Rosario and Rosario
[2016] FamCA 170
•22 March 2016
FAMILY COURT OF AUSTRALIA
| ROSARIO & ROSARIO | [2016] FamCA 170 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – Where the husband and wife were married for 31 years and have three adult children –Where the husband refused to fully disclose his financial circumstances – Where the husband withdrew a significant amount of money from joint funds after separation and did not fully disclose how he applied those funds – Where the husband conceded that $495,000 of joint funds was used by him after separation and could not be accounted for, and therefore agreed that this amount should be added back into the property pool – Where the Court found that the husband had exclusive use of at least $666,916 in joint funds after separation – Where that amount was added to the balance sheet as a preliminary distribution to the husband – Where the parties agreed that their contributions were equal to the date of separation –Where the Court found that contributions were equal overall – Where it is appropriate to make a five per cent adjustment in favour of the wife in light of the husband’s deliberate failure to disclose his financial circumstances – Orders made for the wife to retain the matrimonial assets; discharge the husband’s liability over those assets; and pay the sum of $15,000 to the husband. |
| Family Law Act 1975 (Cth) ss 75(2), 79 |
| Cerini & Cerini [1998] FamCA 143 In the Marriage of Coghlan (2005) FLC 93-220 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 In the Marriage of Lenehan (1987) FLC 91-814 In the Marriage of Norbis (1986) 161 CLR 513 |
Robb & Robb (1995) FLC 92-555
Stanford v Stanford (2012) 247 CLR 108
Weir & Weir (1993) FLC 92-338
In the Marriage of Zyk (1995) FLC 92-644
| APPLICANT: | Ms Rosario |
| RESPONDENT: | Mr Rosario |
| FILE NUMBER: | SYC | 1755 | of | 2014 |
| DATE DELIVERED: | 22 March 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATES: | 22 & 23 February 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Williams |
SOLICITOR FOR THE APPLICANT: | Reid Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Conte-Mills |
SOLICITOR FOR THE RESPONDENT: | King Legal |
Orders
Within sixty (60) days of these Orders the husband do all acts and things necessary including signing all documents to transfer to the wife all of his right, title and interest in the following properties:
(a)the property situate at and known as B Street, Suburb C in the State of New South Wales (“Suburb C property”), being more particularly described in Certificate of Title …; and
(b)the property situate at and known as D Street, Suburb E in the State of New South Wales (“Suburb E property”) being more particularly described in Certificate of Title ….
Simultaneously with the Husband’s compliance with Order 1 above the wife shall
(a)pay to the husband or as he may direct, $15,000; and
(b)do all acts and things necessary so as to discharge all of the husband’s liability in respect of the following:
(i)the mortgage registered over the title to the Suburb C property being registered mortgage number …;
(ii)the mortgage registered over the title to the Suburb E property being registered mortgage number ...
In the event that the wife is unable or unwilling to comply with Order 2 the parties shall forthwith upon that default do all things and sign all documents necessary to list for sale any of the properties in respect of which the husband’s liability has not been discharged pursuant to Order 2(b), to sell that property or those properties for the best price reasonably obtainable and after allowance for adjustments and the costs of sale, discharge all liabilities secured on the affected property/ies, pay the husband $15,000 unless that payment has earlier been made and disburse the balance of the net proceeds to the wife.
Within seven (7) days the husband do all acts and things and sign all documents, deeds and instruments that may be necessary so as to transfer to the wife the motor vehicle currently in her possession being motor vehicle registration ...
Save and except for the property and financial resources dealt with pursuant to the terms of these Orders, each party retains as his or her own property absolutely all assets of whatsoever description and wheresoever situate both real and personal of which that party is the legal owner or which is/are in the possession and/or control of the party as at the date of this Order.
Each party shall do and procure the doing of all things and procure the signing of all documents necessary to give full force and effect to the provision of these Orders and in the event either party refuses or neglects to comply with any provision of this Order within fourteen (14) days of a written request to do so, then a Registrar of this Court at Sydney is appointed to execute all documents in the name of that party in order to give validity and operation to this Order.
Save where otherwise noted in these Orders, the wife shall prepare the documentation necessary to give effect to the provisions of these Orders at her cost and further be responsible for the payment of registration fees, if any, in relation to the transfer of the property to her name.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rosario & Rosario 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: SYC1755 of 2014
| Ms Rosario |
Applicant
And
| Mr Rosario |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings in relation to property settlement where the wife seeks that properties at B Street, Suburb C in the State of New South Wales (“Suburb C property”) and D Street, Suburb E in the State of New South Wales (“Suburb E property”) be transferred to her, that she refinance those properties and that otherwise the parties retain what they have and what they owe. The respondent husband seeks that he receive a payment representing half of a net pool of assets, which net pool includes allowance for a preliminary distribution to him of $495,000.
The parties were married for 31 years. Particular issues between the parties involve the extent of an allowance for a preliminary distribution to the husband; a dispute about the fact and import of their respective contributions made after separation; and issues of non-disclosure by the husband.
Applications
The wife sought orders in terms of a Minute provided to the Court and to the solicitor for the husband under cover of a letter dated 25 February 2016 as follows:
1.Within sixty days of these orders, the husband do all acts and things necessary, including signing all documents, to transfer to the wife all of his right, title and interest in the following properties:
(a)the property situated at [B Street, Suburb C] in the State of New South Wales ([Suburb C] Property), being more particularly described in Certificate of Title …; and
(b)the property situated at [D Street, Suburb E] in the State of New South Wales ([Suburb E] Property) being more particularly described in Certificate of Title ….
2.Simultaneously with the Husband’s compliance with Order 1 above the wife shall do all acts and things necessary so as to discharge all of the husband’s liability in respect of the following:
(i)The mortgage registered over the title to the [Suburb C] property being registered mortgage number …;
(ii)The mortgage registered over the title to the [Suburb E] property being registered mortgage number ….
3.Within seven days the husband will do all acts and things and sign all documents, deeds and instruments that may be necessary so as to transfer to the wife the … motor vehicle currently in her possession being motor vehicle registration ...
4. Save and except for the property and financial resources dealt with pursuant to the terms of these orders, each party retains as his or her own property absolutely all assets of whatsoever description and wheresoever situate both real and personal of which that party is the legal owner or which is/are in the possession and/or control of the party as at the date of this Order.
5.That each party do and procure the doing of all things and procure the signing of all documents necessary to give full force and effect to the provision of these Orders and in the event either party refuses or neglects to comply with any provision of this Order within fourteen (14) days of a written request to do so, then a Registrar of this Court at Sydney is appointed to execute all documents in the name of that party and do all acts and things necessary to give validity and operation to this Order.
6.That save where otherwise noted in these Orders, the transferee spouse shall prepare the documentation necessary to give effect to the provisions of these Orders at their costs and further be responsible for the payment of registration fees, if, in relation to the transfer of the property to their name.
7.Costs of and incidental to the proceeding.
The formal application of the husband was for orders in terms of a Minute included in his Case Outline document as follows:
Matrimonial Home:
1.That within 28 days of the making of these orders, both parties take all necessary steps and execute all necessary documents to cause their property situated at [B Street, Suburb C], NSW and being the whole of the land in title reference … to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute of New South Wales or his nominee and that the proceeds of the said sale be disbursed as follows:
(a)Payment of agent's commission and advertising expenses and legal expenses of the sale;
(b)Payment of any monies due and owing to the mortgagee;
(c)The net balance to be divided between the parties as follows:
(i)50% to the applicant; and
(ii)50% to the respondent.
2.That in the event that the property fails to be sold by private treaty within a period of 3 months hereof, then each party take all necessary steps and execute all necessary documents to cause the said property to be sold by auction at the earliest possible date at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:
(i)Payment of agent's commission and advertising expenses and legal expenses of the sale;
(ii)Payment of any monies due and owing to the mortgagee;
(iii)The net balance to be divided between the parties as follows:
a)50% to the applicant; and
b)50% to the respondent.
3.That until the transfer of the property the applicant occupy the property and maintain it and keep it in a clean and tidy condition and facilitate inspections by prospective purchasers.
4.That until the sale of the property the applicant continue to pay as they fall due all regular instalments in respect of the mortgage, council rates and water rates in respect of the property and pay forthwith any arrears in respect of the said instalments.
5.That until the sale of the property the applicant deposit all rental income received from the property into the mortgage account.
6.At any time by agreement either party may acquire the interest of the other party at a price to be agreed.
