RAPOZO & GOSWAMI (No.2)

[2020] FCCA 1612

FEDERAL CIRCUIT COURT OF AUSTRALIA

RAPOZO & GOSWAMI (No.2) [2020] FCCA 1612

Catchwords:
FAMILY LAW – Property – value of initial contributions – onus on party claiming initial contributions to establish value of contributions – onus on party introducing real property as initial contribution to show value of property exceeded value of substantial mortgages at cohabitation – “add backs” and waste – categorisation of Court ordered interim distribution – categorisation of unilateral premature distribution – unexplained substantial cash withdrawals in period around separation – established pre and post separation substantial gambling losses – obligation of full and frank disclosure – consequences of failure to make full and frank disclosure – credit – limitations on right to conduct a case at Trial inconsistent with the basis on which a treating medical expert instructed to and did provide an opinion, and where expert said to be unwilling to swear an affidavit and not available to be cross examined, and where other party did not seek a single or adversarial expert in reliance on the evidence served – failure to call foreshadowed evidence of a person alleged to be a parties’ employer or business partner – windfall profit on sale of real property owned in one parties’ name – where that property had no net equity at cohabitation – where both parties contributed to servicing mortgage on that property and generally intermingled finances – whether asset-by-asset approach appropriate or required – whether party in whose name property held entitled to benefit of entire windfall as a sole contribution – assessment of contributions – where 48% of the notional property pool remains – where the party who did not engage in waste and had no interim distributions entitled to 60% – orders for party entitled to 60% to retain all of the remaining assets.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 75(2)(o), 117

Evidence Act1995 (Cth), ss.50, 140(2)

Cases cited:

Rapozo & Goswami [2017] FCCA 1889

Trevi v Trevi [2018] FamCAFC 173

Grant & Williams [2010] FamCA 1074

Hayne & Hayne (1977) FLC 90-265

Garrett & Garrett (1984) FLC 91-539

Norbis v Norbis (1986) 161 CLR 513

McMahon & McMahon (1995) 19 Fam LR 99

Jabour & Jabour [2018] FCCA 928

Applicant: MS RAPOZO

Respondent: MR GOSWAMI

File Number: SYC 4628 of 2015

Judgment of: Judge B Smith

Hearing date: 21 May 2020

Date of Last Submission: 22 May 2020

Delivered at: Sydney

Delivered on: 25 May 2020

REPRESENTATION

Counsel for the Applicant: Mr Gardener

Solicitors for the Applicant: Steiner Legal Pty Ltd

Counsel for the Respondent: Mr Finch

The Respondent was self-represented with a direct brief

ORDERS

1. Within 28 days the balance of the funds held in the parties’ names in the VRT Lawyers trust account arising from the sale of E Street, Suburb F be paid to the Applicant wife, or as she directs.

2. Unless otherwise provided for in these orders:

   (a)The parties are each entitled to the sole legal and beneficial ownership of all items of property, including money, motor vehicles, insurances, equities and personal effects and superannuation benefits currently in their possession and/or control of each of them respectively, and for the avoidance of doubt the Applicant wife is the sole legal and beneficial owner as between her and the husband of the property known as A Street, Town B, and is solely liable for the mortgage there-over.

   (b)The parties shall each be solely liable for, and shall indemnify the other against, all liability encumbering all items of property to which each party respectively is entitled pursuant to these orders, and against all liability currently in the name of each party respectively.

3. The Applicant wife is to file any Application in a Case seeking costs, together with supporting evidence, within 7 days of these Orders, and is to notify the Respondent Husband and the Court if she decides not to press a costs application.

IT IS NOTED that publication of this judgment under the pseudonym Goswami & Rapozo (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 4628 of 2015

MS RAPOZO

Applicant

And

MR GOSWAMI

Respondent

REASONS FOR JUDGMENT

1. These are oral reasons for decision in respect of a final hearing regarding property heard before me on Thursday and Friday of last week. The case involves Ms Rapozo (“the wife”) who was born in City C, India and moved to Country D.  She is now 44.  The respondent husband is Mr Goswami (“the husband”), who is 47.

2. They met online in about 2003, married in Country D in 2006 and commenced cohabitation in Sydney when the wife moved to Australia in 2006.  They have one child, X, who is just 10.  The parties separated on a final basis when the wife left the family home at E Street, Suburb F, which I will refer to as the E Street, Suburb F property, on about 29 November 2014, which is five and a half years ago.

3. The property pool of assets, liabilities and superannuation was ultimately narrowed down significantly during the hearing.  The husband owned the E Street, Suburb F property at marriage and cohabitation and sold it in July 2015 some months after final separation.  There remains $201,807 in a solicitor’s trust account from the sale of the E Street, Suburb F property.  That is one of the two assets on the balance sheet.

4. During the course of the marriage the parties purchased, in the wife’s name, a property at A Street, Town B, which is still owned by the wife and which the parties have agreed, for the purposes of the hearing, has a value of $820,000.  The parties also agree that that property is subject to a mortgage of $370,281, both of these the parties also agree should be on the balance sheet. 

5. In addition, the wife has $66,390 in superannuation and the husband has no superannuation.  The only other liability is a costs order against the husband to the wife worth $5,000.  The parties agree that other minor assets and liabilities, including cars and small bank accounts and some personal loans, were not pressed by the parties and this has significantly narrowed the issues for the Court.

6. Therefore, the assets, including superannuation, are the wife’s property at A Street, Town B, the funds held in the trust account, which are joint funds, and the wife’s superannuation.  They total $1,088,197.  The mortgage, plus the $5000 costs liability, which are the liabilities, total $375,281.  The net pool, taking it that far, is, therefore, $712,916. 

7. The complicating fact in the property pool is the substantial asserted, so called, notional “add backs”, or matters to be taken into account at full value pursuant to section 75(2)(o), which were asserted by the wife at items 10 to 12 on her final balance sheet, which is Aide-Mémoire 1, her written case outline at page 11. I note the husband’s balance sheet was filed on 6 April 2020. But, ultimately, in submissions, the parties dealt primarily with the wife’s balance sheet for ease.

8. Prior to the settlement of the E Street, Suburb F property by the husband after sale, (which the wife said she did not know about and there is dispute about that) a Court made certain orders for the payment of debts and disposition of moneys and I will deal with that in more detail later.  However, the Court ordered relevantly that the sum of $201,807 be placed in trust and that occurred.  The Court also ordered that, on the husband’s application, he should have an interim distribution of $200,000 out of the net proceeds of the sale of the E Street, Suburb F property and the order was made that the payment was to be characterised by the trial judge at trial.

9. Now, as I will come to in more detail later, I note that the husband has he says spent all of that $200,000.  He has been ordered, repeatedly, to disclose how the money was expended and those orders run back for several years.  But, as at the date of this trial, neither in his oral evidence, nor by way of documentary material, did he give any disclosure in that regard, and the first time upon which he sought to make disclosure was in re-examination.  That was objected to on the basis that the wife could not possibly test anything he said, and she having raised many credit issues in any evidence, that evidence was not allowed.

10. The further thing that occurred in those orders was that a sum of just under $160,000, for ease and since the parties generally did so, I too will refer to as being $160,000, from the sale of the E Street, Suburb F property, was ordered to be held by the husband in a bank account and not to be used without giving the wife notice.  He has used up all of that $160,000 of money.   Everything I just said about the $200,000 also applies.  He says he has spent it all and, indeed, he said he had spent it all by 2017.  He has not given disclosure.  He did not deal with it in his affidavits.  He has not dealt with it in his documents and, again, he purported, for the first time, to try and deal with that non-disclosure issue and the expenditure of this money too in his evidence in re-examination, which was not allowed.

