Ruan & Chui (No 3)
[2023] FedCFamC1F 630
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Ruan & Chui (No 3) [2023] FedCFamC1F 630
File number(s): SYC 4113 of 2018 Judgment of: CHRISTIE J Date of judgment: 28 July 2023 Catchwords: FAMILY LAW – FINAL PROPERTY – Where the applicant seeks orders for property adjustment following the breakdown of the parties’ marriage – Where the first respondent’s mother and his sister are joined to proceedings – Where the nature and extent of interests in property in both Country S and Australia is in dispute – Whether entitlements to monies and various items of property are accurately reflected by the title and possession – Disclosure – Finding that the first respondent has not met his disclosure obligations – Finding that title particulars are an inaccurate record of the equitable entitlements of the parties – Finding that the first respondent has transferred commissions, bonuses and other income to which he was entitled to the account of the second respondent and to the third respondent through a vehicle established by him to direct his income and commissions – Where the first respondent has failed to pay the mortgage on the former matrimonial home as previously ordered by the Court - Where the first respondent has failed to pay school fees for the parties’ child and/or child support – Contributions – Where the Court cannot be satisfied on the evidence that the first respondent’s financial contributions have not been wholly eclipsed by his diversion of funds outside of the marriage and effort to avoid disclosure obligations and financial obligations – Where the applicant’s financial contributions are not insignificant – Where the applicant’s non-financial contributions are significantly greater than the first respondent’s – Where the funds which remain in the pool available for division are minimal against the background of the matrimonial pool during the marriage and post-separation – Order for the wife to receive the whole of the equity in the two remaining real properties in Australia – Order under s 79 of the Family Law Act 1975 (Cth) binding a third party – Where the third party has been afforded procedural fairness as a represented party in the proceedings – Where the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 90AE
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 6.06
Cases cited: Bevan v Bevan (2013) 49 Fam LR 387; [2013] FamCAFC 116
Chang & Su (2002) FLC 93-117; [2002] FamCA 156
Chang v Su [2002] HCATrans 446
Hicks & Trustee of the Bankrupt Estate of Hicks [2021] FamCAFC 19
NHC v RCH (Chorn v Hopkins) (2004) FLC 93-204; [2004] FamCA 633
Norman & Norman [2010] FamCAFC 66
Omacini v Omacini (2005) FLC 93-218; [2005] FamCA 195
Oriolo & Oriolo (1985) FLC 91-653
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Weir and Weir (1993) FLC 92-338
Division: Division 1 First Instance Number of paragraphs: 215 Date of hearing: 27 February–3 March 2023, 25-26 May 2023 Place: Sydney Counsel for the Applicant: The Applicant appeared in person Counsel for the Respondents: Mr Fantin Solicitor for the Respondents: Sophie Zhang Lawyers Counsel for the Intervener: Ms Diec on 28 February 2023 Solicitor for the Intervener: AG Lawyers ORDERS
SYC 4113 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS RUAN
Applicant
AND:
MR CHUI
First Respondent
MS LIN
Second Respondent
MS J
Third Respondent
THE TRUSTEE FOR AG TRUST TRADING AS AG LAWYERS PTY LTD
Intervener
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
28 JULY 2023
THE COURT ORDERS THAT:
1.Within 28 days the first and second respondents give vacant possession of T Street, Suburb U (“the T Street property”) to the applicant wife.
2.The applicant be appointed trustee for sale of the T Street property.
3.The applicant do all acts and things and sign all documents necessary to sell the T Street property.
4.The applicant apply the proceeds of sale of the T Street property in the following order and priority:
(a)Discharge of mortgage secured on title;
(b)Any adjustments on settlement;
(c)Legal fees and disbursements associated with sale;
(d)Real estate fees and disbursements associated with sale;
(e)Payment of that portion of the $35,000 referred to in order 1 of the orders of 10 February 2022 as remains outstanding to the intervener; and
(f)The balance to the applicant.
5.That within 30 days the husband transfer to the wife all of his right title and interest in the property situate at and known as O Street, Suburb B, NSW (Folio No. …) (“the Suburb B property”).
6.That simultaneously with the transfer referred to in Order 5 the wife discharge the existing mortgages to Westpac secured over the Suburb B property.
7.In the event that the wife is unable to comply with order 6 then the wife be appointed trustee for sale of the Suburb B property.
8.That otherwise than as provided in these orders:
(a)The husband be declared solely entitled to all bank accounts, superannuation entitlements and property in his name;
(b)The wife be declared solely entitled to all bank accounts, superannuation entitlements and property in her name.
9.The wife is permitted to provide a copy of these orders to Westpac Banking Corporation.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application for property adjustment following the breakdown of the marriage between the applicant wife (Ms Ruan) and the respondent husband (Mr Chui). The second respondent is the husband’s mother (Ms Lin) and the third respondent is the husband’s sister (Ms J).
Ms Ruan conducted the litigation on her own behalf while the husband and his family members were represented by (the same) counsel. All parties gave evidence with the assistance of interpreters.
The focus of the case was squarely on whether both parties had faithfully informed the Court about the nature and extent of their interests in property both in Australia and Country S.
BACKGROUND
The parties were married in 2002 in City R, Country S and commenced cohabitation in 2003.
In 1998/1999, prior to the parties’ marriage, the second respondent (hereafter the husband’s mother) says she purchased a property at V Street, Suburb W, City R, Country S (“the V Street property”) using funds provided by her mother. Between 2000 and 2001 the husband’s mother says that she, the husband, the third respondent (the husband’s sister) moved into this property. The wife moved in after marriage in 2002. The husband’s sister moved to Australia at about this time. The wife’s position is that she acknowledges the V Street property was registered in the name of the second respondent, but asserts that it is beneficially owned by the husband. The husband says he had no property, just some savings at the time of marriage.
In 1999 the wife purchased an apartment at Y Street, Country S, (“the Y Street property”) in her sole name. This property had a mortgage. The fact that the wife owned this property at the commencement of the parties’ relationship was not controversial. The husband says he paid the wife a sum which she was able to apply to her mortgage. The wife agreed that the husband had provided those funds.
In 2003 apartment Z Street, Suburb AA, City R (“the Z Street property”) was purchased as an investment by the husband and wife.
In 2004 the wife says the husband asked her to sell her property at Y Street, Country S and she did so. The husband agrees the property was sold but disputes it was sold at his request. The wife bought two apartments at BB Street, City R (“the BB Street property) and CC Street, Suburb DD, City R (“the CC Street property”).
The husband says he paid part of the deposit for the BB Street property. The husband contends the parties purchased the CC Street property without a loan or mortgage and that he contributed half the purchase price.
The wife contends that her brother and parents bought the property at EE Street, Suburb DD, City R (“the EE Street property”) and that the husband and wife agreed to swap properties with them so that the CC Street property was owned by the wife’s family and the EE Street property by the wife. The title remained the same. The husband denied, at least initiallity, this arrangement.
In 2005/2006 the husband’s mother says that a property owned by her and her husband in City FF was demolished by the Country S government and she received compensation. She says that she gave her son one quarter of the amount but says the nature of this money is that it was a loan and not a formal agreement. The wife says that she accepts a property was demolished by the government and the four registered members of the household were allocated a sum of money. Those four members were identified by the wife as: the husband and his sister and the husband’s parents.
The husband asserts that the wife had a property which she owned with her father at 2 GG Street, Suburb AA, City R, Country S and that property was subsequently sold by the wife and the proceeds retained by her.
In 2007 the parties immigrated to Australia.
In 2007 the parties’ son, X was born. X is now 15 years of age and is the only child of the parties. X lives with the wife and has done so since separation.
In late 2007 HH Street, Suburb B NSW was purchased in the joint names of the husband and wife for a purchase price of over $250,000. The husband says he and the wife obtained a mortgage in the sum of $228,000.
In 2009 the wife says she gave the husband an authority to dispose of property in her name in Country S. The wife says that those funds were then used toward the acquisition of the parties’ property at O Street, Suburb B NSW.
In 2010 the parties sold HH Street, Suburb B and purchased O Street, Suburb B (“the Suburb B property”). The purchase price was over $600,000 and the parties obtained a mortgage in the sum of $382,800.
The husband’s mother says that in 2010 she and the husband’s father used funds from the demolished City FF property to purchase JJ Street, Suburb KK, City R (“the JJ Street property”). This property was purchased in the name of the husband. The wife asserts that the husband has beneficial ownership. The second respondent says that the property is held on trust for her.
The second respondent said in her affidavit that that property is currently rented and her husband receives the rental income. The wife’s case is that this property is empty and the husband’s father is dead.
The wife says that the source of funds for purchase of this property were the proceeds of sale of the parties’ matrimonial home in City R.
In 2012 the wife says that the parties sold the V Street property. She asserts that the proceeds of sale were retained by the husband.
In 2014 the wife says that the parties were both working for the G Group. Although the husband says that work may have commenced in 2015.
In 2014 the second respondent says she purchased LL Street, Suburb MM for $300,000, applying her own funds to the purchase. The wife asserts that the funds used to purchase this property came from a sale of the matrimonial home in City R (that is, the V Street property).
In 2016 the husband says the parties refinanced the mortgage over the Suburb B property. The wife says that this was undertaken by the husband alone. The wife asserts that the husband first arranged to refinance the $356,800 mortgage over the Suburb B property in mid-2014 and obtained a mortgage with another lender for $660,000. The wife asserts the husband in early 2016 obtained a second mortgage over the Suburb B property in 2016 for $324,000.
In 2016 T Street, Suburb MM was purchased in the name of the husband and the second respondent as tenants in common 5 per cent/95 per cent. There was a mortgage over the title.
In 2016 the husband applied $24,000 to the deposit for purchase of NN Street, Suburb PP. The husband says that deposit was forfeited.
In early 2017 the second respondent signed a contract for construction of a house on the property at T Street, Suburb MM. To do so, it was necessary for the second respondent to obtain finance.
On 24 February 2017 the husband and wife separated.
At the time of the parties’ separation the husband was employed as a real estate sales person by a company called G Pty Ltd. During the relationship the wife had also been employed by G Pty Ltd.
The second respondent asserts that in 2015 or 2016 she signed an agreement with G Pty Ltd in which she was to be paid for referrals to the business. The second respondent asserts that sums paid by G Pty Ltd to her were not commissions for the husband and that she estimates that she made at least 20 referrals.
On 3 May 2018 the husband transferred the sum of $162,030.63 to his mother.
On 9 May 2018 the husband transferred the sum of $12,050.30 to his mother.
In 2018 the husband’s sister registered E Pty Ltd, a company of which she was the sole director and shareholder.
In around 2018 the third respondent says E Pty Ltd signed an agreement with G Pty Ltd regarding referrals to the business. The third respondent asserts that sums paid by G Pty Ltd to E Pty Ltd were related to her contract and not commissions for the husband.
In 2022 E Pty Ltd was deregistered by the third respondent.
In June 2022 the wife received a default notice from Westpac in respect of the mortgage secured over the Suburb B property.
