Rushdie and Mohsin
[2019] FamCA 838
•14 November 2019
FAMILY COURT OF AUSTRALIA
| RUSHDIE & MOHSIN | [2019] FamCA 838 |
| FAMILY LAW – PROPERTY – Final property orders – Where the parties are in a de facto relationship – Where the de-facto husband asserts there be no further division of assets – Where the parties entered into a joint venture agreement to develop property during the relationship- Assessment of addbacks and contributions of parties – Consideration of factors under ss 90SM and 90SF(3) of the Family Law Act 1975 (Cth) (“the Act”) – Whether it is just and equitable to make orders altering the property rights and interests of the parties. |
| Family Law Act 1975 (Cth) ss 90SM, 90SF(3), 117(2) Real Property Act 1900 (NSW) s 57(2)(b) |
| Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-145 Ferraro & Ferraro [1992] FamCA 64 |
| APPLICANT: | Ms Rushdie |
| RESPONDENT: | Mr Mohsin |
| FILE NUMBER: | SYC | 5450 | of | 2015 |
| DATE DELIVERED: | 14 November 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Henderson J |
| HEARING DATE: | 15 - 19 July 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Schonell |
| SOLICITOR FOR THE APPLICANT: | Watson Law Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Richards |
| SOLICITOR FOR THE RESPONDENT: | Walter & Elliot Family Lawyers |
Orders
That a sum of $100,000 of monies currently held in trust be retained in trust pending the finalisation by the parties of the winding up of their joint venture and partnership in accordance with Order 5 herein.
I order the applicant pay the costs of Mr O as agreed or taxed, thrown away by the aborted hearing in September 2018.
From the applicant’s share of the remaining monies held in trust, a sum of $50,000 be retained to satisfy the payment of Mr O’s costs of the aborted hearing in September 2018.
The Order for costs grants Mr O a lien over the applicant’s entitlement to property until his costs Order is satisfied.
Forthwith, the parties do all acts and things necessary to wind up the joint venture partnership with Mr O, dissolve their partnership and wind up the parties’ jointly owned company, with the parties to equally pay the costs of complying with this Order from the money held in trust under Order 1 herein. In the event there are funds remaining in trust after this Order has been carried out, the proceeds are to be paid as to 60% to the applicant and the balance to the respondent.
Within 21 days of this order the applicant is to advise the respondent of her intention to retain or not the furniture and personality at the home. If she determines to retain the furniture and personality she is to pay the respondent the sum of $15,000 within a further 21 days.
In the event the applicant chooses not to retain the furniture and personality the respondent has 21 days to advise the applicant of his intention to retain the furniture and thereafter 21 days to pay the applicant $15,000 with the furniture and personalty to be removed from the home at his expense.
In the event both parties wish to retain the furniture and personalty the party who retains the former home retains the furniture and pays the other party $15,000 at the time the property comes into their possession.
If there is a sale of the home the furniture is either sold with the home or by private sale and then the proceeds are divided equally.
Within three calendar months the applicant is to pay to the respondent the sum of $388,076 and simultaneously with the payment the respondent is to transfer his interest in the G Street, Suburb H property to the applicant and the applicant is to discharge the current mortgage on the property.
In the event the applicant is unable to purchase the home in the timeframe specified in Order 10, the respondent has six weeks from being so advised to pay the applicant the sum of $600,543 for her interest in the home and within seven days of that payment, the applicant will vacate the G Street, Suburb H property.
In the event the parties determine to sell the G Street, Suburb H property or the respondent is unable or unwilling to carry out Order 11, the property is to be placed on the market by way of private treaty at a price agreed and failing agreement as recommended by the selling agent.
The applicant is to do all acts and things necessary and co-operate with the agent for the purposes of the sale and is to ensure the home is in a clean and tidy condition and will permit prospective purchasers to attend the property at times and dates as recommended by the selling agent.
Upon the sale of the property the proceeds are to be disbursed as follows:
(a)Payment of the outstanding mortgage in respect of the property limited to the sum of $208,997 and the line of credit limited to $48,871. In the event either the mortgage and/or line of credit are a greater sum at settlement, the applicant is to pay the difference from her share of the proceeds of sale;
(b)Agent’s commission, solicitors cost and usual conveyancing adjustments; and
(c)60% of the net proceeds to the applicant and the balance to the respondent.
Thereafter, the parties retain all assets and liabilities in the name including monies in bank accounts, superannuation accounts, share portfolios and the like.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rushdie & Mohsin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5450 of 2015
Ms Rushdie
Applicant
And
| Mr Mohsin |
Respondent
REASONS FOR JUDGMENT
The matter of Rushdie & Mohsin was a property application between a de facto couple which was heard over five days.
Mr Schonell of Counsel acted for the applicant de facto wife, who I will refer to as “the wife” for simplicity, and Mr Richards of Counsel acted for the respondent de facto husband, who I will refer to as “the husband” for simplicity.
Mr Wong of Counsel attended on the first day on behalf of the second and third respondents, which matters had settled. The issue of the costs of the second and third respondents will be dealt with after I have delivered judgment. The settlement between the parties and the second and third respondents was a payment to the second and third respondents of an amount of $871,000.
The agreed balance sheet discloses gross assets of $1,600,000 to $1,700,000, addbacks of $497,000, debts of $602,000 of which $257,000 relates to the matrimonial home, and the remainder appear to be personal debts.
There is absolutely no trust between the parties. The case before me was in large part, driven by the position taken by the husband that the wife had received all she was entitled to receive by way of property adjustment as he asserted she had gambled well over $400,000 during the relationship.
I was tasked to do a tracing exercise and to trace the payment and receipt of every dollar the wife had received into any private account, any business account, or any other account. This is not the purpose of family law property proceedings. They are not a tracing exercise. In a relationship, there are times when one party puts more effort and energy into the relationship, and the other party more direct financial contribution.
Of the assets the parties have, there is some $486,487 in a controlled moneys account; a car in the wife’s name, worth $14,000; a boat which was the subject of Local Court proceedings between the wife and the husband’s father, in which that Court ultimately found that the boat was the wife’s; the former relationship home at G Street, Suburb H (“G Street, Suburb H property”), worth $750,000; the husband’s Motorcycle, worth $6,000; furniture and effects, worth approximately $30,000; addbacks totalling $497,000; and a home loan secured against the G Street, Suburb H property for $208,997 together with a line of credit of $48,871. In addition, the parties have received $497,500 by way of interim property distribution. The wife asserts that I should add back the net proceeds of sale of the husband’s business, Company P of $50,000 as well.
The parties have a plethora of personal debts.
The wife has four credit cards and asserts loans to family and friends.
The husband has two credit cards and a loan to Finance Company for a property purchased post-separation in Queensland which is not part of the relationship assets.
There may be liquid assets of the parties of, perhaps, $1,174,278, less the mortgage of $257,000 on the former relationship home, which brings the asset pool down to some $900,000 in reality.
The wife has received an interim property distribution of $230,000 and the husband $267,000.
This is now a small asset pool and yet the parties have each spent somewhere in the vicinity of $200,000 in legal costs and will spend in excess of $300,000 each. The lack of trust has resulted in this travesty.
DOCUMENTS RELIED UPON
The wife relies upon the following documents:
a)Initiating Application, filed 6 September 2018;
b)Affidavits of 3 June 2019 and 8 July 2019;
c)Financial Statement, filed 16 May 2019; and
d)Affidavit of her partner, Mr Y, filed 4 June 2019.
The exhibits tendered were voluminous.
The wife had three tender bundles, two attached to her Affidavit of 3 June 2019 and a third attached to her Affidavit of 9 July 2019.
The wife’s exhibits were as follows:
a)Exhibit 1, Case Outline;
b)Exhibit 2, Costs Notice;
c)Exhibit 3, email from Mr Ben Wong dated 10 June 2019 containing a Deed of Agreement;
d)Exhibit 4, screenshot of the wife’s computer in relation to a 2014 email;
e)Exhibit 5, statement of a bank account ending 3 dated 2009;
f)Exhibit 6, document from the Club Z in relation to the use of the wife’s Players Card at that that club for gambling on poker machines and the like;
g)Exhibit 7, bundle of bank statements of the children of the wife;
h)Exhibit 8, application by the wife’s son, Mr B to the ANZ Bank;
i)Exhibit 9, bank statement of the husband dated 2 April 2009, being funds held in an interest bearing account in his name ending 2;
j)Exhibit 10, the wife’s credit card statements at or around separation;
k)Exhibit 11, an aide-memoire in relation to the statement of agreed facts, marked court exhibit 2, being a snapshot of payments alleged to be made by the respondent to the applicant, or towards maintenance of the G Street, Suburb H property, or towards the mortgage or Company L, or to the wife for wages and superannuation between the period 29 September 2011 and 23 September 2013;
The purpose of the aide-memoire was to provide a summary of the impossibility of husband’s evidence that his financial contribution to the relationship in addition to paying for the construction of the home was $285,939 with these monies having either been paid to the wife, or paid for the benefit of each of them. The evidence is that his income for the same period was $273,182. The husband asserts he had savings of $60,000 in February 2011. This money was saved during the parties’ relationship and the wife made a contribution to the savings.
l)Exhibit 12, the wife’s current superannuation balance, some $784. The husband asserts it is $5,130.