Investment Property:
7.That within 28 days of the making of these orders, both parties take all necessary steps and execute all necessary documents to cause their property situated at [D Street, Suburb E], NSW and being the whole of the land in title reference … to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute of New South Wales or his nominee and that the proceeds of the said sale be disbursed as follows:
(a)Payment of agent's commission and advertising expenses and legal expenses of the sale;
(b)Payment of any monies due and owing to the mortgagee;
(c)The net balance to be divided between the parties as follows:
(i)50% to the applicant; and
(ii)50% to the respondent.
8.That in the event that the property fails to be sold by private treaty within a period of 3 months hereof, then each party take all necessary steps and execute all necessary documents to cause the said property to be sold by auction at the earliest possible date at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:
(a)Payment of agent's commission and advertising expenses and legal expenses of the sale;
(b)Payment of any monies due and owing to the mortgagee;
(c)The net balance to be divided between the parties as follows:
(i)50% to the applicant; and
(ii)50% to the respondent.
9.At any time by agreement either party may acquire the interest of the other party at a price to be agreed.
10.That the respondent and applicant do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
11.That in the event that either party refuses or neglects to execute any deed or instrument, the registrar of the Family Court of the Sydney Registry be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
Omnibus:
12.That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any moneys under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)Any money standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears;
(c)Each party hereby foregoes any claim they may have to any superannuation benefit that is belonging to or owned by the other save as provided for in these orders;
(d)All insurance policies are to become the sole property of the owner named hereon;
(e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
13.Any joint tenancy of the husband and wife in any real or personal estate is hereby expressly severed.
Spousal Maintenance:
14.That the applicant pay to the respondent by way of lump sum spousal maintenance the sum of $100,000.00 within 14 days of the date of this order.
15.That the payment herein is a payment to which section 77A of the Family Law Act applies and the portion of such payment or the value of the property attributable to the provision of maintenance is $100,000.00.
Compensation Sum:
16.That the applicant pay to the respondent by way of lump sum compensation in the amount of $200,000 within 14 days of the date of this order.
However, I note that those orders are not consistent with the submissions made in the husband’s case. Firstly, the husband did not press his applications for spousal maintenance or compensation and I understood that the husband’s application was withdrawn in respect of those issues. No submissions were made in respect of those matters, for example.
I further understood from the husband’s counsel that because of the lack of evidence about what he described as “the untenable debt”, the husband conceded that $485,000 he says he applied to that debt, represents a preliminary distribution to him. I also understood that there was a further concession as to an additional $10,000, also said to have been applied to the alleged debt at the end of 2015. Thereafter, it was argued in his case that contributions were made equally and that there should be no adjustment for the non-contribution elements of s 79(4) of the Family Law Act 1975 (Cth) (“the Act”). The effect of that would be that the pool be identified, including an allowance for $495,000 already distributed to the husband; that the pool be divided in half; and that the husband receive a payment equating to one half of the pool, minus $495,000 already distributed to him. In the event that the payment is not made, I understood that the husband seeks that the Suburb C property be sold and that he receive the identified distribution from the proceeds of that sale.
Documents Read
The parties relied on the following documents:
Documents relied on by the applicant wife
·Amended Initiating Application filed 21 May 2014;
·Affidavit of the wife filed 28 April 2015;
·Financial Statement of the wife filed 28 April 2015; and
·Affidavit of the wife filed 29 January 2016.
Documents relied on by the respondent husband:
·Response to Initiating Application filed 7 May 2014;
·Amended Financial Statement filed 8 May 2015;
·Affidavit of the husband filed 8 May 2015; and
·Affidavit of the husband filed 17 February 2016.
The Hearing
The case was listed for final hearing over three days commencing on 22 February 2016, however the trial was completed in two days and judgment was reserved on 23 February 2016.
Short History
The wife was born in 1966 in Country F and as at the date of the hearing she was 49 years of age. The husband was born in 1958 in Country G and as at the date of the hearing he was 58 years of age.
The parties married in 1982 and separated on a final basis on 27 January 2014. They have three adult children namely: Mr H (“Mr H”), Ms I (“Ms I”) and Mr J (“Mr J”) who are 31, 28 and 22 years of age, respectively.
Background Facts
Much of the parties’ evidence is irreconcilable and there is little by way of independent evidence. No corroborative witnesses were relied on and few issues were addressed in, let alone resolved by, cross-examination. Happily, much of the balance sheet was agreed and the parties also agree that their contributions were equal to the date of separation. To that extent, little was lost by the lack of clarity in relation to the background facts.
The wife was born in 1966 in Country F and she moved to Australia with her family in 1974.
The husband was born in 1958 in Country G and he migrated to Australia in 1980.
The parties met in early 1981 or 1982.
The husband moved into the home of the wife’s parents for a period until immigration issues he was dealing with were resolved.
The parties went through a marriage ceremony in 1982. The consent of the wife’s parents was required (the wife being 15 years of age). For reasons that are not clear, but perhaps to do with an administrative error, the marriage did not become legally effective until a date in late 1982.
At the time of the marriage neither party had any significant assets. The husband was working several jobs was studying a course at TAFE. The wife left school and also commenced studying at TAFE. The parties stayed in a hotel until they were able to secure a rental unit in Suburb A.
From 1983 to 1985 the husband worked for Company K.
In 1985, Mr H was born.
From 1985 to 1993 the husband worked for a telecommunications company. For the period of 1982 until 1993 the husband worked additional jobs such as cleaning, to supplement the parties’ income.
In 1986, the wife started working for an insurance company.
In 1987 Ms I was born. Prior to the birth of Ms I the wife ceased paid employment to care for the children.
In approximately 1987 the parties purchased a property in Suburb L (“the Suburb L property”). The wife deposed that the property was purchased for approximately $245,000 using a $10,000 deposit. It is the husband’s evidence that the property was purchased for $120,000 using a $20,000 deposit provided by him. There is no basis for resolving that dispute.
The parties undertook various renovations to the property.
The husband said that in 1988 when interest rates went up, he worked five jobs in order to finance the Suburb L property. He deposed that during this time the wife did not work or contribute to the home.
The husband became involved in share trading from the early 1990s on the wife’s version or from approximately 2000 on the husband’s version. The wife said she was never informed about the details of the husband’s share trading and that she often signed documents for him in relation to his share trading without being informed as to their contents or effect.
In approximately 1990 the parties moved out of the Suburb L property and into a rental property in Suburb M.
In 1991 the wife completed a bookkeeping course. In 1992 the wife completed an Associate Diploma, a course that she commenced in 1982. She then commenced working on a full time basis.
In approximately 1992 the parties sold the Suburb L property and purchased a property at N Street, Suburb A (“the Suburb A property”) for $148,000 according to the wife or $169,000 according to the husband. Renovations were undertaken. It is the husband’s evidence that the wife did not assist with the renovations.
In 1993, Mr J was born. The wife ceased paid employment shortly before his birth.
In 1993 the husband commenced a new role wherein he was required to travel overseas from time to time. The wife accompanied him on several work trips.
In 1994 the wife started working at Company O. She said that during this time, she would look after the children during the day and work in the evenings, at which point the husband would be home from work to care for the children.
In 1996 the husband was retrenched. He received a lump sum of approximately $140,000. He deposed that he used these funds to renovate the home. He later became employed by another company.
In 1998 the wife commenced employment at a bank. Approximately three months into her employment, the wife was present during an armed hold-up at her branch. Following this the wife said she had Post Traumatic Stress Disorder and Depression for approximately eight years and took various medications including anti-depressants, sleeping pills and pain killers. The wife found it difficult to deal with the children and spent significant amounts of time by herself in the bedroom. She maintains that she continued to attend to all the cooking, cleaning and other household duties. She said that the husband did not contribute to the domestic duties. The husband contends that the wife did not perform domestic tasks, and that he had to do it in addition to his paid employment. No attempt was made to address this dispute in cross-examination.
After the hold-up the wife received regular compensation payments from the bank, which equated to a percentage of her salary. She sought legal advice in relation to a potential negligence claim against the bank but was not advised to pursue such a claim.
Between 2000 and 2002 the parties purchased the following investment properties, all of which have now been sold:
a)2 N Street, Suburb A, New South Wales;
b)3 N Street, Suburb A, New South Wales;
c)4 N Street, Suburb A, New South Wales;
d)1 P Street, Suburb Q, Queensland;
e)2 P Street, Suburb Q, Queensland; and
f)R Street, S Town, Queensland.
In 2003 the wife received compensation for medical expenses in a lump sum from the bank where she had witnessed the hold-up in the amount of $22,000. The wife said she had temporarily separated from the husband at this time and used the funds for her living expenses.