At the time of trial the Balance Sheet contended for by the parties was as follows:
Property Ownership Wife’s Value Husband’s Value ASSETS O Street, Suburb B Joint $1,250,000 $1,400,000 NN Street, Suburb PP deposit Joint (H) $24,000 N/A T Street, Suburb MM Husband + 2nd Respondent (H)
J (W)$1,100,000 $55,000 (5%)
(total: $1,100,000)Wife’s CBA account ending #...22 Wife $660.97 N/A X’s CBA account ending #...92 Wife $290.87 N/A CC Street, Suburb DD, City R, Country S Wife + Wife’s parents N/A $312,500 JJ Street, City R Husband $600,000 N/A QQ Street, City R Husband $600,000 N/A Motor Vehicle 1 Wife $10,000 N/A Shares – Country S Husband $300,000 N/A Shares – Country S Wife $6,000 N/A D Bank account ending #...18 Husband NK $15.03 CBA bank account ending #...90 Husband NK $1.71 Westpac bank account ending #...36 Husband NK $23.52 Motor Vehicle 2 Husband $10,000 $5,000 F Pty Ltd Husband N/A NIL Furniture of Suburb MM property Husband + 2nd Respondent $5,000 N/A Furniture of Suburb B Property Joint $5,000 $2,000 SUPERANNUATION Superannuation Fund 1 Husband $87,567 $77,567 Superannuation Fund 2 Husband NK N/A LIABILITIES Suburb B Mortgage Joint $1,076,931 $1,076,931 Suburb MM Mortgage Husband + 2nd Respondent $24,294 $24,294 (5%of$485,880 total) Stamp Duty payable on NN Street Joint $13,003 N/A School fees and loans from others Joint $190,000 N/A Westpac credit card Wife $4,233 N/A Lawyers fees – AG Lawyers Wife $35,000 N/A HELP debt Wife $14,012 N/A RR Finance personal loan Husband $47,250 $47,250 Child support arrears Husband $192,380.45 N/A ADDBACKS Withdrawal from joint account without husband’s consent Wife N/A $200,000 Y Street, City R, Country S Wife N/A $10,000 BB Street, City R, Country S Wife N/A $10,000 CC Street property Wife N/A $42,000 Z Street, Suburb AA, City R, Country S Wife N/A $20,000 1 & 2 GG Street, Suburb AA, City R, Country S Wife N/A $50,000 Monies transferred by husband from CBA joint account to second respondent account ending #...10 Husband $64,3652.12 [sic] N/A Commissions of the husband and wife transferred by the husband to F Pty Ltd Husband $131,791.75 N/A Monies transferred by the husband from joint account ending #...90 Husband $531,159.21 N/A Commissions of the husband and wife transferred by the husband to E Pty Ltd account ending #...65 Husband $1,387,848.66 N/A Monies from joint CBA account transferred by husband to 2R account ended #...32 Husband $654,547.82 N/A Monies transferred by husband from joint CBA account to 2R account ending #...61 Husband $271,822.47 N/A Monies transferred by the husband from joint CBA account to 3R account ended #...94 Husband $102,887.17 N/A Monies transferred by the husband from joint CBA account to 3R account ended #...03 Husband $361,317.29 N/A Monies transferred by the husband from joint CBA account to 3R account ended #...04 Husband NK N/A Commissions of the husband and wife transferred by the husband to 2R accounts ending #...12 and #...39 Husband $516,448 N/A Commissions of the husband and wife transferred by the husband to Westpac account ending #...46 Husband $134,985.37 N/A Expression of interest fees transferred by husband to G Pty Ltd account ending #...36 Husband $501,851.67 N/A G Pty Ltd commissions Joint $712,000 N/A PROCEDURAL HISTORY
Some of the orders which have been made in the litigation to date are relevant to the assessment of post-separation contributions, disclosure issues and money payable to the wife’s former solicitors and I set out the details here.
On 6 August 2018 her Honour Judge Boyle made orders which included as follows:
…
2. That immediately upon making these orders, the husband shall commence paying the monthly instalments on the mortgage over the property located at [O Street, Suburb B] (“The [Suburb B] property”), in such sums and at such times when they fall due, as advised by Westpac from time to time, but presently in the sum of:
a.$450 per month until 15 September 2018 and from 15 October 2018, $2,588 per month, in respect of account number […86];
b.$250 per month until 15 September 2018 and from 15 October 2018, $1,255 per month, in respect of account number […84].
3. The wife shall have exclusive occupation of the [Suburb B] property.
The parties were the owners of an investment property at SS Street, Suburb MM, NSW.
After separation while these proceedings were on foot, in circumstances where the parties were in default of their obligation to make mortgage payments in respect of the Suburb B property, orders were made by his Honour Judge B Smith (as he then was) on 2 November 2018 as follows:
…
2. That within 14 days of the date of these orders, the parties shall take all necessary steps and execute all necessary documents to cause the property located at [SS Street, Suburb MM], NSW […] being folio number […] (“The [Suburb MM] Property”) to be listed for sale, by such method as agreed, but failing agreement, by public auction, subject to the following:
a. The wife shall nominate three agents who shall sell the [Suburb MM] Property and the husband shall select one;
b.The husband shall nominate the three conveyancers and the wife shall select one;
c.The listing reserve price shall be as agreed between the parties, and failing such agreement, to be determined by the proper officer of the Real Estate Institute or their nominee; and
d. That the proceeds of the sale be disbursed as follows:
i.Payment of agent’s commission, advertising expenses and legal expenses of the sale; and
ii.Payment of any money due and owing to the mortgagee on title to the Property.
The matter came back before the Court on 14 November 2018 at which time the Court made the following additional orders:
1. In addition to Order 2(d) made on 2 November 2018, the proceeds of sale be dispersed as follows:
a.Payment of the entire residue of the funds after payment of other matters are to be paid in reduction of the mortgages over the [Suburb B] property, being [O Street, Suburb B].
2.Order 2 of the orders made by Judge Boyle on 6 August 2018 shall continue until such time as the proceeds of the sale of the [Suburb MM] property are paid against the mortgages of the [Suburb B] property, but upon payment of the proceeds of the sale of the [Suburb MM] property against the mortgages of the [Suburb B] property that order shall terminate and the wife and the husband shall thereafter be equally responsible for the payment of the mortgages over the [Suburb B] property.
…
AND THE COURT NOTES THAT:
A. The parties should determine for themselves which of the mortgages over the [Suburb B] property should be paid and in what sums.
…
The matter then came before the Court on 18 December 2018. The records record that by consent, an order was made as follows:
…
3. By consent, the [Suburb MM] property at [SS Street, Suburb MM] NSW […] (Folio Number […]) (“the [Suburb MM] Property”) be sold and the proceeds of sale be paid towards to the mortgages over the [Suburb B] property at [O Street, Suburb B] NSW […] (“the [Suburb B] Property”).
It does not appear that that consent order was complied with until the middle of the following year and on 12 April 2019, the Court made the following order:
…
7. The second respondent be restrained by injunction from disposing of or further encumbering the real property at [T Street, Suburb MM] NSW […] until further Order of this Court.
On 29 July 2020 the Court granted the wife leave to lodge a caveat over the T Street property and ordered (as a default provision) the sale of the T Street property. Those orders read as follows:
1.The Applicant, [Ms Ruan], be granted leave to lodge a caveat over the real property known as [T Street, Suburb MM] in the State of NSW […].
2.The First Respondent, [Mr Chui], be restrained by injunction from disposing of or further encumbering the real property at [T Street, Suburb MM] NSW […] until further Order of this Court.
3.If the First Respondent does not, within 28 days of these Orders, pay all outstanding sums due and payable in respect of the mortgage or mortgages over the property at [O Street, Suburb B] NSW […], then the property at [T Street, Suburb MM] NSW […] is to be sold and the net equity in that property, after payment of all usual sale costs, is to be used to pay those outstanding mortgage sums, and the remainder held in trust by the First Respondent’s solicitors to be used to pay the mortgage over [O Street, Suburb B] NSW […] on an ongoing basis.
a.If the parties cannot agree on Orders to facilitate this Order they have liberty to approach to have the matter re-listed urgently, and the Court will make machinery provision orders to give effect to these Orders.
4.If the First Respondent does not continue to pay all sums due and payable in respect of the mortgage or mortgages over the property at [O Street, Suburb B] NSW […] within two months of them falling due and payable, then the property at [T Street, Suburb MM] NSW […] is to be sold and the net equity in that property, after payment of all usual sale costs, is to be used to pay those outstanding mortgage sums, and the remainder held in trust by the First Respondent’s solicitors to be used to pay the mortgage over [O Street, Suburb B] NSW […] on an ongoing basis.
a.If the parties cannot agree on orders to facilitate this order they have liberty to approach to have the matter re-listed urgently and the Court will make machinery provision orders to give effect to these Orders. Orders [sic]
It does not appear as if the wife relisted the matter in order to enforce the orders for sale. On 10 February 2022 orders were made which related to the wife’s outstanding legal fees in the proceedings. Those orders read as follows:
1. The Applicant pay the Intervener the amount of $35,000, inclusive of interest and costs.
2. The amount referred to in Order 1 be deducted in the first instance from any monies directed to be paid to the Applicant by any party to these proceedings or any third party.
3. From 14 February 2022, the Applicant agrees to pay to the Intervener the amount of $50 per week, until such time as the Applicant has sufficient monies to discharge any amount outstanding to the Intervener in accordance with these orders.
4. The Intervener remain a party to these proceedings to ensure that it receives updates as to the progression of the proceedings.
5.Within 7 days of the amount in Order 1 being fully discharged by the Applicant, the Intervener shall file a Notice of Discontinuance to the Application in a Case filed 10 March 2020.
…
The Court then on 5 May 2022 made procedural orders for valuation of properties in the following terms:
…
5. Within 28 days of the date of these Orders the parties will jointly cause an independent valuer to value the properties located at:
•[O Street, Suburb B] NSW […]
•[T Street, Suburb MM] NSW […]
•[CC Street, Suburb DD, City R, Country S]
•[JJ Street, City R, Country S]
The matter was listed for a final hearing before her Honour Judge Beckhouse in August 2022. That hearing was vacated on 3 August 2022. Judge Beckhouse made the following notations:
THE COURT NOTES THAT:
…
D. Orders were made on 5 May 2022 for the obtaining of valuations of the properties relevant to these proceedings, however no valuations have been prepared.
E.The legal representative for the First Respondent and Second Respondent has indicated to the Court that the valuations of the [Suburb B] Property and [Suburb MM] Property will be available within 7 days from the date of these Orders, however valuations for the [City R] properties may not be available by the final hearing.
(Original emphasis)
When the matter came before the Court for final hearing, the parties had an agreement as to the value of the properties in Australia but no valuations had been undertaken in respect of the properties located in City R and neither party had sought any interlocutory orders to ensure that the valuations take place. No party applied for an adjournment to permit valuation evidence to be led.
Ultimately, I took the view that the litigation, having been before the Court for at least five years, needed to come to an end and that it was a matter for the parties as to what evidence they intended to rely upon at the final hearing and an absence of evidence would limit the scope of the orders which I might ultimately be able to make.
THE LAW
The case concerns competing applications for property adjustment and as such is governed by Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
At paragraph 60 of the Full Court’s decision in Bevan v Bevan (2013) 49 Fam LR 387 their Honours discuss the usual steps undertaken by a Court when considering an application for property adjustment orders as follows:
The four stage (or step) process involves:
•identification and valuation of the property of the parties;
•identification and evaluation of contributions to the property (including property no longer owned by the parties);
•identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2);
•consideration of matters of justice and equity.
The same Court noted however, that the pathway is not mandatory but, as the Full Court in Norman & Norman [2010] FamCAFC 66 observed, a way of illuminating “the path to the ultimate result”.
In a case such as the present one which focuses significantly on the first step, the four stage process is a useful tool and I have followed this approach
Disclosure
This is, as indicated above, a case in which each party raises a concern about the extent of disclosure or non-disclosure of the other party.
Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) requires parties to financial proceedings to make full and frank disclosure of their financial circumstances. This requirement is discussed in: Oriolo & Oriolo (1985) FLC 91-653; Weir and Weir (1993) FLC 92-338.
The Full Court in Weir and Weir (1993) FLC 92-338 had this to say about non-disclosure:
… [W]here there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s75(2) factors.