11. The wife says that use of $160,000 was in contravention of the Court orders that were made, which also goes to potentially issues of credit and conduct.  Now, the husband conceded that, indeed, the use of that $160,000, for purposes, perhaps including gambling, was contrary to a Court order when he was before this Court in 2017 with counsel, but now denies in front of me that the use was in contravention of the specific terms of the order, because he told the wife’s solicitors he was going to use the money and even though they said, “We don’t accept this is proper notice”, he, nevertheless, did it.

12. On one view, it is not particularly relevant as to whether there was strictly a breach of the Court order or not.  This is not an application for contravention.  What is clear is that he also had that $160,000 and has spent all that money potentially on gambling, but potentially not.  He has not disclosed what happened to that money. 

13. The wife raises the issue, in respect of both of those sums, either that he may have gambled it all away, or that given his disclosure in this case which she says is anything but full or frank, the Court cannot know where, in fact, that money is, whether it has gone or whether the husband is hiding it. In any event, she says that these are clear preliminary dispositions that the Court should, as a starting point, “add back”.

14. The third item, which is really two items, is a total of $404,027. That is firstly made up, the wife says, of cash withdrawals of $365,050 by the husband from a bank account between 12 September 2013 and 26 November 2014. That is to say in just under 15 months, and it was an amount ultimately conceded by the husband as having been withdrawn in cash, noting the section 50 Evidence Act 1995 (Cth) summary at pages 250 to 254 of the wife’s Court book.

15. The second component of that sum is $38,977 in gambling losses which were recorded prior to separation in respect of which see the wife’s Court book page 224 and the overall gambling Section 50 Evidence Act summary, and ultimately, that was admitted.  That totals $404,027.

16. The gambling is a significant issue. In that regard, in addition to the extensive documents which were produced and then summarised pursuant to section 50 and, ultimately, accepted by the husband as being accurate summaries in respect of electronic transactions. The husband also gave evidence that he gambled in cash as part of his case to try and say that the wife knew he was gambling and, inferentially, that she accepted or consented to his gambling, including, one assumes, up to this amount.

17. It is also important to note that the husband admitted, through counsel to this Court in 2017, that post-separation he had gambled away between $160,000 and $180,000. The wife says he gambled at least $201,000 post-separation and $38,977 pre-separation, see the wife’s Court book 224, and these were the electronic transactions and not cash.

18. The husband’s case in respect of gambling, was that the wife had not given the full picture of his gambling, because he sometimes had wins, but the electronic totality shows that he was not winning, and despite knowing, from at least 2017, that his gambling and where the money had come from and gone to were significant issues in respect of which orders were made for disclosure, he chose to lead no evidence at all.  There is not a single word in his affidavits or through documentation to give any substance to this.  It is, of course, not the wife’s obligation to try and ferret out the truth of his financial position, although, ultimately, she had to do that, and it is not open to the husband to say that the wife, having produced this material, should have been able to produce more material to prove things that might have been useful to him.

19. The totality of these add backs is $764,027.  That is in the context where the net pool currently is $712,916.  So what the wife says is that the husband has had the use of, and either largely wasted or else has hidden and not frankly disclosed to this Court, $764,000. He has wasted at the least something along the lines of $240,000 in gambling that can be proved, and he has either gambled away or has hidden away somewhere in excess of $500,000 and that is money he could have used purchasing a new property, which would then now form part of the pool and, if he has gambled it, then it is pure waste which he must bear the cost of.

20. The wife also says that there is only $712,916 left.  So that of a potential pool, adding together the existing assets and the waste or add backs of $1,476,943, the husband has already had approximately 52%. In those circumstances, in a case where she says that she should get the greater share of the property pool, for a variety reasons which I will come to later, he has already had more than his share, and that the only fair thing to do is to give her every cent of what is left. She says that will not actually be just and equitable, because at least the extra $160,000 should still have been available to add to that net pool, and she would probably have gotten that, but that the only available option, or the most just thing the Court can do, is to give her everything known.

21. The wife’s proposal then is that, based on the add backs, she gets the remaining sum.  The husband’s proposal is that the moneys currently in trust from the proceeds of the E Street, Suburb F property, in the sum of $201,807 be released to him, and also that the wife gives him a further $200,000 or sells her property in A Street, Town B and pays him $200,000.  That is to say he says he should get 56% of what is remaining or; approximately 71% if only the $360,000, he accepts he has previously had or taken from the E Street, Suburb F property is included, or approximately 79% to him if the other $404,000 in moneys which were taken in cash and pre-separation gambling are also included. 

22. The husband’s arguments to support his case are that he contributed the major asset of the parties at cohabitation, which was the E Street, Suburb F property.  The wife’s case is that he did contribute the E Street, Suburb F property but that, on cohabitation and marriage, there was a net debt position over the E Street, Suburb F property.  So that, in truth, it was a negative asset, although she does not seek to actually prove that negative case.  She just says the Court would proceed on the basis it was worth zero dollars. 

23. The husband says, further, that the E Street, Suburb F property should be treated as a discrete asset on an asset-by-asset basis because he brought it to the relationship and it was valuable.  The wife says that, apart from the fact it was worth zero dollars, although they kept their finances separated, something she raised because she was talking about the husband being secretive which is why she did not know about the extent of his gambling, she raises the fact that she was paying for rent for them to live in one place while the E Street, Suburb F property was being rented out and while the husband paid the excess of the mortgage over the rent. 

24. Which means that they were, in effect, both contributing to the E Street, Suburb F property, also she ran a business (G Business) which I will come to later, the total profits of which went to paying the mortgage over the E Street, Suburb F property while she worked and received nothing for working from the company. Also, the evidence is that the parties’ finances were clearly intermingled in many ways, and this is not a case where there was an asset-by-asset basis by the parties. 

25. The wife says he only managed to retain the E Street, Suburb F property because of the joint work of the parties and it becomes clear, as I will come to, that the value of the E Street, Suburb F property appears largely to have come through a windfall in the substantial and, in many cases, unexplainable rises in Sydney property between about 2012 and 2015, which the husband agreed was a windfall.  The husband’s view is that, since it is a windfall to something that he happens to own in his sole name he was entitled to all of it.  The law on windfalls late in the marriage does not assist him in that regard. 

26. Amongst the things to be dealt with are: the husband’s initial contributions and the value of the E Street, Suburb F property; the contributions throughout their relationship; whether the Court should proceed on an asset-by-asset basis, particularly when the husband says the E Street, Suburb F property should be dealt with as his and the wife’s named property at A Street, Town B should be dealt with as theirs; whether the wife unreasonably wound-up her business G Business; the add back issues; and then a variety of section 75(2) factors.

27. Section 75(2) factors include here: the quality of the husband’s financial disclosure generally; the potential extent of his current assets and of his potential current earning capacity; and the husband’s health and whether he is entitled to run a case for an adjustment, pursuant to 75(2), relating to his health needs and earning capacity in the future given the way the case preparation was conducted and, in particular, the basis on which the expert evidence was prepared; and whether if he is able to run such a case, the Court can be satisfied he is not working given certain evidence suggesting he is and his failure to call evidence from the asserted employer or business partner, which he said he was going to call, and which he was told he would be allowed to prepare and would be ruled on at hearing. Another potentially related matter is the husband’s life expectancy, related to the way in which the case was run and the expert evidence, the absence of proper evidence about that, in the context of the balancing adjustment for the wife that might have to be considered, the wife having sole care of the child, if the husband’s life expectancy is, indeed very short; and there is also a question of the extent of the wife’s financial resource in her fiancé.

28. Starting with the initial financial contributions, I read onto the record trial affidavit paragraphs 44 to 46 in totality:

    44. I purchased the E Street, Suburb F Property in2000, and subsequently brought it into the relationship.

    45. At the start of the relationship, I had about $45,000 in superannuation, and over $100,000 in a share trading account with H Shares.

