Riddler and Riddler and Ors

FAMILY COURT OF AUSTRALIA

RIDDLER & RIDDLER AND ORS

[2015] FamCA 436

FAMILY LAW – PROPERTY – Final Orders – Whether a property owned by the husband is beneficially owned by the husband’s parents – Where the husband has an interest in properties overseas – Whether efforts have been made to remove assets from the control of the wife – Whether a Deed of Loan and Tenancy Agreement should be set aside pursuant to s 106B of the Act – Where the husband made significant financial contributions – Where an adjustment is made in favour of the wife under s 75(4).

FAMILY LAW – SPOUSE MAINTENANCE – Where the wife seeks a lump sum payment for spouse maintenance – Where there is no asset available against which such an order could be made – Where the application is dismissed.
FAMILY LAW – CHILD SUPPORT– Where the wife seeks a child support departure order – Where special circumstances warrant a child support departure order be made – Where it is impossible to identify the income of the husband – Where the making of a child support departure order would not cause hardship.

Family Law Act 1975 (Cth) ss 75(2), 75(4), 79(2), 106B

Child Support (Assessment) Act 1989 (Cth) s 117

Calverleyv Green (1984) 155 CLR 242
In the Marriage of Gyselman (1991)15 Fam LR 219
Charles Marshall Pty Limited v Grimsley [1956] HCA 28; (1956) 95 CLR 353
Kawada & Kawada & Ors [2012] FamCA 273
Chorn & Hopkins (2004) FLC 93-204

APPLICANT:

Ms A Riddler

1st RESPONDENT:

Mr B Riddler

2nd RESPONDENT:

Mr C Riddler

3rd RESPONDENT:

Ms D Riddler

FILE NUMBER:

WOC

302

2013

DATE DELIVERED:

27 February 2015

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge J

HEARING DATE:

30 September 2014,
1-2 October 2014 and
16-17 October 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Lloyd SC

SOLICITOR FOR THE APPLICANT:

Reid Family Lawyers

COUNSEL FOR THE 1ST RESPONDENT:

Mr Blackah

SOLICITOR FOR THE 1ST RESPONDENT:

Searle & Associates Lawyers Pty Ltd

COUNSEL FOR THE 2ND RESPONDENT:

Mr Gould

SOLICITOR FOR THE 2ND RESPONDENT:

Godden Lawyers

COUNSEL FOR THE 3RD RESPONDENT:

Mr Gould

SOLICITOR FOR THE 3RD RESPONDENT:

Godden Lawyers

Orders

That pursuant to section 106B of the Family Law Act 1975 (Cth) (“the Act”):
(a)The Deed of Loan Agreement between Mr C Riddler, Ms D Riddler and Mr B Riddler dated 23 November 2010; and
(b)The Residential Tenancy Agreement between Mr C Riddler, Ms D Riddler and Mr B Riddler dated 28 July 2012
be set aside.
The Court declares that Mr B Riddler is the beneficial owner of the Unique Shares No’s … in E Property .
That within fourteen (14) days of the date of these orders, the husband shall do all things and sign all documents to sell his shares in E Property (which give the right to occupy the property F Street, Suburb G), being Unique No’s … and for the purpose of implementing that sale the parties shall do the following:
(a)List the property for sale by public auction, such auction is to occur within four (4) months of the making of these orders at a price to be agreed between the parties and failing such agreement at a price, or at a reserve price, nominated by the President of the New South Wales Division of the Australian Property Institute and his/her nominee;
(b)Forthwith appoint such real estate agent and auctioneer, as the parties may agree and failing agreement within fourteen (14) days, list the property with such agent and auctioneer nominated by the President of the New South Wales Division of the Australian Property Institute (“the Agent”), the costs of and incidental to such appointment to be borne equally by the parties as and when they fall due.
(c)The parties shall each co-operate in every way with the Agent including (without limiting the generality the foregoing):
(i)making the keys available to the Agent;
(ii)allowing inspection of the property at all reasonable times as required by the Agent;
(iii)not do or say anything to hinder or prevent a sale being effected;
(iv)ensuring that the property including the grounds are in a neat, fit state of repair and tidy condition at the time of the inspection by the Agent and prospective purchasers;
(v)sign all documents as requested by the Agent in relation to the listing for sale of the property except contracts or agreements for sale which have not been authorised by the parties’ solicitors;
(vi)the parties shall each execute the contract for sale on the forms prepared by the solicitors having the conduct of the sale at a price or reserve price agreed upon by the parties or in the absence of any agreement at or above the price nominated by the President of New South Wales Division of the Australian Property Institute;
(vii)the parties shall do all things and sign all documents necessary to instruct a solicitor or licensed conveyancer, within seven (7) days of the date of these orders, to have the primary conduct of the sale on behalf of both parties and, failing agreement, such solicitor or conveyancer as nominated by the President of the New South Wales Division of the Australian Property Institute.
(viii)that any costs payable to the solicitors will be and form part of the legal costs of the sale to be deducted from the proceeds of sale.
(ix)neither party may confer upon any agent without the consent of the other party any right, or sole or exclusive agency in respect to the property or to any commission.
(d)That the husband is to vacate the Suburb G property at least seven (7) days prior to settlement.
(e) The proceeds of the sale shall be disbursed as follows:
(i)in payment of the usual costs associated with such sale including Agent’s commission, legal costs and disbursements;
(ii)in discharge of any mortgage or other encumbrances held over the property;
(iii)in discharge of any capital gains tax liability incurred on the sale of the property (and for the purpose of effecting such a payment the solicitor acting on the conveyance for the parties shall calculate and retain a sum sufficient for payment of the Capital Gains Tax);
(iv)the balance is to be distributed, as to 71 per cent to the wife and 29 per cent to the husband.
That wife’s application for a lump sum payment of spousal maintenance is dismissed.
That other than as provided by these orders, the parties shall retain to the exclusion of the other, all property in their sole name, possession and control, including their superannuation entitlements.
The parties shall indemnify the other and keep the other forever indemnified and shall be solely liable for all debts in their sole name or for which they are jointly liable with any other person and the husband is to indemnify the wife against any liability to Credit Corporation Limited, Alphera Finance Limited Commonwealth Bank of Australia other than in relation to account …, National Australia Bank other than the account in her name, Macquarie Bank, Citibank or Westpac Banking Corporation.
Pursuant to section 117 of the Child Support (Assessment) Act 1989 (Cth), there be a departure from the administrative assessment of child support payable by the husband to the wife in respect of the children as follows:
(a)From the date of this order, the weekly rate of periodic child support payable by the husband to the wife in respect of the children be $500 per child; and
(b)From the date of this order, by way of non-periodic child support, the husband pay 100 per cent of the costs of:
(i)School fees and the costs of all school uniforms, stationery, books, excursions and all other associated costs with the childrens’ attendance at school;
(ii)The cost of participation by each of the children in swimming and one winter and one summer sport and any other agreed extra-curricular activities of the children;
(iii)Monthly premiums for private health insurance for the children;
(iv)Gap medical expenses for each of the children.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Riddler & Riddler and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: WOC 302 of 2013

Ms A Riddler

Applicant

And

Mr B Riddler

1^st Respondent

And

Mr C Riddler
2^nd Respondent

And

Ms D Riddler
3^rd Respondent

REASONS FOR JUDGMENT

Introduction

In these proceedings Ms A Riddler (“the wife”) seeks orders for a property settlement, payment of spousal maintenance and an order for payment of child support by way of departure from the administrative assessment against Mr B Riddler (“the husband”).
The major issue in the proceedings was whether or not a property at F Street, Suburb G (“Suburb G property”), which is presently owned by the husband, is in fact beneficially owned by the husband or, as the husband asserted, beneficially owned by his parents Mr C Riddler and Ms D Riddler, who are the second and third respondents to the proceedings. Without intending any disrespect I shall refer to them, and to their other son Mr H Riddler, by their first names.