In 2003 the parties purchased a serviced apartment at 2 D Street, Suburb E in the husband’s sole name. The husband said that the property was purchased in his name for tax reasons. The property is currently subject to a mortgage owing to the Commonwealth Bank.
In 2004 the parties purchased a property at B Street, Suburb C for $670,000. The parties did some renovations to the property themselves. The husband said that the wife helped by sewing some curtains but did not otherwise assist. The parties rented out the Suburb A property.
In 2005 the wife commenced work at a real estate agency.
In 2005 the parties separated for three to four weeks on the husband’s version, or four months on the wife’s version. The wife made a negligence claim against the law firm she saw after the hold-up and received a lump sum pay out of approximately $100,000. She deposed that she gave all the money to the husband and that that they used some of the money for furniture. She said that she is not aware as to what happened to the remaining money. It is the husband’s evidence that the money was deposited into a home loan withdrawal facility and was gradually spent by the wife over the next 24 months. This issue was not addressed in cross-examination.
In 2006 the wife resigned from her job at the real estate agency as she was depressed.
In 2008 the wife worked for four months at a motor vehicle fleet company. She deposed that she found it stressful and had difficulties managing mental health and home problems.
In 2009, Ms T, the husband’s niece from Country G, came to stay with the parties. The wife eventually left the former matrimonial home and moved to her mother’s house. She returned to the home after several weeks.
In 2010 the wife commenced employment at Company U. At that time the husband’s niece moved out of the home.
In 2011 the husband was retrenched from his employment and received a lump sum of approximately $160,000.
In 2012 the wife ceased her employment at Company U.
The final separation occurred on 27 January 2014. The circumstances of the separation are disputed and the dispute was not addressed in cross-examination. Suffice it to say that the husband left the former matrimonial home at the wife’s request.
On 28 January 2014 the husband withdrew a sum of $247,338.94 from his CommSec account. The husband deposed that all amounts withdrawn from CommSec account were used to pay what he refers to as an “untenable debt”, for share trading or for family expenses. The husband says that this debt was incurred as a result of his unsuccessful investment in Company V. This will be referred to below.
The husband deposed that on 30 January 2014 he transferred to the wife a sum of $500.
The husband alleged that on 31 January 2014 the wife and Ms I broke into his Paypal account and paid the amounts of $10,000 and $12,500 into Ms I’s account. The husband said he immediately lodged complaints with Paypal, the Commonwealth Bank and the police and that three days later he was reimbursed.
In early February 2014 the husband attended the former matrimonial home with the police and requested that the wife return a laptop and documents from a filing cabinet. The wife did not provide the laptop or documents to him. The wife deposed that a few days later, she contacted Suburb W Police, who then collected the laptop and the contents of the filing cabinet, for the husband to collect. The husband gave a slightly different version of events but the substance was the same. It was the wife’s evidence that there were no post 2011 records among those documents.
In February 2014 the husband started to take antidepressants and sleeping pills under the care of the Suburb X Hospital. He said he was experiencing suicidal tendencies.
On 11 February 2014 a cheque was drawn to the husband from his IOOF Superannuation account for $180,000. The husband deposed that he used these funds to pay the untenable debt.
On 14 February 2014 the husband commenced share trading through an account in the name of his niece, Ms T. The wife contends that between 14 February 2014 and 30 June 2014 the husband made total purchases of $515,233.10 and total sales of $429,574, with miscellaneous debits of $91,752.87 from this account. As at 1 July 2014 this account had shareholdings of $42,000. The husband initially said he did not deposit any moneys into an account of his niece. He then conceded in cross-examination that he “can’t recall” whether various sums deposited in his niece’s account came from him, and when asked whether he remembered giving any money to his niece he said “don’t remember”. When asked if it [a sum] could have been from him, he said it “could have been, yes”. When asked why he would give that money to his niece, he said that it may have been to pay someone, so that it could not be traced.
On 16 February 2014 the husband transferred $1,000 to the wife.
The wife said that in April 2014 she resumed working at Company U for approximately four hours each Saturday.
As at 1 April 2014 the balance of the mortgage on the Suburb E property was $501,582.
The wife deposed that during the period from 1 April 2015 to 31 December 2015 she paid Sydney Water instalments totalling $1,226, electricity accounts totalling $1,665.83 and gas accounts totalling $781.85 for the former matrimonial home
From mid-April 2014 the wife began receiving calls from the Commonwealth Bank in relation to mortgage arrears. The wife contends that the husband stopped paying the mortgage instalments in April 2014. The husband says he stopped paying in May 2014. Nothing turns on that issue.
From 22 April to 17 June 2014 the husband’s Westpac account number ending in …25-5284 was credited a total of approximately $420,984.03, including the following deposits:
a)On 22 and 23 April 2013 an amount of $184,974.61 comprising of three separate deposit amounts identified as sale of shares in “Y”. The husband said that these funds were used to pay debts;
b)On 28 May 2014 the sum of $4,456.22 was credited from Colonial Mutual;
c)On 29 and 30 May 2014 two sums totalling $10,508.40. The wife asserts that this amount is the balance of an AMP Life Investment the husband held at the time of separation. The husband deposed that these were funds from a superannuation account, and they were transferred to his Westpac account ending in 58-8511. He does not recall spending any of this money;
d)On 29 May 2014 a sum of $40,942.04 deposited from “CMLA Limited”. The wife deposed that she understands this to be a reference to Colonial Mutual Life;
e)On 5 June 2014 a sum of $75,633.94 deposited by “IOOF”; and
f)On 17 June 2014 two sums were deposited by Westpac Securities identified as “POS” totalling $104,465.67. The wife understands this to be the proceeds of the sale of the husband’s Poseidon shares. The husband said that these funds were used to pay debts, credit cards and transferred to other accounts from which he then used the funds for living expenses and travel to Country G.
On 16 June 2014 orders were made providing for, among other things, the parties to cause the sale of sufficient shares in Poseidon so as to achieve net sale proceeds of $80,000 and to provide those funds to the wife. Flagging orders were also made in relation to the husband’s various superannuation interests. The wife did not receive the proceeds of the sale of the shares.
Subsequent to the 16 June 2014 orders, the wife said she received correspondence from AMP, Commonwealth Financial Services and IOOF, with regard to whom flagging orders were made, stating that the husband no longer held superannuation interests with them. The husband said that the proceeds of the shares and superannuation withdrawals were used to pay debts, including the “untenable debt”. In any event he said that all of the withdrawals were made before he became aware of the Court orders.
On 30 June 2014 the husband left Australia for Country G. Prior to the husband’s departure he made cash withdrawals totalling $306,181 and internet transfers and withdrawals totalling $80,671.62 from his Westpac account number ending in 25-5284.
On 9 July 2014 the wife made a payment of $150 to the Commonwealth Bank towards the mortgage secured on the former matrimonial home in accordance with a payment plan she had arranged with the bank.
On 10 July 2014 the wife received two letters from the Commonwealth Bank in relation to the mortgages registered over the former matrimonial home.
On 11 July 2014 the wife received a telephone call from the Commonwealth Bank stating that they required full payment of the arrears by 27 July 2014. The wife deposed that between the date of separation and 27 April 2015 she made mortgage repayments totalling $12,778, without contribution from the husband. In addition, she also paid the water and council rates, household insurance and other outgoings.
Unaware that the husband has already left for Country G, on 16 July 2014 the wife filed an urgent ex parte application seeking to restrain him from leaving Australia. An interim order was made restraining the husband from leaving the Commonwealth of Australia and placing him on the Family Law Watchlist.
On 5 August 2014 the proceedings came back before this Court. The husband’s solicitors asserted that the husband would return to Australia on 2 September 2014.
On 3 September 2014 the proceedings again came before this Court and the husband had not returned. He deposed that he was unable to return to Australia because he had a middle ear infection, but that he would return on 7 February 2015.
On 8 September 2014 the wife obtained full time employment earning a gross income of $38,000. With her weekend work at Company U the wife was working six days per week.
As at November 2014 the balance of the mortgage on the Suburb E property had increased to $517,363.
On 26 February 2015 orders were made restraining the husband from withdrawing funds from various accounts.
On 3 March 2015 the Court ordered that the injunctions granted on 26 February 2015 continue and that the husband cause the remaining funds in the affected bank accounts be paid to the wife. The wife was appointed as trustee for the husband to manage the Suburb E property including the rental income.
On 31 March 2015 the wife ceased her employment Company U.
