1998] FamCA 42
[6] C & C [1998] FamCA 143 at [46]
The court will exercise its discretion to add back in exceptional cases where the particular circumstances of a case, justice and equity requires it. In cases that are not exceptional, justice and equity can be achieved not by adding back but by taking the matter up as a relevant s 90SF(3) factor. The Full Court has indicated that the latter course is technically more correct.[7]
[7] Trevi & Trevi (2018) FLC 93-858 at [28]-[30]
As regards the de facto wife’s superannuation, there is case law to suggest that a superannuation drawdown can be added back in the appropriate circumstances[8]. In this matter however I accept the de facto wife’s evidence that she was able to access her super during the Covid restrictions under the hardship provisions. I accept her evidence that she used the funds to buy a car (which is included in the asset pool) and to meet living expenses. In those circumstances I do not intend to add back any amount over the value of the car - which is already in the asset pool.
[8] Argyle & Argyle [2021] FCCA 505, Dellas & Halton [2022] FedCFamC1F 368, Zeidman & Godar [2021] FCCA 510
The de facto wife seeks to addback a sum equivalent to the shortfall after the mortgagee sale of the K Street property. This is sought on the basis of the de facto husband’s alleged neglect of that property prior to sale and his failure to pay the mortgage.
Her evidence was that on the de facto husband’s instructions, the real estate agent declined to give her the key so she could look after the K Street property. The de facto husband conceded that in the witness box, and gave evidence that neither of the parties needed the key. At separation, the de facto wife was a stay at home mum with two children, so she had no income to contribute to the mortgage and rates. That had always been the de facto husband’s responsibility. He now says that he could not afford to do that post separation. I have however not seen the de facto husband’s bank statements from that time. Given the findings I have made about the de facto husband together with his failure to make disclosure, I do not accept his evidence that he could not afford to pay the mortgage on the K Street property and find that he chose not to do so.
No evidence was brought that the de facto husband sought to rent out the K Street property in order to cover the mortgage and expenses. No evidence was provided that he himself did any specific repairs or maintenance work on that property, although he gave evidence that a friend stayed there for three weeks. His evidence about that friend was initially that he stayed there for three weeks and in return did some work on the water leaks. His evidence then changed and became that the friend stayed there while “in between” places, and then changed again to that the friend was there in the day time only and he was doing the de facto husband “a favour” by fixing the water leak. Based on the emails from the real estate agent, the leak (in the bathroom at least) had not been repaired.
I do not accept the de facto husband’s evidence that there were constant water leaks from virtually every pipe in the house. I do not accept the de facto husband’s evidence that he and/or some unknown friend did maintenance work on the property. That is simply not supported by any evidence.
In any event, maintaining a property is more than fixing water leaks. It is cleaning, mowing and presenting the property to its best advantage. The de facto wife was not working and was in the best position to do that and I accept that she wanted to do that. I am satisfied that the de facto husband prevented her from so doing by refusing to allow her access to the K Street property.
I am therefore of the view that this proposed add back falls within the category of exceptional circumstances. That is based on the findings I have made about the de facto husband’s conduct and dishonesty, his failure to make disclosure, his failure to maintain the property and his failure to pay the mortgage. If he had paid the mortgage, or arranged to rent out the property and maintained it or facilitated the de facto wife in maintaining it, then a mortgagee sale may not have occurred and the parties could have marketed the property for a better price. I am therefore satisfied that this is a sum that should properly be added back to the asset pool.
De facto husband’s loan from his grandparents
The de facto husband gives evidence that he owes $6,000 to his grandparents. His evidence in the witness box was different to his affidavit evidence. In his affidavit he gave evidence of two loans owing at the time of separation – one from his parents and another from his grandparents. In the witness box his evidence was that it was one loan only and that the debt arose early in the separation with the funds used to pay legal fees.
No evidence was brought of that loan – either in the form of a document or an affidavit from the lender or lenders. Due to the inconsistent evidence and the lack of documentation I do not intend to include this amount in the asset pool.