Background

The husband was born in 1965 and is presently aged 49. The wife was born in 1972 and is presently aged 42. The husband and wife met in 1994 and commenced to live together in 1997 at a rental property in Suburb I.
In March 1999 the husband purchased a house at Suburb J (“Suburb J property”) in his sole name. The wife ceased her employment in child care to manage renovations for the house.
The husband and wife were married in 1999.
In approximately 2000 the husband began working for K Pty Ltd.
There are two children of the marriage. L was born in 2001 and M was born in 2004.
In 2006 the husband established a business of his own called “N Pty Ltd”. It was not successful.
On 15 July 2009 the Suburb J property was sold for $1 800 000 due to financial difficulties. After the payment of the secured debt the husband received $350 000 which was subsequently spent on living expenses. The parties moved to rented accommodation at O Street, Suburb P.
From that time until the present the parties have been substantially supported by loans and gifts from each of their parents. The husband commenced to develop his own consultancy business and in March 2012 the wife began working in a casual position as a retailer.
On 23 November 2010 the Suburb G property was acquired. It is owned by E Property. Suburb G was acquired by the husband acquiring 5 700 shares in that company which entitled him to the possession of that unit. The purchase price of $560 000 was entirely provided by Mr C Riddler.
The exact circumstances of the purchase of the property are disputed by the parties and it will be necessary to return to this matter shortly.
In January 2013 the wife moved into the Suburb G property with the children and the husband followed. The husband and wife separated on 27 March 2013 with the wife leaving the Suburb G property with the children and moving to her Aunt’s property at Suburb Q. Very shortly thereafter the wife’s parents purchased R Street, Suburb S (“Suburb S property”) and the wife and the children have resided there rent free ever since. The wife has been substantially supported by her parents since that time.
Since then there have been interim proceedings between the parties as to the parenting of their children. The result of those proceedings is that, at least for the present, the children live substantially with their mother.

Applicable Principles

According to guidelines established through a series of leading decisions the court is required to determine the following matters:
a)The assets, liabilities and financial resources of the parties to the marriage.
b)Having regard to the breakdown of the marriage if any, is it just and equitable to consider whether the alteration of the parties’ interests in their properties is just and equal.
c)All relevant contributions of each of the parties.
d)The matters in paragraphs (a) – (c) of s 79(4), must be identified and weighed against each other.
e)The matters in paragraphs (d)-(g) of s 79(4), particularly paragraph (e) which takes up, by reference, the provisions of s 75(2) must be considered and a determination made as to what, if any, alterations should be made to the entitlements of the parties earlier assessed on account of their contributions.
An order under s 79 must not be made unless the court is satisfied in all of the circumstances, it is just and equitable to make the order.

The Country T and Country U Properties

In September 1994 Mr C and Ms D purchased a property at V Street, W resort in Country T (“Country T property”).
In April 2003 Mr C and Ms D transferred the property to the husband and his brother Mr H subject to an usufruct interest. Thus the property was held by the husband and Mr H as proprietors but subject to the interest of Mr C and Ms D as usufructaries.
That the Country T property was transferred to the husband and Mr H subject to the rights of their parents as usufructaries is made clear by the expert opinion of Mr X, a Country T Notary. Monsieur X described the rights of the usufructaries as follows:
As such they have the right to use the property, occupy it for free without ever being able to be excluded from it by the bare–owners. In addition to this right of use, usufruct also allows to rent the property (signature of any lease) and to receive the rental payments.
However, the one who holds the usufruct rights (l’usufruitier) does not have the right to sell the property. This right belongs to the bare owner.
Those who hold the usufruct rights have a life estate (droit viager), which will extend up to the death of the surviving spouse. Effectively, with the title of Deed of Gift of April 8, 2003 the reversion of usufruct was specified such that the surviving spouse would then be able to occupy the property alone and to receive the totality of the rental of it.
…
The role of the bare owners ([Mr B Riddler] and [Mr H Riddler]) is to take possession of the property only from the day of the death of [Mr. and Mrs Mr C Riddler]. They have the right to sell and give away the property, but only the bare – property.
…
In addition [Mr H Riddler and Mr B Riddler] are in joint possession, each of half of the property.
The legal owners in joint possession have competing rights of the same kind on the same property without it being possible to divide the lots between them.
…
From the foregoing, there is the consequence that [Mr B Riddler] alone cannot sell the totality of the property. The RIDDLER consorts as a whole must agree to sell the full ownership (or freehold) of the property.
(Annexure A, affidavit of Mr X sworn 29 August 2014)
Monsieur X also advised that should, for example, the husband wish to sell his interest in the bare property (which he thought was unlikely because it was improbable anyone would pay for such a title) his brother had a right of pre-emption on the sale.
Monsieur X also indicated that it was possible for the parties to sell the property and distribute the proceeds of sale amongst themselves. In that case the parties can either opt for a distribution “according to the usufruct kept by the [Country T] authorities in order to determine their proportion” or can adopt a distribution according to an “economic” usufruct whereby the value of the usufruct interest is calculated according to the property’s rate of profitability, the usufructuary’s health and life expectancy.
In 2010 Mr C and Ms D decided to sell the Country T property and to seek smaller accommodation in the same area. Accordingly instructions were given for agents to sell the property. It took some three years for an offer to be received and in July 2013 the property was sold. The sale was effected by Mr C and Ms D receiving a payment of €430 000 together with a new property in exchange being Y Street, W Resort (“new Country T property”). Again the new property was registered in the name of the husband and Mr H with Mr C and Ms D as the usufructuaries.
The proceeds of sale were distributed in accordance with the taxation usufruct so that Mr C and Ms D each received 15 per cent of the net proceeds after the payment of taxes and the husband and Mr H received 35 per cent. The husband’s share of the proceeds was €120 820.26. This is slightly less than his brother received due to there being a higher tax impost on a non-resident of the European Union.
This sum was deposited into the Country T bank account of Mr H in March 2014.
From this account the husband directed his brother to pay €60 000 to his father, ostensibly by way of repayment of loans. In cross examination, neither the husband nor Mr C could identify the advances which were said to be repaid by this payment. Mr C conceded that the repayment included repayment of an advance of $45 000 which he conceded he had forgiven prior to the payment. That advance was made in May 2011 and expressly forgiven in late 2012. Mr C then gave evidence that between 2013 and 2014 he provided to the husband 27 separate advances totalling $62 200. Mr C Riddler said in his affidavit at [118]:
As at March 2014 I believe [Mr B] owed me the sum of approximately £60 000.
(Affidavit of Mr C Riddler, affirmed 15 October 2014)
Thus the advance is variously described as being in Australian dollars, euros and pounds, although in approximately the same sum. Having regard to the differing exchange rates that, cannot, of course be a reference to the same amount.
Mr C did provide some money to the husband. The mechanism by which this was done was that Mr C held a bank account in Sydney. He transferred the above funds to that account. The husband was a signatory to that account and withdrew funds from it as he needed it. However, not all of the funds withdrawn from that account were for the husband’s benefit as all the necessary outgoings for the Suburb G property, including rates and other necessary repairs and other expenses, were also paid from that account. Mr C, not being responsible for the making of those payments, was not able to say which of the withdrawals from that account were for the husband’s benefit and which were for his benefit as owner of the unit. The husband, who actually made the withdrawals, was also unable to assist. There is no evidence as to whether any particular payment or transfer was for Mr C’s benefit or the husband’s. Thus the precise indebtedness, if any, of the husband to Mr C as at March 2014 is impossible to ascertain. If, as was conceded by Mr C, some $45 000 was repaid mistakenly it would seem that the actual indebtedness was very much less than £60 000.
In those circumstances it is the wife’s submission that the payment ought to be added back to the list of matrimonial assets or, alternatively, taken into account under s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”) because the husband was disposing of matrimonial property where there was, in fact, no underlying indebtedness.
The husband’s interest in the new Country T property was acquired during the relationship. He either gave part of that interest away to Mr C or, to the extent he did not, used it to pay post-separation living expenses. There is, therefore, force in the wife’s submission.
It is important, however, to reiterate that neither the husband nor the wife made any financial or non-financial contribution to the acquisition of the Country T property or its upkeep. Their interest in the Country T property was entirely a gift of Mr C and Ms D Riddler. Neither the husband nor Mr H paid anything towards the outgoings of the Country T property. Nonetheless, at least $45,000 of the husband’s property was given to Mr C and it will be necessary to take that into account in due course.