The husband relies upon the following documents:
a)Amended Response, filed 5 August 2016;
b)Affidavit, filed 5 June 2019;
c)Financial Statement, filed 5 June 2019; and
d)Affidavit of Mr O, filed 9 July 2019.
The husband’s exhibits were as follows:
a)Exhibit 1, Case Outline;
b)Exhibit 2, Costs Notice;
c)Exhibit 3, bundle of wife’s tax returns for the period 2009 to 2013;
d)Exhibit 4, documents from the perpetual trustee;
e)Exhibit 5, bank account statements of the wife;
f)Exhibit 6, bank account statements of Mr B;
g)Exhibit 7, Affidavit of Mr CC;
h)Exhibit 8, email to wife’s lawyer dated 26 March 2018;
i)Exhibit 9, documents produced by the applicant wife’s solicitors dated 15 July 2019 in relation to Company DD;
j)Exhibit 10, results of a title search of the relevant property; and
k)Exhibit 11, a letter to both solicitors.
Written submissions by the applicant wife together with schedule A1 which formed part of volume 3 of the applicant’s exhibits under tab D. This schedule is an extract from wife’s schedule A which forms part of her tender bundle at the final hearing and is specifically in relation to her assertions of deposits and withdrawals in respect of the Joint Venture agreement for M Street, Suburb N (“M Street, Suburb N project”).
Schedule A1 consists of four tables:
a)M Street, Suburb N project deposits totalling $330,614 and not $220,614 as set out in the wife’s written submissions. I accept the submission of the husband’s Counsel that a deposit from Sydney Water on 13 May 2016 in the sum of $111,505 was a M Street, Suburb N project deposit and it was not included by the wife’s Counsel in his written submissions, I find by error having regard to the layout of the document;
b)M Street, Suburb N project deposits totalling $260,000;
c)M Street, Suburb N project withdrawals totalling $153,082; and
d)M Street, Suburb N project withdrawals totalling $330,268.
Written submissions of the respondent husband together with schedules A and B.
Schedule A is the respondent’s position of deposits and withdrawals from the M Street, Suburb N project given that at the trial he asserts that the wife deposited and then withdrew for her own purposes $142,863 from the Company L Partnership account. That figure is actually closer to $179,000, in his written submissions, a figure I accept.
Schedule B a summary of banking transactions to support the husband’s position in Court Exhibit 2 the statement of agreed facts.
SHORT RELEVANT CHRONOLGY
The husband is aged 55 and the wife is aged 50.
The wife has three children by a prior relationship:
a)Mr B, aged 29;
b)Ms C, aged 25; and
c)Mr D, aged 18.
The husband has two children of a prior relationship:
a)Mr E, aged 28; and
b)Mr F, aged 25.
In 1999, the wife was the owner of a house and land at G Street, Suburb H with a former husband. The wife asserted that she paid some $213,000 for that property, and that it was received by her as part of her property settlement prior to the relationship between the parties commencing. The property was mortgaged and in the wife’s name.
There was an issue in relation to a boat that the wife asserts she paid the husband’s father some $6,000 for. Subsequent to the trial this matter was dealt with in the Local Court where the wife’s claim was accepted and this boat forms part of the matrimonial pool.
In 2006, the husband was working for a company called Company KK earning an income of roughly $40,000 per year. He had had a settlement with his wife and had approximately $332,281 in his Commonwealth Bank account as at 6 April 2006.
Justice Johnston found the parties commenced a de facto relationship no earlier than August 2009 ending in May 2015. The husband disputed the existence of this relationship and this opinion persists as was clear from his evidence. However, given the existence of his Honour’s finding the position of the husband is not a relevant matter for my consideration although I accept it has formed the basis of his oral evidence, submissions and case theory.
Although it has been found the parties’ de facto relationship commenced in August 2009, the parties had been in a relationship well prior to 2009, from late 2006 to early 2007.
On 17 January 2007, the wife was in default of her mortgage and was issued with a section 57(2)(b) Real Property Act[1] notice.
[1]Real Property Act 1900 (NSW), s 57(2)(b).
As at 3 March 2007, the husband had $272,723 in his Commonwealth Bank account ending 1.
For the period January 2007 to January 2013, the wife received a single parent pension in the amount of $81,000. This is a modest income of $13,500 per annum and is supported by the wife’s income tax returns for the period being husband’s Exhibit 3. The wife had sporadic work during this period.
In mid-2007, the wife’s home at G Street, Suburb H and its contents were destroyed by fire. The wife was provided with accommodation for a year by her insurer and she moved in with her mother.
The wife received a settlement from the insurance company around $280,000 and discharged a substantial proportion of the mortgage on the home. As at 2008, the mortgage on the home was $71,000.
In 2008, the parties agreed that they will build a home on the G Street, Suburb H land and enter into what the husband describes as a joint venture agreement.
As at 4 March 2008, the husband had $213,379.46 in his cash investment account ending 1.
At the time the parties agreed to build a home on the wife’s land, the husband wrote out an agreement in relation to the building and this document is exhibited in the party’s material. The agreement states the parties agreed that the land was worth $240,000 and the husband would contribute $240,000 to the building. The document also appears to read that if the build cost more than $260,000, a figure the wife asserts was closer to what was needed to build and complete the home, the parties would jointly fund the additional costs. The agreement is clear that they were to have an equality of interest in the property and this is not inconsistent with the wife and husband’s positions. The document reads the following:
Joint Venture Agreement. This is a 50/50% agreement. You supply land value $240,000. I supply cash $210,000 to build plus $30,000 loan - $240,000. If it cost(s) more than $260,000 to demolish and build the extra costs will be equally shared between both parties. If it costs less than $240,000 you get half of the difference back.
Options on completion. We choose to keep the home. If either party choses to sell first right to purchase goes to the other party. Property is independently valued and the party has __ days to come up with the money to pay the other party out. If the party is unable to come up with the money then the property must be put on the market for auction and sold to the highest bidder. All selling fees are equally incurred.
The parties agree the husband paid the costs to demolish the home and make good the land for the building of the new home. I accept these costs were $10,000. The wife asserts she refunded that money to him later and as the evidence transpired this was correct.
The parties entered into a contract with Company FF on 20 March 2008 for a fixed price of $219,068. This amount included variations they sought but not the costs overrun each agreed occurred. The husband paid the first payment of $43,800 on 13 June 2008.
In June 2008, the husband was working as a labourer earning a modest income of some net $40,000 per annum.
On 21 August 2008, the husband made a second payment of $54,700.
On 28 November 2008, the third payment of $54,700 was made.
On 18 December 2008, the fourth payment of $40,000 was made.
The fifth payment of $14,700 was made on 18 December 2008 and the sixth payment of $6,175 made on 11 February 2009.
In December 2008, the husband purchased Company P for $45,000. This purchase was funded by a lump sum payment of $30,000 and the remainder paid off in instalments from income. The husband conducted that business full time throughout the relationship.
The total paid by him for building costs was $214,630, $10,000 for its demolition and making good the land, and $30,000 to purchase the Company P franchise. This is total expenditure in 2008 and up to February 2009 of $254,000 when his the evidence is that all he had available by way of cash at 4 March 2008 was $213,000, a significant sum in itself.
The parties entered into litigation with the builder and each agree there were cost overruns from the fixed price contract.
In April 2009, the wife increased the mortgage from $71,000 to $150,000. The wife asserts she used this money to fund the additional costs over the fixed-price costs for the construction of the home.
On 3 July 2009, the wife transferred the property to her son, Mr B. At that time, the mortgage was $150,000 and was increased to $225,000 upon transfer. The wife said the husband was aware of this transaction.
The wife deposited $66,274 into her account, transferred $25,000 to Mr B and then received the first home owner’s grant of $24,000. The wife asserts the bulk of his money was used to fund the cost overrun and refurnishing of the home either directly, by depositing cash into the husband’s account, or by her withdrawing cash and giving it to the husband. The wife also asserts she paid the mortgage on the property and outgoings for her and the husband from this money.
The parties agree there were cost overruns on the fixed-price contract. The husband asserts the cost overruns for carpet, tiles, air-conditioning, blinds and landscaping only came to $10,000. The wife does not quantify the cost overrun but disagrees it was only $10,000. The evidence on this issue was unsatisfactory
In August 2009, the parties commenced cohabitation at the newly constructed home.
The husband’s evidence is that he had saved $60,000 by February 2011 and his bank records support this position. This is money saved during the relationship and the wife has made a contribution to that money.
In May 2011, an occupation certificate was finally granted to them. The parties had been involved in litigation with the builders and this delayed the granting of an occupation certificate.
In February 2011 the property was transferred into the husband’s name. The husband’s case is that the wife approached him and said, “I’m in trouble. I’ve done something. I don't know how to fix it. I’ve taken out a loan. I can’t pay it. I’m sorry. I owe the bank $225,000”.
His response was, “Why did you do that. You need to fix this immediately”.