Asset Pool for the purposes of the property division
Having made those findings, the asset pool for the purposes of the property division is therefore as follows:
Ownership
(Legal and/or Equitable)Description Value ASSETS 1 Respondent C Street, Suburb D $400,000.00 2 Respondent Company F business Unknown 3 Respondent Company G $74,800.00 4 Respondent Company H Unknown 5 Respondent Company J Unknown 6 Respondent Company M City B Unknown 7 Respondent Car $5,000.00 8 Respondent Bank Account $69,586.00 9 Respondent Household items $5,000.00 10 Respondent Motorcycle $5,000.00 11 Respondent NAB Account funds $10,006.00 12 Applicant Car $5,000.00 13 Applicant Household items $5,000.00 Total $579,392.00 ADDBACKS 14 Applicant Superannuation withdrawal NIL 15 Respondent Neglect of K Street property prior to sale $16,126.07 Total $16,126.07 LIABILITIES 16 Respondent Mortgage (K Street) $16,126.07 17 Respondent Mortgage (C Street) $293,000.00 18 Respondent Loan to Husband’s grandparents $NIL 19 Respondent Credit Card debt $20,000.00 20 Respondent Income tax liability $3,203.91 21 Respondent Tax liability further as per accounts summary $60,000.00 22 Joint Loan to Applicant’s parents $17,350.00 23 Joint Loan funds from Westpac Bank $58,841.00 Total $468,520.98 SUPERANNUATION Member Name of Fund Type of Interest Applicants value 24 Applicant Super Fund E Accumulation $11,123.22 25 Respondent Super Fund E Unknown $21,863.39 Total $32,986.61
That gives a total asset pool of $159,983.70 consisting of non-super assets of $126,997.09 and super of $32,986.61.
Determining the Approach
While the de facto husband’s evidence is that he brought assets into the relationship worth about $120,000, consisting of savings and vehicles, the value of those assets are in dispute. No evidence of their value or of any liabilities secured to those assets is before the court. He properly does not seek to deal with those assets separately. I am satisfied that a global approach is appropriate.
Determining whether it is just and equitable to make Orders
This is a relationship of almost 11 years, the parties have two children, worked together in the de facto husband’s business and purchased two real properties together, noting that the second property was in the de facto husband’s sole name. I am also aware of the de facto wife’s evidence that the parties did not operate joint accounts, although there may have been business accounts.
I am satisfied that it is just and equitable to make property orders in those circumstances.
Evaluation of section 90SM(4) - Contribution Issues
At the commencement of the relationship the de facto husband gives evidence that he had cash and vehicles to a combined total value of $120,000, $40,000 of which was cash. The de facto wife’s affidavit evidence is that the de facto husband had no significant assets, although under cross examination agreed that he had a number of vehicles and that she had no knowledge as to the quantum of his savings.
The de facto husband’s evidence as to his initial contributions was unreliable as, on the one hand, he said he purchased the Motor Vehicle 1 worth $60,000 using his workers compensation payout. On another occasion his evidence was that he had used finance. I am satisfied that he did have cash and assets but not to the extent that he asserts. I accept the submission that the de facto husband has exaggerated the value of his initial contributions and that there was liability which reduces his estimate.
The de facto wife concedes that she had minimal assets at the commencement of the relationship.
The court was asked to consider that the business “Company N” was based upon the de facto husband’s skill as a transport worker. This may be true but that asset was liquidated shortly after separation and does not form part of the pool.
I accept the de facto husband’s evidence that he contributed $30,000 from savings to the purchase of the K Street property. I note however that this property was purchased in 2016, some eight years into the relationship. He has not provided any evidence that he retained his initial savings for that eight years and I am therefore of the view that these savings were accumulated during the relationship. It is therefore not a contribution by the de facto husband but a joint contribution of funds accumulated during the relationship.
The de facto wife’s affidavit evidence that she did the entirety of the household chores, softened under cross examination to concede that the de facto husband occasionally made contributions. I accept that the de facto wife was the primary contributor to the household and that the de facto husband made far lesser contributions as he worked full time.
It is an agreed fact that the de facto wife was the primary carer for the children, although the de facto husband disputes that he was not involved in hands on parenting at all. I accept that the de facto husband made some minor contributions to parenting.