In a similar vein the Full Court recently wrote in Hicks & Trustee of the Bankrupt Estate of Hicks [2021] FamCAFC 19:
86. It is trite that the integrity of the s 79 process heavily depends upon the absolute duty of parties to meet their obligations of full and frank disclosure of all information relevant to the case, including disclosure of their financial position both as to assets and liabilities.
87.Whilst at one time this Court appeared to adopt the approach in non-disclosure cases that the jurisdiction under s 79 of the Act was limited to making orders with respect to identified, identifiable or quantified assets (see, for example, Monte and Monte (1986) FLC 91-757), more recent Full Court authority supports the principle that a party should not be able to take advantage of his or her own non-disclosure such that it may be appropriate to make an order beyond the ascertained property, provided that any order made on this basis can be seen to achieve substantial justice relative to the subject non-disclosure (Weir at 79,593).
(Footnotes omitted)
CONSIDERATION
What are the assets of the parties available for adjustment between them?
It is important to endeavour, in so far as is possible having regard to the evidence, to set out what assets are available for adjustment between the husband and the wife. In order to undertake this task it will be necessary to make findings about the wife’s contentions that assets in the names of his mother and his sister are assets to which the husband and wife (or the husband) have a beneficial entitlement. It will also be necessary to make findings about the husband’s contentions that properties registered in the names of the wife’s family are assets to which the wife has a beneficial entitlement. Finally, it will be necessary to evaluate the wife’s claim that the husband has transferred capital, income and or commissions to his mother and sister and to determine whether those transactions should be set aside and/or the monies regarded as a notional asset of the husband. Accordingly, the issues which appear to arise for determination are as follows:
(a)Was the V Street property which was registered in the names of the husband’s parents the property of the husband?
(b)Did the husband’s mother receive compensation for the demolition of the City FF property? Did she gift or loan one quarter of the amount to the husband? Alternatively did the husband have an entitlement to one quarter of the amount as a registered occupant?
(c)Were the proceeds of sale of the parties’ property in BB Street applied to acquisition of property in Australia?
(d)Does the wife have any interest in property in Country S?
(e)Does the husband’s mother have an interest in the property registered in the husband’s name in JJ Street?
(f)Was the deposit which the parties paid to acquire an investment property in Suburb MM forfeited as the husband contends or returned to the husband as the wife contends?
(g)Is the husband’s entitlement to the T Street property greater than is reflected by the title to the property?
(h)How was the acquisition of the T Street property funded and how have its outgoings been met subsequently?
(i)Did the husband provide his mother with money representing his own commissions in the period after separation?
(j)Did the husband provide his sister (through the vehicle of E Pty Ltd) with money representing his own commissions in the period May 2018 to September 2019?
(k)What was the husband’s obligation to meet mortgage payments on the home occupied by the wife and the parties’ son in the post-separation period?
I must record that at the conclusion of the evidence it was difficult to determine who had advanced what funds for what purpose. However, it was clear that the second and third respondent had not conducted most (if not all) of the transactions in respect of identified accounts ostensibly in their names (or an entity controlled by them) and those transactions had been undertaken by the husband in these proceedings.
Value of Suburb B property
The wife appeared initially to challenge the value attributed to the Suburb B property by the single expert. The single expert was not required for cross-examination. No submissions were made by the wife contrary to the expert opinion. Accordingly I accept the value of $1,400,000.
Value and ownership of T Street property
One of the key issues to determine is whether the property which is registered in the names of the husband and his mother should be treated by this court as owned by the husband and his mother in the proportions reflected on title or whether – as the wife contends – the property should be treated as the property of the husband alone by reason of his having made the entirety of the financial contributions towards its acquisition from his or their funds. If the husband’s position is adopted the value is $55,000. If the wife’s position is adopted the value is $1,100,000
The property is variously referred to as T Street, Suburb U or T Street, Suburb MM. To avoid confusion with other properties I will refer to it in these reasons as the T Street property.
There is a caveat on the title registered by the wife in accordance with the court orders permitting same.
It was purchased in 2014. The purchase price is recorded in the annexures to the valuation as $300,000.
At the time of acquisition there was no structure on the land.
The second respondent says she paid the deposit of $30,000 from her funds.
A D Bank account …39 in the name of the husband’s mother shows a withdrawal in 2014 of $30,000 to TT Real Estate and a further withdrawal of $16,790 marked UU Pty Ltd.
What is significant about this account is that it also receiving cash deposits from an unidentified source in the period leading up to payment of the deposit and a specific deposit of $29,248.70 after payment of the deposit. At a point in time after the payment of the deposit the account also received transfers from the linked D Bank account ending #...12 which are plainly on their face commission monies to which the husband was entitled. These facts support the conclusion that the husband was using this account and support the conclusion that while the deposit was sourced from a bank account in the name of the second respondent the funds in the account were those of the husband. There was no objective evidence to support the conclusion that the funds came from the second respondent from the sale of real estate in Country S or otherwise.
The second respondent says in her affidavit that her son’s name was only added to the title of the T Street property at the time she was required to obtain finance for construction (2017). This is inconsistent with the information contained in Exhibit 10 which shows the names of the purchasers in 2014 as the husband and his mother but consistent with the contract the second respondent attached to her affidavit.
I accept that the deposit for the T Street property came from the D Bank account in the name of the second respondent. It is not plain that she made any further contribution of capital to the acquisition or improvement of this property. Her affidavit material says:
18. I pay the mortgage using my savings which I have from the remainder of the compensation from the [City R] government for [City FF] Property, the proceeds from selling [V Street] Property, and my [Country S] pension which I about [Country S currency] 5000 per month.
(As per the original).
To the extent that the second respondent claims to have made mortgage payments the objective evidence does not support this assertion. This is discussed in more detail below.
The property is valued at $1,100,000. The mortgage at the time of trial was $485,880. For reasons which follow I am comfortably satisfied that the husband has provided his mother funds to which she was not otherwise entitled and accordingly I am satisfied that the orders which I propose to make, including for the sale of the T Street property and the application of the whole of the net proceeds to the wife to the exclusion of the husband’s mother are orders which are just and equitable as is required by the provisions of both ss 79(2) and 90AE(3)(d) of the Act.
The entitlement of the third party, here the husband’s mother, is that she holds the bare title in circumstances set out in more detail below, where the funds to acquire the property and service the outgoings and mortgage have all come from the husband.
It follows that I am satisfied of the following:
(a)The husband’s mother has been afforded procedural fairness as a represented party in the proceedings: s 90AE(3)(c) of the Act;
(b)The order which I intend to make dealing with the T Street property is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage.
Suburb PP deposit
The wife sought to include in the pool of assets the monies paid by the parties as a deposit on NN Street, Suburb PP. The wife appeared to accept that the transaction did not complete. She submitted that since G Pty Ltd were involved in the sale the usual principle that the purchaser who does not complete will forfeit their deposit did not apply in this case. The wife was not able to point to any evidence to support the conclusion that the husband had the deposit monies returned to him and I will not include them in the balance sheet. It follows that I do not accept that the parties have a liability to pay stamp duty on the sale which did not complete and the purported liability will not be included.
CC Street property
Judge Beckhouse made an order that the parties obtain a valuation of CC Street, City R, Country S. I expect that this was a reference to the CC Street property. The husband says he believes that the title to this property is registered in the names of the wife and other members of her family but that he contributed half of the purchase price when the property was acquired (without mortgage). The wife says that she did indeed purchase the CC Street property which was subsequently swapped for a property owned by her brother and parents in EE Street. That property was subsequently sold – during the marriage and the parties received their funds according to the wife.
The wife cross-examined the husband about this property swap. The husband did not disagree with the proposition that one property had been exchanged for the other. The husband’s complaint was confined to two matters: firstly that he did not believe it was a fair swap and secondly that his name was not on the title. I accept the wife’s evidence that when the property to which these parties were beneficially entitled was sold they received the proceeds. This conclusion is supported by the husband’s contention as to addbacks. He seeks that the court addback an amount of money said to represent what he says was the difference in value between the two properties.
The husband has not established to my satisfaction that that there is any property in the name of the wife in City R to which she has a beneficial entitlement.
JJ Street property
The wife says that JJ Street, City R should be included in the balance sheet as an asset of the husband. The husband agrees it is a property registered in his name. The husband says that while it is registered in his name it is his mother’s property. Attached to the affidavit of the husband’s mother was a lease in respect of the JJ Street property. The lease is said to have commenced in 2018. The lessor is Mr M. In her affidavit the husband’s mother identifies that person as her husband or the father of the husband in these proceedings.
Significantly, the husband’s mother does not list this property in her financial statement filed 20 February 2023 nor does she tell the court that she receives any rental income from this property. This is consistent with the wife’s position, namely that the property is both legally and beneficially that of the husband.
The wife says that the JJ Street property is registered in the name of the husband because the husband funded its purchase and the opportunity to purchase came from the husband’s employer. Further she says that the husband’s father is deceased. The husband says it is registered in his name because the opportunity for its purchase arose from his employment but that he did not make any financial contribution to its acquisition.
The husband’s sister accepted, during cross examination that her father has died. Neither the husband in the proceedings nor his mother gave any evidence about this changed circumstance. Given it was their case that he was receiving the rents from the property registered in the husband’s name the failure to lead any evidence about this was a factor supportive of the wife’s claim that the property did belong to the husband. If the husband’s father had been receiving rents (as the second respondent asserted) – what happened to those rents after his death? Unanswered questions in litigation do not create the opportunity to fill lacunae with theories or speculation but they do allow me to approach the husband’s evidence and that of his mother on this topic with caution.
As Callinan J said in Chang v Su [2002] HCATrans 446 in rejecting an application for special leave to appeal from the Full Court’s decision in Chang & Su (2002) FLC 93-117:
… a court has to do the best it can. It does the best it can, having regard to the evidence that is adduced and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the court can make.
The court is therefore permitted to make orders without necessarily referencing an overall pool. Whilst the court may take a robust approach it must nonetheless have some evidentiary foundations for a finding and cannot act upon suspicion alone.
The parties were ordered to obtain valuations of the property in City R. They failed to do so. I asked the husband’s counsel what value I should attach to the property in those circumstances. He said “nil”. I do not accept that can be the case. While it is not open to me to substitute my own opinion as to value it cannot be the case that if I accept the husband is the legal and beneficial owner of the property then the value of that property is fixed at nil as a consequence of his failure to file evidence in accordance with a court order.
The husband agreed to an order for valuation of this property. The husband has not satisfied me that he is not both the legal and the beneficial owner of the JJ Street property. Accordingly, I intend to find that the JJ Street property is an asset of the husband with an undetermined value.
QQ Street property
The wife included in the balance sheet a property identified as QQ Street, City R and said it to be the property of the husband. There is no reference to this property in her evidence and accordingly I am unable to find that this should be included as an asset of the husband.
Other property
I have included the parties’ cars at the value each attributed to their own car in their respective financial statements.
I have excluded the parties’ bank accounts and household contents as de minimus.
The wife included an amount in the balance sheet as “husband’s shares”. Her evidence was that the husband had shares with VV Bank in Country S worth around $300,000. She said she had her own account with the same company with a value of $6,000. The husband accepts that the parties historically owned shares in Country S but gave evidence that they were sold in 2010, 2015 and 2016 to fund property purchases. The wife has not established that the husband has any present entitlement to shares in Country S. The wife says her shares were managed by the husband. He denies that. The wife has not discharged the burden to establish on the balance of probabilities that the husband has shares. Similarly, the husband has not established that the wife continues to own shares. I will exclude any shareholding from the balance sheet.
The wife included F Pty Ltd in the list of assets but did not attribute a value to it. It does not appear as though the company has traded recently and I accept that it appears to have been a vehicle to receive commissions, referral fees and the like. I do not accept that it has a value which is appropriately recorded on the balance sheet.