From 2 April 2015 the wife began to receive the rental income from the Suburb E property, being an average amount of $3,056 per month. From that income, she has paid instalments of $2,200 per month on the mortgage secured over that property.
On 15 April 2015 a Registrar of this Court signed documents pursuant to a s 106A order made on 3 March 2015. To date the wife has received one amount of $18,228 from Westpac Bank and $30,445 from St George Bank pursuant to those orders.
The husband returned to Australia on 27 April 2015, departing again on 18 May 2015.
On 2 December 2015 the wife was notified that a statement of claim had been issued against the husband in respect of unpaid strata levies for the Suburb E property.
On 7 February 2016 the husband returned to Australia. He deposed that he borrowed money from family members in Country G to the value of approximately $A141,800 for the purposes of investments and living expenses.
The wife currently lives at the former matrimonial home at Suburb C, where she has boarders staying from time to time. The wife’s evidence is that she currently works at Company U where she earns approximately $530 per week, after tax. The husband deposed that when he has not been in Country G, he has been staying at hotels or with family members. He said that he is no longer engaged in share trading and is generally unemployed. He deposed that he has a 50 per cent interest in a small company in Country G. Rather confusingly, he says the interest is worth approximately $3,000, however the relevant permits for the business have expired and as such, the business has no current value.
issues
Pool of Assets
In addition to allowances for paid legal fees, the husband conceded that there should be an allowance in the pool of assets for a preliminary distribution to him in the sum of about $485,000. The husband conceded that position because of matrimonial funds applied by him to the “untenable debt”. I further understood that it was accepted in his case that because the husband paid a further $10,000 off the alleged debt, that the concession about a preliminary distribution was therefore in the sum of $495,000.
The wife contends that rather than $495,000, the allowance should be $789,739, made up of all of the sums she asserts were not accounted for by the husband as well as the amount by which the mortgage debt increased after April 2014.
The husband argues that his credit card debt of $11,481 and an asserted debt owed to his sister Ms Z, in the sum of $100,000 should be included in the list of relevant liabilities and the wife opposes that course. The wife argues that debts she claims to Mr AA in the sum of $1,800, Ms I in the sum of $4,550 and her credit card debts at $10,500 should be included in the list of relevant liabilities and the husband either opposes that course or challenges the quantum of those liabilities.
Contributions
The wife contends that as a result only of an imbalance of contributions after separation, she made 60 per cent of the contributions and the husband 40 per cent. The husband argues that the parties’ contributions were equal.
Adjustments
The wife contends that there should be a further adjustment to her of 20 per cent of the pool because of the husband’s failure to make proper disclosure and or because of waste.
The husband argues that there should be no adjustment from a 50:50 division of the net assets as conceded by him.
Credit and Submissions
The Evidence Of The Witnesses
As the cases were ultimately presented, the only witnesses relied on were the parties themselves.
The wife was not successfully challenged on any significant issue.
The husband was not a satisfactory witness. The husband deliberately failed to make full financial disclosure and much of the evidence he did give was not believable. When challenged about inconsistencies in his testimony he prevaricated and dissembled. He gave snippets of evidence about the “untenable debt”, an asserted debt in respect of which he said he paid $495,000 but he refused to give any detailed evidence about the alleged debt. The husband could not or would not point to any documents evidencing the existence or origin of the debt, or that the debt was owed including to whom the money was paid, when, or in what amounts. He gave evidence that he variously did and did not own real property in Country G. He said that in Country G he earned $A15 per day in February 2016 while incurring expenses of $A1,980 per week. I have referred above to his confusing evidence about whether he deposited funds in a bank account in the name of his niece. It was distracting that a very substantial proportion of the husband’s written evidence was irrelevant or otherwise inadmissible. That material was struck out and importantly, largely by agreement.
The Law
The Approach In Proceedings Under Section 79
In the context of these proceedings s 79 of the Act relevantly provides:
FAMILY LAW ACT 1975 - SECTION 79
Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or
….
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i)either or both of the parties to the marriage; …
….
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
….
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
There has been found to be a preliminary aspect of the requirement created by s 79(2) of the Act going to whether it would be just and equitable to make any order. The proceedings before me do not involve any controversy about that issue. As was observed in Stanford v Stanford (2012) 247 CLR 108 the preliminary just and equitable requirement is often readily satisfied. Here, after a long marriage, the parties’ relationship has broken down and they live apart. The former matrimonial home is held jointly and the Suburb E property is in the sole name of the husband. Neither of the parties contends that the legal ownership of those properties should continue unchanged. Some legal formality is required to alter the parties’ interests in property in a way that reflects the aspirations in ss 79 and 81 of the Act. The latter provision contains the exhortation to “as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them”. It is just and equitable that the parties have relief under s 79 of the Act.
I turn to the task of identifying just and equitable orders that will alter the interests of the parties in property. There is no mention of steps or stages in s 79 of the Act, let alone of the sequence set out in a) – d) below. However, I will address the following matters:
a)Make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing;
b)Identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties;
c)Identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g) of the Act, (“the other factors”) including, because of s 79(4)(e) of the Act, the matters referred to in s 75(2) of the Act so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties; and
d)Consider the effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
The property of the parties
First I must identify the assets, liabilities and financial resources of the parties and their values.
The husband and wife settled a joint balance sheet. The penultimate version was settled immediately prior to the commencement of oral submissions. I received a further version of the balance sheet after the conclusion of the trial, under cover of an email dated 25 February 2016. The penultimate version included handwritten amendments and therefore printed totals on the document did not reflect the amendments. The ultimate version of the document included two apparent errors. As to the legal fees paid by the wife, the figure was asserted to be $54,364 by the wife’s counsel and that is the figure included in the ultimate joint balance sheet. However, a different figure ($54,634) was disclosed in the wife’s cost advice[1] and no explanation was offered as to the difference in those amounts. I assume that the figure in the ultimate joint balance sheet was a typographical error and that the figure of $54,634 in the wife’s cost advice is correct. Secondly, the concession on the penultimate version of the balance sheet as to the balance of the Suburb E property loan at $529,540 was apparently withdrawn in the later version and it was represented that the husband again contended that the balance was $529,473. I will assume that the ultimate version of the balance sheet is incorrect and that the figure is agreed at $529,540. In any event, no evidence was lead to address a controversy about the amount of that debt. I will assume that the agreed balance sheet is as follows:
[1] Exhibit 12
Assets
Owner Description Wife’s value Husband’s value 1 J Former matrimonial home – B Street, Suburb C $1,412,500 $1,412,500 2 H Investment property – Lot D Street, Suburb E $525,000 $525,000 3 H Commsec Account
# …
NK NIL 4 H Commsec Account
# … (Mr BB)
NK NIL 5 H ETrade Australia Account # … NK NK 6 H ETrade Australia Account # … nominal NK 7 H Other shareholdings NK NIL 8 W ETrade Australia Account # … $1,053 $1,053 9 J Household contents $E5,700 $5,700 10 H 4WD $5,000 $5,000 11 H Motor Vehicle $E8,000 $E8,000 12 H EE Pty Ltd NK $E2,500 13 H CBA Account #... NK NIL 14 H CBA Account #... NK NIL 15 H CBA Account #... NK NIL 16 H CBA Account #... NK NIL 17 H Westpac Account #... NK $E18 18 H St George Sense Account… NK NIL 19 H Other cash at bank NK NIL 20 W CBA Account #... $1,558 $1,558 21 J Rosario Investments P/L NIL NIL 22 H CC P/L NK NIL 23 H DD P/L NK NIL 24 H Property in Country G NK NIL 25 H Other assets, including loans owed to husband NK NIL 26 W ANZ Account #... Nominal NK Total $1,958,811 $1,961,329
Addbacks
Owner Description Wife’s value Husband’s value 27 H See Note 27
$789,739 $485,000 28 H Legal fees paid $82,600 $82,600 28A W Legal fees paid $54,634 $54,634 Total $926,973.00 $622,234.00
Liabilities
Owner Description Wife’s value Husband’s value 29 H Home loan on D Street, Suburb E, CBA account ending #... $529,540 $529,540 30 H CBA Line of Credit #... $31,006 $31,006 31 H CBA Mastercard #... NIL NIL 32 H CBA Gold Awards Credit Card … NIL $11,481 33 J CBA loan #... Secured against B Street, Suburb C $378,841 $378,841 34 J CBA loan #... Secured against B Street, Suburb C $141,981 $141,981 35 J CBA loan #... Secured against B Street, Suburb C $9,377 $9,377 36 H Loan from Ms Z Rosario NIL $E100,000 37 W Loan from Mr AA $1,800 NK 38 W Loan from Ms I Rosario $4,550 NK 39 W Credit card debts (see note 39) $10,500 NK Total $1,107,595 $1,202,226
Superannuation
Owner Description Wife’s value Husband’s value 40 W AMP $6,962 $6,962 41 W Care Super (#...) $720 $720 42 W Equity Super (Apex) $4,057 $4,057 43 W Super Trace (#...) $5,106 $5,106 Total $16,845.00 $16,845.00
As to the issues about the balance sheet:
Assets
I was told, without complaint, that the only substantive issue in relation to the assets in the balance sheet related to the EE Pty Ltd. Nevertheless, the joint balance sheet shows differences between the parties on many items.