    46. The realised value of my E Street, Suburb F Property that I brought into the relationship at the time of sale in July 2015 was $2,360,000

29. In respect of the E Street, Suburb F property, he also gave evidence in that affidavit, paragraphs 8 and 9 and I read those onto the record in their totality:

    8. I was living in my property (“E Street, Suburb F Property”, that I acquired in/around 2000 (and well before we had met), prior to the time we had met and during the time we were ‘courting’, Ms Rapozo had on occasions visited me in Australia and stayed in the E Street, Suburb F Property with me.

    9. Prior to Her relocation to Sydney in 2006, I placed the E Street, Suburb F Property on rent as an investment and moved in with my parent’s house in Suburb J who agreed to provide accommodation and support us on a temporary basis while she settled in.

1. So the husband gave evidence that he purchased the E Street, Suburb F Property for an unstated sum in 2000 and sold it in July 2015 for $2,360,000.00.  He did not give evidence of the purchase price of the E Street, Suburb F Property at the date of purchase in 2000 either in his oral evidence or through documents, which one would have thought should have been available to him. 

2. The wife asserted a purchase price of $845,000 with a mortgage of $875,000 at that time, see the wife’s affidavit paragraph 11, but I was not directed to evidence to establish that figure and give it no weight.  It is, however, highly relevant because the husband could have been under no doubt whatsoever that the wife’s case was that the E Street, Suburb F Property came into their relationship with negative net equity.

3. Critically, the husband also led no evidence as to the likely value of the E Street, Suburb F Property at cohabitation in 2006 and, most significantly, made no disclosure and led no evidence, oral or documentary, of the mortgage value of the E Street, Suburb F Property at cohabitation.

4. Now, though he was represented by counsel at the hearing, part of his case was that this was a self-represented litigant.  But this is a very intelligent man.  He was an astute commercial man.  He was, in 2014, conducting commercial transactions where, on his evidence, for 10 hours of high level commercial work, he was paid about $70,000.  He has also read the judgment from 2017, which I will come to.  So I have, looking at his material, absolutely no doubt that he knew that the question to be considered was the net contribution at cohabitation and I have absolutely no doubt that he intentionally structured his evidence to only provide certain information which might advance his case and to not provide, quite intentionally, and not address things that might hurt his case in the hope that somehow he would slip through.

5. The husband sought to create an impression that he brought a very valuable item of real property to the relationship and to avoid the issue of the associated mortgage debt.  I raise this now because this was the nature of his evidence generally.  It was highly selective and often intentionally misleading. 

6. In that regard, as I will come to, the husband has been aware, since 2017, when he told the Court that he needed more money because he had spent at least $160,000 to $180,000 on gambling, that gambling was a significant issue in the case.  He could have had no doubt of that from that judgment.  He could have had no doubt of that from the wife’s evidence, and yet he chose not to lead a single word in his affidavit about it.  He has also produced no disclosure in regards to it despite repeated Court orders and the issue being specifically referred to in a judgment in 2017, which he confirms he has read.

7. I will go through many other issues with the husband’s evidence but it may be useful to point out, at this stage, that I consider him to be an entirely unreliable witness who has sought to mislead the Court through selective evidence and who has intentionally failed to disclose the relevant material that might have allowed the Court to know the truth. 

8. The wife, on the other hand, although she was not perfect, and no witness is, was generally a good witness, I thought.  She answered questions reasonably honestly, she became a little bit argumentative through frustration but, overall, I considered her to be a generally reliable witness.  So that, in respect of any matter where there is no supporting independent evidence, I will not accept Mr Goswami’s evidence and, in respect of any matter, such as housekeeping, or other matters such as that, where the parties are in conflict, I prefer, without question, the evidence of the wife.

9. Coming now to the mortgage.  Since the husband led no evidence of the mortgages over his asset, the wife did.  At cohabitation, the husband had a mortgage through his mother in the sum of $400,000.  It was registered over the house, by way of caveat, Exhibit F.  Now, there was a loan date in 2004/05 for $400,000.  The caveat and mortgage was lodged in 2007, possibly because of the marriage, but that loan was still extant for $400,000 at the date of sale.  So the parties only paid off interest and, indeed, the wife, through her work, was paying, at one stage, the interest to the husband’s mother through G Business.

10. There was also a financial institution mortgage, dated 18 July 2006, which was in the sum originally of $920,000, Exhibit E, and stamped by the Office of State Revenue on 21 July that year noting the $920,000 and “New $1,013,999”. Now, there is no doubt there was a $920,000 mortgage, I am not sure if I am able to safely rely on the latter figure without more.  But, nevertheless, what the evidence proves is that, in July 2006, around the time of cohabitation, or between marriage and cohabitation, the E Street, Suburb F property, of an unknown market value, had a debt of $1.32 million.

11. There was evidence from the husband that he gave an option to sell the E Street, Suburb F property in 2012 and 2013 for $1.5 million, see the husband’s second affidavit at paragraph 34.  Now, that is some six to seven years post-cohabitation.  Six to seven years post-cohabitation in what was a market for property which did vary because of the Global Financial Crisis but it was going up again clearly.  In any event, that is not supportive of the husband’s contention that the house was worth more than the mortgage at the date of cohabitation.  I can go no further than that.

12. The wife also said the husband received $300,000 cash or possibly only $200,000 cash and a cheque for $250,000 on the option and she says that she did not see that money, in particular the cash, some of which had to be paid back when the E Street, Suburb F property was sold. 

13. Now, also the husband did not explain in his affidavit his decision to move out of his property; in with his parents in 2006; then to move out and rent with the wife.  His tax returns show, in 2007, he carried forward a non-primary production loss of $694,000.  The husband’s tax return, Exhibit 1, see page 6 of the husband’s Court book, he gave evidence that this allowed the parties a financial benefit over the course of the relationship because of his tax structuring and allowing the wife to obtain financial family benefits.  But he did not go to the source of the losses or the impact of his overall financial position at cohabitation. 

14. As I said, the husband sold the E Street, Suburb F property in 2015 for $2.36 million, see the husband’s affidavit at paragraph 46.  It was agreed there was a significant windfall through an increase in the property’s value over the two to three years between 2012/13 when it was worth $1.5 million and in 2015 when it was worth $2.36 million, for which the husband claims sole credit because the property was in his name, and as it was not he says contributed to by the wife.

15. As his counsel acknowledged, the husband had the legal and evidentiary onus to show that there was any equity in the E Street, Suburb F property at the date of cohabitation, particularly when the wife had put this squarely in issue, and the husband has completely failed to lead any evidence that would assist his case at all.  I find that the husband has not established that there was any net equity in the E Street, Suburb F property at marriage or cohabitation.

16. Counsel for the wife conceded that if she wished to actually press the case that there was negative equity, and that the husband brought debt to the relationship that should be taken into account, she would then bear the reverse evidentiary onus to have gotten more information about the value of the house at certain times and her counsel did not seek to go that far on her behalf. 

17. I proceed on the basis that the E Street, Suburb F property was owned by the husband at the time of cohabitation but at a value no greater than the mortgage debt then secured on it.

18. In effect, the husband, brought in nothing other than the ownership of the E Street, Suburb F property.  The parties could have decided to sell it but they decided instead to keep it, as a joint decision, and to work on an asset that was then worth nothing to see if they could make it worth something.  When it was rented out, the rent that came in was not, as the husband says, his contribution, it was the parties’ contribution.  Particularly where, even if he was paying the mortgage, she was paying most of the rent for the property they were living in instead.  He says he paid rent on a few occasions, but that is merely a structuring issue.  The fact that he was paying the mortgage does not mean it was his sole contribution and that he gets a free ride on the wife’s income spent in other regards.

19. I note that the failure to disclosure the purchase price or the mortgages at any stage in the five years of this litigation is also indicative of the husband’s approach to disclosure, which was selective and neither full nor frank. 