Superannuation
The wife included two superannuation entitlements in the name of the husband. The husband accepts he has a superannuation entitlement with Superannuation Fund 1. He says it is valued at $77,567 (as per his financial statement) while the wife says it is valued at $87,567. I was not provided with any independent documents to verify the balance of the account. There was no cross-examination on the issue. I find the balance of the account is $77,567.
The wife also referred in the balance sheet to Superannuation Fund 2, said to be an entitlement of the husband with an unknown value. There is no evidence about this and I have excluded it from the balance sheet.
Liabilities
I have not included in the schedule of assets, liabilities and superannuation the husband’s personal loan to RR Finance as his costs notice suggests that it was applied to payment of legal fees (and otherwise applied to child support debt) and consistent with the principles discussed in NHC v RCH (Chorn v Hopkins) (2004) FLC 93-204 its inclusion would result in the wife bearing some responsibility for the husband’s legal fees without the necessary s 117(2A) considerations being taken into account.
I have not included the husband’s outstanding child support liabilities as an item in the balance sheet either for similar reasons. The inclusion of a liability which is the husband’s alone in the balance sheet of the parties’ assets and liabilities would see the wife become responsible for a child support debt owed to her.
In application of the same principles I will exclude the monies the wife owes to her former solicitors from the balance sheet.
Addbacks
There are a number of entries in the joint balance sheet which appear under the heading “addbacks”. Omacini v Omacini (2005) FLC 93-218 at 79,617 – 79,618 [30] and 79, 619 [39] and Trevi & Trevi (2018) FLC 93-858 at 78,454 [27]-[30] may be taken as authority for a cautious approach to the inclusion of assets or monies in the pool for division in circumstances where those assets no longer exist. I accept that it will be necessary in some cases in order to do justice and equity as between the parties for the court to include an addback. Here the task is difficult because the vast majority of what the wife seeks to include as “addbacks” are effectively income which the husband has diverted to his family. In some cases this income was diverted prior to separation. The husband also seeks that I include in the balance sheet “addbacks” as against the wife. I will consider each of the claims in turn.
The husband says that a withdrawal by the wife from the joint account without his consent in the sum of $200,000 should be added back. There is no rule that monies which existed at or about the time of separation but do not exist at the time of hearing should be added back. It is necessary to understand how those funds have been applied.
On 14 November 2016 (before the date the parties agree they separated) the wife withdrew $120,000 from the mortgage facility secured over the Suburb B property. On 3 January 2017 (again prior to separation) the wife withdrew $100,000 and on 27 January 2017 a further $9,000. Those funds total $229,000 but would appear to be the $200,000 which the husband says should be included as an addback.
The parties had, in March 2016, obtained a second mortgage secured over the Suburb B property in the sum of $324,000 with the intention of constructing a granny flat. The wife says, and there was no serious challenge to this evidence, that the funds she removed were placed in an account in her son’s name and were applied to construction costs and educational expenses for X. In that case it would not be appropriate to treat funds which have been expended on capital improvements and living expenses as though those funds were still in the possession of the wife. To treat those funds as an “addback” in the circumstances of this case would make the resulting orders unjust and inequitable.
The husband asserts that the wife sold 2 GG Street, Suburb AA, City R, Country S and retained the proceeds. He says this should be added back. He says this property was in the names of the wife and the husband’s father.
The husband asserts the wife sold 1 GG Street, Suburb AA, City R, Country S and retained the proceeds. He says this should be added back. He says this property was in their joint names.
The wife agrees these properties were sold. She says the funds were retained by the husband.
Both 1 and 2 GG Street, Suburb AA, City R, Country S were sold in 2006. There was no objective evidence available about these sales. The sales occurred during the parties’ intact marriage: three years after the parties married and a year before they both migrated to Australia. The sales occurred at least ten years before they finally separated. I am unable to find that either the husband or the wife retained funds from those sales. I am certainly unable to reach the conclusion that justice and equity require me to treat the sale proceeds as a notional asset or addback in the hands of one or other of the parties and I decline to do so.
In a similar vein the husband submitted that I would “addback” the proceeds of a property located at Z Street, Suburb AA, City R, Country S. The wife gave evidence that the property had been purchased off the plan just after marriage and sold immediately upon completion. It is not apparent from the evidence if there were proceeds of sale or how they were applied. I will not be including any amount from that sale as an addback.
The husband sought to include as an addback an amount of $42,000 which he said represents the wife’s interest in the CC Street property. I have discussed this property transaction above. The husband says that he and the wife contributed half the purchase price but the property was registered in the name of the wife and other members of her family. The wife agrees that she purchased CC Street, Suburb DD, City R, Country S in 2004. She says the purchase was facilitated by her applying the proceeds of sale of her property in Y Street. She says that her brother and her parents bought a property nearby the same year. She says that she and her brother effectively swapped properties (without any price adjustment) so that the CC Street property became the brother’s property and the EE Street property became the wife’s property. The EE Street property was subsequently sold and the wife says the parties received the funds in 2012.
To the extent that the husband appeared to be suggesting that there was an unfairness to the swap in so far as the properties may not have been of equivalent value, I am unable on the evidence before me to draw any conclusion. No money will be “added back”.
The husband sought to include an amount of $10,000 as an addback in the wife’s name referrable to Y Street, City R, Country S and an amount of $10,000 as an addback in the wife’s name referrable to BB Street, City R, Country S. It is not clear where these figures come from. The wife’s case was that she gave the husband authority to sell the properties as she was in Australia and he was in City R and as far as she knew the proceeds were applied to the parties’ acquisition of property in Australia. There was no cross-examination on behalf of the husband to challenge the wife’s evidence in this regard. No monies will be added back in respect of these properties.
The wife sought to include a number of different amounts as addbacks as against the husband. They predominantly related to amounts of money transferred by the husband to accounts in the name of the husband’s mother, the husband’s sister or E Pty Ltd. They also included instances where the wife asserted that the husband had used the parties’ funds to pay expression of interest fees to G Pty Ltd. The amounts which were enumerated by the wife included transactions both before and after the parties’ separation.
The wife argued that it was necessary to include monies transferred by husband from CBA joint account to second respondent’s account ending #...10 in the sum of $64,365.12 between November 2016 and May 2018. It was not clear which account the applicant was referring to when she used the expression “CBA joint account”. There is no evidence that the parties had a joint CBA account. From context I have assumed that this account was one which the wife referred to as a “family account” being an account in her husband’s name ending #...90. She says the husband transferred money from this account into an account with his mother. I have reviewed the statements for that account for the relevant period and they show two transfers from the husband’s bank account #...90 to his mother’s account on 12 January and 11 July 2017. They total $2,133.89. I do not propose to addback the amount the wife suggests nor, in the absence of further evidence the sum of $2,133.89.
The wife sought to include as an addback commissions of the husband and wife transferred by the husband to F Pty Ltd in the sum of $131,791.75. It was not plain how the figure was calculated but the bank statements attached to the wife’s affidavit demonstrate:
Direct Credits from G PTY LTD into F Pty Ltd Account #...35
Miscellaneous Credits into F Pty Ltd Account #5635
Date Description in Bank Statement Amount 30 August 2018 Direct Credit … G PTY LTD Aug18 … G PTY LTD $7,260.00 28 September 2018 Direct Credit … G PTY LTD Commission Sep18 G PTY LTD $4,908.75 29 October 2018 Direct Credit … G PTY LTD Commission Oct 18 $5,878.13 26 November 2018 Transfer From WW Company Referral Fee $1,725.00 27 December 2018 Direct Credit … G PTY LTD $5,000.00 29 January 2019 Direct Credit … G PTY LTD $5,000.00 26 February 2019 Direct Credit … G PTY LTD Commission Feb 19 $18,282.69 28 March 2019 Direct Credit … G PTY LTD Commission Feb19 $12,861.76 26 April 2019 Direct Credit … G PTY LTD Commission Apr19 $14,355.00 7 May 2019 Direct Credit … G PTY LTD … $270.37 7 May 2019 Direct Credit … G PTY LTD … $178.11 31 May 2019 Direct Credit … G PTY LTD Commission May19 $6,590.84 4 February 2020 Transfer From G PTY LTD Commission Jan20 $5,041.66 20 April 2020 Transfer from NetBank $50.00 Total $87,402.31
Date Description in Bank Statement Amount 20 April 2020 Transfer from NetBank $50.00 7 May 2020 Direct Credit … ATO ATO …67 $3,000.00 14 May 2020 Direct Credit … Service NSW … $9,988.00 18 June 2020 Direct Credit … ATO ATO…23 $3,000.00 2 August 2020 Direct Credit … ATO ATO…03 $3,000.00 1 September 2020 Direct Credit … ATO ATO…71 $3,000.00 4 September 2020 Direct Credit … ATO ATO…84 $4,500.00 30 October 2020 Direct Credit … ATO ATO…39 $3,000.00 3 December 2020 Direct Credit … ATO ATO…78 $2,400.00 15 December 2020 Direct Credit … ATO ATO…62 $2,400.00 12 January 2021 Direct Credit … ATO ATO…60 $3,600.00 14 February 2021 Direct Credit … ATO ATO…72 $2,000.00 14 March 2021 Direct Credit … ATO ATO…97 $2,000.00 11 April 2021 Direct Credit … ATO ATO…33 $2,000.00 6 October 2021 Direct Credit … ATO ATO…12 $501.00 Total $44,439.00 I accept that the husband has had the benefit of those funds. It is not appropriate to merely add them back without understanding how they may have been applied (living expenses, business expenses, mortgage payments on T Street property) but I accept it is appropriate to take into account that they were received by the husband after separation and apart from their application to mortgage repayments are not otherwise represented in the balance sheet.
The wife sought to include as an addback in the balance sheet monies transferred by the husband from the account she called the joint account ending #...90 totalling $531,159.21. These transfers were said to have occurred in a ten year period which straddled separation. Again, it was not plain how this figure was calculated or whether it included the monies said to have been transferred from that account discussed at [111]. The wife has not demonstrated that I should add back those funds.
E Pty Ltd addbacks
The wife sought to include as an addback in the balance sheet the sum of $1,387,848 described as commissions of the husband and wife transferred by the husband to E Pty Ltd. I have had regard to the bank statements for E Pty Ltd. The bank statements for E PTY LTD CBA Account No. ending #...65 for the period 17 May 2018 to 1 August 2022 contain the following deposits which I have classified under four headings.