Mr H retains the remaining €60 000. The husband described it in his financial statement as an asset of $60 000 (sic). It is accordingly an asset of the husband’s that will need to be taken into account.
This is so notwithstanding that the husband has said that he subsequently borrowed $84 000 from Mr H. The husband was adamant that this was a borrowing and not a repayment of the debt. That is a post-separation borrowing for his own benefit so will not appear in the parties’ list of assets and liabilities.
A valuation of the new Country T property was conducted. It was said to have a value of €270 000. If it were sold immediately at that price, the husband would be entitled to 35 per cent of the net sale price on the basis of a taxation usufruct. 35 per cent of the value of the property is €94 500.
The wife sought to include this interest as an asset of the parties. I accept the submission of the husband that it is not an asset of the parties but a financial resource of his. This is because the husband’s interest in the property, so valued, can only be realised upon a sale of the property. A sale of the whole property requires the consent of the other owner, Mr H, and the usufructuaries, Ms D and Mr C. It is clear, from correspondence which will be discussed shortly, that, at least, Mr C is prepared to do what he can to ensure that the property available to be divided between the husband and the wife is as limited as possible. I am confident that he would not agree to any course of action, such as a realisation of the owners’ interests in the new Country T property, that would make available to the husband further assets capable of being divided between the husband and the wife.
Another way to look at it is that the husband presently has a bare property interest in the new Country T property which is, for reasons given earlier, essentially valueless. At some time in the future, upon the death of his parents, or by their agreement, he will be become entitled to a half share or whatever share arises by operation of the law upon the property’s sale. He has an expectation of an interest as co-owner unfettered by usufruct, contingent upon the death of both of his parents.
None of these, however, would assist the husband realising any interest in the property. It is a resource of value but when it will move from being such a resource to an asset capable of being dealt with by him as he sees fit is entirely unknown.
On 30 July 1999 a property at Y Street, Z Town, Country U (“Country U property”) was acquired. The funds for the purchase of the property were provided by Mr C and Ms D but the registered title holders were their sons, the husband and Mr H. Again the property was acquired subject to usufruct rights with the usufructuaries being Mr C and Ms D.
Their uncontested evidence was that neither the husband nor Mr H had had any dealings with the Country U property, received any income from the property or paid any funds for the property.
The expert evidence establishes that the law relating to usufruct in Country U is essentially the same as that in Country T. Accordingly the discussion as to usufruct above applies equally to this property.
Again, the wife had this property valued. The value of the property is €488 115. Applying Country U law, if the property were sold today, the husband would be entitled to a 37.5 per cent interest or €183 043.
Again the wife sought to have included as an asset of the husband’s this interest. For the reasons above in relation to the Country T property it is not presently an asset of value but rather a financial resource to which regard will need to be had in due course.