Reply, “We can’t fix it unless you take over ownership of the land”. Thereafter, the property was transferred into the husband’s name and remains so today.
The husband’s case is he only found out that the property was in Mr B’s name when the transfer to him was being effected.
The wife’s case is that the husband knew the property was in Mr B’s name in July 2009 as they had each agreed this was the only way they could obtain additional funds to finish the house and furnish it. The wife asserts that in February 2011 he said to her, “We had better get the property out of Mr B’s name now that he’s getting married”.
In cross-examination, the wife explained this came about because her soon-to-be daughter-in-law had said something a bit foolish at a family dinner. She and the husband became concerned that the home was in Mr B’s name and they went to the bank to transfer it into the husband’s name as he had been working for Company P for two and a half years by that time in a full-time job, whilst the wife was not working.
The wife says she was solely responsible for the mortgage, council rates and water rates from 2005 to May 2011 and thereafter paid 50% of the outgoings with the husband. The husband does not accept this position.
After the transfer to the husband, he asserts that he paid all outgoings in respect of the property, including the mortgage.
In May 2011, the husband said he asked the wife to move out of the house because it was his. He asserts that she agreed and told him she had placed herself on a housing commission waitlist. Further, pending her removal from the home, the husband said she agreed to pay him $200 per week rent and also pay for other expenses. The husband accepts she paid this sum to him for 13 months. The wife says they continued as a couple sharing household expenses to the best of their ability and agreed she paid him $200 per week in addition to other expenses, and that this arrangement continued up until separation in May 2015.
The parties engaged in social activities throughout this period of time from 2009 to January 2017. The parties played at poker tournaments at various clubs, and each agreed they played poker machines at those clubs. The parties would withdraw money out of ATMs located at places of gambling throughout the relationship. I accept that the number of times the wife carried this activity out far exceeds that of the husband, as do the amounts and frequency of withdrawals.
In February 2011, the husband created and registered Company L Pty Ltd (“Company L”) with the wife as the other partner.
The husband paid all costs associated with him and the wife attending a Boot Camp in Queensland in preparation of the new venture of property development and subdivision, the total cost of which was $44,700 on 14 December 2012. It is clear that this money came from his savings, to which the wife had made a contribution.
In June 2013, Company L negotiated to purchase a property at M Street, Suburb N from Mr GG under an option agreement. The wife says both parties were engaged in this venture, whilst the husband asserts it was him alone.
In September 2013, the husband paid Mr GG $45,000, having borrowed $34,000 from his family and the balance from his earnings from Company P. Again, the wife made a contribution to those additional funds.
In early 2014, the husband approached Mr O, a friend and acquaintance, with an opportunity for him to become involved in the subdivision of M Street, Suburb N as a financial partner.
In mid-2014, Company L was incorporated, the husband and wife were directors and equal shareholders and the husband was appointed secretary of the company.
In mid-2014, a draft joint venture agreement was prepared by solicitors between the husband, wife and Mr O and their respective companies. This is known as the Joint Venture Agreement and was created for the purposes of subdividing the land at M Street, Suburb N. Mr O did not sign the agreement until April 2015. Lots were sold and the first settlement was effected in December 2015.
The parties separated in May 2015.
From April 2014, Mr O began paying the wife $500 per week in consulting fees involving neighbouring land to the M Street, Suburb N land.
In June 2014, the parties received a finder’s fee of $60,000 which was equally divided between them.
In April 2015, the wife received $20,000 from the M Street, Suburb N projects for work undertaken by her from 1 July 2014. The wife asserts she repaid this money.
On 6 July 2015, the wife, without knowledge of the husband, removed him as secretary of Company L, appointing her friend, Ms Q in his stead. The wife would not admit this at the trial but it is clear this is what happened.
Thereafter, the wife opened up an account in the name of company with her as a sole signatory. The husband had no access to this account and she had sole use of the partnership funds.
Proceedings commenced on 19 August 2015.
On 31 August 2015, orders were made by consent restraining the husband from dealing with the former relationship home and permitting the wife exclusive occupation. The orders also provided that the parties each pay one half of the cost of repayments towards the mortgage and the line of credit.
On January 2016, the husband sold the Company P franchise, netting $50,000, $34,000 of which he paid to his parents.
On 12 January 2016, the husband and wife via their partnership received $265,278 for expenses and interest as per their agreement with Mr O. Mr O received $1,907,546.
On 25 June 2019, the parties settle the matter between the second respondent and wherein he received $871,255.75 from monies held in a controlled monies account.
The parties have each received $230,000 by way of interim property distribution and the husband an additional $37,000 from the monies held in trust.
ORDERS SOUGHT
The husband seeks $100,000 of the money held in trust be quarantined to finalise the winding up of the joint venture between he and the wife. Otherwise the parties retain all assets that they currently have in their name and I make no adjustment to the wife either by way of my exercise of accrued jurisdiction in relation to the partnership and the profits that the wife retained that he asserts should have been distributed to him, or due to the husband’s superior financial contribution to the assets pursuant to section 90SM of the Family Law Act 1975 and the wasting of assets by the wife to which the husband had an entitlement.
The wife seeks a 65% division to her of the assets of the parties and an opportunity to buy out the husband’s interest in the G Street, Suburb H property.
I am also asked to deal with applications for costs by Mr O and the husband in relation to the adjourned proceedings before Justice Johnston in September 2018.
At the outset I have declined to exercise my accrued jurisdiction and deal with the parties’ relationship assets in relation to M Street, Suburb N as if those asserts were merely a partnership asset for the following.
I have had regard to the findings of Justice Johnston of the existence of a de facto relationship between August 2009 to May 2015 which was at the time the home was constructed and the joint venture partnership between the parties with Mr O commenced and I regard these events as part of the parties’ de facto relationship and not otherwise.
ISSUES FOR DETERMINATION
The following issues emerge:
a)Whether the wife expended $140,000 she obtained by way of increasing her mortgage in early 2009 and later in June 2009 on construction and refurbishment of the home and/or necessary expenditure, or did she waste that money.
b)Whether the wife has improperly used moneys from the joint venture project for M Street, Suburb N given that only the wife access this account and the husband did not. This amounts to $179,077 in the husband’s written submissions.
c)The contribution based entitlement of each to the G Street, Suburb H property having regard to the initial financial contributions and contributions during the relationship and post the relationship and the relevant s 90SF (3) factors either may have.
d)The capacity of each party to pay what they assert they paid during the relationship by way of mortgage, outgoings and necessary expenditure having regard to the income each earned during that period of time and their financial resources.
e)Whether I accept the husband’s evidence that moneys drawn from the wife’s account at the Club Z and other gambling institutions were drawn out for her sole use or, as she asserts, for both she and the husband’s use.
f)Whether the husband was aware the wife had re-mortgaged the property initially and then again in June 2009 when the property was transferred into Mr B’s name prior to the husband becoming the registered proprietor in 2011.
g)Reconciling the husband’s position to enter into a joint venture with the wife and effectively fund that joint venture in 2012 in circumstances where he asserts he had found out that the wife had re-mortgaged the house twice and transferred the property into Mr B’s name without his knowledge, and that he had been concerned as to her significant wastage of money by gambling since 2010.
h)Whether the wife did unpaid work in Company P, as she alleges.
i)The vexed issue of add backs.
j)Whether I accept the wife’s assertion that she had a practice of drawing out significant sums of money on multiple occasions on any one day at gambling institutions to pay bills and other expenses and not only for gambling.
k)Whether I accept the husband’s denial that he did not know that the property had been transferred to Mr B given that Mr B had included him as a referee on his application for finance to the ANZ bank and included the husband’s mobile telephone number alleging he was working for Company P.
Issues in contention regarding the construction of the home
In 2008, the husband drafted a handwritten document which is attached at page 125 of the respondent’s exhibits in relation to the rebuilding of the home at G Street, Suburb H. The document is headed joint venture agreement, and reads the following:
This is a 50-50 agreement. You supply land value at $240,000. I supply cash $210,000 to build a home and $30,000 home loan equalling $240,000. If the costs to build and demolish exceed, there is a figure written which could be $210,000, $260,000 or $240,000, we equally contribute to those costs. If the cost is less than $240,000 you get half of the difference back.
I take from that last sentence that the figure which is difficult to read is $240,000.
Various options upon completion are noted.
In March 2008, the husband had $213,007 in his cash investment account and no other accounts have been produced to show he had additional funds at that time. The husband’s evidence was that he contributed and/or had sufficient funds to contribute more than $213,000 and did not need to borrow any money to make an equal contribution by each of them of $240,000 into the project. However, the joint venture agreement he drafted is inconsistent with this evidence and I prefer the facts, which is that at the time he had $213,000 available together with his ongoing income to make an equal contribution to that of the wife and that he and may have needed to borrow money as appears in that document and writing.
The husband contended on the last day of the trial that in addition to the money in his no.1 account, he had other bank accounts with additional money and produced a bank statement showing he had $84,000 in an account ending in 2 as at 29 September 2018. This assertion is not correct and is an example of the husband double counting as he has done in this matter on multiple occasions.