Miscellaneous Deposits
Date Description in Bank Statement Amount 29 June 2018 Chq Dep Branch AC Building 1 JUN 18 $153,041.92 8 July 2018 Transfer from NetBank $5,000.00 9 August 2018 Cash Dep Branch AC Building $200,000.00 8 December 2018 Transfer from Ms YY Commbank app $20,000.00 8 December 2018 Transfer from Ms YY CommBank app $80,000.00 20 December 2018 Chq Dep Branch Suburb PP $27,712.58 18 January 2019 Cash Dep Branch Suburb AD $27,850.00 21 January 2019 Direct Credit … Ms ZZ interest $5,000.00 24 April 2019 Cash Dep Branch AC Building $70.00 1 May 2019 Cash Dep Branch AC Building $100.00 5 June 2019 Cash Dep Branch AC Building 1 pay for credit card $500.00 6 June 2019 Cash Dep Branch AC Building 1 personal loan 4 paid $650.00 4 July 2019 Cash Dep Branch AC Building $6,000.00 26 November 2019 Transfer From XX Finance $6,250.00 14 February 2020 Transfer from Ms ZZ NetBank PAYBACK $15,490.37 21 May 2020 Direct Credit … ATO ATO…71 $3,000.00 18 June 2020 Direct Credit … ATO ATO…41 $3,000.00 23 July 2020 CASH/CHEQUE DEPOSIT CBA ATM Suburb AE NSW $1,618.91 2 August 2020 Direct Credit … ATO ATO…35 $3,000.00 1 September 2020 Direct Credit … ATO ATO…35 $3,000.00 11 September 2020 Direct Credit … ATO ATO…51 $4,500.00 1 November 2020 Direct Credit … ATO ATO…26 $3,000.00 4 March 2021 Direct Credit … ATO ATO…74 $1,500.00 5 May 2021 Transfer from NetBank $490.00 29 June 2022 DEPOSIT CASH $300.00 CHEQUE $0.00 $300.00 Total $571,073.78 Deposits from Sales of AB Company
Date Description in Bank Statement Amount 20 September 2019 Direct Credit … AB Company …21A $579.74 20 September 2019 Direct Credit … AB Company …22A $54.32 18 October 2019 Direct Credit … AB Company …45A $56.84 21 February 2020 Direct Credit … AB Company …20A $129.92 3 April 2020 Direct Credit … AB Company …31A $90.16 8 May 2020 Direct Credit … AB Company …16A $110.32 17 July 2020 Direct Credit … AB Company …95A $224.00 14 August 2020 Direct Credit … AB Company …98A $72.80 11 September 2020 Direct Credit … AB Company …94A $72.80 9 October 2020 Direct Credit … AB Company …53A $72.80 31 December 2020 Direct Credit … AB Company …02A $92.40 26 March 2021 Direct Credit … AB Company …22A $81.76 Total $1,637.86
Deposits from G PTY LTD Housing
Date Description in Bank Statement Amount 1 June 2018 Direct Credit … G PTY LTD Commission May 18 $51,297.44 31 July 2018 Direct Credit … G PTY LTD Commission Jul18 $14,705.63 6 September 2018 Direct Credit … G PTY LTD Commission Aug18 $15,359.99 1 October 2018 Direct Credit … G PTY LTD Commission Sep18 $58,716.63 31 October 2018 Direct Credit … G PTY LTD Commission Oct18 $9,187.29 21 December 2018 Direct Credit … G PTY LTD ManagerBonus Dec18 $32,303.71 1 February 2019 Direct Credit … G PTY LTD Commission Jan19 $11,662.52 15 March 2019 Direct Credit … G PTY LTD Commission Feb19 $16,569.76 3 June 2019 Direct Credit … G PTY LTD Commission May19 $4,452.45 28 June 2019 Direct Credit … G PTY LTD Fee Jun19 $770.00 28 June 2019 Direct Credit … G PTY LTD Commission Jun19 $9,838.72 28 June 2019 Direct Credit … G PTY LTD ManagerBonusFY19Q3 $3,514.50 2 September 2019 Direct Credit … G PTY LTD Commission Aug19 $38,740.09 1 October 2019 Transfer from G PTY LTD Mgt Fee Sep19 $271.70 Total $267,390.43 Deposits from RR Finance
Date Description in Bank Statement Amount 18 February 2019 RR FINANCE INVESTMENT REF …62 $500,000.00 5 July 2019 Transfer From RR Finance payback $47,746.59 Total $547,746.59
The wife submits that I would include as an addback all funds deposited in the E Pty Ltd account. I find that the payments which are identified as payments from G Pty Ltd are payments to which the husband was entitled (as opposed to E Pty Ltd or the husband’s sister). I discuss the evidence underpinning this finding in more detail below.
AB Company appears to be a direct marketer. In her affidavit the husband’s sister stated that selling AB Company products was one source of her income. I find that the payments which are marked AB Company are payments to which the husband’s sister (or E Pty Ltd were entitled). The husband’s sister gave evidence that the renovations to her home were financed in part by a loan from RR Finance. I find it is more probable than not the monies from RR Finance were borrowed by the husband’s sister.
I find that that the miscellaneous payments are on the balance of probabilities monies which belonged to the husband in these proceedings and were transferred by him into the account of E Pty Ltd. They include the cheque deposit of $153,041.92 which the husband’s sister was unable to explain. This view is also supported by the fact that the transactions were undertaken at AC Building where the parties agreed the office of G Pty Ltd was located and the husband’s sister accepted she did not undertake the transactions.
In order to understand the net effect of this it is also important to have regard to the withdrawals from this account.
E PTY LTD CBA Account No. ending #...65 withdrawals for the period 17 May 2018 to 1 August 2022.
Transfers
Date Description in Bank Statement Amount 7 July 2018 Transfer to CBA A/c CommBank app $200,000 8 July 2018 Transfer to other Bank NetBank … $550.00 8 July 2018 Transfer to other Bank NetBank … $550.00 8 July 2018 Transfer to other Bank NetBank … $550.00 5 December 2018 Transfer to CBA A/C CommBank app pay $20,000.00 5 December 2018 Transfer to CBA A/c NetBank E Pty Ltd pay $80,000.00 5 April 2019 Transfer to other Bank NetBank …79 $472.32 7 June 2019 Transfer to CBA A/C CommBank app pay for referral $650.00 4 July 2019 Transfer to other Bank NetBank pay … $20,000.00 10 July 2019 Transfer to CBA A/c NetBank …commis $2,500.00 10 July 2019 Transfer to CBA A/c NetBank …commiss $5,000.00 10 July 2019 Transfer to CBA A/c NetBank …commis $4,000.00 4 August 2019 Transfer to CBA A/c NetBank … $210.00 22 August 2019 Transfer to CBA A/c NetBank …commission $1,000.00 28 August 2019 Transfer to CBA A/c NetBank $524.00 3 September 2019 Transfer to CBA A/c CommBank app $3,000.00 17 September 2019 Transfer to other Bank NetBank payment … $20,000.00 27 October 2019 Transfer to other Bank NetBank Ref … $5,000.00 4 November 2019 Transfer to CBA A/c NetBank $2,000.00 16 November 2019 Transfer to CBA A/c NetBank Business … $980.00 6 December 2019 Transfer to other Bank NetBank pay $41,000.00 31 December 2019 Transfer to CBA A/C NetBank transfer $100.00 5 January 2020 Transfer to CBA A/c NetBank … $100.00 16 February 2020 Transfer to CBA A/C Commbank app pay $3,400.00 11 March 2020 Transfer to CBA A/C NetBank …COMMISSION $5,000.00 18 March 2020 Transfer to other Bank NetBank RENTFEE $1,000.00 4 May 2020 Transfer to CBA A/c NetBank $501.00 28 May 2020 Transfer to other Bank NetBank tax return fee $1,650.00 28 May 2020 Transfer to CBA A/c NetBank $100.00 23 June 2020 Transfer to CBA A/c NetBank ATO $4,350.00 3 August 2020 Transfer to CBA A/c NetBank ATO $3,000.00 5 August 2020 Transfer to …90 CommBank app $500.00 12 August 2020 Transfer to other Bank NetBank tax return fee $440.00 28 August 2020 Transfer to CBA A/c NetBank $100.00 3 September 2020 Transfer to CBA A/c NetBank $2,500.00 3 October 2020 Transfer to CBA A/c NetBank ATO $3,000.00 5 October 2020 Transfer to CBA A/c NetBank $3,000.00 4 November 2020 Transfer to CBA A/c CommBank app $2,000.00 6 April 2021 Transfer to CBA A/c NetBank $2,400.00 29 June 2022 Transfer to other Bank NetBank E Pty Ltd $385.00 Total $441,512.32 Withdrawals/Payments
Date Description in Bank Statement Amount 9 July 2018 RapidPay NetBank BPAY … …02 legalfee $3,191.00 18 January 2019 Wdl Branch Suburb AD $390,030.00 5 April 2019 Wdl Branch AC Building $94,037.68 5 April 2019 Wdl Branch AC Building $990.00 29 April 2019 Wdl Branch AC Building $438,030.00 5 June 2019 AMERICAN EXPRESS NetBank BPay …07 pay4amex $4,919.38 9 September 2019 DEFT PAYMENTS NetBank BPAY …36 $3,576.28 20 September 2019 TAX OFFICE PAYMENTS NetBank BPAY …60 tax bill $1,617.00 23 September 2019 … NetBank BPAY …91 $1,116.50 25 September 2019 TAX OFFICE PAYMENTS NetBank BPAY …60 E Pty Ltd PAYG $1,602.00 27 February 2020 Wdl Branch AC Building $2,700.00 7 March 2020 Wdl Branch Suburb AF $3,000.00 3 August 2020 ASIC NetBank BPAY …40 $349.00 18 August 2021 ASIC NetBank BPAY…40 ASIC E Pty Ltd $617.00 14 April 2022 ASIC NetBank BPAY …40 Appn For voluntary $42.00 Total $945,817.84
The net effect is that the husband would appear to have had the benefit of the miscellaneous deposits totalling: $571,073.78 and the deposits from G Pty Ltd totalling $267,390.43. How those funds have been applied once withdrawn from the E Pty Ltd bank account is less clear. I am conscious that the above analysis is not a forensic account of the transactions involved. However, there cannot be any injustice to the husband as I am comfortably satisfied that he (and not E Pty Ltd or the husband’s sister) was entitled to all the payments from G Pty Ltd.
Deposits or transfers to bank accounts in the name of the husband’s mother
The wife asked the court to find that the husband had transferred $654,547.82 from the account she calls the joint CBA account (actually account in husband’s name ending #...90) to an account in the name of his mother which ended #...32.
The transfers that are visible from the documents in evidence for the period 3 May 2018 to 29 July 2022 being the period in which the wife asserts the $654,547.82 was transferred are limited to one transaction: a transfer of $1,000 on 31 July 2019. I do not propose to add back those funds.
On 3 May 2018 the husband closed an everyday offset account in his name and that of his mother at the Suburb PP branch and withdrew $162,030.63. On the same day that amount was deposited in to a Commonwealth Bank account in his mother’s name ending in #...32.
On 9 May 2018 the husband transferred $120,150.30 from his Commonwealth Bank Direct Investment Account ending …04 to a Commonwealth Bank account in his mother’s name ending in #...32.
During cross-examination the husband accepted he made these transfers totalling $282,180.93. He did not give evidence in chief about the nature and purpose of the transactions. The effect of those transfers was to take $282,180.93 from accounts in the husband’s name and control and place them in the account of the second respondent.
The second respondent’s account continued to receive deposits – some in cash and others by way of transfer. On 3 July 2018 $50,000 and on 7 July 2018 $200,000.
The total credits to the account of the husband’s mother ending #...32 in the period 3 May 2018 to 29 July 2022 were $609,547.82.