The de facto wife’s evidence is that she mowed the lawns and attended to maintenance of both properties, including painting, and that renovations were done by tradesmen. This is disputed by the de facto husband who says he made significant non-financial contributions to those aspects. I am satisfied that he made some non-financial contributions but I accept the de facto wife’s evidence that she made the far greater non-financial contributions to lawns and painting the properties. If I accepted the de facto husband’s evidence, then in addition to working full time he installed electric gates, did the fencing, fixed the roof, attended to painting, rewired the property and fitted air conditioning units. I do not accept his evidence about those matters. I prefer the de facto wife’s evidence that tradesmen were employed to undertake the majority of that work. I find that the de facto wife made the greater non-financial contribution to the gardens and maintenance.
I accept the de facto wife’s evidence that during the relationship she made contributions to the de facto husband’s business and attended at the office most days to do so, often with the children.
It is an agreed fact and I accept that the de facto husband was the breadwinner during the relationship making almost all of the financial contributions.
I accept the de facto wife’s evidence that she was subjected to family violence during the relationship. This is supported by the findings made in the Magistrates Court, though I note the de facto husband’s denial in cross examination. No Kennon argument was raised and this issue did not impact the determination as to contributions.
The de facto husband has lived in the C Street property post separation and has met the mortgage. The de facto husband had the benefit of living in the property and the mortgage has not reduced in that time. The de facto wife has paid rent for her own and the children’s accommodation needs.
Post separation the de facto husband has paid minimal child support.
It is an agreed fact that the K Street property was purchased in February 2016 for $281,740. The parties used funds borrowed from the de facto wife’s parents in the sum of $32,000 for the deposit and $30,000 was also contributed, noting that I have found that later amount to be joint funds. The parties obtained a mortgage for the balance of the purchase price.
The property was ordered to be sold but ultimately was sold by mortgagee sale as the de facto husband ceased paying the mortgage giving evidence he could not afford to do so and complaining that the de facto wife refused or ignored offers. I do not accept the de facto husband’s evidence that he could not afford to pay the mortgage and have made findings to that effect. There is no evidence as to his income at that time, as he has failed in his duties to make full and frank disclosure. He had purchased the C Street property and paid for renovations to that property which confirms my view that he had funds available at that time.
I am satisfied that the de facto husband would not have purchased a second property unless he was satisfied that he could meet the costs, either directly or through renting out one of the properties. I am satisfied that the de facto husband chose to cease paying the mortgage. I am satisfied that he did so in order to reduce the asset pool and thus to reduce or completely void the requirement to make a property settlement payment to the de facto wife.
This view is further confirmed by the fact that the mortgage that he chose not to pay was the one in joint names with the de facto wife, and not the one that was in his sole name and I which he was living. This is further confirmed by the fact that he did not install a paying tenant and that he refused to allow the de facto wife access to maintain the K Street property.
The de facto husband’s evidence is that he continues to pay the debt arising from the sale of the K Street property post separation as the property was sold for less than its liabilities. I note the de facto wife’s unchallenged evidence that a fuel debt was secured to that property by way of caveat. Each party points the finger at the other for failing to maintain this property and failing to make mortgage repayments post separation. I do not accept the payment of this debt post separation by the de facto husband as a further contribution by him in circumstances where I have found that he was the cause of that debt existing.
Moving to look at the de facto husband’s conduct in sending the company O Pty Ltd into liquidation post separation. The business had been running without significant issue and had supported the family prior to separation. It was put into liquidation by December 2019 – within six months of separation.
The de facto husband was cross examined about the trailer purchased with a joint loan of $100,000 for which there remains an outstanding debt of about $58,841.00. The de facto husband gave convoluted evidence around this subject. Firstly in relation to the de facto wife signing the loan documents he was aggressive and challenging; asking if it was suggested that he held the de facto wife down. When asked if he cut the trailer up he failed to give a straight answer; firstly giving evidence that it was in for repairs when the business was liquidated, then giving evidence that in fact it was himself and a couple of workers who were doing the repairs and then giving evidence that he can’t weld “so no”.
