SFAKIANAKIS & SFAKIANAKIS

FAMILY COURT OF AUSTRALIA

SFAKIANAKIS & SFAKIANAKIS

[2017] FamCA 1103

FAMILY LAW – PROPERTY – Where the parties were married for over thirty years and have one adult son –Where it is just and equitable for the Court to make property settlement orders – Where the contributions of the parties are assessed to be equal – Where the parties are of similar age – Where the wife was the primary caregiver of the husband’s children for 10 years in circumstances where his former wife had died – Where money was lost through criminal activity - Where the husband has substantial legal costs from Supreme Court proceedings – Where an adjustment under s75(2) of the Family Law Act 1975 (Cth) is not just and equitable – Where it is just and equitable for each party to receive property equivalent to an equal division.

Family Law Act 1975 (Cth): ss 75(2)(o), 79

Bevan & Bevan (2013) FLC 93-545
Stanford v Stanford (2012) 247 CLR 108

APPLICANT:

Ms Sfakianakis

RESPONDENT:

Mr Sfakianakis

FILE NUMBER:

SYC

4232

2015

DATE DELIVERED:

22 December 2017

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Johnston J

HEARING DATE:

25 & 26 September 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Nagle

SOLICITOR FOR THE APPLICANT:

W G McNally Jones Staff Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Hanrahan

SOLICITOR FOR THE RESPONDENT:

Hal Lawyers

Orders

That within sixty (60) days the husband pay to the wife the sum of $588,726 by way of bank cheque or cleared funds.
That simultaneously with the making of the above payment the wife shall do all things and sign all documents necessary to transfer to the husband her interest in the property situated at and known as 1 B Street, Suburb C.
Both the husband and the wife shall do all things and sign all documents necessary to discharge all mortgages and encumbrances presently registered over the 1 B Street property at their equal cost.
That, as between the parties, and provided the payment in Order 1 is made, the husband is declared solely entitled to the property situated at and known as 2 B Street Suburb C and the husband indemnifies and shall keep indemnified the wife in relation to all mortgage payments, statutory rates and charges, other expenses and liabilities in relation to the said property whenever and however arising.
That each party be declared the sole owner of all other property and superannuation in their possession and/or control respectively.
That each party be solely liable for any debt, credit card, personal loan or other liability standing in their sole name as at the date of these orders and indemnify and keep indemnified the other party in respect of same.
That in the event the husband does not comply with Order 1 the wife be appointed trustee for sale of the properties situated at 1 B Street, Suburb C and 2 B Street Suburb C and thereupon do all such things to execute all necessary contracts for sale, documents, instruments, transfers, discharge of mortgage documents, authorities, directions, and do all necessary things on behalf of the husband to:
7.1sell the said properties at 2 B Street Suburb C and 1 B Street, Suburb C for the best prices reasonably able to be obtained;
7.2sign on behalf of the husband all costs agreements with McNally Jones Staff Lawyers;
7.3forthwith give 30 days’ notice in writing to any tenants or occupiers of 1 B Street, Suburb C to vacate the property; and
7.4issue a writ of possession to secure vacant possession of 1 B Street, Suburb C.
That the proceeds of sale of the properties be paid as follows:
8.1 to pay all agent’s commission, costs on sale and legal costs of the sale;
8.2 to discharge all mortgages; and
8.3to pay 48.591 per cent of the balance remaining to the wife and 51.409 per cent thereof to the husband.
That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
That the above orders not commence operation until 6 February 2018.
That both parties have leave to relist these proceedings by arrangement with the Associate to Johnston J not later than 5 February 2018 for the purpose of further submissions in relation to the form of the orders only.
That both parties have leave to relist the proceedings by arrangement with the Associate to Johnston J in relation to the implementation of these orders.
That all exhibits be released.
That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders then the Registrar of the Court shall be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

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 Sfakianakis & Sfakianakis 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 4232 of 2015

Ms Sfakianakis

Applicant

And

Mr Sfakianakis

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Sfakianakis (“the husband”) and Ms Sfakianakis (“the wife”) commenced cohabiting in May 1980, married in 1981 and separated on 16 September 2014. They have been unable to resolve their property dispute and have asked the Court to determine a property settlement for them.
The husband was previously married but his previous wife passed away due to cancer on 8 June 1981. They had separated and were able to resolve their family law proceedings just before she passed away.
The husband has two children from his previous relationship:
a)Ms D Sfakianakis (“Ms D”), aged approximately 44 years;
b)Mr E Sfakianakis (“Mr E”), aged approximately 43 years.
They were around seven and eight years of age when their mother passed away. These children are now estranged from the parties.
There is one child of the marriage, Mr F Sfakianakis (“Mr F”), born in 1983 and currently aged 34 years.
The husband has been diagnosed with a neurological condition.