Items 3 - 7
It is not contended that there is an asset within the descriptions given, to which a relevant value can be attributed. I will omit these items from the balance sheet.
Item 12 – EE Pty Ltd
The evidence about this asset is entirely unsatisfactory. As I understand the husband’s evidence, at some point he agreed with the owner of a business in Country G to buy an interest in the company for $A5,000. There is no evidence of a transaction or a series of transactions whereby exactly $A5,000 was transmitted to Country G. There are two transactions[2] which total $US5,000 but of course that reflected a different amount in Australian dollars - $A5,039.17 according to the transfer documents. The purpose of the transfer is recorded on the International Money Transfer receipts as “Loan” and each contains a message to the recipient: “para comprar equipos”. I take notice that the expression is Spanish for “to purchase equipment”. There would seem to be no reason for the purchase price of a share of a business to be described as a loan or to be endorsed to the purchase of equipment. It is the husband’s case that another part owner of the business wanted to be paid out and that the husband was taking up his share. If that was not confusing enough, the husband says that in fact he paid much more than $A5,000 to the owner of the business because, the husband said, the business needed further injections of cash. The husband did not reveal how much he invested in the business overall. In his Financial Statement the husband asserted a value for the business of $3,000. It is the husband’s evidence that the business does not trade and lacking certain permits, cannot trade.
[2] Exhibit 7 – undated Commonwealth Bank International Money Transfer receipts
I find that the husband has an interest in a business in Country G and that the value of his interest is not known.
Items 13 – 19 – Husband’s bank accounts
There is no agreement about these accounts having any significant value. The husband did not meet his obligation to provide current statements of his accounts. He gave unclear evidence about when and if, he closed certain accounts.
In relation to item 19 it was the evidence of the husband in cross-examination that he does not have a bank account in Country G and that he has never had such an account. That last evidence sits uncomfortably with a reference in a power of attorney he gave his sister, Ms Z Rosario (Ms Z) in 2012. A copy of the power of attorney and a translation are in evidence[3]. In the power of attorney, there is reference to moneys being deposited into “the Banco [Country G] account or the Banco Citi [Country G] account held in the name of [Mr Rosario]”. Therefore I am satisfied that the husband did have bank accounts in Country G. In those circumstances there is no reason to presume that the husband no longer has bank accounts in Country G. Indeed, having lived in Country G for much of the period since separation, it is probable that he does have such an account or accounts.
[3] Exhibit 10
Nevertheless, without any information about the balance of any such accounts, I will omit these items from the balance sheet.
Items 22 – 23
No value is asserted for the interests in these companies.
I will omit these items from the balance sheet.
Item 24 – Husband’s property in Country G
There is no probative evidence as to whether the husband has real estate in Country G or not. Again, the husband’s evidence was very confusing on this issue.
At one point in 2005 the husband transferred funds to a Spanish bank account of Mr FF and Ms GG endorsed “to pay home loan”[4].
[4] Exhibit 4
As I understood his evidence in cross-examination, one of the husband’s sisters bought a property in Country G. Ultimately that sister became sick and sadly, she later died. She had been struggling to make payments in relation to the property and the husband provided financial support in that regard. The husband said that ultimately, such was the level of his support that the husband considered and he put to members of his family, that the interest in his sister’s property was properly his.
The husband agreed that the property in question is the one referred to in the power of attorney he gave his sister, Ms Z in 2012. There the property is referred to as a house located at HH Street, II Town, Country G. Supporting an argument that the husband had an interest in the property is the fact that one of three express purposes for the power of attorney was to deposit proceeds of the house into one of two bank accounts in the husband’s name. It is probable that the husband had an interest in the II Town property. There is no probative evidence as to whether he continues to hold that interest. There is no evidence about the value of the interest.
I will omit this item from the balance sheet.
Items 25 - Other assets or loans owed to the husband
The wife is not able to assert the existence or value of any other assets in the hands of the husband. However, such is the paucity of his disclosure and of his evidence that I can take no comfort from the husband’s assurances.
I will omit this item from the balance sheet but of course I have no real idea about the asset position of the husband.
Items 26 - The wife’s ANZ account
No value is asserted for balance in the account. I will omit the account from the balance sheet.
Addbacks
In other cases there have been circumstances whereby assets that no longer exist have been included in the list prepared at the first stage of the process of identifying a just and equitable division of property. The same logic has been applied to exclude from the relevant list of liabilities, debts that do exist at the date of the hearing.
Often legal fees are treated in that way, with paid legal fees added back to the assets and unpaid legal fees, ignored in the list of liabilities. As I understand the current state of the authorities on this issue, there are no circumstances whereby add-backs must be included, nor are add-backs proscribed in all situations. However, they have been authoritatively found to be “the exception rather than the rule…” Cerini & Cerini [1998] FamCA 143. The obvious problem created by add-backs is their artificiality. The Court’s power under s 79 of the Act is to change interests in property. That power is only effective with assets that exist. The greater the provision for add-backs in a pool established for the purposes of s 79 of the Act proceedings, the greater the difficulty in making sensible orders to give effect to the ultimate property settlement. To labour the point, the scope for changing interests in property is limited to the value of the property that exists.
In these proceedings the parties agree that some amounts should be added back and therefore there is no dispute about add-backs as a matter of principle. The 4WD motor vehicle has been sold and yet it has an agreed place on the balance sheet. There is also agreement about at least $495,000 being added back to the credit of the husband and about the same approach for the parties’ paid legal fees. I will adopt the agreed approach.
Item 27 – Preliminary distribution to the husband
The settled balance sheet recorded the concession made on behalf of the husband that there should be an allowance in the pool of assets for a preliminary distribution to him in the sum of $485,000. As I understood the husband’s case, he concedes that position because of matrimonial funds he says he applied to what he describes throughout his affidavits and other documents as the “untenable debt”.
The husband’s evidence about the untenable debt is far from clear and deliberately so. Doing the very best I can with the evidence, the husband contends that he made an investment in the shares of a company, Company V and the investment was lost. The husband contends that the loss arose from the misconduct of the directors of the company. There is in evidence copies of correspondence suggesting that the husband and others sought to take action through the corporate regulators in regard to that alleged misconduct. With that background but without any detailed disclosure, the husband says that he somehow incurred a debt in relation to something related to the lost investment or in relation to the company. He says that the debt amounted to millions of dollars but ultimately resulted in him paying a total of about $495,000. As I have indicated, the figure was put at $485,000 on the balance sheet but without complaint, I reminded learned counsel for the husband of the husband’s evidence that after payments totalling $485,000, he had made a subsequent payment of $10,000. The husband refused to identify the person/s or agency to whom the debt was owed or repaid. In that regard he said that threats had been made to members of his family. He did say that all payments were made in cash. The husband did not identify the consideration for the debt or give evidence about how the debt arose.
The wife contends that rather than $495,000, the allowance should be $789,739.30, made up of all of the sums she says were not accounted for by the husband, as well as the increase in the mortgage after April 2014. The amount she claims is said to be made up as follows:
Item
Amount
Withdrawal from the husband’s IOOF superannuation 11/2/2014
$180,000
Withdrawal from the husband’s IOOF superannuation 6/6/2014
$75,633.94
Withdrawal from the husband’s AMP superannuation 29/5/2014
$1,054.80
Withdrawal from the husband’s AMP superannuation 30 May 2014
$9,453
Withdrawal from the husband’s Commsec account 28/1/2014
$247,338.94
Proceeds of the sale of Poseidon shares 17/6/2014
$104,465.67
Sale of Y shares 23/4/2014
$184,974.61
Withdrawal from the husband’s Colonial Mutual Life account 28/5/2014
$4,456.22
Withdrawal from the husband’s Colonial Mutual Life account 29/5/2014
$40,942.04
Minus deposit to husband’s Commsec account 31/1/2014
-$74,360.92
Increase in Suburb E mortgage from 1 April 2014 to November 2014
$15,781
Total
$789,739.30
It was the husband’s contention that the balance of moneys available to him, on the above figures $294,739, was applied by him to joint liabilities and his living expenses.