Who is the Beneficial Owner of the Suburb G Property

It is not controversial that the Suburb G property was acquired by funds provided entirely by Mr C and Ms D. It is registered in their son’s name. In those circumstances the presumption of advancement applies. This presumption is that by placing the property in the name of their son, Mr C and Ms D intended that he should have the beneficial interest as well as the legal interest in the property.
The presumption is rebuttable by evidence that establishes that those who provided the purchase funds had a different intention. Calverleyv Green (1984) 155 CLR 242 per Gibbs CJ at [9]:
It then becomes necessary to apply the principle enunciated by Dixon C.J. in Wirth v. Wirth [43] to the case in which a man purchases property in the name of a woman with whom he is living in a de facto relationship. I do not regard Napier v. Public Trustee (W.A.) [44] as concluding the question in favour of the view that a presumption of advancement can never arise in such a case. In that case Aickin J. [45] , with whom Mason, Murphy and Wilson JJ. agreed, said that it is “well established that no presumption of advancement arises in favour of a de facto wife”. However, the question was not argued in that case and it was not necessary to decide it for the purposes of the decision; I left the question open. The question is whether the relationship which exists between two persons living in a de facto relationship makes it more probable than not that a gift was intended when property was purchased by one in the name of the other. The answer that will be given to that question will not necessarily be the same as that which would be given if the question were asked concerning a man and his mistress who were not living in such a relationship. The relationship in question is one which has proved itself to have an apparent permanence, and in which the parties live together, and represent themselves to others, as man and wife. It is true that in some cases a person may maintain a de facto relationship for the very purpose of preventing the other party to the relationship from obtaining any right or claim to property, but the question now asked arises only when the party has taken the deliberate step of purchasing property in the name of the other. Once one rejects the test applied in Soar v. Foster as too narrow, and rejects any notion of moral disapproval, such as is suggested in Rider v. Kidder [46] , as inappropriate to the resolution of disputes as to property in the twentieth century, it seems natural to conclude that a man who puts property in the name of a woman with whom he is living in a de facto relationship does so because he intends her to have a beneficial interest, and that a presumption of advancement is raised. Cases such as Soar v. Foster, where the relationship was based on an invalid marriage ceremony, or Murdock v. Aherne, where the relationship was founded on a bigamous marriage, would be a fortiori. For these reasons I consider that there was a presumption of advancement in the present case.
Care must be taken as to what evidence regard may be had for the purpose of ascertaining that intention.
In Charles Marshall Pty Limited v Grimsley [1956] HCA 28; (1956) 95 CLR 353 the court said at [11]:
Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase (in this case before or at the time of the acquisition of the shares by allotment) or so immediately thereafter as to constitute a part of the transaction.
Accordingly it is important to look at what the parties said and did at the time of the acquisition of the Suburb G property and any admissions they may have made subsequently against their interest. However, other statements made by Mr C and Ms D that were made after the property was acquired are inadmissible.
Mr C described the acquisition thus at [41] – [54]:
41.In or around 2009 my wife and I agreed to purchase a property in Sydney for the purposes of visiting [Ms A], [Mr B] and our grandchildren.
42.Given the distance and expense to travel to Sydney my wife and I agreed that it would make sense to have our own place to stay for a longer period of time and not intrude on [Mr B] and Ms A in their home.
43.I discussed the purchase with a solicitor in Sydney whose name I cannot recall in or around 2009 who said to me words to the effect of “As a foreign investor you can only buy a new property and not an existing one. If you have a son that is a resident or citizen I suggest that you purchase the property in his name and take out a lease to protect your interests.”
44.The unit at [E Property] was not a new property and from my discussion with the solicitor referred to above I believe that I could not purchase the property in my name or that of my wife because we were not permanent residents.
45.In or around 2009 I had a discussion with [Mr B] as follows:
I said:I have spoken with a solicitor in Sydney and he has advised me that we cannot purchase existing property in Sydney because we are not citizens or residents. We would have to purchase new property. I advised him our son is a citizen and he suggested the property could be purchased in your name.
[Mr B] said:Well why don’t you do that. Why not purchase it in my name?
I said:I think that’s our only option.
46.In or around September 2010 I asked [Mr B] to look for a suitable one bedroom property for my wife and I. At the same time [Mr B] and I had a conversation to the effect of:
I said:Can you find a solicitor who will look after the legal process?
[Mr B] said:Yes, I can do that.
I said:We want to be able to stay there when we come down but since it will be vacant most of the time we will want you to manage the property, find a tenant so we may receive the rental income.
[Mr B] said:Ok.
51.On 12 October 2010 I instructed my son [Mr B] to attend the public auction and bid on [E Property]. Prior to bidding in or around October 2010 I said to [Mr B] words to the effect of “I don’t wish to pay more than $560,000, so make sure you don’t go over that amount.”
52.Prior to the auction on 12 October 2010 I had a conversation with [Mr B] to the effect of:
[Mr B] said:The property is purchased under company title and the board needs to approve any tenants. I am not sure if this is a good property to purchase because I have gone through the documents and I have read that if I become the registered owner I cannot apply for a tenant to reside in the property and I must own the property for 12 months.”
I said:This wouldn’t work as we want to come down in December and we wouldn’t even be able to live in our own unit.
[Mr B] said:Let me see what I can do, I’ll discuss it with the agent.”
53.Several days later [Mr B] contacted me again and a conversation took place to the effect of:
[Mr B] said:I have spoken to the agent and they have advised me that they are likely to revise those rules anyway because they’re over 10 years old and that it should be fine to gain approval for you and mum to lease the property under 12 months as the board will be made aware of our situation.
I said:Ok, that’s great, good luck at auction.
54.On 12 October 2010 I had a conversation with Mr B to the effect of:
[Mr B]:Congratulations, you now own an apartment in Sydney.
I said:Delighted, we are very pleased. What did we get it for?
[Mr B]:Five hundred and sixty, it was meant to be.
(Affidavit of Mr C Riddler, affirmed 15 October 2014)
Ms D described the purchase thus at [21] – [24]:
21.In 2010 my husband and I decided to purchase a property in Sydney so that we could visit more often. At the time we planned to visit for 3 months in each year, however due to health problems this has not transpired.
22.[Mr B] and [Ms A] sent us photos and video of the property and my husband and I were very excited and grateful for their assistance since we could not inspect the property ourselves.
23.My husband organised [Mr B] to purchase the property on our behalf, however in or around late 2010 my husband said to me words to the effect of “I’ve spoken to a lawyer, we cannot invest in Sydney unless we buy a new property. The only thing we can do is put it in [Mr B’s] name. I will speak to a lawyer in Sydney, maybe there is a way we can legally secure our interests”.
24.My husband took care of all of the legalities and purchase.
(Affidavit of Ms D Riddler, sworn 16 September 2014)
None of the above was recorded in any document.
The husband arranged for a solicitor, Mr AA, to act on the conveyance. It was Mr AA’s evidence that he received instructions only from the husband, did not at any time speak to Mr C or Ms D and only communicated on one occasion by email with Mr C.
Mr AA, however, did not have copies of any emails relating to the transaction. He said it was his practice to copy all emails he sent in relation to a purchase to his clients and therefore he did not at any time print copies of the emails out and place them with the file. He said that all of the emails relating to the acquisition of this property in his hands were lost due to a computer virus.
Mr AA said his instructions from the husband were that he intended to purchase a property at Suburb G. He said:
It was my clear recollection, to, that there are – that the purchase – whenever somebody instructs me on a purchase, the next question is always how are you funding the purchase? And the instruction was that this is going to be – it’s not going to be funded by a bank, it will be funded by a loan from [Mr C] and – well, [Mr C Riddler], [Ms D Riddler], the parents. The instructions were so that they are supposed to be able to live in the property every time they are in Australia. And the instructions is to find ways to secure money, … funds, to assist in the purchase of this property. And that’s the reason why there is a lease for 100 years.
(Transcript of proceedings, 30 September 2014, page 46, lines 20-29)
Mr AA maintained that at all times he understood the husband to be the legal owner of the property and that he had borrowed monies to acquire that interest from his parents.
Shortly after this evidence was given Mr AA altered his evidence to say his understanding was that part of the purchase price was coming by way of a loan from his parents notwithstanding his earlier evidence that:
I am not instructed as to how much money or what else has passed between the parties that’s what I am instructed to do this is what I’ve done.
(Transcript of proceedings, 30 September 2014, page 45, lines 22-23)
Mr AA prepared two documents at the time of or sometime after the completion of the conveyance. One was a Deed of Loan and the other was a 100 year commercial lease for the Suburb G property.
The Deed of Loan is said to be dated 23 November 2010. It is between Mr C and Ms D as the lender and the husband as borrower. In the Deed the husband acknowledged that he received the advance of $120 000, that he would use it predominantly for investment business purposes and that he would repay the principal and interest as set out in the schedule. Clause 8 of the Deed provided:
As security for the performance of the Borrower’s obligations in this Deed, the Borrower agrees to grant the Lender a charge over the property at [F Street, Suburb G] NSW Australia and permits the Lender to place a caveat over that property.
(Annexure E, affidavit of [Mr C Riddler] affirmed 15 October 2014)
Precisely how that was to take place, given that the interest held by the husband was a bundle of shares in E Property, is not entirely clear.
According to the schedule to the Deed the principal advanced was $120 000 and the term as to repayment was:
The Lenders have entered into a lease of [F Street, Suburb G] Australia from the Borrower, such lease to commence from 23 November 2011 (“the Lease”). If the Lenders surrender the Lease at any time prior to the expiry of the Lease, the Principal shall be deemed to be repaid in full.
(Annexure E, affidavit of Mr C Riddler affirmed 15 October 2014)
Clause 12(d) provided:
This Deed contains the entire agreement as between the parties in relation to the subject matter of this Deed and supersedes all previous and prior agreements and representations made.
(Annexure E, affidavit of Mr C Riddler affirmed 15 October 2014)
There was no other provision for repayment.
Although Mr C and Ms D provided all of the purchase price and other costs associated with the acquisition of the Suburb G property, and provided money for it to be furnished, there was no suggestion that there was ever an advance of $120 000 to the husband or any other payment that could be regarded as an advance to him of that sum.
The husband simply could not remember whether he received such an advance or not. He said:
Just wait a moment. Do you recall [Mr C] giving you $120,000 consistent with the deed in November of 2010?‑‑‑I don’t recall.
How could you not recall getting $120,000 from your father when you say you’re down on your knees and your wife spent all your money?‑‑‑In which money are you talking about?
November 2010. The date of the deed?‑‑‑May you just repeat the comment about me being down on my knees in 2010.
Well, your affidavit, sir, tells us about your escalating debt secured over [Suburb J] that went up to $1.4 million and you sold for $1.8 netting $350,000 and your ‑ ‑ ‑?‑‑‑I just said to you ‑ ‑ ‑
Just let me finish?‑‑‑ ‑ ‑ ‑ $45,000 went into the account.
Just let me finish – and your affidavit and cross-examination of my client was to the effect that your wife was a spendthrift?‑‑‑Spendthrift.
So wouldn’t you remember getting $120,000 from your father?‑‑‑Well, look, I said to you earlier I remember getting 45 and then you said I didn’t or it was forgiven or something and I think that was around that time.
Your financial affairs, sir, are just one great mystery to this court, aren’t they?‑‑‑I don’t agree.
HIS HONOUR: But you can’t recall whether or not you got $120,000 from your father four years ago?‑‑‑I’m trying to work out which payment came when from the amounts I just added up, but I know that in that period, there was possibly six or seven hundred thousand transferred.
Well, the short answer is you have no idea; is that right?‑‑‑Pretty much.
(Transcript of proceedings, 1 October 2014, page 138 line 26 to 139 line 9)
Mr AA described his instructions as to the deed thus:
Landlord is described as [Mr B Riddler]. Tenant is [Mr C Riddler]. Term of the agreement is 100 years?‑‑‑Yes.
Who instructed you to prepare that lease?‑‑‑[Mr B Riddler].
And what, were you instructed, was the reason why that lease needed to be prepared?‑‑‑I cannot remember the exact words that were said. I’m just going by recollection. It’s obviously to ensure that the security or tenure for [Mr H] and – sorry, for the tenants.
(Transcript of proceedings, page 44, lines 12-19)
The reference in the Deed to an advance of $120 000 to be used for investment purposes secured over the Suburb G property is consistent with the husband owning the beneficial interest in Suburb G because, if it were otherwise, his parents would simply be taking security over their own property. However, of course, the $120 000 was not advanced. The Deed could have, but did not, record an advance to the husband of the entire purchase price by way of loan. A deed could have provided that notwithstanding the provision of funds to the husband, Mr C and Ms D were to retain their beneficial interest in the property. There is no such deed.
The existing Deed, however, is linked with the lease.
The lease agreement is contained in a standard form Residential Tenancy Agreement between the husband as lessor and Mr C and Ms D as lessees. The term is said to be 100 years commencing on 24 November 2011. Schedule A to the lease the provided:
From 24 November 2011 to 23 November 2040, rent is $1 per annum.
From 24 November 2040, rent is $52,000.00 per annum.
Additional terms – break fee.
41. The tenant agrees, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of $120,000 to the landlord.
Additional terms – automatic surrender on death
46.In the event of death of both tenants prior to the expiry of the Term, the lease is automatically surrendered by the tenants (and/or their legal personal representative) to the landlord.
(Annexure E, affidavit of Mr C Riddler, affirmed 16 September 2014)