I find that the de facto husband did in fact do all he could to prevent this asset being sold for any value that would reduce the debt in order to reduce the asset pool and the de facto wife’s entitlement.
I find that post separation the de facto husband significantly reduced what was in any event a modest asset pool.
Findings as to Contributions
Counsel for the de facto husband urged me to consider that contributions overall were equal. Counsel for the de facto wife on the other hand made submission that contributions fell within the 55:45 or 60:40 range for the de facto wife.
Having considered the evidence and the findings that I have made, I find that contributions both during the relationship and post separation were 55:45 in the de facto wife’s favour.
Evaluation of Section 90SF(3) factors - Future Needs
The parties are of a similar age, being relatively young at 35 and 37 years of age respectively. They each have many more years in the work force.
The de facto husband has provided a MRI scan which reflects degeneration of the spine. He gives evidence that this causes numbness and tingling in his arms and legs and has “significantly” impacted his ability to work. He gives evidence that he is also receiving cortisone injections for an unspecified problem with his neck and that he will require surgery. Whilst I have no reason to doubt that he has these issues, no medical evidence as to the impact on his ability to work in the future is provided. Without such evidence I can place little weight on this factor, particularly where his own evidence is that he works full time, although he alleges that he has changed the nature of the work done.
The de facto wife works in retail earning $795 per week. She also receives a government benefit. Whilst it was submitted that between her income, child support and government benefits she had a good income, I accept her evidence that she struggles to make ends meet and requires assistance from her parents.
Whilst some effort was made to suggest that the de facto wife could earn more elsewhere, I do not accept that submission as she has no qualifications which would enable her to do so.
The de facto husband is self-employed. His Financial Statement reflects a salary of $866 per week however this was inconsistent with his evidence under oath that he received $1,400 per week and that latter amount is what is reflected in his bank statements which were disclosed on the day of trial. Given the findings as to his evidence about the businesses purportedly owned by his current wife, coupled with this evidence which changed with the production of his bank statements, I cannot know the de facto husband’s real level of income. I do not accept his evidence about financial matters in general and find that his income is in fact greater than he admits.
In the event that I am wrong about that, I find that the de facto husband has the far greater income earning capacity, even on his admitted income.
The de facto husband’s evidence under oath as to his current wife’s income being $800 per week was “that’s what I’ve been told”. That is a surprisingly low income for someone who was happy to generate an invoice of $130,000 for management services rendered and that the de facto husband was equally happy to pay without question. I do not accept that the de facto husband has no idea what his current wife earns, just as I do not accept that he has no idea about or involvement in the business interests registered in her name.
The de facto husband’s evidence under oath is that he has only the one bank account. A review of the six months’ worth of bank statements disclosed shows that no regular groceries or household bills appear to be paid from this account. There are regular payments to Bupa, child support and his mortgage repayments, but otherwise in general only small day to day expenses are paid from this account. For someone who says that he has no other bank accounts that was surprising. I do not accept the de facto husband’s evidence that he has no other bank accounts. If I am wrong about that I am of the view he must have access to other funds.
The wife has not re-partnered and there is no other income coming into her household, other than the assistance her parents give her as needed.
The de facto husband owns the majority of assets including the only real property – noting that it is significantly encumbered. I have also found that he is in reality the owner of several businesses the value of some of those businesses are unknown. Whilst he has $69,586 in savings he owes $63,203.91 in two tax liabilities. He has however the control of the majority of assets holding a net total of $105,873.87 in assets including his super valued at $21,863.39.
Under cross examination the de facto husband conceded that he pays about an extra $100 per week into his super. I cannot see that coming out of the one bank account that he disclosed.
The de facto wife has only $10,000 in assets being the car she bought with her super drawdown and household goods. She also has $11,123.22 in super. She remains jointly liable for the debt to her parents in the sum of $17,350 and the Westpac loan in the sum of about $58,841.
The de facto wife continues to receive financial assistance from her parents.