Applications

The wife seeks orders to the following effect:
·That within 35 days the husband pay to her the sum of $665,000;
·That simultaneously with the above payment the wife do all things and sign all documents necessary to transfer her interest in the property at 1 B Street, Suburb C to the husband and the parties shall forthwith discharge all mortgages and encumbrances registered against the title to the property at the cost of the husband;
·That provided the payment of $665,000 is made the husband be declared the sole owner of the property at 2 B Street, Suburb C and he shall indemnify the wife in relation to all the mortgage payments, rates and any other outgoings or liabilities in relation to the property;
·That in the event that the husband does not pay the $665,000 the wife be appointed trustee for sale of the properties at 1 B Street, Suburb C and 2 B Street, Suburb C and she shall sell the said properties for the best prices reasonably able to be obtained (This order was deficient but I infer that the net proceeds of sale would be applied to pay agent’s commission and legal costs on the sale, to discharge the mortgages registered against title to the properties, to pay the wife the sum of $665,000 and to pay the balance to the husband);
·That the wife as trustee for sale have liberty to relist the proceedings in relation to implementation of the orders;
·That otherwise each of the parties be declared the sole owner of all other property and superannuation in their possession and/or control respectively;
·That each party be solely liable for any debt or liability in their sole name and to indemnify the other in respect of such;
·That each party releases the other from actions, claims and liability as specified; and
·That an enforcement order be made as specified.
On the other hand, the husband seeks orders to the following effect:
·The wife transfer to the husband or to Mr F Sfakianakis her interest in the property at 1 B Street, Suburb C;
·The parties each be declared the sole owner of all other property and superannuation in their possession and/or control;
·The husband be declared the sole owner of the property at 2 B Street, Suburb C;
·That the wife remove the caveat lodged against the title to the property at 2 B Street, Suburb C;
·The Court note that the sum of $225,000 already received by the wife by way of partial property settlement be regarded as part of her final property settlement;
·Such other order as the Court thinks fit; and
·Costs.
For completeness I annex at Annexure “A” to these reasons for judgment the form of orders sought by each of the parties by way of final property settlement orders.