The facts are that $84,000 was transferred into his account ending 4 on 29 September 2008 and $1,176 into his account ending 2 on the same day. His account number 1 had $85,176 in it on 29 September and this account was closed as at 30 September 2008. It is clear $84,000 in account number 4 came from account number 1 and $1,176 in account number 2 also from account number 1 and that this sum was not additional savings of the husband at the time the home was being constructed as was submitted.
Thereafter, the remainder of payments to the builders by the husband in 2008, being $40,000 on 28 November; $16,700 on 12 December; $14,700 on 18 December and $6,175 on 11 February 2009, all come from account number ending 4 whereas previously the monies used to fund construction of the home totalling $153,000 came from the husband’s account ending 1. The monies to fund the purchase of the Company P franchise in December 2008 also came out of this new account.
The husband’s total expenditure from his bank accounts on the home by 11 February 2009 of $214,630 and the purchase of Company P franchise of $30,000 and $10,000 to make the site good totals $254,630. At the time of the first payment by the husband towards the cost of building the home, being demolition and payment for the slab, he had $213,000 in his account, some $40,000 less than his total expenditure on the home and the payment towards Company P franchise.
Thus, he was considerably short even on his own evidence of the $219,000 needed to complete the fixed contract price home and given he also paid $30,000 for Company P during the build and the parties agree there were cost overruns and additional monies needed to refurnish the home.
On 3 July 2009, the wife transferred the property to her son, Mr B. At that time the mortgage was $150,000 and was increased to $225,000 upon transfer. The wife said the husband was aware of this transaction.
The wife deposited $66,274 into her account, transferred $25,000 to Mr B and then received the first home owner’s grant of $24,000. The wife asserts the bulk of his money was used to fund the cost overrun and refurnishing of the home either directly, by depositing cash into the husband’s account, or by her withdrawing cash and giving it to the husband. The wife also asserts she paid the mortgage on the property and outgoings for her and the husband from this money and did so until the property was transferred into his name in 2011.
The parties agree there were cost overruns on the fixed-price contract. The husband asserts the cost overruns for carpet, tiles, air-conditioning, blinds and landscaping, only equated to $10,000. The wife’s does not quantify the cost overrun but disagrees it was only $10,000. The receipts attached to his Affidavit in his exhibits referred to building of the slab March 2008, demolition costs of $10,000, in payment of blinds of $2,700 and for tiles.
The wife claimed she paid for the air-conditioning and there were clearly cost overruns, being the driveway, landscaping, additional tiling, re-fencing, let alone total refurnishing of the home with every item necessary in our modern world. The wife asserts the home ultimately cost $270,000 to construct and finish. This is not an unreasonable figure to complete the home and pay for the additional costs overruns. This figure did not include furnishings. The figure in the handwritten agreement speaks of a possible $240,000 needed to complete the build which is $30,000 more than the husband had in his bank account and I have found there were significant additional costs to complete and furnish the home. I do not accept the husband’s assertion that the costs overrun were only $10,000 and he sought to minimise the additional costs that were incurred by the parties.
The wife asserts that she contributed by way of refinancing the home and increasing the mortgage on two occasions and that this contribution together with payment of necessary outgoings for herself and the home was somewhere in the vicinity of the $140,000 she ultimately borrowed. That this money together with the $214,630 that the husband paid was the real cost of construction and re-furnishing of the home.
The wife’s case must be correct as the husband did not have sufficient funds in his bank to pay for the fixed price contract of the home, Company P and the outgoings he asserted he paid. His limited income of net $790 a week would not have been sufficient to make up for this significant shortfall of income and resources over expenditure.
If one deducts the costs of the Company P franchise from the monies he had available to fund the build as at March 2008 he only contributed $184,000 to the construction. If the cost of the build was $240,000 ultimately this is a shortfall of $60,000. If the build was closer to $270,000 as he wife asserts the shortfall is $90,000.
Thus, monies must have been paid to him as cash and/or paid directly into his account as she asserts they were as he had no other bank accounts in his name at this time which have been produced to support an additional source of funds than those I have referred to. For example, from 29 September 2008 to 28 November 2008, some $50,000 was transferred by phone into the husband’s account ending 4.
From 29 November 2008 to 2 February 2009, phone transfers of $33,700 and cash deposits of $16,000 were paid into the husband’s account ending 4.
On this evidence, I find it is clear that to fund the construction and furnishing of the home, the wife used monies drawn down from her mortgage to make up the shortfall as well as paying necessary outgoings on the home, including the mortgage in circumstances where her income was only some $13,500 per annum. Therefore, she could not have expended money on gambling to the level asserted.
Additionally, the wife making these contributions is consistent with their agreement to jointly construct the home and share the costs equally.
The husband’s evidence is that he had saved $60,000 by February 2011 in the Company P account and his bank records support this position. This is money saved during the relationship and the wife has made a contribution to that money. I have difficulty accepting that the husband paid all the household costs he asserts he paid, including the mortgage, rates, taxes and food, and saved $60,000 by the early 2011 on an income of net $790 per week and within a year or so of building home and repaying vendor finance for Company P of $15,000 from income.
When viewed in this light the husband’s own case supports the wife’s position that she and the husband together paid for construction of the home, costs overrun and necessary outgoings for the property together with refurnishing the property, thus allowing him to save this money and that the primary source of her contribution was the mortgage drawdowns.
The evidence discloses that $10,000 was deposited into the husband’s account in May 2009 and two amounts of $7,000 around the same date in cash. The husband would not accept that the wife deposited this money into his account and claimed it came from him via from Company P. That cannot be correct and nor do the Company P records support this. The husband had only commenced the Company P franchise in December 2008 and had paid off by way of vendor finance $15,000, being part of the purchase price. He could not possibly have accumulated this money from his business and paid all the outgoings he asserted he paid in that time.
Wife’s Exhibit 5 support payments by her into the husband’s bank account of these cash amounts as withdrawals from her account and deposits of cash into his account are on the same day and supports her evidence that this is how they conducted their relationship. The wife would pay him money directly into his bank account as cash, or give him cash to purchase items or refunding expenses which he said she needed to refund. I accept that the husband was most meticulous in ensuring that the wife paid what he regarded as her fair share of household costs as well as construction and furnishing of the home and that is consistent with his position at trial.
This then explains in part how the husband has come to double count and form a view that the wife gambled in excess of $400,000. He has taken account of what he has paid out and not what was returned to him by the wife forming the view that he in some way was able to fund deposits into his account from his income which on any view of the evidence is an impossibility.
The other part that explains how the husband has come to form his position is that he has failed to take into account the wife’s necessary expenditure for items for herself such as clothing, medical bills, hairdressing, et cetera and the necessity to furnish the home in its entirety.
The husband’s case is simply unrealistic as to the funds he had available to pay what he asserts he pays and the costs overrun and the failure to take account for the cost of furnishing the home or the wife paying her own necessary expenditure. Given the wife’s limited income of $13,500 per annum and the husband’s assertion that he saved $60,000 by early 2011 I prefer the wife’s evidence in this regard.
I find she has made out her case that the monies she drew down on her mortgage were used towards the funding of the construction of the home and payment of necessary outgoings, including the mortgage, together with gambling and institutions which both parties engaged in as part of the leisure activity and was not only wasted on gambling.
Having said this, I accept entirely that the wife gambled. I had significant difficulty with her minimisation of her gambling as I did with the husband minimising his gambling, although each admitted they gambled. The evidence was clear to me, as part of their social activity in their relationship, the parties gambled and played at poker tournaments. The evidence does not support the husband’s assertions that the wife gambled excessively. Had she done so, they would never have been able to fund the construction of the home, cost overruns and refurnishing of the home, let alone pay the mortgage and other outgoings that they both clearly paid during the relationship.
I do accept the majority of transactions involving withdrawals of large sums of money either wife were at gambling institutions, at times in multiple amounts, and on occasions on the same day, and are a significant feature in this matter and may have given the husband cause for concern initially.
Each party’s Counsel submitted that there were significant issues of credit for both parties and that may well be correct. However, I will determine this matter on the facts as I find them.
I do not accept the submission by the wife’s Counsel that because the respondent husband’s bank account at 6 April 2006 had $332,281 in it and at 4 March 2008 had $213,279 that I should find he had gambled $89,000. A finding based upon that submission and the evidence would be unsafe and I will not so find.
The husband’s cash contribution to the construction of the home is a significant contribution for without that cash injection I see no evidence of the wife’s capacity to borrow sufficient monies to fund construction of a home on the vacant land and her evidence was she intended to sell the land initially. By the time the home was constructed mortgage on the property had increased to $225,000. I have no doubt some of this money was used for the purposes of gambling and entertainment for both the husband and the wife, however, I do not see it is to the extent the husband alleges.
The contribution of cash together with payment from income for outgoings by the husband, the wife and husband’s contribution to the profit from M Street, Suburb N and her sole occupation of the property since separation in 2015 will be the significant factors in the exercise of my discretion.
The respondent would not admit that he knew the wife was gambling and says he was most concerned and shocked when he discovered the two refinances on the mortgage since they had agreed to build a home on the property and the transfer of the property into Mr B’s name in July 2009. This evidence of lack of knowledge of the wife’s gambling is inconsistent with his own evidence. In his trial Affidavit he says that from 2010, “I became suspicious that Mr Rushdie had been gambling money in the pokies”.