Date Description in Bank Statement Amount 3 May 2018 Transfer In Branch Suburb PP $162,030.63 9 May 2018 Transfer from NetBank $120,150.30 3 July 2018 Direct Credit …24 Ms Lin THE VIP $50,000.00 7 July 2018 Transfer from CommBank app $200,000.00 3 August 2018 Transfer in Admin surplus $0.89 9 August 2018 Cash Dep Branch Syd $50.00 3 June 2019 Return 03/06/19 Loan Repayment LN REPAY …23 $2,762.00 4 June 2019 Cash Dep Branch AC Building $6,000.00 4 June 2019 Rfn Unpaid Pymt Fee $5.00 31 July 2019 Transfer from CommBank app $1,000.00 3 September 2019 Transfer from CommBank app $3,000.00 3 October 2019 Return 03/10/19 Loan Repayment LN REPAY …23 $2,762.00 4 October 2019 Cash Dep Branch Suburb PP $3,000.00 4 November 2019 Transfer from NetBank $2,000.00 20 November 2019 Direct Credit …68 RNSW …35/FHOG RNSW $15,000.00 31 December 2019 Transfer from NetBank transfer $100.00 3 January 2020 Cash Dep Branch Suburb PP $3,000.00 3 February 2020 Return 03/02/20 Loan Repayment LN REPAY …23 $2,762.00 3 March 2020 Return 03/03/20 Loan Repayment LN REPAY …23 $2,762.00 30 March 2020 Transfer from NetBank $180.00 3 April 2020 Return 03/04/20 Loan Repayment LN REPAY …23 $2,762.00 6 April 2020 Cash Dep Branch Suburb AH $2,605.00 4 May 2020 Transfer from NetBank $501.00 28 May 2020 Transfer from NetBank $100.00 3 June 2020 Transfer from NetBank $3,000.00 3 July 2020 Transfer from NetBank $2,000.00 3 August 2020 Transfer from NetBank vip $3,300.00 28 August 2020 Transfer from NetBank $100.00 3 September 2020 Transfer from NetBank $2,500.00 5 October 2020 Transfer from NetBank $3,000.00 4 November 2020 Transfer from CommBank app $2,000.00 4 December 2020 Transfer from NetBank VIP $2,300.00 4 January 2021 Transfer from NetBank $2,590.00 7 January 2021 Transfer from NetBank $345.00 3 February 2021 Return 03/02/21 Loan Repayment LN REPAY …23 $2,401.00 3 March 2021 Transfer from Commbank App $2,500.00 6 April 2021 Transfer from NetBank $2,400.00 3 May 2021 Transfer from NetBank $2,400.00 14 May 2021 Transfer from NetBank $417.00 3 June 2021 Return 03/06/21 Loan Repayment LN REPAY …23 $2,401.00 4 June 2021 Cash Dep Branch Suburb PP $5,000.00 6 July 2021 Transfer from NetBank $377.00 3 August 2021 Transfer From Mr H transfer $5,000.00 1 October 2021 Cash Dep Branch Suburb PP $5,000.00 3 December 2021 Transfer From Mr H Transfer $1,600.00 5 December 2021 Transfer from NetBank out $695.00 30 December 2021 Cash Dep Branch Suburb PP $5,000.00 3 March 2022 DEPOSIT CASH $5,000.00 CHEQUE $0.00 Branch Suburb PP $5,000.00 2 May 2022 DEPOSIT CASH $5,000.00 CHEQUE $0.00 Branch Suburb PP $5,000.00 1 June 2022 Transfer from NetBank redraw $689.00 29 June 2022 DEPOSIT CASH $5,000.00 CHEQUE $0.00 Suburb Q $5,000.00 Total $654,547.82
I cannot determine what may be internal transfers of funds between accounts in the name of the husband’s mother and what are transfers from the husband. The husband’s mother was unable to explain the transactions in cross-examination and repeated that she had received “whatever I was entitled to”.
Counsel who appeared for the husband (and his mother) conceded that his client, the husband, had transferred funds into his mother’s account. The husband’s evidence did not address the nature of or purpose of the transactions. I accept on the balance of probabilities that the money which was deposited in the account of the second respondent was money to which the husband was entitled. In reaching that conclusion I have had regard to the fact that the husband’s mother did not have any income during this period (having concluded that monies from G Pty Ltd belonged to the husband).
The wife asked the court to find that the husband had transferred an amount of $271,822.47 from a joint CBA account to an account in the name of the husband and his mother ending #...61. On 17 July 2017 an amount of $236,981.76 was credited to that Commonwealth Bank account of the husband’s mother. She does not explain this transaction in her evidence. The source of funds is identified in the bank statement as being a transfer from another Commonwealth Bank account ending in the digits #...23. That account is the mortgage account secured over the T Street property. The transfer from the mortgage account increased the indebtedness of the husband and his mother in respect of the T Street property. On 29 August 2017 a further deposit to this bank account in the sum of $25,140.71 was identified as having come from the Commonwealth bank account ending in #...10 – being a joint account of the husband and his mother. It follows that I do not accept that there was a transfer of $271,822.47 from a joint account of the husband and wife or from the husband’s Commonwealth Bank account described erroneously by the wife as joint to account #...61.
It is difficult to reach a conclusion about the proper way to take into account the husband’s transfer of funds from accounts in his own name to those in the name of his mother as it is not possible to ascertain with precision whether inclusion of the whole amounts transferred from each account would constitute a double count – the process of determining the movement of funds has not had the benefit of any arm’s length forensic analysis. That said, it is plain that if the husband had not drawn down on mortgages secured over property and diverted funds to which he was entitled from G Pty Ltd to other members of his family then there would be a significantly greater net pool of assets to divide between the husband and wife.
Deposits or transfers to accounts in the name of the husband’s sister
The husband’s sister had a bank account in her name with the Commonwealth Bank which ended with the digits #...94. The wife says that the husband transferred funds into that account totalling $102,887.17 and same should be added back to the pool of assets available for division between the husband and wife. It is not plain to me from those statements that the deposits to that account were monies to which the husband was entitled. It seems to include rent received by the husband’s sister and her husband (Mr H) for their investment property as well as Mr H’s salary. It follows that I do not propose to add those funds back or make any allowance for them in my considerations of the assets of the husband and wife.
The next addback which the wife seeks is in respect of monies which she says were transferred by the husband from a joint CBA account to an account in the name of the husband’s sister ending #...03. The amount said to have been transferred is $361,317.29.
On 16 January 2017 a cheque in the sum of $175,200 was deposited to the credit of this account. There is no evidence to permit a conclusion about the source of this cheque. On 20 January 2017 $200,000 was withdrawn from this account and applied to the mortgage of the husband’s sister and Mr H.
On 11 July 2017 the amount of $200,000 was deposited in this bank account, said to be a transfer from an account identified as ending #...79. That account is the investment loan account of the husband’s sister and Mr H and those funds would therefore appear to be their own loan funds (and not monies to which either the husband or wife would be entitled).
I could not be confident on the evidence before me that any of the deposits to the account #...03 were funds belonging to the husband (or wife). Certainly, after the initial cheque, a review of the bank statements produced on subpoena and tendered by the wife for the period 3 January 2017 to 1 August 2022 supports the conclusion that this was an account operated by the husband’s sister and Mr H and that the primary sources of deposited funds were the proceeds of a loan in their names, Mr H’s pay and government benefits. While I accept that there are some cash and cheque deposits which are not easily identified I am not satisfied that the wife has established that those deposits have any relevance to the proceedings.
The next category of funds which the wife seeks to include as an addback were described as monies transferred by the husband from joint CBA account to his sister’s account ending #...04. The wife said she was unable to quantify them. The evidence does not allow me to quantify them and so this submission by the wife can be taken no further.
As a separate category the wife sought to include commissions of the husband and wife said to have been transferred by the husband to D Bank accounts in the name of his mother ending #...12 and #...39 in the sum $516,448. An analysis of the D Bank statements in evidence suggests that the account of the husband’s mother did receive commission payments from G Pty Ltd into account #...12:
Date Description in Bank Statement Amount 17 November 2016 Commission Nov16 G PTY LTD …65 $82,587.42 28 February 2017 Commission Feb17 G PTY LTD …80 $16,283.36 31 March 2017 Commission Mar17 G PTY LTD …61 $24,911.93 9 May 2017 Commission Apr17 G PTY LTD …93 $53,317.89 Total $174,036.15 The account of the husband’s mother with D Bank ending #...39 did not directly receive deposits of commission from G Pty Ltd but commissions were transferred from account #...12 into account #...39 and as the bank statements demonstrate large amounts were transferred from that account and marked Ms J.
A further category of funds which the wife says should be added back were commissions of the husband and wife transferred by the husband to Westpac account ending #...46 in the sum of $134,985.37. That Westpac account is an account in the husband’s sole name. I accept that it may be the case that commissions which the wife earned were ultimately retained by the husband but I am not satisfied that the wife has discharged the onus to demonstrate this on the basis of admissible evidence and accordingly I do not propose to add back the amount she submits.
The wife argued that the husband had transferred “expression of interest” fees to G Pty Ltd account ending #...36 from the parties’ funds. These transfers were said to have occurred between 1 January 2010 and 31 December 2017. I note that this is a period almost entirely prior to the parties’ separation. I accept that the wife is aggrieved by the husband’s practice of using their funds to meet business expenses however I cannot be satisfied that this was not an appropriate way to run their business activities. I am not satisfied that it is as simple as including the amounts transferred as an addback and I decline to do so.
The final category of funds which the wife sought to add back were termed G Pty Ltd commissions and said to total $712,000. The wife did not address me about how this figure had been calculated and it is not clear to me whether it includes amounts previously discussed above. I will not include the figure in the balance sheet.
I am unable to conclude with precision the extent of the monies transferred by the husband to members of his family. I can, as a consequence of the evidence safely conclude that that the transactions have resulted in the pool available for division being significantly compromised. The best example of that is to observe that the mortgage on the parties’ home has significantly increased at a time when the husband was obliged by court order to meet it. Had he complied the pool would have been greater. I propose to take the husband’s non-disclosure, his transfers of commissions, bonuses and other income to his family and his diversion of the parties’ funds into property in the name of himself and his mother into account under s 75(2)(o) of the Act. The funds which the husband has provided to his family are so significant that it would not be just and equitable for him to receive any of the remaining assets in Australia.
Having considered the evidence and the submissions about the inclusion (or exclusion) of items in the balance sheet and the value to be attributed to various items the balance sheet which I will have regard to is as set out below:
Property Ownership Value ASSETS O Street, Suburb B Joint $1,400,000 T Street, Suburb MM $1,100,000 JJ Street, City R Husband $600,000 Motor Vehicle 1 Wife $10,000 Motor Vehicle 2 Husband $9,000 SUPERANNUATION Superannuation Fund 1 Husband $77,567 LIABILITIES Suburb B Mortgage Joint $1,076,931 Suburb MM Mortgage Husband + 2nd Respondent $485,880 School fees and loans from others Joint $190,000 Westpac credit card Wife $4,233 HELP debt Wife $14,012 ASSESSMENT OF PARTIES’ CONTRIBUTIONS
I accept that both parties made financial and non-financial contributions during the relationship. As discussed later in these reasons the wife’s non-financial contributions have been significantly greater than those of the husband. It may have been the case that the husband’s financial contributions were greater than those of the wife but I find that the wife’s financial contributions from employment and real estate were not insignificant and as discussed above and below, in considerable detail, any financial contributions to which the husband may have laid claim have been almost extinguished by his conduct in failing to pay the mortgage as ordered, transferring the parties’ funds and loan funds to his family, failing to pay child support and/or school fees and diverting income/commissions to which he might otherwise have been entitled to persons or entities associated with his family.
I find that the wife’s initial property at Y Street, City R, Country S was owned by her at the commencement of the parties’ cohabitation. She bought the property in 1999, about four years prior to cohabitation. She paid a partial amount and otherwise secured a mortgage. The monthly mortgage repayment was 500 Country S currency and the rental income 1,000 Country S currency. The wife accepted that the husband had applied some of his funds to discharge the mortgage. The wife says that she gave her husband an authority to sell the property in 2004 and understood it was being sold to fund the parties’ acquisition of BB Street, City R, Country S and EE Street, Suburb DD, City R, Country S. The wife says that when the BB Street property was sold in 2009 she understood the husband transferred the proceeds to Australia to purchase property in Australia. I accept the wife’s evidence – it fits with the timeframe for the parties’ acquisition of the Suburb B property and the fact that the wife was in Australia and the husband remained in City R. Those seed funds assisted the parties to acquire property.
The husband has said he did not have any property at the commencement of the parties’ relationship. The wife disagrees claiming that he had an interest in the property at V Street. The evidence does not permit me to resolve this dispute. However, since the wife says that the husband did not contribute any funds from the sale of this property to the family or acquisition of property the effect is the same, ie the husband may not be considered to have made any initial financial contribution.