Background

The husband was born in 1950 in G Town, Greece.
The wife was born in 1952 in H Town, Greece.
The wife migrated to Australia in 1954.
The husband migrated to Australia in January 1969. He had completed his schooling in Greece to the third form high school level.
The wife completed Year 10 at J School and completed a one year TAFE Course in Brisbane.
The wife moved to Sydney in January 1979 and worked for K Solicitors in Suburb L.
The parties met in 1980 when the husband instructed K Solicitors to act for him in relation to his marriage breakdown.
The parties commenced living together in approximately May 1980.
On 5 June 1981 orders were made by this Court providing for the husband to have the sole custody of his children Ms D and Mr E and for the property at M Street, Suburb N (“the Suburb N property”) to be divided equally between the husband in his own right and as trustee for Ms D and Mr E.
As indicated above, the husband’s previous wife passed away on 8 June 1981. At this stage Ms D and Mr E were approximately eight and seven years of age. The children came to live with the parties and the wife became their primary carer. The parties were living in rented premises at O Street, Suburb P.
In 1981 the parties were married in Brisbane.
At the time of the marriage, the husband’s brother, Mr Q Sfakianakis, was staying with the parties for approximately five months. During this time he found employment at Suburb R. The wife woke early in the morning and drove him to Suburb R and then returned home to get the children ready for school.
After the wedding, the wife reduced her hours of working at K Solicitors to be home for the children before and after school.
In 1981, the husband sold the Suburb N property for $72,500 and purchased a property at 2 B Street Suburb C (“2 B Street”) for $82,500. The parties moved into this property with Ms D and Mr E. The wife attended to the conveyance of the sale of the Suburb N property while working for K Solicitors. The property at 2 B Street was purchased 50 per cent in the husband’s name and 50 per cent in the husband’s name as trustee for Ms D and Mr E.
Between 1981 and 2005 the husband applied mortgages to 2 B Street to the XY Bank (“the Bank”). These mortgages related to the purchase of a couple of vehicles.
In 1983, Mr F Sfakianakis (“Mr F”) was born.
Following Mr F’s birth the wife continued to do some work at K Solicitors. When she did this, she took Mr F with her to work.
Shortly after the birth of Mr F, the husband purchased a car trailer and started a business working during the day. This vehicle was upgraded a number of times. Eventually the husband purchased a truck in 1996 or 1997 for approximately $90,000. The husband subsequently spent an additional $25,000 to have additional equipment affixed.
In October 1986 the wife commenced working at Company S and she continued working at Company S until December 2006.
In 1986 the parties purchased another vehicle funded by a loan from the Bank. The vehicle was sold in 2000 following an accident by a person who had hired it.
When Ms D and Mr E were in their early 20s they became aware of the interest they had in 2 B Street under the trust that the husband had created. Mr E had previously become estranged from the parties at the age of 16 when they would not support his wish to purchase a motor bike. Ms D also became estranged from the parties at the age of 19.
Ms D and Mr E commenced court proceedings which were resolved by the husband paying each of them $65,000 for their interest in 2 B Street. This was done pursuant to orders of this Court on 13 February 1998. The husband also paid $23,000 in legal fees.
Mr F left school in year nine and completed a one year course at TAFE. He worked as a tradesman for some years but later commenced working with his father in the business.
In 1999 the wife’s father passed away. The wife’s mother sold her home and moved to Sydney. The parties purchased a small villa type home at 1 T Street Suburb C (“1 T Street”) close to where they lived and the wife’s mother moved in and began paying the parties $200 per week rent. This amount was sufficient to pay the mortgage and they were able to negatively gear the property.
The parties subsequently purchased a property at 2 T Street Suburb C (“2 T Street”) and had it rented for three years.
In 2003 the husband’s business obtained an operator’s licence from the relevant licensing authority. The operator’s licence is in the name of both of the parties. The husband was involved in all aspects of the business and the wife was involved in the bookwork.
In April 2003 the wife’s mother passed away and the parties sold both 1 T Street and 2 T Street. Following the sale and discharge of the mortgage there was a sum of about $100,000 remaining in the estate. The wife received an inheritance of approximately $70,000.
The parties subsequently purchased two home units in U Street, Suburb V Sydney (“the Suburb V properties”). The parties found that the interest repayments were too expensive and they sold the properties at a loss of more than $200,000.
In 2004 the parties purchased 1 B Street, Suburb C (“1 B Street”) which was directly across the road from 2 B Street where the parties were residing. It was purchased as joint tenants and financed by a loan from the Company S Credit Union (now trading as W Bank) secured by a mortgage over the property. This property was rented out until it was later developed into a duplex.
The wife asserts that in 2004 Mr F found himself in trouble with two men after a deal with some cars went wrong. She asserts that these men extorted a substantial sum of money from her. I shall refer to this again below.
On 23 January 2004 there was a break in at 2 B Street. The wife’s jewellery was stolen during this invasion.
In 2006 the parties developed 1 B Street into two duplexes, one being known as Duplex A 1 B Street, Suburb C (“Duplex A”) and the other being known as Duplex B 1 B Street Suburb C (“Duplex B”). The construction costs were approximately $250,000. The construction was funded by a loan from the Bank secured by a mortgage on 2 B Street (“the Bank loan”). The husband contends that he was unaware of the Bank Loan and that the wife had forged his signature on the relevant documents. He states that he believed that the construction was funded through savings in the Bank and that the parties should have had $500,000 in the Bank at this time. He contends that these funds were used by the wife without his knowledge. The wife denies that she forged his signature. I shall refer to this again below. Duplex B and Duplex A were then rented out for some years.
In December 2006 the wife accepted a $90,000 redundancy payout from Company S. The $90,000 was transferred into the parties’ joint Company S Credit Union Account …92.
By 2007 Mr F was virtually running the family business. He was paying $500 per week to the husband for the hire of the truck.
In 2007 Mr F purchased a home at X Street, Suburb Y (“the Suburb Y property”). Mr F’s girlfriend, Ms Z, and her two children subsequently moved in with him at the Suburb Y property. Mr F started to receive social security benefits and was finding it difficult to pay his mortgage repayments. Between 2007 and 2012 from time to time, the wife made contributions to Mr F’s mortgage from the parties’ funds.
In February 2007 the wife began to work in administration at Company AA. She worked there full-time until the business went into liquidation in December 2009. Following this employment, the wife began working at BB Lawyers.
In 2010 the husband suffered a heart attack and had a stent inserted.
In mid 2010 CC, Mr F’s daughter and granddaughter to the parties, was born.
In October 2011 Duplex B was sold for approximately $600,000, the net proceeds of sale being $586,199.45. Duplex A was kept as an investment property and tenanted for another year.
In early 2013, Mr F married Ms Z. The costs of the wedding reception were paid from the parties’ funds.
At the end of January 2013 Ms Z’s two elder children moved in with the parties as they were enrolled in a nearby school. The wife attended to the payment of school fees for both children.
In late February 2013 Mr F and his wife sold the Suburb Y property and moved into Duplex A. They paid a reduced rent to the parties.
On 18 September 2014 the parties separated.
Following separation, the wife moved into Duplex A with Mr F and his family. She resided there until 14 February 2015 when she left on her own accord. Following the departure, Ms Z sought an Apprehended Violence Order against the wife however it was withdrawn by the New South Wales police prior to the hearing.
On or about 18 September 2014 the husband drew a cheque for $30,000 from the Company S Credit Union joint account. He states that this withdrawal was so that he would have money to invest in the cars and funds to carry on the business. The husband then tried to draw a cheque to himself for $140,000 which he banked in the JJ Bank account held solely in his name. On realising this, the wife withdrew $140,000 on the same day into her name and deposited it into her bank account in her sole name at the JJ Bank. When the Company S Credit Union saw both cheques they telephoned the wife and she told them to stop payment on both cheques. The parties later agreed to divide the remaining funds between them.
On 19 October 2014 the parties entered into a written agreement prepared by the wife’s solicitors which included provision that the husband would live at 2 B Street and the wife would live at Duplex A with Mr F and his family. The husband asserts that he was unaware of the mortgage on 2 B Street when the agreement was made. The agreement recorded that the wife had received $225,000 and the husband had received $259,668.22. In my view, nothing turns on this agreement, its relevance being part of the history of the parties’ relationship only.
On 10 March 2015 the husband commenced proceedings in the Supreme Court of New South Wales (“the Supreme Court”) against the wife, the Bank, the Registrar-General and Ms DD in relation to the Bank loan obtained to fund the development of Duplex A and Duplex B. The husband contends that the wife fraudulently obtained the mortgage by forging his signature. The wife asserts that she gave the mortgage documents to the respondent and he signed them in her presence. She states that she then took them to work and had the signatures witnessed by Ms DD. I shall refer to this again below.