Additionally, it is clear from the offensive description of monies transferred to the wife from 2010 disclosed in Court Exhibit 2, that he knew full well she was gambling and he continued to provide her with money for reasons that he was not able to satisfactorily explain to me. The wife’s explanation was that this was how they conducted their relationship. He would use her card to debit cash when he had reached the limit on his card, she would use her card, she would pay him back monies he gave her, and vice versa, and they carried out these transactions at the club where they spent their leisure time.
The husband was fixed in his view that the wife has wasted her money on gambling and asserts he can show that the wife drew from her account at places of gambling of some $469,849 in the period July 2009 to 10 May 2016. This is a period of seven years and would amount to $67,000 per annum wasted on gambling if I accept his case. The difficulty with this argument is I do not see until such time as monies began to flow from the M Street, Suburb N project that the wife had access to $67,000 per year other than her drawing down on her mortgage. The wife agrees that she drew money out at places of gambling but not that she gambled all the money she drew out.
Neither the husband nor wife could survive if the wife was gambling $67,000 per annum. Up until 2014, the combined income of this couple was his $41,000 annum and her $13,000 government pension, a total of $55,000 net per annum, together with sporadic payments of work for Company P and others. The parties did not earn $67,000 per annum to be able to gamble that sum, unless I accept that she gambled all the money drawn down on the mortgage which I do not.
Secondly, the husband failed to include in his calculations deposits into the account and only looked at withdrawals. My concern is that the husband has confused drawing out money at a place of gambling with the activity of gambling and I must be satisfied that gambling and wastage has occurred.
When this evidence is seen in light of the facts I have found which is that the husband was not able to fund the expenditure he asserts on the fixed-price contract let alone cost overruns, refurnishing and the purchase of Company P, the wife’s evidence as to what she did with money she drew out at various places of gambling is further strengthened as is my finding.
Transfer of property to Mr B
Mr B had put the husband’s name and telephone number in his loan application as a referee asserting he was working for him at that time in Company P. I take judicial notice that it is common practice for banks to clarify the employment of a borrower with their employer and that the husband was the owner and director of Company P, Mr B’s asserted employer. The husband’s denial of receiving a phone call from the ANZ bank does not accord with commercial reality.
I do not accept the husband’s evidence that he was not aware of the property being in Mr B’s name or the second draw down of the mortgage. The parties needed the increase in the mortgage the wife obtained when the property was transferred into Mr B’s name to complete their home as the evidence shows the husband did not have sufficient funds to do so.
Post 2011 conduct of the parties
I have difficulty accepting the husband’s evidence that he was unaware until 2011 the wife had refinanced the mortgage and transferred the property to Mr B and was wasting money on gambling when I have regard to his actions and conduct post the asserted revelation in 2011.
The husband asserts he expended $132,918 on their joint venture partnership between 27 February 2013 and 27 April 2015 and that pursuant to the agreement he and the wife entered into he is to be reimbursed from the partnership profits for these expenses. There are difficulties with this argument.
Firstly, I am determining this matter under section 90SM of the Family Law Act1975 (Cth) (“the Act”) and not under any Partnership Act. A contribution husband asserts he made to the joint partnership, if accepted by me is clearly a contribution to the relationship and will be regarded as such.
Secondly, the husband has failed to account for reimbursement of monies to him for example $40,000 from the spotter’s fee, a refund of the $45,000 deposit he paid in respect of the M Street, Suburb N development to Ms HH and the $22,000 refund from the Company LL.
Thirdly, the events occurred during the party’s de facto relationship and I am not constrained by a financial agreement in relation to the manner with which I deal with this asserted contribution.
Fourthly, he saved $60,000 during the relationship, monies to which the wife has made a contribution. I accept that these savings were used by him in the setting up of this business. The husband has failed to take account of the wife’s contribution those significant savings and that his capacity to save this money is consistent with her position that she needed to obtain a mortgage drawdown to fund their lifestyle and to complete the home.
Fifthly, monies the husband earned to put towards the joint venture were earned during the relationship and the wife has made a contribution to those earnings.
In 2012, they attended a three-day boot camp in Queensland with all expenses paid by the husband to educate them in relation to subdivision and sale of land and for the purposes of their joint venture. The cost of this course was in excess of $44,000.
This conduct is difficult for me to reconcile with the husband’s now assertions of his wanting the wife to leave the home in 2011, an assertion she denies and his assertion that he had been unaware of the dealings with the property by the wife pre-the 2011 transfer of the property into his name. The joint partnership the parties entered into to develop land and the courses they attended is action and conduct of a couple who are still together and have a significant relationship and trust in each other.
The husband says he wrote out an agreement which the wife has annexed to her Affidavit as to how they would split the profits and carry out this joint venture. Primarily, the agreement provided that the husband would pay the expenses needed to initially establish the business, which included paying the wife’s expenses. The wife would continue to live at the G Street, Suburb H property and pay $200 per week to the husband and share in the electricity and telephone expenses. The husband would contribute as much time as he could to running the business, given he was still running the Company P franchise full-time. The wife would run the business but would not bill the husband for her time and on completion of the first development he would receive in addition to a share of the profits 10% of the initial net income after tax and expenses because he had taken all the financial risk. The husband’s expenses were to be paid from profit and the remaining profits equally split.
The wife’s expenses would only be paid from her share of the profit, and when she received her share she was to leave the G Street, Suburb H property. This last aspect of the agreement is not in the written document but was the husband’s case at trial.
The wife denies this was the agreement between them and that they entered into this venture as a couple with each sharing the risk and the profits from the venture.
The wife says together they observed an opportunity to subdivide land at M Street, Suburb N and approach the owners of that property.
The wife asserts the parties jointly entered into a partnership with Mr O, being a joint venture partnership with the husband and wife trading as Company L in mid-2014 and establish a Company L Properties Proprietary Limited trust.
This must be correct as the wife has provided documents from a Mr Wong, referring to the wife’s enquiries in relation to properties and owners of properties the wife approached and it is clear this was a joint venture that the parties undertook in the true sense of the word.
Add backs and Contributions
There have been some matters agreed between the parties and Court Exhibit 2 is a statement of agreed facts. This exhibit consist of various tender bundles.
Tender bundle B is a list of monies transferred from the husband’s CBA bank account ending 5 to the wife’s CBA account ending 3 between 29 September 2011 and 9 April 2015 which amounts to $45,373 or $11,000 per annum. The husband says this sum is an add back.
The wife only saw this document at the trial and she was quite distressed upon reading it and the offensive words the husband had used to reference the payments to her in his bank statements, for example, “sick of this shit”, “fuck this”, “thick head”, “you are shitting me up the head”, “pokies”, “take it all”, “last time, help me God” “blow job”, “last loan”, “stupid”, “Dick head”, “for fucks sake”, “I give up”, “blow me”, “help me God”, “I love you”, “stupid”, et cetera.
The respondent submitted this $45,373 he advanced to the wife be added back to the pool. This was voluntary transfer for him in circumstances where he was not compelled to do so and that argument is not accepted by the Court.
Tender bundle C is an accurate identification of payments made by the husband to various payees he says in respect of the property at G Street, Suburb H for the period to 9 November 2014 to May 2018, for example; home insurance, Telstra bills, AGL electricity, Internet, council rates, et cetera, totalling $45,759. Over a period of nine years, this amounts to $5,000 per annum. The wife disputes all these amounts were paid towards the G Street, Suburb H property. However, annexure B and C tend to show that the husband was contributing some $16,000 per annum for the upkeep and maintenance of the property and expenses in addition to mortgage payments.
Tender bundle I is an identification of payments made by the husband towards the council rates and water bills from 15 July 2015 until December 2018 totalling $8,955.71. Apart from the period May 2018 to December 2018, these payments have also been included in tender bundle C, thus there is a doubling up and I will exclude this sum as additional payments made by the husband except for the sum of $700, being three payments made to Sydney Water for 18 July 2018, 26 September 2018 and 12 December 2018. This increases the monies paid in annexure C to $46,459.
The wife’s work during the period of the relationship was spasmodic until the parties commenced the joint venture. The wife had a hairdressing salon called Business, which closed in 2007, although she maintained the account. Tender bundle D is money is withdrawn by the wife from her Business account at Club Z, Club AA and Club BB, for the period 26 March 2010 to 26 July 2012 in an amount of $17,250. The wife accepts these withdrawals and the amounts withdrawn and her evidence was she withdrew this money to play the poker machine, have a meal at the club with the husband, and pay for household utilities, food and other necessary items to maintain the property. It is trite to say, however, merely because a party withdraws money from a place of gambling does not mean that the money was spent on gambling.
Tender bundle E of Court Exhibit 2 sets out that the husband has paid the sum of $68,450 towards the G Street, Suburb H mortgage from 3 October 2011 to 26 August 2015 a period of four years, being $17,000 per annum.