20. In regard of his contribution of shares at the start, the husband said he had, as I have noted above, over $100,000 in a share trading account with H Shares. 

21. The husband included, at page 269 of the husband’s Court book, a document, marked originally MFI3 but which is in evidence, which he says was a statement from H Shares for 2006 showing a value of shares in excess of $100,000.  However, that document had been copied in a way which made it unable to be properly read as to the year, and so the husband was requested to produce the original overnight, which he did and which is exhibit 11.

22. That document was, in fact, dated 2005, not 2006.  It does not establish that he had shares in the total shown on that document of $122,000 at the date of cohabitation.  The husband bore, again, the evidentiary onus to establish that he had shares as alleged at the date of cohabitation.  He has not done this.  I find that the husband has not proved he brought shares to the relationship.

23. But this evidence also raises the question of why the husband, who had at least one statement from H Shares going back to 2005, has in the five years of this litigation in which he has asserted that he had shares of value then, produced only that one single statement and no other.  He has produced the one statement to the Court, in an unreadable form, but one asks where are all the other statements? 

24. The husband did not try and explain why he had access to one statement only but not others, except, making some comments about the statements being around his house but not easy to find.  He found one which he thought helped his case and he produced that but not the others which might have shown the truth.  He had a positive duty, having raised this issue, to disclose all the statements he has.  I do not accept, for a moment, that the husband only happens to have one statement.  This is another area in which the husband has not only failed to make full and frank disclosure, and to produce one document a few days pre-trial which he thought might help him, and otherwise, I am confident, given all the material in the case, that he has hidden those statements because they would not help him. Again, this all goes to the credit finding I make about the husband, that he is utterly unreliable.

25. The husband also said he made an initial contribution of superannuation of $45,000.  Now, he was not challenged on that, although it was not separately proved, but there is certainly no reliable evidence it has increased in the relationship, it seems it did not, and the husband has drawn that down and spent it by no later than the date of his financial statement dated 25 May 2018.  That superannuation fund, which did not apparently grow, and which he has entirely spent due to the hardship issue he says, was a nominal contribution.

26. The wife asserts that she contributed $25,000 Country D at the start.  The husband says bank records only show $11,000. 

27. Therefore, I am confident that, at most, the husband had $45,000 worth of superannuation that did not increase, but which he has subsequently spent, and the wife had somewhere between $11,000 and $25,000.  Weighing these I find that the initial financial contributions were basically equal.

28. It is appropriate now to consider the conduct of the husband relevant to the sale and disposition of the E Street, Suburb F property in 2015; the order for an interim distribution of property; and to go to the question of add backs. 

29. In July 2015, orders were made at the time of the impending settlement of the E Street, Suburb F property, and settlement sums were to be paid as to the agent’s fees, the mortgage to Perpetual Trustees Limited (Victoria) which was then $935,000.  I note that Perpetual was the mortgage I referred to earlier, which, at time of cohabitation, was worth at least $920,000.  I have used that lower figure earlier because it was clearly there.  But the husband says that he was paying the mortgage.  The figure tends to suggest that even with the wife’s assistance, that mortgage had increased.  The mother still had $400,000 owed, so although the mortgage had been serviced, there had been no payment down of it to the mother.

30. The husband had to pay back a loan to a Ms K, who is a friend of his, for $103,000 and the wife has not sought to bring that in as an add back.  He was ordered to pay $55,000 in judgment debts to Bank L. I note that he finally conceded, after some difficulty, in his evidence here that despite that order he did not pay that money back and it remained a debt.

31. The husband was to put $201,000 into trust, which occurred.  There was an order that there be paid to the husband a sum of $200,000, the characterisation of such payment to be determined by the trial judge.

32. Those were the initial orders in 2015.  They were varied a few days later, because the person who had given the husband money for the option, sued in the Supreme Court, and the husband was ordered to pay $250,000 to that person and he was to pay the legal costs of the Supreme Court’s proceedings, and

    The balance then remains to be placed in an Interest Bearing Deposit in the name of the husband, and the husband is not to deal with such balance in any way without 7 days prior written notice being given to the wife’s solicitors.

33. At that time, it appears that the excess figure was somewhere around $159,000.

34. This matter later came before Her Honour, Judge Sexton, reference Rapozo & Goswami [2017] FCCA 1889. The husband conceded that he had read the judgment and did not contest the accuracy of what Her Honour recorded. It came before Her Honour on 2 August 2017, and the husband was represented by experienced counsel and solicitors.

35. Now, Her Honour made certain findings, but I do not give them any weight.  It is for me to make my own findings, but the concessions are relevant, as they were admissions against interest made through counsel in open Court in these proceedings, and I think that is evidence that can be tendered against the husband, as with any other admission.

36. It is also relevant, since the husband says he has read the decision and I am quite satisfied he understood it, given he is an intelligent, well-educated man, that the issues that were to come before me were raised fairly and squarely in August of 2017. The suggestion made by his counsel was that in some cases it is more difficult for a self-represented litigant, and in some cases that is true, but in this case, the husband knew exactly what was coming.

37. I now read onto the record a portion of paragraph 1 of Her Honours judgment:

    1. The Husband seeks a partial property settlement pursuant to s.79 of the Family Law Act 1975, by way of an Application in a Case filed 1 June 2017. He seeks immediate payment to him of all the funds held in the trust account of his solicitors, Vizzone Ruggero Twigg Lawyers, being the sum of $203,644, and costs. The Wife opposes the Application and seeks costs.

38. I read onto the record the totality of paragraph 3:

    3. On 20 July 2015, the Family Court made interim orders by consent in relation to disbursement of the proceeds of sale of the property at E Street, Suburb F, and, after discharge of the mortgage, discharge of a debt to the Husband’s mother in the sum of $400,000, payment of a loan in the sum of $103,000 and payment of two outstanding judgment debts to Bank L, not to exceed $55,000, the sum of $200,000 to be held in an interest bearing account, any withdrawal requiring the consent of both parties, a payment of $200,000 to the Husband (to be characterised at final hearing), the balance to be held by the Husband and not to be withdrawn without 7 days prior notice being given to the Wife’s solicitors.   The terms of the last item were varied by consent by order of 29 July 2015 providing for payment in the sum of $250,000 to Ms M, payment of the Husband’s legal costs in the Supreme Court proceedings, with the balance (of approximately $160,000) to be held by the Husband and not to be withdrawn without 7 days prior notice being given to the Wife’s solicitors.

39. The totality of paragraphs 5, 6 and 7:

    5. On 21 March 2017, orders were made for financial disclosure and for the parties to attend informal mediation.

    6. On 13 June 2017, the Court made further orders for financial disclosure and listed the matter for this interim hearing.

    7. It is common ground that the Husband has failed to fully comply with orders for financial disclosure. It is acknowledged by the Husband at this hearing that, in breach of Court orders, he withdrew the whole of the sum of approximately $160,000 for his own use, without giving notice to the Wife as the order required, and that he did not comply with the order to pay the judgment debt of $55,000 to Bank L.  That debt remains outstanding.

40. The matter came before the Court because the husband needed money, and he wanted the $201,000 held in the trust account.  The Court noted that the orders that had been made, including that the husband not withdraw the approximately $160,000 without the seven days prior notice being given to the wife’s solicitors.  The Court noted that on 21 March 2017 and 13 June 2017, orders were made for financial disclosure, and it was noted that the husband had acknowledged at that hearing that “In breach of Court orders, he withdrew the whole sum of approximately $160,000 for his own use without giving notice to the wife, as the orders required.”  He also conceded he did not comply with the order to pay the judgment debt of $55,000 to Bank L, and that debt remained outstanding. 