Mr C said of these two agreements:
67.No money ever exchanged hands and I believed that the deed of loan was signed by all the parties to reflect the legal position that my wife and I owned the premises.
68.It was my understanding at the time that the lease worked in the same manner and capacity as an “usu fruct” right to reside in the property until the last of my wife or I die.
The apparent reason for the delay in the commencement of the 100 year lease was that the articles of E Property precluded an owner from letting their apartment for 12 months after the purchase.
Mr AA said he created the 100 year lease because:
The advice for tenure over the long term and the whole idea was basically to protect the money that’s loaned to [Mr B]. My clear instructions was that de facto – wise this property belongs to [Mr H] and [Ms D]
De facto wife?- - - For all practical purposes, this property is bought for the enjoyment of [Mr B’s] parents.
(Transcript of proceedings, 30 September 2014, page 50, lines 41-47)
When asked by counsel how the idea for a 100 year lease came about when the husband was simply borrowing the funds from his parents, Mr AA replied that he had no idea.
It is difficult to see what reliance was placed by the parties on the 100 year lease because, as Mr C said:
69.Shortly after signing the agreement [Mr AA] said to me words to the effect of “The tenancy agreement cannot be lodged as [E Property] is still subject to a restriction which only allows leasing following a 12 month ownership by [Mr B]”. Accordingly, in due course, we received a second lease document and signed this document in 2012.
(Affidavit of Mr C Riddler, affirmed 15 October 2014)
In cross examination Mr AA said that he did not need to register the lease as there was an exemption for registration if the lease exceeded 99 years. He was unable however to point to the legislation that so provided.
On 28 June 2011 the husband wrote to Mr AA asking how best to approach the board of E Property to gain approval for the lease to commence in November 2011.
On 20 July 2011 Mr AA replied. He advised that at the time of the purchase the board’s policy on renting was that renting was permitted after ownership of 12 months. Subsequent to the purchase, however, the board changed its policy requiring there to be evidence of 12 months residence prior to the owners renting the property as opposed to 12 months ownership.
Mr AA’s proposals for dealing with this issue were:
f)To canvass enough support from all other unit owners to change the renting policy; or
g)To take legal action pursuant to the Corporations Act 2001(Cth) alleging that the renting policy was an oppression of the minority.
It is not suggested that either of those suggested courses of action was pursued. The parties took no steps to give effect to the lease that had been prepared. Ultimately, a new lease was prepared.
The first lease is most curious. It does not secure repayment of the loan. It grants a right of occupation for an extraordinarily long time, given the age of the parents, with terms calculated to ensure that a liability of $120 000 would arise between the parents and the husband which would be offset by his obligation under the Deed.
It all seems a contrivance to ensure some sort of right of occupation for the parents in the property. Tellingly, if it is a genuine lease, this is consistent with the evidence of Mr C that he was endeavouring to acquire a right akin to a “usufruct” over the property. Such a concept is unknown in Australian law but Mr C was seemingly trying to achieve the same thing by such means as were available to him.
This is a double edged sword. Whilst as an usufructuary, or more accurately a person with the benefit of a long term lease with negligible rent, Mr C and Ms D would be entitled to the use of the property and the benefit of any sub-letting, they would not be the owners of the property. That is to say the husband would be the owner of the property subject to the rights of his parents as, they were hoping to be, de facto usufructuaries. That is inconsistent with intending to retain the entire beneficial interest in the property.
It is to be noted that neither of the counsel who appeared for the husband or for Mr C and Ms D sought to place any weight upon either the Deed of Loan or the 100 year lease.
The new lease is headed ‘Residential Tenancy Agreement’ and it is said to be made on 28 July 2012 with the husband as the landlord and Mr C and Ms D as the tenants. The lease is for a period of 20 years commencing on 28 July 2012. The rent was $100 per annum.
Mr AA was adamant that at the time instructions were given to him to prepare the new lease the husband told him that he wanted the lease secured on the property for the benefit of his father and mother.
It was the wife’s case that these documents and, in particular the lease dated 2012, were devices aimed at defeating any claim she might have in relation to the property. In doing so she relied upon a number of emails sent by Mr C to various persons. These emails also contain a number of statements which she said were clearly admissions against interest by Mr C and, by implication, Ms D. It will be necessary to set out the text of some of these emails in full.
On 18 August 2013 Mr C sent the following email to the husband, Ms D and Mr H:
Hi [Mr B]
As you know we are in [Z Town] with [Mr H] and family. Our conversation recently turned to your situation and its implication for us and our futures.
Our first conclusion was that after 12 months uninterrupted separation either party is entitled to a divorce. Please confirm this and give us the earliest date on which proceedings can begin.
Our second conclusion was that [Ms A] would begin proceedings as soon as possible and would claim half your assets. The court would require you to list your assets which at present include [E Property], and half the chalet and the villa. You and I are exchanging messages about the lease of [E Property] and altho’ that has been delayed many times there is still sufficient time to ensure that it is leased to us for many years. If it was only a short lease then [Ms A] would place a compulsory sale order for the date of lease expiry. It follows that if you can not arrange a very long lease then you should sell it and return the funds to us. We believe that you should do one or other before the end of 2013.
Turning to the villa. You may remember that at time of purchase in 1999 we gave it to you and [Mr H] but with lifetime tenancy for [Ms D] and self. We used to joke about the fact that you could sell it but the buyer could not use it until the last of us passes.
We know that [Ms A] is well aware of the details of this arrangement and of the matching arrangement which we put in place for the chalet in 2003.
[Ms A] would ask the court to put a sale order on the villa and that would result in a forced auction. The sale price would be very low as a buyer would know that we could not be evicted for some years and thereafter [Mr H] might not agree to sell. However to prevent sale at a negligible price, [Ms A] might arrange a modest bid.
To prevent the forgoing horrors we suggest that you now agree to give your half to [Mr H], so that we can begin to find out how that can be legalised.
We are hoping to sign a sale promise next week which will cover the exchange of the chalet for a flat and cash at the end of October. You need to think about what happens to your share of the cash which would more than clear your debts. The flat would automatically be owned in the same way as the chalet but we know that you could relinquish your share, soon after acquiring it for a tax payment of about £9000.
To summarise, do you agree to:-
1.Arrange a good long lease of [E Property] to us before Xmas or alternatively sell it and return the funds.
2.Relinquish your half of the villa
3.Relinquish your half of the chalet or if it is exchanged, then your half of the flat
Rest assured that it would be [Mr H’s] intention to restore your share of these assets when ever your circumstance render that safe.
(We guess that [Ms A] may have inherited from her Grandad in which case she is doubtless giving her assets away)
dad
(Annexure D, affidavit of Ms A Riddler, sworn 1 September 2014)
The letter raises two issues. The first is the regrettable suggestion that the husband’s interest in the properties in Country T and Country U be transferred to Mr H, hidden by him and then returned once the proceedings were over. This establishes that Mr C was prepared to do what he could to remove the husband’s assets from the reach of the wife.
The second issue deals with the Suburb G property. The phrase “the court would require you to list your assets which at present include E Property, and half the chalet and villa” clearly indicates that the husband has an asset in E Property (Suburb G property) in the same way that he has an asset in his interest in the chalet in Country T and the villa in Country U. There is no suggestion that either of those properties is held on trust for Mr C and Ms D by the registered owners, although the European properties are subject to usufruct.
The aim of the letter is to clearly remove as many properties as possible from the area of dispute between the husband and the wife. However, if, in fact, the Suburb G property was held on trust for Mr C and Ms D the establishment of such a relationship would remove that property from the area of dispute as the property would not be owned by the husband. The email does not say that. I regard the third paragraph of the above email as a clear admission by Mr C that the husband was the beneficial owner of E Property (Suburb G property), that he was not holding it on trust for his parents and was thus required to include it in his list of assets.