Tender bundle F is an identification of withdrawals made by the wife from her CBA account number ending number 3 between 9 July 2009 and 21 December 2016, totalling $280,780. These monies were withdrawn by her from the Club Z, Club AA, and Club BB. This is a period of seven years, being withdrawals of $40,000 per annum. Until December 2015, the wife’s income was modest $13,000 and on one occasion, $20,000 per annum. The fallacies in the husband’s argument is that he has only looked at the withdrawals from these accounts and not the deposits. Even with the $11,000 per annum he provided her as set out in tender bundle B, the wife only had $24,000 to gamble and pay for her own necessities and toiletries, and as I have accepted, she did not use the mortgage drawdowns to gamble excessively. Therefore, the husband’s argument fails.
In further answer to the husband’s claim of excessive gambling and losses from gambling by the applicant is applicant’s Exhibit 6, a document from the Club Z entitled “Game session”. This is a record of the wife’s use of the club card for the period 25 January 2010 to 5 January 2016 just post separation. People would use this card when gambling as they receive bonuses on the card which can be retrieved for food, beverages and further gambling. Thus, it would be most unusual for someone who did gamble as frequently as the husband asserts the wife did, to not use this card when gambling at the club.
What this document reveals is that for the period 25 January 2010 to 5 January 2016, the wife bet a total of $103,450 and lost $103,246. The net loss was $204 over a period of six years. There were other clubs the parties attended, for example, Club AA. However, by looking at the bank statements of withdrawals of cash, it is evident that the Club Z was by far the most frequent club the parties attended. These records show that the wife gambled and lost very little money, and therefore, the husband’s argument simply falls away and does not accord with reality, rather his case theory. This is further support of the wife’s argument which I have accepted that the majority of the money she drew down on her mortgage was used to fund the construction of the home and to pay necessary outgoings and the like, and was not wasted as the husband asserts.
It is the wife’s evidence that the money she drew down in institutions of gambling was used for gambling, purchasing of meals and alcohol for the husband and herself, payment of outgoings and bills and to repay in cash to the husband monies he had expended on her behalf. The wife’s evidence was that was the way their relationship worked. There were many occasions she withdrew money from her account to repay the husband monies he had expended on her behalf, such as payment of the mortgage, gas and electricity, rates and the like. I accept this evidence although it was roundly denied by the husband. The wife made concessions on this point and her evidence is consistent with the facts as I have found them, which is that the husband simply had insufficient income to pay all the costs he asserted he paid on his own as well as save $60,000 by early 2011.
Such is the husband’s mistrust and dislike of the wife as was apparent in the witness box that he endeavoured to discredit her evidence that she and he engaged in poker tournaments during their relationship by the filing of an Affidavit of Mr CC on 17 July 2019. The husband asserted Mr CC’s evidence, which was that the group known as the MM Group ceased running poker tournaments at the Club Z in October 2010 proved that the wife was lying about her gambling. However, the parties also attended other clubs to play in Poker tournaments and, there was no evidence to suggest that the Club Z only ran poker tournaments via the MM Group after 20 October 2010. Rather than this evidence assisting the Court it merely tended to show the lengths to which the husband would go in his firm and fervent belief that the wife had gambled or wasted in excess of $400,000 during the relationship.
Tender bundle G is a list of payments the husband asserts he withdrew from his various CBA bank accounts ending 6, 7, and 8 for the period 22 February 2013 to 21 February 2018 for the benefit of the Company L Partnership. These amounts total $136,308 and is not accepted by the wife. During this period, the husband also was running Company P. There is some force in the husband’s argument that these amounts relate primarily to the M Street, Suburb N project for legal fees, development applications, deposits into the account marked M Street, Suburb N project, Finance Company for the PC, which total in excess of $120,000, were clearly for the M Street, Suburb N project.
What the husband has failed to do is provide evidence of how he could fund these payments from his income as well as pay for all the other expenses he asserts he paid for such as the mortgage, rates, electricity, gas, food and the like, and as set out in tender bundles C and B and E. Additionally, the sums paid by him were from monies earned during the relationship to which the wife has made a contribution. In addition, he has not disclosed repayments to him from the Company L venture of these expenses.
Tender bundle H is payment to the wife’s sister, Ms JJ, in wages of $8,483.26. It is clear that the husband paid this sum from his private account and that it was paid for the benefit of the parties enterprises at that time, which were Company L and Company P. It did the wife little credit to object to this as being a contribution by him when clearly it is, however again this was paid from monies earnt whilst the parties were in a relationship and the wife has made a contribution to that.
I accept that the husband was quite confident that his bank statements would not reveal cash withdrawals from gambling institutions. There was a level of arrogance when the husband gave his evidence, he being absolutely certain of things which at times were shown not to be correct. The husband was taken to three withdrawals in February, April and August 2008 in sums of $3,500, $3,500, and $4,000. However these records are from 2008 and the quantity and frequency of these cash withdrawals pale into insignificance when one has regard to the volume on a daily basis, sometimes multiple withdrawals on the same day, and the amounts of cash withdrawn by the wife from various gambling institutions on her account.
I do not accept that the husband was untruthful in that sense and it was difficult to find cash withdrawals in his bank statements. This is in stark contrast to the wife’s bank statements which are virtually nothing but cash withdrawals with the preponderance of those withdrawals being made at institutions of gambling.
Company P
It was nitpicking of the husband to assert that the wife did not assist him working in Company P franchise and that her assistance was for weeks only. I prefer the wife’s evidence as to the assistance she rendered to the husband in the Company P franchise business which was for a period of years and not weeks or months.
When the husband sold Company P on January 2016, he received net $45,641 and $5,000 for the sale of the tools. I accept the husband repaid his parents $34,000, being a repayment of the monies he obtained from his parents for the deposit for the first M Street, Suburb N project. Although he did not disclose that loan in his 28 August 2015 Financial Statement, I accept this is what occurred as it is consistent with the position the evidence has led me to, which is by December 2008, the husband had no money at all in any bank having expended his savings of $213,000 and, his income on construction of the home and purchasing of Company P, and funding the additional $15,000 vendor finance from the income of Company P. I accept he repaid this money to his parents as they had lent it to him and I find there is an add back of $16,000 as I have formed the view the wife has made a contribution to that sum.
I have determined to deal with the two significant periods in the parties’ relationship separately, namely the parties’ financial relationship prior to and during the period of cohabitation, and secondly, the setting up of the joint venture which was effectively post separation.
The M Street, Suburb N Joint Venture Project
The parties separated very shortly after money began to flow from the joint venture. I accept the husband became very concerned once it was obvious he had, without his knowledge or consent, been removed as a secretary of the parties’ proprietary limited company and was thereafter unable to access any bank accounts relating to the joint venture with Mr O. The conduct of the wife in relation to the joint venture has further fuelled the husband’s suspicions of her poor money management and wastage of funds by gambling.
From June 2015, the wife was in sole control of money from the joint venture and money flowed from this venture.
When the parties determined to set up their joint development, they opened a bank account as joint partners titled, the Company L account. Monies were deposited into and withdrawn from the account in relation to their various transactions relating to the M Street, Suburb N development. After separation the wife opened up a new account for Company L and operated this solely as she continued to carry out the joint partnership work she and the husband had commenced prior to separation.
The wife and Mr O also operated jointly the M Street, Suburb N project bank account from which monies were paid to Company L for work done and expenditure made in respect of the M Street, Suburb N development.
The real significance of the deposits into and disbursements from the Company L Partnership account is that this primarily occurred post separation, and the husband had no control or access to this account which has caused him significant concern.
One of the difficulties with the husband’s way of looking at this matter, which is reflected in his submissions, is that although he has been careful to set out monies he paid for the home and the M Street, Suburb N project, he has not been careful to set out monies he received from the M Street, Suburb N project. For example, I accept that on 16 September 2013, he paid a deposit of $45,000 for the M Street, Suburb N project development. Nowhere in his material does he disclose that this money was returned to him in June 2014. He does not disclose that $22,350 was returned to him from the Company LL course he paid for, nor did he treat the spotter’s fee of $40,000 to him as a refund of monies expended. These amounts total $107,000 and this has compounded the husband’s significant suspicions and double counting.
Additionally, the contributions made by the husband to the project came from monies earned by him during the relationship, to which the wife has made a contribution. For example, $60,000 from Company P paid towards a project is also the wife’s contribution.
I must now assess the wife’s evidence in relation to monies transferred into the Company L Partnership account from the M Street, Suburb N project, paid out from that account on behalf of the M Street, Suburb N project, together with deposits and withdrawals in the Company L Partnership account not related to the M Street, Suburb N project. Unfortunately, the wife did not keep non-M Street, Suburb N deposits and withdrawals separate from those related to the project and this was particularly so when she opened up the sole Company L account in her name to continue to run the business as the husband was clear in his evidence he would not permit her to continue to run the joint account. This mixing of M Street, Suburb N project deposits and withdrawals with personal deposits and withdrawals by the wife in the Company L account, be it in the initial joint account or the new account, has further heightened the husband’s mistrust of the wife and complicated the running of the matter.