The de facto wife is the primary carer of the two children of the relationship. They are 12 and 9 years old. In accordance with parenting orders the children are to spend time with the de facto husband each alternate weekend and half school holidays. The parties agree that during school holidays the de facto husband’s current wife cares for the boys during the day while the de facto wife works. I find that the de facto wife continues to be the primary carer for the children.
The de facto husband pays child support assessed on his wages received. His bank statements show a weekly sum of $60.00 being paid. That equates to $30 per child per week or less than $5 per day. This money would be of no real practical assistance in meeting the children’s needs. The de facto husband’s bank statements reflect payments to the boys’ schools in January 2023 in the sum of $157.55 and $189 respectively. Given that the de facto husband is, on the face of it, contracted to work for his current wife there is no expectation that this minimal amount of child support will increase.
The de facto husband and his current wife have a young child. They are both bringing in an income to meet that child’s needs.
The de facto wife worked in the business during the relationship. Whilst the extent of her contributions are disputed, having seen the parties in the witness box I prefer her evidence. I find that she has contributed to the husband’s earning capacity through supporting him in that way.
This was a de facto relationship of almost 11 years.
It is difficult to consider the financial circumstances of the husband’s current living arrangements given his limited disclosure and the findings that I have made about his dishonesty. Certainly he is living with his current wife. His evidence is that she is on maternity leave and earns $800 per week but his evidence is also that she has the capacity to earn management fees of $130,000 per annum given that he happily paid her that amount. It is hard to know what to believe. I will err on the side of generosity towards the de facto wife due to those failings.
Looking at any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account, in this case I have already relied upon Mayhew & Fairweather to add a value to the asset pool for the business Company G.
In relation to the four businesses Company F, Company H, Company J, and Company M City B, which I have found are in reality the property of the de facto husband although registered in his current wife’s name, I will take those businesses into account when making my determination as to the appropriate adjustments for future needs.
Findings as to Future Needs
Counsel for the husband urged me to consider that future needs were equal and that no further adjustment should be made. Counsel for the de facto wife on the other hand made submission that the de facto wife should receive a further uplift for future needs bringing her overall entitlement to 70:30.
Having considered all of those factors I propose to make a further adjustment of 15% in the de facto wife’s favour.
Just and Equitable
Overall I propose to make orders of a 70:30 division in the de facto wife’s favour. In dollar terms that means the de facto wife receives cash and assets to the value of $111,988.59.
The de facto wife already has cash and asset in her possession to the value of $10,000 and has super to the value of $11,123.22. That is total in her possession to the value of $21,123.22. She is jointly liable for the debt to her own parents and the debt to Westpac.
Given my findings I am satisfied that the husband should be solely liable for the debt to Westpac and will make orders that the debt be transferred to his sole name or paid out in full within 60 days. I propose that the de facto wife will be solely responsible for the loan to her parents in the sum of $17,350.00 as that is the only way to guarantee that it will be paid. If I deduct that from the assets she holds that means she holds assets, super and liabilities with a net value of $3,773.22.
The husband then must pay her a cash payout of $108,215.37.
There is net equity in the C Street, Suburb D property of $107,000. If the de facto wife retains that property in accordance with her proposal, then the husband would also need to pay her the sum of $1,215.37.
The husband would retain his other assets and super and the Westpac loan, the K Street debt and his credit card and tax liabilities amounting to $158,170.98. Given that I have found that the husband deliberately reduced the asset pool and has minimised his income and assets I am satisfied that it is just and equitable that he bear the burden of meeting those debts and has the capacity to do so.
As the parties both have minimal amounts of super I am satisfied that a superannuation spilt is not necessary to achieve justice and equity.
Having undertaken that process, I am satisfied looking at the proposed property settlement in dollar terms that the outcome is just and equitable. The court will therefore make orders in general terms of those sought by the de facto wife, with re-drafting to ensure enforceability, inclusion of default clauses and time frames.
CONCLUSION
The orders that will be made are in general terms as those sort by the wife but with mechanical and other provisions included to ensure a smooth transition and to facilitate arrangements in the event of a default.
I am satisfied that the orders I now propose to make are just and equitable as between the parties.
I certify that the preceding one hundred and seventy-two (172) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cope. Associate:
Dated: 4 May 2023
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