The husband addressed his use of funds in his primary affidavit. As to funds he says were paid out from January 2014 and not for the purposes of the untenable debt, the husband disclosed[5]:
[5] Paragraph 253 of the Husband’s affidavit
Item
Amount
Suburb E loan repayment 10/2/2014
$1,811
Suburb E strata levies 11/2/2014
$2,200
CBA credit card debt from before separation 11 February 2014
$9,900
Suburb E loan repayment 10/3/2014
$1,909.51
Transferred to wife 5 & 16/2/2014
$1,500
Loan repayment … 4/2/2014
$618
BUPA Health Fund
$99.60
Loan repayment … 2/2014
$126
Car finance payment 19/2/2014
$346
Loan payment … 25/2/2014
$1,551
Living expenses 25/2/2014
$5,000
Living expenses clothes and others 24/2/2014
$4,000
Loan repayment 831533108 1/3/2014
$618
CBA credit card 17/3/2014
$977
Rent for Mr J Rosario
$1,520
Loan repayment … 19/3/2014
$126
Living expenses 29/3/2014
$1,600
Loan payment … 25/3/2014
$1,401
Living expenses 31/3/2014
$800
Loan repayment … 1/4/2014
$618
CBA credit card 14/4/2014
$88
Loan repayment … 19/4/2014
$126
Interest payment on viridian line of credit account … 1/4/2014
$106
Living expenses 15/4/2014
$200
Keyboard for computer 23/4/2014
$50
Loan repayment … 1/5/2014
$600
Interest payment on viridian line of credit account … 1/5/2014
$132
CBA credit card 19/5/2014
$141
Loan repayment … 19/5/2014
$126
Loan repayment … 1/6/2014
$623
Interest payment on viridian line of credit account … 1/6/2014
$136
Loan repayment … 19/6/2014
$126
CBA credit card 12/6/2014
$16,000
Rent for Mr J Rosario 16/7/2014
$400
Interest payment on viridian line of credit account … 1/7/2014
$136
Loan repayment … 19/7/2014
$126
CBA credit card 16/7/2014
$5,300
Interest payment on viridian line of credit account … 1/8/2014
$136
Loan repayment 247248403 19/8/2014
$126
Interest payment on viridian line of credit account … 1/9/2014
$136
CBA credit card 16/9/2014
$2,436
Loan repayment … 19/10/2014
$126
Interest payment on viridian line of credit account … 1/10/2014
$136
CBA credit card 14/10/2014
$1,080
Loan repayment … 19/11/2014
$126
CBA credit card 19/11/2014
$400
Interest payment on viridian line of credit account … 1/11/2014
$132
Loan repayment … 19/12/2014
$126
CBA credit card 14/12/2014
$114
Interest payment on viridian line of credit account … 1/12/2014
$136
Loan repayment … 19/1/2015
$126
CBA credit card 14/1/2015
$610
Interest payment on viridian line of credit account … 1/1/2015
$136
Loan repayment … 19/2/2015
$126
Interest payment on viridian line of credit account … 1/2/2015
$132
CBA credit card 17/2/2015
$1,030
Loan repayment … 19/3/2015
$126
Interest payment on viridian line of credit account … 1/3/2015
$124
Loan repayment … 19/4/2015
$126
CBA credit card 14/4/2015
$100
Total
$68,983.11
As to funds he says were received from the sale of shares that were paid out from January 2014 and not for the purposes of the untenable debt the husband disclosed[6]:
[6] Paragraph 255 of the Husband’s affidavit
Item
Amount
CBA credit card 16/7/2014
$5,300
Total
$5,300.00
As to funds he says were paid out of Westpac Bank account 588511 from 17 June 2014, and not for the purposes of the “untenable debt”, the husband disclosed[7]:
[7] Paragraph 257 of the Husband’s affidavit
Item
Amount
Living expenses in Country JJ and Country G for 9 months approximately
$35,000
Expenses 23/6/2014
$400
CBA credit card 16/7/2014 (duplicated from the table at para 122 above
$5,300
Replacement automatic transmission for 4WD 11/8/2014
$4,586.17
Green slip and insurance for 4WD 8/2014
$2,100
Fee for rescheduling flights
$1,154
Total
$48,540.17
In that way the husband purports to account for the following sums:
Amount
$68,983.11 $5,300.00
$48,540.17
$122,823.28
Therefore, of the amount of $294,739, which the husband contends was applied by him after separation from joint funds in respect of joint liabilities and his living expenses, the husband has sought to account for $122,823.28. There is no evidence from the husband about his application of joint funds after April 2015. The husband had the opportunity to give any evidence he needed to give about any such expenditure in his updating affidavit. In the normal course, putting a party to account for all of their expenditure for any significant period would be considered unreasonable and unrealistic. Here however, the husband has had access to joint funds, refused to properly account for nearly $500,000 and apart from assertions about the application of another $122,823.28, does not account for a balance of $171,915.72.
On the husband’s evidence he has applied matrimonial funds in unconventional ways. In March 2006 the husband emailed[8] his sister telling her how he would like certain funds distributed to his children in the event of his death. He said that his work colleague, Mr KK had close to $A260,000 (presumably of matrimonial funds) and he reminded his sister that she had about €42,000 of his money. There is reference in the husband’s updating affidavit to him borrowing about $100,000 from his sister, (who in turn is said to have borrowed the money from her daughter), to invest funds in a business operated by a niece, only to have the niece defraud the husband. Whatever might be said about that, it is not suggested that the wife was informed about or agreed to that venture.
[8] Exhibit 14
The authorities have it that in the case of significant non disclosure, the Court should not feel unduly constrained in making provision, within the identified assets for the other party. See Weir & Weir (1993) FLC 92-338;
16 Fam LR 154. The extraordinary circumstances of the untenable debt are not resolved by $495,000 being added back to the balance sheet. The husband’s refusal to fully disclose the circumstances of the alleged debt prevents any scrutiny of transactions with matrimonial funds by the wife or by the Court. Financial disclosure is fundamental to the identification of a just and equitable settlement of property and the husband’s failure to disclose prevents any considered assessment in these proceedings.On his own evidence, the husband had the exclusive use of at least $666,916 ($495,000 and $171,916) in joint funds after separation and has not accounted for that use. In accordance with the approach settled by the parties in respect of the conceded figure of $495,000, I will add $666,916 to the balance sheet as a preliminary distribution to the husband.
Item 28 – The husband’s paid legal fees
According to the agreed balance sheet the husband has paid $82,600.88 in legal fees. If the paid fees are not added back then the effect is to cause each of the parties to contribute to the costs of the other. That should not occur in advance of a costs application and the consideration of s 117. From the drafting of the agreed balance sheet I gather that the parties accept that position.
The husband’s costs notice[9] identifies the source of the paid costs as himself, the parties’ son, Mr J and what I understand to be Mr J’s business. If the source of the paid fees was borrowed funds then it would be double counting to add back the paid fees and not also include the related debt. However, here the husband has not identified the amounts he obtained from each nominated source. It is not for the Court to characterise the husband’s vague representations in his favour. I will add the paid costs back to the balance sheet.
Item 28A – The wife’s paid legal fees
[9] Exhibit 12
According to her costs advice, the wife has paid $54,634 in legal fees. The notice omits reference to the source of the funds applied to those fees. I understood that the costs were paid from a preliminary distribution of joint funds to the wife. There is specific reference in paragraph 22 of the wife’s updating affidavit to amounts of $30,445 and $18,228 being applied from joint funds to her legal fees. I will add the amount of paid legal fees to the balance sheet. In that way it is not necessary to also add back the preliminary distribution referred to in paragraph 22 of the wife’s updating affidavit.
Liabilities
Item 32 - CBA Gold Awards Credit Card 5250
The husband claims a credit card debt in the sum of $11,481. There is a reference in the husband’s Financial Statement to a debt of $14,000 owed by him on a CBA credit card. I was not taken to any bank statement showing the current balance. The debt is challenged by the wife. Given the problems with the husband’s evidence and disclosure and the lack of corroboration, I will omit this liability.