The first table in schedule A-1, headed M Street, Suburb N Project Deposits, total $332,159. The evidence from Mr O was that the M Street, Suburb N project account was jointly operated by himself and the wife, and that no funds were released from that account unless he signed off on the relevant disbursement after having considered the spreadsheet prepared by the wife. The wife would gather together the deposits and payments in respect of M Street, Suburb N, create a spreadsheet, provide that to Mr O, and they would both then sign off on the expenses in the spreadsheet. Monies were then dispersed from the M Street, Suburb N project account to various entities, including the Company L account. Cash did not feature in the M Street, Suburb N project. The husband took no part in this activity and this in part has fuelled his significant distrust of the wife.
Apart from three deposits into the Company L ANZ bank account in respect of the M Street, Suburb N deposits being $79,024.50 for a Sydney Water board bond, $1,000, and $605, all remaining deposits in table 1 of schedule A1 came from the M Street, Suburb N project account ending 9 jointly operated by Mr O and the wife.
The second table in schedule A-1 entitled the non-M Street, Suburb N Deposits evidence that deposits from bank accounts ending 10, 11, 12, and 13 into that account were either owned by the wife, her children, or Company L. One of the deposits is described as a ‘kinetic data loan’, a loan taken by the wife and disclosed by her. These deposits total $260,447.
The third table in schedule A-1 entitled M Street, Suburb N Project Withdrawals, total $153,082. It is clear that of the deposits in the M Street, Suburb N project of $332,159 only $153,082 were withdrawn in respect of payments for the M Street, Suburb N project. From the balance of $179,077, the wife agrees she retained $67,532 as unpaid wages for her work on the project. I note the evidence of the husband and Mr O that the wife was paid $500 a week from 2014 for consulting fees for work undertaken outside the project.
It is the wife’s case that the joint venture agreement provided that she was to be paid $150,000 for her work, the husband asserts his money was to be paid to them from profits after completion of the project. The $67,532 the wife retained is less than the agreed share of the profits that even the husband concedes.
The fourth table of schedule A-1 is headed non-M Street, Suburb N Project Withdrawals. These total $303,268. Taking this sum from the non-M Street, Suburb N deposits of $260,447 results in the wife withdrawing $63,000 more from the account in respect of non-M Street, Suburb N deposits than was deposited in respect of that same category a sum close to the $67,532 the wife agreed she retained as unpaid wages for her work on the project. However, these deposits and withdrawals have nothing to do with the husband and were clearly not related to income earned from the M Street, Suburb N project to which he had made a contribution although not as significant as the wife.
This still leaves the question whether I add back the whole $179,077 or allow the wife some of these funds.
Attached to the wife’s Affidavit is the joint venture agreement. As part of the expenses, the schedule attached to that agreement, the words “Mr Rushdie wages $150,000” appear and this supports the assertion that she was entitled to wages of $150,000 from the joint project despite the husband’s position is as to how that sum was to be characterised.
I accept the wife’s evidence that due to the separation and orders of the Court, the wife was the party who carried out work to ensure the completion of the transactions contemplated by the joint venture agreement with Mr O. I accept also Mr O is the husband’s friend.
The wife asserts the only payment she has received in the three and a half years she worked in the joint venture was a salary advance of $20,000, which she said she repaid, and $67,532 withdrawn from the Company L Partnership account in lieu of her salary.
That is inconsistent with her Affidavit as at paragraph 225, where the wife says she was paid the sum of $164,000 from the joint venture between 1 July 2013 and 30 March 2017. The wife says she was entitled to $223,000 in total and thus is entitled to keep the $67,000 she has retained.
Neither the husband nor Mr O agree with this proposition and neither do I. The wife’s argument that she was in some way entitled to unpaid wages of $67,000 is not accepted by me as she was paid the wage that the joint venture prescribed she was to be paid, together with interest. I accept the husband’s position that the sum of $179,077 should be added back to the pool as monies the wife has solely retained and to which the husband has made a contribution.
I accept the wife has continued to work in the joint venture post March 2017 without payment of wages.
I do not accept the husband’s assertion that even though he was locked out of the partnership, the work of the partnership by June/August 2015 was minimal. He would not know as he was locked out. The facts are that it was the wife, who, with Mr O, has been handsomely reimbursed, carried out the lion’s share of the work to create the profits and finalise the project.
The project the parties entered into with Mr O generated just under $1 million in profits, of which $486,497 is currently held in trust given the interim property distribution the parties have enjoyed. To create a profit of this size in three and a half years requires significant energy, effort and skill. Apart from the initial set up costs, I find the wife carried out the majority of these necessary tasks. This was her work post separation. After having heard the parties give evidence, it is clear to me that, to use the words ascribed to the husband, yet denied by him “Mr Rushie was the brains of the outfit”, are correct. The husband only has one way of looking at things, and made no concession whatsoever that his version of events may not be the only version of events.
In relation to the husband’s claim that he is entitled to reimbursement of $134,000 from the joint venture, I dismiss that claim for the below reasons.
In his calculations, the husband did not make the allowances for the monies that were refunded to him of $46,000 the deposit of the M Street, Suburb N project, $40,000 spotter’s fee, nor the refund of $22,350 from Company LL. Additionally, savings and income that the husband asserted he used to fund his contribution to the joint venture were acquired by him during the relationship and the wife has made a contribution to those savings and income.
I will assess the husband’s contribution to the M Street, Suburb N project in the same manner as the wife’s contribution, as a couple in a relationship.
Contribution based entitlement of the parties
Consistent with decisions such as Hickey & Attorney-General for the Commonwealth of Australia[2] and Ferraro & Ferraro[3], there is a four stage approach the Court must engage in to determine the parties’ contribution based entitlement to their property. Once a de facto relationship is established the principles applying to the division of the assets acquired by parties be they in a marriage or de facto relationship is the same although covered by different sections of the Family Law Act 1975, namely section 90SM in a de facto matter and section 79 in a marriage.
[2] (2003) FLC 93-145.
[3] [1992] FamCA 64.
The first stage is to identify the value nature and species of the pool of assets for division.
The second stage is to ascribe to each party their contribution based entitlement to the property expressed as a percentage having regard to their direct financial and non-financial contributions, indirect financial and non-financial contributions and the role of parent and homemaker.
It is also important to determine whether one party has made a superior contribution post separation to the assets of the parties or to either of them or the family.
Finally, the Court determines whether there ought to be an adjustment to either party’s contribution based entitlement for their past contributions having regard to the their future needs often referred to as the 75(2) factors in a marriage or section 90SF(3) factors for parties in a de facto relationship.
Going to the pool.
a)Assets
i)Company L Partnership monies, $496,487.
ii)G Street, Suburb H property, $750,000.
iii)Motorbike, $6,000.
iv)Wife’s boat, $6,000
v)The wife’s Motor Vehicle 1 worth $14,900, which was purchased by her with part of her interim property distribution as was the husband’s property at W Street, Suburb X, Queensland (“W Street, Suburb X property”). I note the husband’s interest in this W Street, Suburb X property is net some $75,000. These assets will not be included in the pool as this would be double counting.
vi)Gross assets total, $1,258,487.
b)Relationship debts
i)G Street, Suburb H home loan, $208,997.
ii)ANZ line of credit, $48,871.
iii)Total relationship debts, $257,868.
iv)Net assets without add backs, $1,000,619.
All other debts in the balance sheet are personal debts acquired by them post separation.
c)Add backs
i)Sale of Company P, $16,000.
ii)Monies retained by wife in the Company L account, $179,077.
iii)Interim property distribution, $497,000.
iv)Total add backs, $692,077.
Total asset pool for division, $1,692,696.
d)I do not accept the husband’s case that there are any other add backs to be taken into account. Payment of rates and water bills between 15 July 2015 and 12 December 2018 totalling $8,955 are amounts which I regard as contributions by him post separation and not as add backs. Monies he advanced the wife voluntarily, payments he made towards the joint venture, his significant cash contribution to the construction of the home, the wife’s sole occupation of the home for four years and his payments of mortgage in respect of the property during this period, will be taken into account in the exercise of my discretion, as will the wife’s contributions.
Neither party is seeking a splitting order. The wife’s superannuation she asserts is some $700 although the husband claims it is $5,700 and the husband has no superannuation.
The asset pool for division is $1,692,696, of which $692,077 has been expended by the parties and is no longer available to them. This leaves a net amount of $1,000,619.
I find the husband has made a superior direct financial contribution to the construction of the home and purchase of Company P over that of the wife during the relationship, being a cash injection of $214,630 and his income pre the commencement of the de-facto relationship. In addition, he has made some significant post separation contributions.
I am satisfied that without the husband having this money available to him, neither of them would have been able to fund borrowings to build the home. At all times during the relationship the husband earnt more than the wife and he contributed his income and assets to the construction of the home.
The wife’s contribution was a block of land worth $240,000 with a mortgage of $70,000. She then contributed to the construction and fit out of the home by increasing the mortgage by $140,000 to $225,000 by 2011. I accept the wife used her limited income to pay for outgoings and expenses, as did the husband, and that each of them carried out the activity of gambling at clubs as part of their recreation together.