41. Now, in this proceeding, the husband argued that because he had sent an email telling the wife’s solicitors he was going to take the money, that when they wrote back saying we do not think that is proper notice, they were wrong.  I think that he has clearly made, at a more contemporaneous time, an admission.  It speaks to me of the fact that he knew what the orders intended, which were that that money should be protected, and sending an email saying I am going to do this anyhow, effectively trying to get in before they could get an injunction, was not what the Court intended. 

42. I read onto the record in full the judgment at 14:

    14. The Husband deposes to having depleted the whole of the funds he has received in the past 2 years from the proceeds of sale of the E Street, Suburb F property, being the sum of approximately $360,000 as well increasing his debt to $108,000, total expenditure of $468,000.  He offers no explanation in is affidavit as to how he has applied those funds despite the Court’s orders for financial disclosure and despite the Wife’s repeated requests for financial disclosure. However, at the commencement of this hearing, the Husband’s counsel advised the Wife’s solicitor and the Court, that the Husband had lost approximately $160-180,000 (perhaps more) by gambling.

43. At that time, just two years post-sale of E Street, Suburb F, and having also had $160,000, the husband deposed to having spent $360,000 as well as increasing his debt to $108,000 which was said to be expenditure of $468,000.  Now, the husband points out that the $108,000 included the $55,000 he already had, so at its best, he is saying that he expended $360,000 and added another $53,000.  So he spent $413,000 in two years, and it was particularly noted, so that there can be no doubt that the husband knew that disclosure, and how this money was to be used, even though self-represented later, was absolutely at the heart of this case.  Her Honour said,

    He offers no explanation in his affidavit as to how he has applied those funds despite the Court’s orders for financial disclosure and despite the Wife’s repeated requests for financial disclosure.

1. It was also noted that, at the commencement, the husband’s counsel advised the Court the husband has lost $160,000 to $180,000, perhaps more, by gambling.  It is absolutely clear that the husband knew for the last three years that what happened to that $360,000 and why he increased his debt by $53,000 in a two-year period, was something he was required to give disclosure of, and he has not done it.

2. Now, this is a clear and gross and contumelious breach of his positive obligation to provide disclosure.  I find that there is still no full and frank disclosure going to any of the issues involved in the asserted add backs, and that weighs extraordinarily heavily against the husband.

3. The husband first attempted to give evidence about how this money was used in re-examination, when the wife would have had no opportunity to investigate in respect of the matters which were raised with him squarely by the wife in Court almost three years ago. 

4. Obviously, he was not allowed to give such late and untestable evidence in re-examination, but the essential issue is that the husband knew this was an issue, and he has done nothing to address it. He did not give a single word of evidence about gambling. When first shown the section 50 summaries, which were unfortunately delivered late but which were read overnight, the husband prevaricated and tried to avoid dealing with the issue, as he had avoided it in his affidavit.

5. I am satisfied that the husband has not, and has intentionally not, made disclosure in respect of what happened to the $360,000 he received from the sale of the E Street, Suburb F property.  He has not made disclosure in respect of the $365,000 of cash, and in addition he spent basically $39,000 in gambling before.

6. Possibly separate from the $365,000 cash, he has lost $200,000 gambling electronically post-separation.  That was proved against him, not admitted by him, at the hearing, and it also only deals with about $201,000 of the $760,000, which may have been spent gambling. Which raises a real inference against the husband, either that he has used it on gambling, or that he may, in fact, have it hidden somewhere, and that his failure to make full and frank financial disclosure is because he is hiding assets.

7. One of the issues, of course, for people who do not make disclosure is that the Court does not know the truth, but to the extent to which the truth is not known because of the husband’s intentional and continued failure to make proper disclosure, the inferences in this case should be drawn against him, and the orders to be made must protect the wife from the consequences of his failure to disclose the truth.

8. As I have said, the judgment at paragraph 17 noted:

   …the Wife deposes to her greater initial contributions given the Husband’s debt position…

9. Again, there is no doubt that from 2017 the husband was absolutely on notice that the wife said he brought negative assets into the relationship and he has clearly not given full disclosure of his financial position, including what all of his debts may have been at the date of cohabitation or marriage.

10. I come now to the question of the add backs, and how they should be dealt with.  The Full Court discussed add backs relatively recently in 2018 in Trevi & Trevi [2018] FamCAFC 173, and summarised the matters:

    …the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements.

11. The Full Court emphasised that this was a discretionary “accounting” “balance sheet exercise” which may be required:

    … so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.

12. The decision to add back is a discretionary exercise with reference to the guidelines which have been laid down by the Full Court, and in the context that the parties’ lives do not go into suspended animation on separation.

13. In that regard, counsel for the husband sought to make an argument that these sums would have been reasonable expenses over five years.  The difficulty with that is that it does not bear any correlation to the facts.  It was not the case in 2017 that he had spent maybe $80,000 or $100,000 of the monies.  He had spent all of them, at best for his case, otherwise, one would have to find that he was then hiding them, as he may still be hiding them.

14. The discretion is to be exercised as necessary to do justice and equity between the parties, noting that in certain circumstances it will instead be appropriate to take the factors relevant to an asserted add back into account instead of any exercise of the different discretion pursuant to section 75(2).

15. Now, there are three long-recognised categories of add backs. First, where the parties expend matrimonial money on legal fees. That is because of the requirements of section 117, but that is not relevant here. Secondly, where there has been a premature distribution of matrimonial assets by one party, and thirdly, where there has been waste, including the reckless or negligent dissipation of assets. The wife asserts that, in respect of the entirety of the claim, there has been a premature distribution of matrimonial assets by one party, and also in respect of the proven gambling, that was waste.

16. The wife asserts, and I accept, that the $200,000 interim payment ordered by the Court, and which was to be characterised by me, was clearly a premature distribution.  On that basis I find that that sum should be added back.  They were matrimonial assets as the E Street, Suburb F property was a matrimonial asset, and I consider that in more detail below.

17. As to the $160,000 which was taken unilaterally, against Court orders, as the husband conceded to the Court in 2017, that was also matrimonial property, which he prematurely distributed to himself, which he has had the benefit of, and spent or else has somewhere hidden. I have no doubt that these sums to should be added back.

18. I note that the fact that the husband has not provided disclosure about these sums, or indicated how he dealt with them, also supports that.

19. In respect of the cash withdrawals of $365,050 by the husband between 2013 and 2014, the husband has given no disclosure as to what happened.  It is clearly joint matrimonial money.  He took it in the period immediately before and just after separation, and he has not sought to deal with it, and now despite knowing that waste, including gambling, were significant issues, he did not make any reference to gambling or relevant disclosure.  He has not led any evidence about what happened to that $365,050.

20. Now, the husband complained that the wife did not complete a full picture of his gambling, because she did not take into account the fact that he won sometimes. His electronic accounts do not show him winning overall, and it is interesting how many problem gamblers count every win, but no losses.  If the husband, in fact, has had gambling wins in cash, then he should have disclosed them, and he also should have disclosed where that winning money is.

21. The second suggestion was that the wife, somehow, was consenting to this because she occasionally went with him to N Casino when he was gambling, and as he won $25,000 on the roulette table one night.  They also went to City O, and when she went off to dinner with her brother, he kept gambling at the tables, and this was put to her to suggest that she knew and consented to his gambling.  I do not accept that for a moment.  It is one thing to go occasionally to the casino with someone and, given the odds at a casino and the roulette table, if you put a bid on an individual number, it is possible to make $25,000 with a couple of rolls. But to suggest that going to City O for a period with the family, for a holiday to meet family who are in Country P, is somehow consent to that spending, or means that she really knew about the problems, I consider to be fanciful.  I do not accept it.