The email then goes on to propose the creation of a long term lease in order to defeat any claim that the wife may make against the property. The alternative proposal is the sale of the property and the “return of the funds to us”. The aim of the long term lease or sale and return of funds is clearly to defeat the wife’s claim against the property. The fact that such steps are proposed is a clear admission by Mr C that absent one of those two steps being taken the wife would have a claim against the property. She could only have a claim against the property if the husband is the beneficial owner of the property.
This email as I have said was sent to Ms D. There is no suggestion by her that she disagreed with the contents at the time although in cross examination she said that she left financial dealings to her husband.
Finally, this letter creates significant doubt over the date of the creation of the 20 year lease referred to earlier in these proceedings. The lease is dated 28 July 2012. The email was written on 18 August 2013. If there was in fact a 20 year lease in operation at the date of the email there would be no need for Mr C to suggest that a very long lease should be obtained prior to the end of 2013. It suggests very strongly that the 20 year lease was created after this date. It also confirms that no one regarded the 100 year lease as having any effect whatsoever.
In his response the husband said:
As you know, she [the wife] wrote to you about school fees in a last ditched effort. In one of your responses you clearly stated that [E Property] was a gift. You didn’t mention the loan or the lease but she is well aware of each.
(Annexure D, affidavit of Ms A Riddler, sworn 1 September 2014)
On 19 August 2013 Mr C sent the following email to the husband, Ms D and Mr H:
We gave the villa to you two on 31.07.1999 before you married [Ms A]. Please find out if it would be counted as an asset for divorce settlement. and also check on what would happen if you gave it away in November 2013 … would it still be counted as your asset in 2014?
(Annexure D, affidavit of Ms A Riddler, sworn 1 September 2014)
In an another email on 19 August 2013 Mr C Riddler said:
Hallo [Mr B]
Thanks we welcome your response.
The four of us are agreed that we have never discussed these arrangements with [Mr BB] and/or [Ms CC]. Nor have [Ms D], [Mr H] or I discussed them with [Ms A]. However [Ms DD] remembers talking to [Ms A] in Sydney in December 2011 when she seemed well aware of the arrangements.
We will focus on March 27 as we believe that it is the act of separation (not earlier discussions about it) which is the legal basis.
Even if [Ms A] did not know about the arrangements, the divorce process would surely require you to list your assets. You would have to think very carefully about omitting any. You could not credibly have “forgotten” about half a villa. I will research the amounts which you could gift to us or [Mr H], tax fee, which could later be returned to you. I know that the amounts are quite small in Country T and UK. I recall that [Ms EE], our contact at Commbank told me in 2010 that I could gift to you in Australia, whatever was in my account, with no tax liability. Unless your law has changed you could gift / return to me the sale proceeds of [E Property]. Equally if we send you your share of the sale proceeds from the chalet you could also give those to us in Australia.
We wonder if that is not too easy a solution. If you declare in 2014 that have no assets are they not going to ask you to declare what assets you had in 2012? Can they make a claim on assets you have given away? At some time between now and next March you are going to need to choose a lawyer……..
dad
(Annexure D, affidavit of Ms A Riddler, sworn 1 September 2014)
The email clearly proposes that the husband give away his interests in the Country U and Country T properties to avoid a claim being made against them by the wife. This was said to be a preferable course as opposed to the husband simply and deliberately omitting the villa and chalet from the list of assets.
It was submitted by the husband and by the parents that this sentence was not an admission against their interests because it was simply a reference to a return to them of assets that they owned. I do not agree. As far as the European properties were concerned the husband had rights as a bare owner of the properties and a contingent right to a half share.
As far as Suburb G (referred to in the email as E Property) is concerned the words “gift / return to me the sale proceeds of E Property” are entirely inconsistent with the notion that it was their property. If the Suburb G property was, in fact, owned by Mr C and Ms D they could simply demand its return. They would not need to request the husband to give or return to them the sale proceeds. The fact that the gift or return of the sale proceeds lies within his control and not theirs is a clear admission that he was the beneficial owner of the Suburb G property.
I am satisfied by the above email exchange that the 28 July 2012 lease was created some time after this email exchange, that is in or after August 2013. It was clearly created in an attempt to defeat the claims of the wife. In any event, it had that effect.
The fact that the husband and the parents deliberately created such a backdated lease is also a powerful indication that they regarded such a lease as necessary to protect the Suburb G property from the claims of the wife. Such protection would be unnecessary if the property was, in fact, beneficially owned by the parents.
In March 2013 the wife wrote to Mr C and Ms D advising them of the separation and enquiring whether they would be prepared to provide the funds to enable the children to attend FF School. The email reply contained the following:
Our own view which derives principally from discussions with you both, is that after [Mr B] secures employment, the task of clearing your debts which exceeded $110,000 in January and then funding the cost of two separate homes (the offer to use [E Property] rent free was made for 2013) will require all of your available funds well into 2014. We are aware that during your years together there were periods when you enjoyed high levels of income but did not make any savings.
You did not mention [M] and when asked, you said “that would be much later”. What do you intend for [M]? She has always seemed to us to be unusually bright and we wondered whether her tuition was arranged mainly because [L] was having tuition or because she too was falling behind her classmates.
Turning now to your question which is whether we will help, we have to say that we can not at present see how we can do so. In 2010 we decided to fund pensions for our sons by giving them flats to let on condition that we enjoyed the income. As we received no income from [E Property] we decided that it would be right for [Mr H] to keep the income from his [UK] flat. The result is that we have invested $1,200,000 from which we receive no income. This situation reduces our ability to help at present. However [E Property] alone has a rental potential of $30,000 p.a. and when we begin to receive that we should be able to offer some help.
Apart from our own position we established a trust in 1997 to provide help to our sons and their families in situations of need. It actually provides help with [GG’s] fees and is now paying fees for [L] and [M] and also covering the levies at [E Property] and withdrawals by [Mr B]. It is a trust duty to help [Mr B] until he can avail himself of social assistance from the state or secure a salary. These uncertainties need to be resolved before the trustees could consider offering some help.
We would welcome your response in due course.
[Mr C] & [Ms D]
(Annexure Q, affidavit of Ms A Riddler, sworn 1 September 2014)
The second last paragraph contains a clear admission by Mr C and Ms D that the Suburb G property was given to the husband, albeit on the condition that they enjoyed the income.
Mr C tendered a number of emails that passed between him and Michael HH in September 2010 in an attempt to demonstrate that he was intending to retain the beneficial ownership of the property. The husband had sought assistance from Mr HH, as a real estate agent, on the purchase of the Suburb G property.
On 27 September 2010 Mr C wrote to Mr HH, who had advised on the letting potential of the property, the following:
This is a very helpful message and one which would encourage me to pursue this particular property were it not for the twelve month clause. As a non-resident (I am British) I am limited to a three month visa and the prospect of leaving it empty for 9 months whilst paying charges, is not appealing. Is there any possible solution to this.
(Exhibit 25, email sent by Mr C Riddler to Mr HH dated 27 September 2010)
Whilst Mr C submitted strongly this was consistent with Mr C and Ms D retaining the beneficial ownership of the Suburb G property this email is equally consistent with the intention to give the property to the husband but to retain the rental benefits for themselves as they had done with the other properties.
In an email dated 30 January 2012 sent between Mr C and the husband the following appeared:
Hallo [Mr B]
We recently decided to renew our wills and which involves listing our assets, including a loan and a lease at [E Property].
I have the documents which [Mr AA] prepared including the loan agreement but believe that the he never sent a copy of the charge over the property, described in clause 8
8.As security for the performance of the Borrower’s obligations in this Deed, the Borrower agrees to grant to the Lender a charge over the property at [F Street, Suburb G] NSW Australia and permits the Lender to place a caveat over that property.
Please ask him when he sent it and request a copy. If, for any reason he “overlooked” it, please ask him to process it now and advise how long it will take.
I would welcome a copy of what you send him.
love
dad
(Exhibit 8, email sent by Mr C Riddler to Mr B Riddler dated 30 January 2012)