Item 36 - Loan from Ms Z Rosario (the husband’s sister)
There is no probative evidence about how the asserted debt arose and there is no evidence from the husband’s sister corroborating the husband’s contention or at all. In those circumstances there will be no allowance for moneys owing to the husband’s sister in the balance sheet.
Item 37 - Loan from Mr AA
I was taken to no evidence about the establishment of the asserted loan. The loan is referred to in the wife’s Financial Statement of April 2015 but I could find no mention of the loan in the wife’s primary affidavit. I will exclude that liability from the balance sheet.
Item 38 - Loan from Ms I Rosario
During cross-examination the wife was asked about a claimed debt of $4,550. She was taken to the fact of funds being advanced by and to Ms I and opined that perhaps half that amount is owing. That suggests a level of informality in relation to moneys passing between mother and daughter. There is no adequate evidence to support a finding that a debt is owing by the wife to the parties’ daughter in the sum of $4,550 or in any amount. I will exclude that liability from the balance sheet.
Item 39 – Wife’s credit card liabilities
The wife claims a combined debt of $10,500 on ANZ visa card and David Jones American Express accounts which is said by her to be the balance not referable to paid legal fees. The evidence about the balances is contained in paragraphs 12 and 13 of the wife’s updating affidavit. There she deposes to balances of $5,586 and $4,715.97 respectively. The affidavit was sworn in January 2016 but in each case the wife deposed to making minimum repayments only and that she was not using either account for new purchases. I was not taken to the statements accounting for the claimed balance. I will include this liability at $10,301.97.
I find that the balance sheet is as follows:
Assets
Owner Description Value 1 J Former matrimonial home – B Street, Suburb C $1,412,500 2 H Investment property – D Street, Suburb E $525,000 3 W ETrade Australia Account # … $1,053 4 J Household contents $5,700 5 H 4WD $5,000 6 H Motor Vehicle $8,000 7 H EE Pty Ltd NK 8 W CBA Account #... $1,558 Total $1,958,811.00
Addbacks
Owner Description Value 9 H Preliminary distribution to the husband
$666,916 10 H Legal fees paid $82,600 10A W Legal fees paid $54,634 Total $804,150.00
Liabilities
Owner Description Value 11 H Home loan on D Street, Suburb E, CBA account ending #... $529,540 12 J CBA loan #... Secured against B Street, Suburb C $378,841 13 J CBA loan #... Secured against B Street, Suburb C $141,981 14 J CBA loan #... Secured against B Street, Suburb C $9,377 15 W Credit card debts (see note 39) $10,301.97 Total $1,070,040.97
Superannuation
Owner Description Value 16 W AMP $6,962 17 W Care Super (#...) $720 18 W Equity Super (Apex) $4,057 19 W Super Trace (#...) $5,106 Total $16,845.00
Net assets
Therefore the net value of the assets of the parties for the purposes of s 79(4) of the Act is $1,709,765.03 ($1,958,811.00 + $804,150.00 + $16,845.00 - $1,070,040.97).
Contributions
The obligations placed on the Court by s 79 of the Act call for an assessment of the respective contributions by and on behalf of the husband and wife. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets.[10] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the husband and wife in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of husband and wife.
[10] In the Marriage of Shewring (1987) l2 Fam LR 139.
As to whether the Court should apply the considerations in s 79(4) of the Act to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) FLC 91-814; In the Marriage of Norbis (1986) 161 CLR 513; In the Marriage of Zyk (1995) FLC 92-644.
In In the Marriage of Coghlan (2005) FLC 93-220 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79 of the Act, whether or not a splitting order is sought in those proceedings. The Full Court suggests at [61] that:
… This approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
Here only the wife has any superannuation and the value of her interests is modest. The parties’ submissions on s 79(4) of the Act were made on a global basis. I too will deal with superannuation and non-superannuation assets globally and make any necessary adjustments from the non-superannuation assets.
The husband contends that the parties’ post separation contributions were equal. The wife argues that the post separation contributions were made in the proportions 60 per cent by her and 40 per cent by the husband. Both parties contend that their contributions were equal as at the date of separation. Therefore it is the wife’s case that her greater contributions resulted from an imbalance in contributions made after separation.
Given the agreed position, it is not necessary to go into much detail in relation to contributions prior to separation.
Section 79(4)(a) Contributions
Financial contributions to property, both direct and indirect were made by each of the husband and wife.
The parties had little by way of assets when they commenced their relationship. During the marriage, the husband had paid employment and undertook share trading. During the marriage, the wife had paid employment for some periods.
There were injections of funds through each of the parties but they were largely incidents of the parties’ employment. The wife received payments as a result of proceedings against her lawyers in connection with the consequences for her of exposure to an armed robbery.
Apart from a few payments by the husband from joint funds, after separation the wife maintained the parties’ real estate. Balancing those contributions in the case of the Suburb C property, the wife also had use of the property, to the exclusion of the husband.
The wife was out of the paid workforce at the time of separation and returned to the paid workforce shortly thereafter.
Section 79(4)(b) Contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.
Renovations and improvements were made to matrimonial property during the marriage. It is conceded that the husband undertook this type of work. The wife contends that she too made those contributions. That is disputed by the husband. Neither party was cross-examined about the issue and it is not possible to make a finding in that regard.
There is no evidence of significant contributions of this type, made after separation.
Section 79(4)(c) Contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage. It is likely that the wife’s contributions as parent and homemaker exceeded those of the husband during the marriage. It was the parties’ arrangement, for example, that the wife remained out of the paid workforce for periods associated with the early lives of the children. Even with the wife’s evidence about the impact of stress and depression on her capacity in the household, it was her evidence that she nevertheless performed all of the cooking, cleaning and other household chores. It is the husband’s contention that the wife did not contribute to the household duties during her years of incapacitation. Perhaps because of the concession about contributions to the date of separation, neither party was challenged about this issue in cross-examination. Nevertheless, given the credit findings against the husband, I am inclined to the wife’s version of events. The wife deposed that prior to separation, Ms I was unwell and she did not like to leave her alone for very long as Ms I’s emotions fluctuated from hour to hour.
In terms of the wife’s argument about the differences in the parties’ contributions after separation, it is her case that the husband effectively abandoned his financial responsibilities on and from separation. The wife says that she was left to keep the finances together, negotiate with banks and take all of the financial responsibility for the family. There were no children of the marriage under 18 years of age after the date of separation. Although not referred to in the written submissions prepared in her case, I understood that the wife’s case in relation to contributions relies at least in part to her role in supporting Ms I after separation. There is no significant detail in relation to those contributions. The wife gave evidence, for example that Ms I is in receipt of a Newstart Allowance, rather than Centrelink benefits referable to a disability. The question also arises as to whether contributions to an adult child can be credited under this paragraph. Neither counsel was able to assist me in that regard. As with the arguments in Robb & Robb (1995) FLC 92-555; 18 Fam LR 489 in respect of contributions to a child who is not a child of the marriage, it may not matter in practical terms because those contributions could in any event be counted under s 75(2)(o) of the Act.
Conclusion on Contribution
The submissions of the parties refer to capital injections of funds received during the marriage and issues about non-financial contributions and contributions to the family. All of those matters are addressed and the arguments resolved by the concession that the contributions of the parties were equal to the date of separation.
Attention turns to the impact on overall contributions of the respective contributions of the parties after separation. The problem for the wife’s argument is that she seeks an increment of 10 per cent in contributions because of events that occurred after separation. That would create a differential between the parties of 20 per cent which translates to about $340,000 in the context of this case. That is a tall order based on the difference in the contributions of the parties made in the last two years of a 33 year history of contributions. In my view the wife cannot make that case.
I am satisfied that there was a difference in contributions after separation, the question is: what impact did that difference make to the proportions in which the parties made contributions over 33 years? In summary the wife was largely left to manage the family finances after separation. To add insult to injury, the wife’s negotiations with the mortgagee bank were undermined by the husband and had to be restored. On the other hand the wife had the use of the former matrimonial home. She returned to paid employment after separation while the husband did not have significant employment.
An argument could be made for a very small increment to be allowed to the wife because of the imbalance of contribution after separation but in my view the proper finding is that the parties’ contributions, over 33 years, were equal.
The other matters in Section 79
Once contributions have been assessed, the other factors in s 79(4) of the Act need to be considered. They are:
Section 79(4)(d)
Pursuant to s 79(4)(d) of the Act I am required to take into account the effect of any proposed orders on the earning capacities of the husband and wife. The wife has earned income from renting out rooms in the Suburb C property. If she is able to retain that property, that income may continue. Otherwise nothing comes to attention in that regard.