22. I also reject the argument that was put that the wife did not paint a full picture of his financial dealings in gambling.  That was for the husband to do.  She provided such information as she could from business records.  The fact that he chose to ignore, and not mention a word of it, does not mean that she somehow had to squirrel out more information that might have helped him.  Nor am I satisfied that she had more information she withheld.

23. The other argument he raised is that he brought in, over the course of the relationship, one and a half million dollars in gross income, or something along those lines.  And therefore, in effect, he could afford to drop $365,000 or even $240,000 in gambling.  Not a big issue.  But the reality is, he is not a multi-millionaire.  He is not a billionaire.  He is not someone who could afford to drop a few hundred thousand dollars on a whim, without it in any way affecting his financial position. 

24. He may have earned, over a period of eight years, a substantial income, but his declared income, for example in 2014, when these moneys were taken out, was $106,000 gross and in 2015, it was $24,000.  To suggest that $360,000 cash is spent on gambling, or that $240,000 approximately, in pre and post separation gambling was a triviality is a nonsense. The fact that this case is being fought so hard over the sums involved shows just what a nonsense it is, because those sums are large percentage of the assets these parties had.

25. The husband also sought to justify his gambling by reference to his diagnosis of a health condition, and that may well be a cause, but he did not deal with it in his affidavit evidence.  He tried to deal with it with late evidence from a psychologist, which was not allowed, since it was provided at the heel of the hunt, and I consider that again later.

26. But in any event, that is not something which should be visited on the wife.  Most people who have a gambling problem have an underlying problem, and there is usually a reason for the gambling. The entire concept of waste would not exist if people could say, well, I was unhappy so I gambled, or I was depressed so I gambled, and the other party should bear the loss. 

27. In all of these circumstances, I also find it appropriate to deal with the $365,000 in cash that was taken in a very short period as a premature distribution by the husband, and I will add that back in full.

28. I am also satisfied that it is appropriate to deal with the gambling losses of $38,977, or $39,000 pre-separation, which were through electronic payments, and so unlikely to be double-counted in the findings above, as waste to be notionally added back rather than being dealt with under 75(2).

29. On that basis, I find that it is appropriate to, and I do, notionally add back all of the add-backs asserted by the wife. 

30. On that basis, I accept the wife’s submission, and find that the total pool for notional accounting purposes is $1,476,943.00 of which the husband has had, including wasted, $764,027 or 52% leaving only 48% approximately remaining, which is the $712,916.

31. Now, the contributions initially were equal.  I note there is extensive evidence about ongoing contributions in the affidavits.  The wife is a health care worker.  She worked full time from 2007 as a professional, then moved to become a health care worker.  She was earning about $50,000 to $60,000 dollars a year.  She had a year of maternity leave with 36 weeks paid, and went back to work from 2011, starting at two days, increasing to four days by 2013.

32. In early 2011, the wife took over a business called G Business, referred to throughout as G Business.  It was the husband’s business, and for reasons no one was able to explain satisfactorily to me, the husband wanted the wife to take the business.  The wife used her savings to buy the stock in the company from the husband and took all the shares, became the sole director and took on liabilities including, she said, personal guarantees.

33. Now, she worked in the business while on maternity leave and when she was working part-time as a health care worker, and as best I can estimate, that is a period of maybe 18 months. Then a part-time assistant took over and her husband operated the business. The wife still owned the business and was the director, and was also liable for its debts which she ultimately had to pay some of, about $8000, post-separation.  Very significantly, given the husband’s argument that the E Street, Suburb F property is a separate property, to be dealt with on an asset by asset basis, apart from her paying rent for a property they lived in, G Business contributed about $102,000 in loan repayments to the husband’s mother between 2011 and 2015.

34. The loan repayments during the 12-18 month period when she was operating the business were the direct result of her personal exertion labour, because she was not paid, and the money went to pay the E Street, Suburb F loan.  Nevertheless, the husband seeks to argue that the fact that the E Street, Suburb F property was legally in his name, it is relevant that this business was legally her business.  Legally, all of those contributions were her contributions to the mortgage.

35. The argument that these properties were kept entirely separate, and the husband paid for them, is a fanciful nonsense.  The parties’ purchased the property at A Street, Town B in the wife’s name, and the husband provided some payments to her in the period prior to the purchase. Although, she says these repayments were return for payments she had given to him, the wife does not argue that A Street, Town B was her sole contribution, or that it is other than a matrimonial asset, as with the E Street, Suburb F property.

36. The question of trying to track back payments as between the parties in that regard is irrelevant here as the one wife says A Street, Town B is a joint matrimonial asset and one looks to their incomes and the intermingling. 

37. The husband’s argument was that their finances were kept separate in terms of intermingling. The wife says, noting her evidence of him keeping his taking of cash and other issues secret, that she used her credit card to buy tens of thousands of dollars of computer equipment for a business her husband did not own, but worked for, and he would then repay her, and she got the benefit of the frequent flyer points.  That is a benefit she got, one amongst a myriad of contributions the parties made to each other, but again, it makes it fanciful to suggest that their finances were separate, and there was other evidence about transactions moving tens of thousands of dollars back and forth between them.

38. The husband has set out, at some length, his contributions.  I note his income was higher than hers, and obviously there is a period when she was on maternity leave and the husband places great weight on that, but this was a marriage not a joint venture between corporate entities for a commercial purpose.  I note what Strickland J said in Grant & Williams [2010] FamCA 1074. I note that the husband’s counsel, on instructions, sought to argue that the parties, in effect, were at arm’s length like a commercial relationship, but the underlying facts and transactions running between them and intermingling just makes that unarguable.

39. In that regard, I find that the parties both worked and exercised their full earning capacity after cohabitation, and mixed their funds.  Some money she earned was used for the mortgage on the E Street, Suburb F property.  At times both properties were rented.  The rent was a return to both parties.  I find overall that the financial contribution throughout the relationship were, when properly assessed according to the principles that govern this Court, which is not a commercial Court dealing with joint venture assessments, their financial contributions in that respect that they both exercise their full earning capacity, and noting that there is no doctrine of special contributions, and even if there were, the husband is not someone who is making contributions of millions of dollars a year, but rather he was earning a higher income, the financial contributions were broadly equal.

40. I have looked at the husband paying for parts of the marriage ceremony and all the other issues about who paid for what, but it seems to me they brought in the money exercising their capacity and they used the money to pay off mortgages and to live and raise a child.

41. The payment for weddings or other particular items is of no great assistance, and again I refer to Grant & Williams and all the cases that are referred to there, including Hayne and Hayne (1977) FLC 90-265, Garrett and Garrett (1984) FLC 91-539, Norbis v Norbis (1986) 161 CLR 513.

42. In terms of non-financial contributions, the wife says that she did the majority of the cleaning, washing and cooking.  They shared gardening.  He did the bins.  She did the majority of outdoor work.  She did the majority of the care of the child.  The husband says, in effect, the contributions of a non-financial basis were equal.  Clearly he was doing some of the non-financial contributions.  But, as I have noted, the husband has serious credit issues, and I have found and find that he is not a reliable witness. 

43. The difficulty with that is, when it comes to a question of non-financial contributions and when all I can possibly have is the word of the wife versus the word of the husband, where I find him an unreliable witness and she a generally reliable witness, it seems to me that the appropriate course is to accept her evidence on non-financial contributions.  The wife does not say he did nothing but she says she made greater non-financial contributions.  Therefore, accepting her evidence on non-financial contributions where it conflicts with his, I find that she made greater non-financial contributions. 

44. In those circumstances where I find the initial contributions were equal; financial contributions throughout were equal, each party exercising their full financial capacity to the best of their ability; and where the wife did contribute over the period of the relationship significantly more in terms of non-financial contributions, not merely when the husband became of poor health or because of the husband’s poor health,  I find that the wife’s overall contributions during cohabitation were greater and I would find in favour of the wife in that respect, and find that the contributions overall were 55% to the wife and 45% to the husband.