Other than the husband’s cash injection, I find the parties’ contribution based entitlement to their assets was equal during the relationship, that each did the best they could to finalise construction and fit out of their home, and that each contributed to the others entertainment and lifestyle costs.
Monies the husband earned or saved during the relationship were contributed to by the wife. His evidence that he had saved $60,000 by February 2011 supports the wife’s contention that he was not fully supporting her given her limited income of $13,000 per annum during this period and that she must have used the monies available to her, being drawdown on her equity in the land to not only fund the construction of the home but also to pay necessary outgoings for herself and the property and pay the mortgage.
I accept the wife carried out the bulk of homemaker and parenting given that the husband was effectively in full-time employment during the relationship and her work was sporadic. The husband admitted this was a 75/25 sharing in the wife’s favour. However, this property provided a home for her adult children at times and continues to provide a home for her and her aged mother and the husband has made a contribution to her children and her mother with the payment of mortgages and outgoings during the relationship and post separation. I note the wife has been in sole occupation of the home since separation some four years.
In relation to the other post separation contributions, and in particular to the M Street, Suburb N development, they favour the wife as her almost sole energy, effort and skill resulted in the parties netting almost $1,000,000 from that enterprise. The husband paid from his accounts all costs associated with setting up the M Street, Suburb N development, much of which was refunded to him, and this project was a financial success for the parties. The monies the husband used to pay these costs were accrued or earned by him during the relationship to which the wife made a contribution. Again, the wife clearly did the lion’s share of the work in that project and maintained and continued the project post separation.
I accept the wife has not been paid for work she did in the project since March 2017, however has been paid up to that time in the sum of $164,000
On these facts, I find the wife has made a superior contribution to the current asset base to that of the husband and therefore, allow her 60% of the assets and the husband 40%.
I find that post separation, the husband has made a superior contribution to the parties assets over and above that of the wife in that he has paid rates, taxes, a mortgage on the property that the wife, her mother and adult children were living in, and that the wife has lived in that home for a period of four years to the exclusion of the husband. I will therefore allow him 5% for this contribution.
This results in a contribution based entitlement of 55% of the wife and 45% to the husband.
Going to the 90SF(3) factors. The wife does not work and is caring for her aged mother who has dementia and has some attachment to the property, being a property she has familiarity with. The relationship was for a period of six years.
The husband is not currently working, however his 2018 Income Tax Return indicates he was earning $79,000 per annum and he clearly has a capacity to work. He owns a property in Queensland which he purchased with part of the interim property distribution and he is in stronger financial position to the wife, although it is still a modest position.
The wife has legal fees to pay amounting to $340,000, having paid $65,583 to date. The husband has paid legal fees of $261,792 and has an additional $132,000 to pay. These legal fees are totally out of kilter with the value of the asset pool the parties have to divide and are a travesty. I cannot see either party will be able to buy the other out of their interest in the property given the size of the add backs which monies have been expended and the legal fees yet to pay, save that I accept the wife’s friend Mr Y’s evidence that he will assist the wife to buy out the husband’s interest in the home if he can.
I find the wife has the 90SF(3) factors in her favour given her age and current lack of employment and care of her mother, and that it will be far more difficult for her to be able to adequately support herself into the future than it will be for the husband. I therefore find a 5% adjustment is an appropriate adjustment for this factor.
This results in an adjustment of the relationship property of 60% to the wife and 40% the husband.
In order to determine whether the Orders I propose to make are just and equitable, I must determine what the effect of the orders I propose to make are upon the parties and the property.
The net asset pool is $1,692,696. 60% of this amount is $1,015,620 to the wife and 40% is $677,076 to the husband.
The wife has received $230,000 by way of interim property distribution, $179,077 retained in the M Street, Suburb N project and her boat worth $6,000. This amounts to a total of $415,077 reducing her entitlement to $600,543.
The husband has received an interim property distribution of $267,000 together with $16,000 from the sale of Company P and his motorcycle of $6,000 being a total add back to him of $289,000 reducing his entitlement to $388,076.
Thus, if the wife wishes to buy out the husband’s interest in the matrimonial home, she must pay him the sum of $388,076, and if the husband is to buy the wife’s interest in the former relationship home, he is to pay her $600,543.
If neither party can buy the other out, or chooses not to do so, I will order the parties to sell the home, divide the net proceeds of sale after payment of the mortgage, agent’s commission and usual conveyancing costs, 60% of the wife and the balance to the husband and for the parties to divide the money standing in Marsden’s trust account in the same manner.
If the wife chooses to buy out the husband’s interest in the property, the wife has three months from the date of these Orders to pay to the husband the sum of $388,076, at which time the husband will transfer the property to the wife and the wife will discharge the current mortgage on the property.
If the wife chooses not to buy out the husband’s interest in the property or is unable to comply with my orders, the husband has six weeks from the date of being advised of either event to pay the wife $600,543 to buy out her interest in the property. Otherwise the property is to be placed on the market for sale.
I will deal with the division of furniture and personality in my orders.
ISSUE OF COSTS
Mr O and the husband each seek their costs of the aborted hearing before Justice Johnston in September 2018.
Mr O’s application is contained in his Amended Response to Initiating Application and Affidavits, filed 17 July 2019. The costs he has incurred to date amount to $155,000. It is a travesty when effectively innocent third parties are caught up in litigation disputes between a husband and wife or a de facto couple who cannot agree on the time of day let alone important factors in their case and who will simply not make any concessions, as is the case here.
The matter may not have been ready to be heard before Justice Johnston in September 2018 as the husband and wife were still arguing about valuations.
More importantly, the wife had filed an amended application raising a multitude of new issues on 6 September 2019, 12 days before the hearing was due to commence. Mr O had no time to respond and these new issues which are clearly set out in paragraph 24 of his Affidavit as follows.
The wife argued about paid legal costs associated with the joint venture company, sought monies that Mr O had received be refunded to the parties’ company, raised questions about ongoing and outstanding liabilities for the company as at 17 September 2018, raised the issue of the $150,000, raised that Mr O had been overpaid his first distribution of profits, sought he transfer his interest in the joint venture company to her and Mr O did not have sufficient time to do an audit of the accounts before the hearing. This also applies to the husband who had no time to respond to these fresh issues raised by the wife two weeks before a final hearing.
I regard the wife’s conduct as an ambush, that this ambush necessitated the adjournment and that the wife has been ultimately totally unsuccessful in a claim against Mr O given the parties resolved this matter at mediation.
The husband had no say in the adjournment given the position of Mr O however the parties had not even been able to agree on value of the home at that time despite there being nothing particularly unusual or special with the parties former matrimonial that would have rendered its value not easily obtained from an expert.
Having regard to the matters I must under section 117(2) of the Family Law Act 1975.
The wife is to receive a fund of money or an interest in a property.
Mr O’s appearance at this hearing, the incurring by him of legal fees for preparation for the aborted trial has come about solely due to the conduct of wife.
It is clear that the wife was wholly unsuccessful in her claim filed just prior to the trial against Mr O and the filing of this application necessitated the adjournment.
In these circumstances, it is proper that the wife paid Mr O’s costs and those of his associated companies for the aborted hearing as agreed or at scale.
Going to the question of the husband’s costs. The husband and wife had not agreed on the value of the former matrimonial home, thus the husband was equally to blame regard as was the wife. Had Mr O not been involved in the matter and the husband and wife came to trial as they did without an agreement as to the value of the home the matter may have been adjourned.
Secondly, the conduct of the matter and the attitude taken by the husband towards the wife’s alleged gambling, his failure to account for deposits into his various bank accounts, the resulting double counting by him of his contributions, failure to acknowledge the contributions made by the wife to his savings, the ultimate wealth of the parties from the M Street, Suburb N development, and the building of the home, have been significant factors in the length and complexity of this matter and the necessity for the Court to undertake a tracing exercise.
This attitude by the husband no doubt has had a significant part in the extraordinary legal fees these parties have expended. There are clearly other factors, such as the wife joining Mr O to the proceedings, however she is to bear those costs in part.
I must be satisfied under section 117(2) of the Family Law Act 1975 that it is proper I exercise my discretion to make a costs order. In light of these facts, I do not see it would be so proper. Therefore, the husband’s application for costs is dismissed.
The husband sought an additional order the $100,000 of the monies remaining in trust be retained to effectively wind up the parties joint venture. This is a sensible approach in a matter where the parties can agree on very little. It is also important that monies be held in trust to satisfy the costs claim of Mr O. I will order $50,000 of the wife’s entitlement to the monies held in trust be retained by Marsdens Law Group to satisfy Mr O’s legal fees and once paid any surplus be refunded to her.
In addition, $100,000 of the monies held in trust is to be retained by Marsdens for the costs of winding up the parties’ joint venture by way of dissolution of partnerships and winding up of companies. Once these events have occurred, any surplus left over is to be divided as to 60% to the wife and 40% to the husband.
I certify that the preceding two hundred and forty-seven (247) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Henderson delivered on 19 July 2019.
Associate:
Date: 14 November 2019
Key Legal Topics
Areas of Law
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Commercial Law
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Equity & Trusts
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Property Law
Legal Concepts
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Costs
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Injunction
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Remedies
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Res Judicata
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Restitution
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