Section 79(4)(e) - Section 75(2) factors
The most relevant matters in s 75(2) of the Act would seem to be paragraphs (a), (b), and (o).
(a) the age and state of health of each of the husband and wife;
The wife is 49 years of age. She suffers from sleeplessness and headaches. The wife attends a GP but has not consulted a psychologist in some time.
The husband is 58 years of age. He has a sore back and a sore hand. He says that he was prescribed medication at a hospital because of suicidal tendencies.
There is no probative and current medical evidence about either party.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The evidence about the wife’s financial circumstances is not entirely clear. Her Financial Statement is nearly 12 months out of date. The updating information in her affidavit filed 29 January 2016 does not permit ready comparison with the earlier document.
As to the wife’s income, she gave oral evidence that she earns $540 per week as a consultant. In her recent affidavit she said that from that source she earns $530 per week, after tax. The wife currently receives a total of $870 per week from three tenants who occupy rooms in the former matrimonial home. There is no evidence about the likely income tax implications of that income[11]. Pursuant to interlocutory orders made on 3 March 2015, the wife receives the rent from the Suburb E property. She has received an average of $3,056 per month by way of that rent.
[11] The wife’s counsel was instructed that the wife had not yet been required to complete a tax return declaring that income.
The parties’ daughter, Ms I, lives with the wife. Ms I receives $519 per week by way of the Newstart Allowance. She does not regularly contribute to the household expenses. No explanation was provided for that lack of contribution.
For the same reasons, it is not possible to make definitive findings about the wife’s expenditure. In her 2015 Financial Statement the wife deposed to expenses of $643 per week (to be met out of her declared income of $962 per week) but the expenses expressly included no allowance for variable living expenses such as food and clothing etc. Of the fixed expenses, the minimum payments of $400 per month made in 2015 on an American Express account are said to be $122 per month in January 2016. Unlike 2015, the wife now has an ANZ visa card debt of $5,586 and she makes the (unspecified) minimum repayments. The wife pays council rates of $100 per month; water rates of about $136 per month (based on $1,226 paid in nine months from 1 April 2015 – para 16 of the wife’s updating affidavit); $185 per month for electricity and $87 per month for gas. The wife pays $2,200 per month in instalments toward the mortgage secured over the Suburb E property.
From the wife’s disclosure it is not possible to know what her total liabilities are and therefore, whether she operates with a weekly surplus or shortfall. Those are matters that the wife could have addressed.
The evidence about the wife’s assets and liabilities is set out earlier in these reasons.
The wife is apparently able to undertake her current level of paid employment. No evidence was given nor submissions made about whether the wife is fully exercising her earning capacity or not.
It was the evidence of the husband that as at the date of the hearing he had no paid employment and no income. He said that he last worked for a few days in early February 2016 in Country G as a construction supervisor, earning $A15 per day. In his updating affidavit the husband deposed to weekly expenses in Country G, totalling $A1,980 per week. That included rent of about $A350 per week and loan repayments of $A300 per week. In my view the claimed expenses are largely unrealistic and out of all proportion to an economy where wages for a construction supervisor are said to be as low as $A15 per day. As to his rent, the husband said something to the effect that he had to live in an expensive area because, having returned from a rich country like Australia, he would otherwise be a target for undesirable elements in Country G. The husband also said that in Australia he hoped to secure some work from his son, Mr J or through his business. I could not find any evidence about the husband’s intentions for the future – whether in Australia or elsewhere.
The evidence about his assets and liabilities is addressed above.
The husband is more than eight years older than the wife and therefore potentially has less time than her in the paid workforce.
…
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out above, what there is of the evidence in relation to the parties’ expenses.
Whereas the wife has been providing support for Ms I, the husband has received financial support from Mr J.
(f) Subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia, and the rate of any such pension, allowance or benefit being paid to either party;
I have referred to the evidence about the parties’ superannuation interests. Neither of the parties deposes to receiving an income tested benefit.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is no significant evidence about the standard of living enjoyed by the parties during cohabitation or at any time. The husband’s evidence about the living conditions he experienced in Country G is confusing.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
Neither of the parties is engaged in a course of education or training and there is no evidence that such a course is in prospect.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
In my view the likely orders will not adversely impact on the ability of a creditor to recover any of the debts listed in the balance sheet.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
Nothing comes to attention here.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
No probative findings are available in this regard, on the available evidence.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have referred to the wife living with Ms I. I understand that the husband was staying with the parties’ son, Mr J during the trial but there is no evidence about the financial incidents of their cohabitation.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
It is submitted on behalf of the wife that there should be a further allowance to her, largely because of the husband’s conduct in the proceedings – his failure to provide proper disclosure and because of his waste of assets.
As I have indicated earlier in these reasons, the mischief caused by the husband’s failure to make financial disclosure is not remedied by adding back sums of money to his account on the balance sheet. Once there is a failure of proper disclosure, the exercise of identifying a reasoned, just and equitable settlement of property is made impossible. The facts of the case, including importantly the parties’ financial circumstances provide the foundation from which discretion is exercised to achieve the aspirations of the legislation for property settlement. Without a sound foundation, the exercise of discretion necessarily becomes arbitrary.
In my view the failure of the husband to make proper financial disclosure warrants attention under s 79(4)(e) of the Act.
Otherwise, nothing comes to attention here.
Section 79(4)(f)
Beyond those referred to above, there are no relevant orders made under the Family Law Act 1975 (Cth).
Conclusion
In my view a further adjustment in favour of the wife is warranted.
The relevant matters arising from the remaining elements of s 79 of the Act, which include the s 75(2) of the Act factors referred to above are:
·The wife is eight years younger than the husband; and
·The husband has deliberately failed to make a full disclosure of his financial circumstances and of his dealings with joint funds since separation.
The first factor works in favour of an adjustment to the husband and the second, for a substantial adjustment in favour of the wife. In my view the allowance to the wife should be five per cent. Five per cent represents about $85,490 and such an allowance will make a difference between the parties of about $170,980.
Just and Equitable
The net value of the assets of the parties for the purposes of s 79(4) of the Act is $1,709,765.03 of which $16,845.00 is in the form of superannuation and $1,692,920.03 is in the form of non-superannuation assets.
If the assets are divided in the proportions 55 per cent to the wife and 45 per cent to the husband then the wife will have about $940,370 and the husband will have about $769,394.
Of the pool of assets identified by me, the husband has the benefit of and would like to retain:
Owner Description Value 1 H 4WD $5,000 2 H EE Pty Ltd NK 3 Preliminary distribution to the husband $666,916 4 Legal fees paid $82,600 Total $754,516.00
In order to bring him to 45 per cent of the net assets the husband would need to receive $14,878 from the wife which I will round out to $15,000.
That would leave the wife with:
Owner Description Value 1 J Former matrimonial home – B Street, Suburb C $1,412,500 2 H Investment property – D Street, Suburb E $525,000 3 W ETrade Australia Account # … $1,053 4 J Household contents $5,700 5 H Motor Vehicle $8,000 6 W CBA Account #... $1,558 7 W Legal fees paid $54,634 8 W AMP $6,962 9 W Care Super (#...) $720 10 W Equity Super Apex $4,057 11 W Super Trace (#...) $5,106 12 J Home loan on Lot D Street, Suburb E, CBA account ending #... -$529,540 13 J CBA loan #... Secured against B Street, Suburb C -$378,841 14 J CBA loan #... Secured against B Street, Suburb C -$141,981 15 J CBA loan #... Secured against B Street, Suburb C -$9,377 16 W Credit card debts -$10,301.97 Minus payment to the husband -$15,000 Total $940,249.03
I will provide for the wife to pay the husband $15,000 within 60 days. Importantly, the wife must refinance the properties in order to protect the husband from the associated debts. If she cannot achieve that within 60 days the properties will have to be sold. I will make orders in the general form proposed by the wife.
Conclusion under Section 79
This was a marriage that spanned 31 years and very significant contributions were made by each of the parties. They acquired substantial assets and provided for their children. The husband failed to account for a very significant proportion of the parties’ funds and some of those moneys are deemed to have been received by him. The parties shared the work of the marriage in different ways but overall their contributions were equal. An adjustment in favour of the wife is justified by reference to the husband’s failure to make proper disclosure. The wife will pay the husband $15,000 and retain the balance of the parties’ assets. She will refinance any joint debts or will sell the affected property and discharge the debts. In my view that will reflect a just and equitable division of their property.
I certify that the preceding one hundred and ninety nine (199) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 22 March 2016.
Associate:
Date: 22 March 2016
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