45. I have dealt with the financial questions in respect of the E Street, Suburb F property.  I will note that apart from the factual problems, the law as set out in Norbis v Norbis allows the Court to deal with matters either globally or on an asset-by-asset basis.  I note in particular it was said in McMahon & McMahon (1995) 19 Fam LR 99 where the Full Court considered Norbis v Norbis, and in that particular case found that the Judge should have applied an asset-by-asset approach.  The particular features that they relied upon were:

    The short duration of and the unhappy nature of the marriage, coupled with the parties' strict division of assets and their method   of dealing with them lent itself to an asset by asset approach,  particularly where they had separately identified another group of assets as joint.

46. It was also a case where:

    …this is not a case where the homemaker and parent contribution looms large…

47. There are certainly cases where an asset‑by‑asset approach would be appropriate or required.  If the husband had brought the E Street, Suburb F property to the relationship with equity in it and/or if the husband had solely paid the mortgage it may have been appropriate to deal with it that way. Although, even then, the cross-subsidisation by the wife of his rent would probably have made it inappropriate.  The reality is the facts of this case just do not bring it within the kind of case where the E Street, Suburb F property should be dealt with on an asset-by-asset basis.  I find that all of the assets of the parties in that respect were joint assets.

1. I note that, in terms of post-separation contributions, the husband said he met all expenses involved in preparing the E Street, Suburb F property at a cost of $30,000 but he provided no documentary evidence to support that assertion, see his affidavit paragraph 100.  He said he personally painted most of the interior walls and some of the exterior walls which is quite a feat given his evidence, which I will come to, about his then physical condition.  He said he also paid a storage facility $10,000, see his affidavit paragraph 111, but again I do not find it is proved.

2. The wife had the greater care of the child, worked and also paid child support to the husband who had then ceased working due to his health conditions.  Noting also my findings below about the husband’s employment capacity in recent times and the real possibility that he is, in fact, engaged in some employment and has been engaged in employment, together with the fact that I find that the truth of the matter cannot be known because of the approach the husband has taken to his evidence, I find that post-separation contributions favour the wife by 2.5%.  In those circumstances, including all pre and post separation contributions, I find the wife should have 57.5% and the husband 42.5%.

3. The husband disclosed one document, consistent with his approach to disclosing only certain documents which might assist him, in which the wife refused to transfer the property to him.  He did not disclose what the terms of the offer were.  The wife says she wound up G Business rather than transferring it to the husband because she was worried about her liabilities as the owner and director and her personal guarantee she said she gave.  The husband bears the evidentiary onus to show that the wife acted unreasonably and dissipated an asset. 

4. Given his conduct generally, and given that he has not met the onus of showing what the terms of the offer were, so that the wife could be satisfied that she would not be lumped with his debts when he took over the business, and given that she had outstanding guarantees and even though he had been running the business and taking the money from it she eventually had to pay $8,000 to debtors when she wound it up, I am not satisfied the husband has shown that the wife acted inappropriately or that there was any waste on the wife’s part here. 

5. I will note that the husband has raised the issue that because the asset in the E Street, Suburb F property was in his name that he would get the windfall.  I refer to Jabour & Jabour [2018] FCCA 928 and other cases. A windfall due to the property increasing late in the relationship, particularly in circumstances where both parties were contributing to it, is a windfall to both the parties generally.

6. We then come to the question 75(2) matters.  The husband seeks an adjustment in his favour because of his health impairment which he says means he is not employable. 

7. The husband has produced evidence from Dr Q but one needs to consider the history of the matter. 

8. The wife says that the husband is barred from conducting a case that he should have a 75(2) adjustment in respect of health needs and earning capacity because of the way the case was prepared and set down. 

9. The matter was set down on 6 November 2019 for hearing on 21 May 2020, and that was noted at the time

   B. The applicant is tendering two reports of Dr Q of 13 October 2015 and 29 May 2019 however Dr Q is not required for cross examination.

10. The procedural history in respect of Dr Q is set out in the wife’s third affidavit filed 14 May 2020, at paragraphs 33 to 40, which went to the possibility of extra evidence being given by Dr Q at the hearing.  She refers to the letter of instructions to Dr Q, which is Annexure A to that affidavit, and in particular to the fact that the husband’s letter of instruction said, at the wife’s court book 169:

    I do not wish to drag these court proceedings out and I wish to simply resolve this matter promptly and focus on the past known items & not any future items in relation to my health.  My case does NOT seek nor do I claim for any adjustment for any “future needs” in relation to health issues.(Emphasis in original)

11. On that basis the wife says, and I accept, that her lawyers took the view that she did not need to seek a single expert or require Dr Q for cross-examination.  That would be a perfectly reasonable and forensically sensible approach to take.

12. The matter was listed for mention to check readiness for trial on Friday, 30 April 2020, about a month or less prior to trial, and at that stage the notes are that the court was told by the husband that:

    A. The husband’s cardiologist has completed a report but is not willing to swear an Affidavit, there is no order for single expert.  In these circumstances the only witnesses at hearing with be the parties.

13. The husband was then seeking to call additional evidence from the doctor, but advised that the doctor was not willing to swear an affidavit. It created an insurmountable difficulty to any additional evidence being allowed, as the wife’s decision to not cross-examine was clearly based on the reports served, which as noted, were limited by their instructions to the past. 

14. Further, even had Dr Q been willing to swear an oath and give evidence, given the forensic decision that the wife had taken not to seek a single expert, or an adversarial expert, to test his opinion, the prejudice to the wife would be overwhelming in attempting to cross-examine an expert on new material not previously provided and without the benefit of assistance from an adversarial or a single expert.

15. Now, I note the husband was self-represented but he is a highly educated commercial man.  There are many reasons he may have taken this approach, including, for example, the life expectancy estimate in the report obtained.  I will read onto the record the last paragraph on the husband’s court book page 186:

    Clinical examination showed evidence of left ventricular dysfunction with a very obvious gallop rhythm and an electrocardiogram showed biatrial enlargement and left ventricular hypertrophy. The echocardiogram went on to show a severely dilated left ventricle with very severe impairment of left ventricular systolic function with an ejection fraction of 24% in keeping with a dilated cardiomyopathy. The prognosis of a severe dilated cardiomyopathy which does not improve, which is about 75% of them, is of a relentlessly progressive downward course and an estimated five-year prognosis of a 50% mortality depending on other associated risk factors. In other words, a very serious diagnosis in a young man.

16. As noted above, the life expectancy estimate appears to be for a 50% mortality within five years, at trial that might have been within four years, although these statistics do not necessarily work that way.  There is no actual life expectancy given beyond that.  If the husband, having spoken with the Professor, decided he had a very short life expectancy, that would tell against his future needs.  Also, there was an issue of how his condition was going, and if he was recovering too, that might not assist him.  For whatever reason, it is clear that the husband took a very specific forensic approach that he would only look to the past, and that is the basis upon which the doctor wrote his report and the wife proceeded.

17. The prejudice to the wife, in the husband being allowed to conduct a case contrary to the letter of instruction, cannot be overcome except by way of an adjournment. No adjournment was sought to allow the wife to obtain a single expert report or other evidence on the husband’s current health condition, prognosis, functional capacity for work and life expectancy. 

18. In those circumstances, in my view, the husband cannot be allowed to conduct a case for a section 75(2) adjustment for his health, needs or its impact on his future earning capacity or earnings.

19. As there was a live issue as to that question, and also because of the issue in respect of the husband’s earnings or work history to the date of hearing, certain evidence was taken on voir dire. 

20. I note that I admit that evidence on the voir dire in respect of the husband’s past work history only, and if I am wrong on the question of whether the husband should be allowed to conduct the claim for an adjustment for future needs for health and for diminution of earning capacity, that material would have to be considered in that regard too.  At the moment as far as I am concerned it is in only for the husband’s past earnings.