On 2 July 2014, pursuant to orders made by me on 25 June 2014, the husband provided to the wife details of the sale of the Country T property and advised the wife that the husband had received the sum of €120 820. The husband did not advise the wife then that he had already paid €60 000 to his father.
Thus it was on 4 July 2014 I made an order restraining the husband from dealing with the sum of €120 820 without first giving seven days’ notice in writing to the wife’s solicitor.
The husband submitted he was not in breach of this order because he had made the payment before the order was made. However it would appear that he was in breach of the order of Loughnan J made on 9 October 2013. In his affidavit the husband said:
81.I considered this money to belong to my parents so I did not think that I had breached Court orders.
(Affidavit of [Mr B Riddler], sworn 18 September 2015)
When asked about that statement in cross-examination the husband said:
Did you believe at the time of the injunctions that you did not have an interest in the chalet?---I knew there was an interest I didn’t know how much.
Well, why would you say you considered this money to belong to my parents?--- I didn’t really understand what they were up to. They were doing a trade in and I always felt that those properties were, you know, they were always theirs. That’s where they live.
(Transcript of proceedings, 1 October 2014, page 140, lines 14-20)
It is impossible to reconcile that evidence with his evidence that paying part of that sum to his father was a repayment of a loan.
In 1999 three paintings were purchased. The husband said he purchased them for about $5 000.
The husband deposed:
49.After separation I was short of money and I needed to pay bills so I sold them for approximately $24 000 to a third party who repaid some debt and expenses for me. I did not receive any funds directly.
(Affidavit of Mr B Riddler, sworn 18 September 2015)
There is no evidence as to what those debts and expenses were and whether or not they were pre or post separation debts. In those circumstances the only finding that can be made is that the husband has had the use of assets that would have otherwise been available for distribution to a value of $24 000.
I have already referred to the €60 000 paid to Mr C by the husband. Again that sum is a sum which other than for that payment would be available for distribution in these proceedings. There is no satisfactory evidence that establishes that there was a loan being repaid by that payment accordingly it will be necessary to take that sum into account as an asset dealt with by the husband for his benefit.
The wife’s disparity in earning capacity and the wife’s substantial care of the children in the immediate future require an adjustment under s 75(2) in her favour. The husband’s dealing with the proceeds of the paintings and his payment to his father of €60 000 requires a further adjustment in the wife’s favour. Also requiring an adjustment in the wife’s favour is a recognition that the husband has two valuable financial resources in his interests in the villa in Country U and the chalet in Country T. Whilst his interest in those properties might not be realised until the last of his parents dies it is possible that they could be realised at any time with the consent of his parents and his brother.
Finally there is no satisfactory evidence as to the husband’s income or the state of his business. He did say that his taxable income to be the following at [25]:
$119 971 for the financial year 1 July 2009 to 30 June 2010;
$117 202 for the financial year 1 July 2010 to 30 June 2011;
$96 417 for the financial year 1 July 2010 to 30 June 2012; and
$143 177 for the financial year 1 July 2012 to 30 June 2013.
(Affidavit of Mr B Riddler, sworn 18 September 2015)
The husband estimated his taxable income for 2014 financial year to be about $80 000. How he could do so in light of the evidence referred to earlier is difficult to understand. It is evident from the above evidence that he has available to him significant funds to spend on discretionary expenditure such as a boat, extensive alcohol purchases and restaurants. He has, effectively, failed to disclose in any meaningful way his business income or the nature of his business. Its value cannot therefore be determined. In those circumstances the court is entitled to be less than cautious as to the manner in which it approaches the case.
Taking all these things into account I am of the view that there should be a 20 per cent adjustment in favour of the wife. Thus the wife will receive 60 per cent of the net assets ($576 026) and the husband 40 per cent ($384 017). The difference is substantial ($192 009) but it is justified by the matters taken into account in paragraphs 217 and 219. I am conscious that the assets retained by the husband include superannuation at $100 000 which the husband will not be able to access for some time.