The husband did contribute an amount from the City FF property, either because he was beneficially entitled to those funds or in the alternative because they were gifted to him by one or both of his parents.
The difficulty that I face at the conclusion of the evidence is that while it is plain that the husband earned significant income and that there were contributions made by the husband by way of acquisition and sale of property, the funds which remain are minimal. In the ordinary case a party who has made contributions is entitled to have them considered and given weight in the adjustment of property interests. The position is not so straightforward here as regards the husband because I cannot be confident, given his evidence and the efforts he has made to avoid disclosure obligations and financial obligations under the orders that his contributions have not been wholly eclipsed by his diversion of funds outside the marriage.
O Street, Suburb BB
This property was purchased by the parties as their home. There was an issue about whether or not the funds from the HH Street, Suburb B property were applied directly to this acquisition or whether they were subsequently paid towards the mortgage. Nothing turns on this discrepancy.
The parties had owned property in Country S and together with funds from the sale of HH Street they were able to acquire the Suburb B property.
At the time of separation there was a mortgage to Westpac Bank registered on title. In the year prior to the parties’ separation they each transacted on the Home loan account. As at 16 December 2015 the parties owed $560,000. In February 2016 there were two withdrawals totalling $99,900. It is not plain how those funds were applied. The wife’s case was that the husband used the parties’ mortgage to pay expression of interest fees to his employer G Pty Ltd on behalf of potential purchasers but that the funds were not subsequently returned to the mortgage. As discussed above it not clear how the husband accounted for these payments.
There are two mortgages on the title of the Suburb B property. The first mortgage is an account which ends #...84. The second mortgage is an account which ends #...86. As at the date of hearing the outstanding balance of both mortgages together was $1,076,931.
Both mortgages were in arrears at the time of hearing. The matter was not able to be completed on the dates it was originally listed and further dates were allocated. I made an order when the matter was adjourned part heard on 3 March 2023 as follows:
3.The applicant and first respondent serve a copy of this order on Westpac Banking Corporation.
THE COURT NOTES THAT:
A.The parties have received correspondence from Westpac Banking Corporation who are aware of the existence of these proceedings.
B.Should Westpac Banking Corporation wish to become a party to the proceedings, they should provide notification by way of an Application in a Proceeding and supporting affidavit, such application to be filed by no later than 4.00 pm on 17 March 2023.
There was no application or appearance by Westpac. I intend to make an order permitting the wife to provide the bank with a copy of the final orders in this matter.
Sale of the parties’ Suburb MM investment property
In late 2016 the parties purchased a property at SS Street, Suburb MM (the Suburb MM investment property) for the sum of $416,000. The purchase was facilitated by two mortgages from the ANZ Bank.
By court order dated 2 November 2018 the parties were required to sell the Suburb MM investment property and on 14 November 2018 an order was made requiring the husband to apply proceeds to reduction of the mortgage secured on the title to the Suburb B property. That sale did not take place until mid-2019.
The husband’s affidavit says the proceeds were $144,622 less agent’s commission and disbursements. The wife’s case is that the husband only deposited $90,000 from the proceeds towards the Suburb B mortgage. On 18 and 19 July 2019 two amounts were deposited against the Suburb B mortgage #...84. Together they totalled $96,416.16. They are described as “salesproceeds[Suburb MM]” $77,706.16 and “releaseof deposit” $18,710. An amount of $48,576.05.05 was withdrawn on 24 July 2019. It is difficult to reconcile these figures. The cross examination did not assist greatly. The husband’s position is that the whole of the proceeds were applied to the Suburb B mortgage with $48,576.05 paid into Westpac Loan account ending #...86 and $96,046 paid into the other mortgage secured on the title of the Suburb B property which ends #...84. The husband does not explain the $48,576.05 withdrawal. The wife agreed that there had been a payment on 19 July 2019 of $48,576.05 which was transferred into the mortgage secured over the Suburb B property ending #...86. The evidence does not explain why that identical sum is shown as having been withdrawn from the other mortgage #...84 five days later.
One way to determine the net effect of application of the funds from the sale of the Suburb MM property is to examine the mortgage balances before and after the transaction. As at 15 July 2019 the mortgage account ending #...86 had a debit balance of $702,656.85 and the mortgage account ending #...84 had a debit balance of $339,617.90. The total amount outstanding was therefore $1,042,274.75. As at 25 July 2019 the amount owing on the Suburb B mortgage ending #...86 was $660,000 and as at the same date the mortgage ending #...84 had a debit balance of $291,777.79 and the two totalled $951,777.79. That means that the net effect of the amounts paid to the mortgage from the sale of the Suburb MM property was in the approximate sum the wife contended. The evidence does not assist me to determine where the remaining sum was deposited even if diminished by agent’s commission.
The wife says the increase in the mortgage amount secured over the Suburb B property is due to the husband’s practice of paying expression of interest of interest fees from the parties’ funds. Traditionally, those fees would be reimbursed when the purchaser exchanged or would be returned if the transaction did not proceed.
The wife says those funds have not been returned to the parties’ mortgage and accordingly it is now very significant. The vast majority of those transactions were undertaken by the husband during the parties’ marriage – as evidenced by the ANZ statements.
The other cause of the increase in the indebtedness of the parties is the husband’s failure to make mortgage payments as required by the orders of 6 August 2018.
The second respondent’s financial circumstances
It is necessary that I consider the evidence about the transactions on accounts in the name of the husband’s mother or in the names of the husband and his mother jointly as the wife’s case was squarely that those transactions all involved funds to which the husband (and not his mother) were entitled.
I find that the husband’s mother is, as she deposes, retired from paid employment. She was born in 1939 and is 84 years of age. It was confirmed during the hearing that she has not been in paid employment in Australia.
Her financial statement says that she has income of “Nil”, although curiously at question 15 of the financial statement she filed she says as against the category “Other income” - “[Country S] Government Pension”. In her affidavit Ms Lin says that she receives a pension from the Country S Government of 5000 Country S currency per month. On the basis of this evidence, doing the best I can I find that her income is either nil or negligible.
Further, in oral evidence Ms Lin said her Country S pension is paid into an account in City R and withdrawn by her when she returns to City R and brought back to Australia in amounts of less than AUD$10,000. When asked when she last travelled to City R she said 2016 (although later she inconsistently referred to a trip in 2019). Accordingly, it is not open on the available evidence to conclude that Ms Lin has made any payments towards the mortgage secured over the T Street property from her own funds.
Ms Lin’s financial statement lists weekly expenses which total $800 and consist of rates $50 and mortgage $750.
No part of the evidence establishes how the second respondent is able to meet those expenses or her living expenses.
Ms Lin says she pays the mortgage with savings but her bank accounts (according to her financial statement) only contain $4,420. If the amount received by way of pension is 5000 Country S currency per month that would not permit the repayments of $750 per week.
Ms Lin’s affidavit says her son sometimes pays the mortgage.
The T Street mortgage is held by the Commonwealth Bank. In November 2016 the bank advanced the sum of $240,000 by way of loan funds. By the end of November 2016 repayments totalling $130,000 were made such that the outstanding balance on 30 November 2016 was $110,000. By 30 December 2016 further repayments had been made such that the outstanding mortgage was $63,959.28. By February 2017 further repayments took the level of indebtedness down to $3,018.24.
When the loan was refinanced in mid-2017 the new sum borrowed was $332,449.11 in September 2017 and a further $92,450 in October 2017 followed by $73,960 in March 2018.
The mortgage statements do not plainly identify the source of funds used to make the repayments and the affidavit evidence of the husband and his mother does not assist.
Sale of the T Street property
Ultimately the conclusion I have reached is that the T Street property must be sold. I am buoyed in this view by the fact that there has been a previous orders for its sale, against which no appeal was lodged.
Because I have found that the title particulars are an inaccurate record of the equitable entitlements of the parties then it follows that I will direct that the proceeds of sale are dealt with in a manner which is different from that which would have been the case but for these reasons and orders.
Because the property has been the subject of two previous orders for sale – and has not been sold – I will order that the wife be appointed trustee for the sale of the property.
The husband and the second respondent will be required to vacate the property within 28 days of the date of my orders to allow the wife the opportunity to prepare the property for sale.
Financial arrangements between the husband and his sister
In 2018 a company E Pty Ltd was registered. The registered office was the home of the husband’s sister and she was listed as the director and sole shareholder.
In mid-2018 a bank account was opened for E Pty Ltd with the Commonwealth Bank. That account was a business transaction account ending #...65. The address for bank statements was the residential address of the husband’s sister although it was later changed to the T Street property. The husband’s sister says the address was changed as she was living at the T Street property during renovations to her property at Suburb Q.
On 18 May 2018 the husband’s sister, on behalf of E Pty Ltd, signed a “Referral Services Agreement” with G Pty Ltd. That agreement contained the following clauses:
8. REFERRAL FEE SCHEDULE
Referral Fees payable to the Referrer by the Company will be relevant to the level of service provided by the Referrer, and in accordance with the rates stipulated in Schedule A of this Agreement. Applicable Referral Fees are typically paid 50% on Exchange of Sales, and 50% of Settlement of Sales. Upon termination of this contract, the Referrer will receive 75% of the remaining Referral Fees of settlement of sales.
Payment of Referral Fees upon Exchange or Settlement will be 30 days from the date that the Company received payment of the Gross Commission and Commission Request Form.
…
Referral Fee Schedule
The Referral Fee payable may be inclusive or exclusive of GST, which will also be clarified at the release of each project.
The schedule below outlines the total Referral Fee, as a percentage to the Gross Commission Percentage that the Referrer might be entitled to, based on the total sales achieved by the Referrer/Classification of the Referrer.
Referrer Classification Referral Fee Rate
(As a percentage of each […] sales price)Criteria to Maintain Agreement Senior Sales 1% No compliance issues during agreement term, while achieving other requirements of [G Pty Ltd].
On 1 June 2018 G Pty Ltd deposited $51,297.44 into that account with the reference Commission May18.
Ms J’s employment prior to the incorporation of E Pty Ltd was described in her affidavit as follows:
3. I got married to [Mr H] (“my husband”) in [City R] of [Country S] in 1998. My husband migrated to Australia in around 1989, and I joined him in Australia in around 2001. We have been residing in Australia since then. We have two children, [Ms K] in age of 21 now and [Mr L] in age of 18, both are studying in university. In the past decades, my husband has been the bread earner in our family. I spent almost my entire life till now being as a parent and housewife taking care of our home and children. My husband works [in transport], earning around $1300 pre-tax per week and he works around at least five to six days weekly. I worked on a few casual jobs in the early years before I operated the company named [E Pty Ltd], and the casual and/ or short-term part-time jobs I had worked include:
a)I worked as a casual employee in [AJ Pty Ltd] [in] 2005;
b) I worked as a full time basis employee in [AK Pty Ltd] between […] 2011 and […] 2014;
c) I worked as a part – time employee in [AL Pty Ltd] [in] 2016;
d) I worked as a casual sale in [AC Company] between […] 2019 and […] 2021.
(As per the original).
It is incredible and I cannot find on the evidence, that the husband’s sister would or could have referred clients during the period of the referral agreement (18 May 2018 – 31 May 2018) so as to produce income in the order of $51,297.44.
In her evidence the husband’s sister said that those payments related to her referrals over a long period of time. However, absent the referral agreement, it beggars belief to accept that G Pty Ltd would have paid E Pty Ltd money for referrals made in an earlier period.
The cross-examination about other transactions on this bank account was equally illuminating. The husband’s sister was unable to explain why she, a person with no credentials as a real estate agent, would be entitled to be paid Commissions by G Pty Ltd. Nor was she able to explain why G Pty Ltd had paid E Pty Ltd Manager Bonuses.