21. The husband has a serious health condition but the wife put in her affidavit evidence, which has no weight other than to show that the husband was aware of the issue, that she believed the husband is in fact doing some work for someone.  The wife noted this starting at paragraph 30 of her third affidavit on 14 May 2020, and she referred back to her affidavit of 16 March, where she alleged that the husband was working for a company called Employer R owned by Ms S.  Now, I note that was a live issue from her affidavit of March 2020, and the husband did not address it at all in his trial affidavit.  Now, on one view, since she did not have reliable evidence then, perhaps he did not have to but he chose not to.

22. One of the issues that the wife relied upon which was objective evidence was a series of text messages which the husband admitted were from him to the wife’s new partner, and they read as follows:

    Please tell X that grandpa has just left to pick him up and will bring him home, change of plans and we are staying in tonight.  Once he gets there, I will call you so he can come down – prob 20 mins

23. Then there is another text message:

    Is there a chance they could withhold it against the debt we owe ato from last BAS?

24. And then next message:

    Disregard last message

25. Now, the husband, although he did not address the issue in his affidavit, did seek leave to rely upon certain additional evidence at the hearing. That application was heard before me on 15 May 2020, which was the Friday before the hearing started the following Thursday.  He sought to call additional evidence from Ms S, who is the operator of this company; Mr T, who is a psychologist; and also a Mr U.  A note was made at the determination – the order that was made was:

    2. The determination of the question of whether the evidence from Ms S, Mr U and Mr T will be allowed will be made at trial.

    With a note:

    B. The onus remains on the husband to persuade the Court that the interests of justice require the late evidence to be admitted.

26. The husband did obtain and sought to tender a report of the psychologist, Mr T, to advance his case, although that was not allowed since it came late and could not possibly be met. 

27. The husband did not get anything from Ms S, and he says it is because the Court told him there was not enough time.  I certainly did mention at the callover that time would be a relevant factor, but I also noted that if there was a recent allegation of employment that that was an important issue that he may have to be allowed to rebut. 

28. The husband did not call any evidence from Ms S, and I consider that to be a significant issue where he was well aware of the issue; where he sought leave; where he was given leave to prepare the evidence so that it could be considered whether it would be admitted at trial; and where I had noted that as it was a recent allegation then that would be a basis upon which he could be allowed to lead new evidence.

29. The husband admitted that the text was a mistake, and it was being sent to Ms S’s accountant.  He then said, he does go and spend a day a week there at her business, although he then reduced that to sometimes a day a week.  Now, he did not say what he does there the days he spends there.  Apparently he just goes and sits there all day in the office while people work around him.  Not working.  He does this and spends the day there to have lunch with his friend. 

30. He said that the text message was just assisting Ms S by texting her accountant because of issues with JobKeeper.  When asked why he used the word “we” when he sent the text:

    Is there a chance they could withhold it against the debt we owe ato from last BAS? (Emphasis added)

31. His answer to the effect was, “Well, otherwise I would have had to have said I”, and I consider that to be very surprising evidence and questioned him about that. 

32. It is not clear to me why he would not have said “she”, if there is a debt “she owes” or “the business”.  But to suggest “I” might have been the alternative strongly suggested to me that he is working in the business or possibly has an interest in the business. 

33. While I very rarely favour taking demeanour into account, because of the grave uncertainty about it, this very strongly seemed to me to be, noting both what was said and his reaction, to be one of those moments when a witness slips and tells the truth they did not mean to disclose, and then flounders trying to explain the slip away.  Having made the slip with the text message, he made a further slip in his evidence.

34. In my view this text message and the husband’s answer in the overall context of his failings to disclose significant financial matters and to selectively disclosing documents, for example the one H Shares statement, and my findings about his credit, and also noting his evidence that he is highly skilled commercially and was able to make up to $70,000 with one big transaction in 10 hours work, although I accept his evidence that transaction was a rarity, I am satisfied that there must be at least a very grave concern that the husband is in fact working. 

35. Now, he has a heart condition and that clearly has a physical impact on him.  But earning capacity is made up of and dealt with in four or five different aspects.  There is the physical capacity, and his physical capacity is clearly reduced.  There is psychological capacity, and I do not accept there is evidence that he is psychologically impaired for work.  There is vocational capacity, and his vocational capacity is for commercial transactions and running businesses.  Then there is a question of the labour market existence and employability, but this person is a friend. 

36. He says he has a heart condition, but whenever one looks at physical capacity one needs to then compare the capacity reduction with the job.  The classic example is that if someone, such as a barrister or a Judge, was to lose a little finger, whilst it would be very unfortunate for them, once they dealt with some issues perhaps around typing, it should have no significant impact on their earning capacity.  Whereas, if one of the world’s top five concert pianists was to lose a little finger, that would decimate their earning capacity and they might, instead of earning seven figures a year, have to try and work, if they could, as a music teacher or in some other job. 

37. The question is would the husband’s health capacity let him do a day a week of sedentary commercial work, and that is not addressed in the evidence.  It is also pointed that he has done an enormous amount of work preparing his case.  I am comfortably satisfied that in this he certainly has not proved that he could not work a least one day a week, and possibly more doing sedentary work, even from home, of the kind which he has the education, training and experience to do. 

38. In those circumstances, on balance, I am satisfied that the husband has probably been working to some extent up to trial.  The fact that the extent and what income he may have been earning, and whether it is very large or very small is not known, is a consequence of his failure to be candid with the Court.

39. In those circumstances, even if he was allowed to argue an adjustment for future factors, I would find that he has not established that there should be an adjustment in his favour in respect of future diminution of earning capacity. As I have said, I have taken into account post‑separation contributions, the fact that I think, having considered the matter very carefully, that it is likely, noting section 140(2) of the Evidence Act, that it is likely he has been doing at least some work for an unknown remuneration. 

40. In those circumstances, I then would make a finding there should be an adjustment in favour of the wife as primary carer for the child, where she has also been paying child support and may continue to, and his non disclosures and I would make a positive adjustment of 5%.  The wife does have a new relationship.  It appears stable.  She is not married yet, and it cannot be certain but he is someone with a good income.  In those circumstances I think that some allowance should be allowed for that, so I would allow an adjustment back of 2.5%.  In those circumstances, I would allow a further 2.5% adjustment for the wife.  That is 60% to 40%.

41. That then brings us, when one does the maths, to the conclusion that the wife should be getting more than half of the money but the majority of the money has gone. 

42. It then becomes a simple proposition, as the wife’s counsel says, that where contributions and adjustments overall favour the wife, as they do, so that she should be getting more than half of the notional asset pool, but where less than half of that asset pool remains available, then the only order that could possibly do justice and equity between the parties is to make the orders that the wife seeks so that she gets the entirety of the remaining net assets of the parties.

43. The effect of that is to say she keeps A Street, Town B together with its mortgage, she is also to be paid the funds held in trust, and she also keeps her superannuation.

44. I will just emphasise again that these orders are not really doing justice and equity to the wife, because she is receiving substantially less than she should have because of the husband’s waste and the husband’s allocation to himself of $160,000 in circumstances where it appears that he was not entitled to do so. 

45. The wife is to file any application for costs within 7 days if she considers it worth pursuing.

46. Finally, I note that the husband’s solicitors sought to join themselves to the proceedings, but I would not allow that to happen at trial, so their application remains extant.  I will stand that matter over to consider whether it is appropriate for this Court to try and make orders in respect of the husband’s costs to his solicitors since they commenced the application prior to hearing but too late to be joined.  They may take a view once they see these orders.

I certify that the preceding one hundred and sixty-five (165) paragraphs are a true copy of the reasons for judgment of Judge B Smith

Associate: 

Date: 18 June 2020