Form of Orders

The wife sought an order that she receive the Suburb G property. That submission was based upon her balance sheet which included as assets the husband’s interests in the properties in Country T and Country U. Given the findings above that is not possible and it will have to be sold.
Leaving aside the Suburb G property for the moment the parties will receive and be liable for the following:
Wife:ANZ account  $445
Contents  $4 000
Jewellery  $1 000
Superannuation                  $2 226
CBA account                 ($1 127)
Net total =  $6 544
Husband:CBA account   $2 400
Motor vehicle 1              $23 650
Contents   $4 000
Computer/phone               $2 000
Debt from Mr H             $88 264
Superannuation             $100 000
Credit Corporation      ($42 125)
Alphera Finance           ($24 690)
Net total =  $153 499
Therefore from the Suburb G property the wife needs to receive $569 482 (576 026 – 6 544) and the husband $230 518 (384 017 – 153 499). $569 482 is 71.2 per cent of $800,000 and $230 518 is 28.8 per cent. Given that Suburb G will have to be sold and its actual sale price and selling costs are unknown the appropriate order is that it be sold and the proceeds divided as to 71 per cent to the wife and 29 per cent to the husband. This will be sufficiently close to give effect to the above findings.
Taking all of the above matters into account, I am satisfied that the orders I propose to make are appropriate, that is to say, just and equitable taking into account all of the matters I have discussed under the heading s 79(4) as set out above. The orders meet, as best they can in the circumstances, the obligation under s 81 finally to determine the financial relationship between the parties and avoid further proceedings between them to the extent possible.

Spousal Maintenance

The wife sought an order for payment of lump sum spousal maintenance in the sum of $250 000.
Although the wife’s expenditure clearly exceeds her income her counsel appropriately conceded that there was no asset available against which such an order could be made. In those circumstances the application must be dismissed.

Child Support Departure Order

The wife sought an order pursuant to s 117 of the Child Support (Assessment) Act 1989 (Cth) (“Child Support Act”) that there be a departure from the administrative assessment of child support payable by the husband to the wife in respect of the children with the order being a payment of $500 per week in respect of each of the children together with all of the costs of sending the children to a private school nominated by the wife, costs of one winter and summer sport, premiums for the private health insurance for the children and gap medical expenses for each of the children.
In his evidence the husband said:
Yes. You understand that my client has an application to vary the quantum of the payment of child support that you currently pay. She wants it increased. Do you understand that? Do you know why we are here, in part?‑‑‑Yes.
And his Honour can assume, can he, that you oppose any increase in child support?‑‑‑No.
Okay. So can his Honour accept that you consider the amount currently assessed to be inadequate?‑‑‑I don’t know.
Do you have a view about the adequacy of the payments that you make at all, given that they are your children?‑‑‑Which payments are you referring to?
Child support payments, sir?‑‑‑The child support payments, I pay what I was asked to pay.
I understand that. Do you have a view as to their adequacy or not?‑‑‑My personal view is they are inadequate for my children.
Right. And is the difficulty that you have in increasing the sum an inability to pay any more?‑‑‑No.
Okay. So you do have a capacity to pay more?‑‑‑Yes.
And have you given any thought to the – what you believe to be the appropriate payment for them?‑‑‑Yes, I have.

And what conclusions did you come to?‑‑‑I can’t remember.
(Transcript of proceedings, 1 October 2014, page 86, lines 20-46)

In submissions the husband’s counsel said of the submissions made on behalf of the wife in relation to child support that much of them were correct but that the husband objected to an order for fees of a specific school as the choice of a specific school is in fact a parenting order and the parenting proceedings are yet to be heard. It was then submitted there were no special circumstances as required in order to found an order under s 117.
It is a little difficult to know what to make of those contradictory submissions.
Section 117(1) of the Child Support Act provides:
Court may make departure order
(1) Where:
(a) application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
The grounds for departure are set out in s 117(2) of the Child Support Act.
There is no doubt that the court has jurisdiction to make such an order because a child support assessment has issued. The approach to be taken, as identified by the Full Court in the marriage of In the Marriage of Gyselman (1991)15 Fam LR 219 is to follow the three step process identified in s 117(1)(b) which is namely:
1.Whether a ground of departure is established if so:
2.Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order
3.Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
It is quite clear that the use of the phrase “special circumstances” was intended to emphasise that the facts of the case must establish something special or out of the ordinary. It is not the intention of the Child Support Act that the court interferes with the administrative formula in the ordinary run of cases.
In the present case it is impossible to determine what is the income of the husband. It is impossible to identify the extent and nature of his business. In those circumstances no reliability can be placed on the husband’s income tax returns or upon statements he might make to the Child Support Agency. Thus his income, property and financial resources and earning capacity are not readily identifiable. He himself concedes that the amount of child support he pays is inadequate and that he had the capacity to pay more.
Further, I have found that the husband has dealt with assets the effect of which is to put them beyond the reach of the wife (the proceeds of the sale of the chalet in Country T) and has financial resources and significant assets abroad.
All these things establish that an administrative assessment of child support would result in an unjust and inequitable determination of a level of financial support to be provided by the husband for the children.
I am satisfied that this case establishes special circumstances as identified by s 117(2)(c) of the Child Support Act.
I now turn to s 117(4) of the Child Support Act. The wife is doing the best she can to maintain the children whereas the husband is making irregular and sporadic payments of child support. Indeed a significant payment was only made immediately prior to the hearing. The wife is receiving an income tested pension which means her income is $615 per week and receives a limited income from her employment. The wife’s evidence is that the costs of the children are $1 138 per week. That includes of course the counselling for M and the special medical expenses in relation to L’s mental health.
The proper needs of the children were identified by the wife in her financial statement and were not challenged in anyway by the husband. As to them going to a private school, the husband agreed in cross examination that he would like the children to be privately educated and indeed he said that he had started paying private school fees and was prepared to pay them until he discovered that his daughter had been withdrawn.
Neither of the children has any income earning capacity, property or financial resources.
I have already described the income, property and financial resources of each of the parents. The income of the wife is very limited. The income of the husband seems to be significantly greater although his precise income is unknown. There is much force in the submission of counsel for the wife that as the husband did not fully and properly disclose his income he now cannot complain about the quantum of any child support order or his ability to pay.
I do not see the making of this order would invoke or cause any hardship. I am satisfied that the order sought by the wife is just and equitable within the meaning of s 117(4) of the Child Support Act.
In dealing with s 117(5) there is no evidence that indicates the making of the order would have any effect on the entitlement of the child or the carer entitled to child support to any income tested pension, allowance or benefit or the rate thereof.
The orders sought by the wife will have each party contributing towards the maintenance of the children according to their relative incomes. Taking all of the above matters into account I am satisfied that it is otherwise proper to make the orders as sought by the wife with the exclusion of the words that give to the wife the entitlement to choose the childrens’ school.

I certify that the preceding two-hundred and forty-five (245) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 27 February 2015.

Associate:

Date: 27 February 2015

[2015] FamCA 436

27 February 2015

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Res Judicata