Further, the husband’s sister was unable to explain how it was that G Pty Ltd knew how much E Pty Ltd was owed, what paperwork was necessary to ensure payments or how records were kept to determine which sales had exchanged and which sales had completed. I take into account the amount of paperwork completed by the parties (and relied on by the wife) to secure payment of referral fees and commissions. I take into account the terms of the agreement between G Pty Ltd and the husband which included references to management bonuses.
The evidence relied upon by the third respondent did not establish that she was beneficially entitled to the money which was deposited into the bank account of E Pty Ltd (with the exception of deposits marked AC Company and loan funds). Put simply, the evidence of Ms J was so lacking in detail about the operation of the company she purported to both own and run that I have little difficulty in accepting that it was, as the wife contends, a vehicle established by the husband to direct his income and commissions in an effort to avoid further scrutiny by the Child Support Agency or this court or both.
It is therefore necessary to determine what flows from the finding that the husband has diverted income to which he was entitled to a company controlled by his sister. Set out above at paragraph [113] is an analysis of the deposits into the E Pty Ltd account. Those deposits (not including loan funds from RR Finance) total: $840,102.07. It is also safe to assume that the AC Company deposits belonged to the husband’s sister making the total: $838,464.21.
It may be the husband effectively has had the whole of the use of the funds in the E Pty Ltd account (or at least those set out above). One example of funds which appear to be applied to the husband’s expenses is there payment of a credit card bill on 5 June 2019. The husband’s sister confirmed she did not have an account with that credit card and explained the transaction as necessary to repay her brother for shopping she had undertaken on his card. She was unable to recall what she had bought. If her family income were such that the amount was not significant then it may have been easy to accept that she had forgotten. However, given what she says is the income of her household I do not accept she has forgotten what she bought. I accept that the account was used to pay the husband’s credit card because the funds in it were at all times funds which the husband had earned.
A withdrawal from the account on 18 January 2019 of $23,500 in a Suburb AD branch appears to have been deposited to the account of the husband’s mother.
I am unable to determine precisely how the comingling of funds occurred and with what precise effect. I have not been persuaded that the husband’s sister retained the funds which G Pty Ltd paid to E Pty Ltd and consider it more likely on the available evidence that they ended up in the possession or control of the husband.
It follows that I do not propose to make any orders directed to the third respondent but this should not be seen as vindication of her position that she should not have been joined to the proceedings in the circumstances set out above.
Non-financial contributions
The wife sets out in her affidavit material evidence about parenting tasks undertaken by her for the welfare of the parties’ son. The husband does not dispute that the wife undertook the primary parenting role during the parties’ relationship.
Between 2008 and an unspecified date in 2010 the wife was in Australia and the husband was in City R. The wife cared for X during this period. It appears similarly uncontroversial that the wife has provided sole care to X in the period between the parties’ separation and trial - a period in excess of six years.
It is important that her contributions in that regard are given more than token weight. The only way to give them objective value is through an adjustment of the identifiable assets to reflect those contributions.
MATTERS UNDER SECTION 75(2)
The husband’s financial position
In 2014 the parties established a company F Pty Ltd. They were both directors of this company which carried on business activities. Both the husband and the wife were licensed to undertake this work. In 2017 the wife resigned as director of F Pty Ltd.
The Commissions were deposited to a bank account with the Commonwealth Bank ending #...35.
According to Notices of Assessment in evidence before me:
(a)the husband reported taxable income to the Australian Taxation Office in the year ended 30 June 2021 of $26,674;
(b)In 2020 he reported income of $42,177;
(c)In 2019 $35,444; and
(d)In 2018 $113,188.
In the relevant years the husband appears to have received income either from a company or as a sole trader.
At the time of separation, the husband was employed by G Pty Ltd and a subpoena was issued to that entity. G Pty Ltd provided a document entitled “[Mr Chui] payment list”. That list includes payments to a number of different bank accounts, including bank accounts in the name of the husband and his mother. The payments are classified as commission, salary and commission, and sometimes has direct child-support deductions or salary. He also received bonus payments. There was no challenge to the accuracy of the documents produced by G Pty Ltd, and in summary they provide as follows:
Date Amount Account 2014/15 Tax Year 17 December 2014 3,874.54 Husband 18 February 2015 4,156.97 Husband 16 March 2015 9,660.00 Husband 29 May 2015 5,964.24 Husband 30 June 2015 10,173.70 Husband Total: $33,827.45 2015/16 Tax Year 31 July 2015 2,802.35 Husband 1 September 2015 8,076.17 Husband 30 September 2015 10,025.52 Husband 30 October 2015 22,690.50 Husband 16 November 2015 30,000.00 Husband 18 December 2015 3,448.69 Husband 29 January 2016 3,448.69 Husband 29 February 2016 3,448.69 Husband 31 March 2016 10,998.67 Husband 29 April 2016 10,998.67 Husband 31 May 2016 10,998.67 Husband 3 June 2016 14,965.88 Husband 30 June 2016 10,998.67 Husband 30 June 2016 13,960.52 Husband Total: $156,861.69 2016/17 Tax Year 29 July 2016 10,998.67 Husband 31 August 2016 10,998.67 Husband 30 September 2016 10,998.67 Husband 31 October 2016 10,998.67 Husband 16 November 2016 12,541.59 Husband 30 November 2016 10,998.67 Husband 30 December 2016 10,998.67 Husband 31 January 2017 10,998.67 Husband 31 January 2017 3,000 Husband 28 February 2017 10,998.67 Husband 31 March 2017 10,998.67 Husband 28 April 2017 10,998.67 Husband 31 May 2017 10,998.67 Husband 29 June 2017 10,998.67 Husband 30 June 2017 2,064.13 Husband Total: $149,589.76 28 December 2016 8,465.26 Joint 30 December 2016 32,083.36 Joint 11 May 2017 53,287.89 Joint Total: $93,836.51 2017/18 Tax Year 31 July 2017 10,998.67 Husband 31 August 2017 10,998.67 Husband 29 September 2017 10,998.67 Husband 29 September 2017 4,000 Husband 31 October 2017 10,998.67 Husband 30 November 2017 10,998.67 Husband 11 December 2017 10,000.00 Husband 21 December 2017 10,998.67 Husband 31 January 2018 10,998.67 Husband 28 February 2018 10,998.67 Husband 29 March 2018 10,998.67 Husband 30 April 2018 10,998.67 Husband 31 May 2018 10,998.67 Husband 28 June 2018 1,586.58 Husband Total: $136,571.95 9 August 2017 15,008.04 Joint 1 September 2017 30,139.94 Joint 29 September 2017 5,704.72 Joint 23 October 2017 3,393.18 Joint 11 December 2017 82,753.84 Joint 21 December 2017 8,444.81 Joint 29 March 2018 19,514.34 Joint Total: $164,958.87 31 October 2017 1,086.80 Child Support 30 November 2017 1,067.08 Child Support 29 December 2017 1,067.08 Child Support 2 February 2018 1,067.08 Child Support 28 February 2018 1,067.08 Child Support 29 March 2018 1,067.08 Child Support 3 May 2018 1,067.08 Child Support 1 June 2018 1,067.08 Child Support 28 June 2018 1,862.11 Child Support Total: $10,423.51 2018/19 Tax Year 31 July 2018 1,586.58 Husband 31 August 2018 1,586.58 Husband 27 September 2018 1,586.58 Husband 30 November 2018 3,448.69 Husband 21 December 2018 3,448.69 Husband 31 January 2019 3,448.69 Husband 28 February 2019 3,708.33 Husband 29 March 2019 3,448.69 Husband 30 April 2019 2,521.66 Husband Total: $24,784.49 31 July 2018 1,862.11 Child Support 31 August 2018 1,862.11 Child Support 27 September 2018 1,862.11 Child Support 31 October 2018 3,448.69 Child Support 30 April 2019 1,186.67 Child Support Total: $10,221.69
It is difficult to reconcile the 2018 deposits with the husband’s declared taxable income in that financial year.
To the above amounts it is necessary to add all of those funds which were deposited into the F Pty Ltd account or into the account of the husband’s mother or into the account of E Pty Ltd. The husband has a significant earning capacity.
The husband asserted he had resigned from his employment with G Pty Ltd in late 2019. The wife attached documents to her affidavit which postdate the same date and suggest the husband continues to operate – and email inquiries for him should be made to G Pty Ltd. The documents list him as a G Pty Ltd agent and he responds to client inquiries from his G Pty Ltd email address. Whatever his employment status may be I am satisfied he is working as a real estate agent.
It is appropriate that I have regard to the arrangements for financial support of X. X is in year 10 at school. He lives with his mother and the evidence suggests spends no time in the father’s care.
The mother has struggled to obtain child support from the father. In the period immediately after separation she was able to apply some of the parties’ capital to support of herself and X. More recently she has borrowed from others.
The history suggests the father will not be a reliable source of child support.
The most significant factor to consider under section 75(2)(o) of the Act is the impact of the husband’s conduct in diverting funds into his family’s hands. I find that given the extent of this conduct and its impact on the pool available for division the only manner in which I could be satisfied that the orders which I propose to make are just and equitable is if I make orders providing for the wife to receive the whole of the equity in the Suburb U property and the Suburb B property.
The wife has qualifications and experience in the workforce. It does not appear as though she has engaged in paid employment for some time and appears to have been reliant on loans to meet her living expenses. I accept that she has found these proceedings (and related Child Support proceedings) all consuming. I anticipate, absent evidence to the contrary, that she will return to paid employment in due course.
Husband’s superannuation
It appears to be the case that the husband has been an employee of G Pty Ltd, although that is not the present position.
As an employee the husband would have had employee entitlements including the entitlement to superannuation. The wife says that the husband has superannuation entitlements with Superannuation Fund 1 and Superannuation Fund 3. The husband’s financial statement records superannuation with Superannuation Fund 1 with a value of $77,567. In the absence of other evidence I find that the husband has superannuation to that value.
The wife sought a superannuation splitting order in respect of the husband’s interest in Superannuation Fund 1. I was told that the trustee had not been afforded procedural fairness.
An order which binds the trustee of a superannuation fund can only be made where the trustee is on notice of the application and form of order sought. I decline to make a splitting order. Accordingly, the husband will retain his superannuation.
CONCLUSIONS
This case has had a tortured history. It is most unfortunate that it was not able to be heard and determined on a final basis at a much earlier stage. That said it has been the husband’s repeated actions which have brought about the unsatisfactory facts. The only possible way in which an order approaching one which may be just and equitable can recognise the contributions and s 75(2) considerations in the wife’s case in light of the diminution of the asset pool by the husband is to order that the wife receive the whole of the equity in the T Street and Suburb B properties.
So in making the leap from words to figures I will order that the husband receive:
Property Value JJ Street, City R Undetermined Motor Vehicle 2 $9,000 Superannuation Fund 1 $77,567
The wife will receive:
Property Value O Street, Suburb B $1,400,000 T Street, Suburb MM $1,100,000 Motor Vehicle 1 $10,000 Suburb B Mortgage ($1,076,931) Suburb MM Mortgage ($485,880) School fees and loans from others ($190,000) Westpac credit card ($4,233) HELP debt ($14,012) Legal fees owed to the intervener
The wife was represented by AG Lawyers. The wife was unable to meet the lawyer’s fees and at the time they filed a Notice of Ceasing to Act the wife owed those lawyers to the amount of $35,000.
At the commencement of the hearing before me a representative of the intervener appeared
The wife consented to an order on 10 February 2022 which provided that she pay her former lawyers $35,000. From 14 February 2022 the same orders required that she pay an amount of $50 per week towards discharge of that debt. The orders otherwise identify that she should make payment from monies ordered to be paid to her in these proceedings. I have made consistent orders.
I certify that the preceding two hundred and fifteen (215) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 28 July 2023
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