As at December 2015 the wife’s superannuation was $28,034. The wife has since exhausted her superannuation funds.
The husband and wife were divorced on 1 December 2016.
In July 2017 the Supreme Court made orders dismissing the husband’s claim against Ms DD and the Bank with costs. Following this decision the husband filed a holding notice concerning an appeal.

Credit

Ms Sfakianakis

The wife was responsive in her answers to questions. She had a good recollection for details.
It is the case, however, that she procured the husband’s signature on a mortgage by what can only be regarded as a deception, as will be seen below. This was to enable the parties to obtain a substantial loan from the Bank, secured over the properties owned by the parties, without the knowledge of the husband.
This reflects adversely on her credit. Apart from this, the wife was a good witness. Generally where her evidence conflicts with that of the husband and/or Mr F I prefer the wife’s evidence.

Mr Sfakianakis

The husband was reasonably responsive to questions. He demonstrated very little knowledge about financial matters. It was clear that he left the financial management of the parties’ affairs to the wife.
For a time he appeared to maintain his assertion that the wife forged his signature on the relevant mortgage document but his counsel conceded that it was his signature which appeared on the Mortgage.
I have serious reservations about the reliability of the husband’s evidence.

Mr F Sfakianakis

Mr F Sfakianakis is the adult son of the parties. He was reasonably responsive to the questions.
As in the case of his father, I have serious reservations about the reliability of his evidence.

Ms Z Sfakianakis

Ms Z Sfakianakis is the daughter-in-law of the parties. She assisted the husband in the preparation of his affidavit and had a good knowledge of his current financial affairs.
I have a favourable view about her evidence.

Mr EE

Mr EE, forensic document examiner, prepared an expert report concerning the question of whether the signature which appeared to be that of the husband on the Bank Mortgage was, in fact, that of the husband. As indicated above, counsel for the husband conceded early in the hearing that the husband accepted that it was his signature.

Issues

The Alleged Extortion

A major issue in these proceedings was an allegation by the wife that between 14 May 2004 and 28 June 2004 she paid extortionists a total of $385,000 in order to protect the life of the parties’ son, Mr F.
In her affidavit the wife said that in 2004 Mr F found himself in trouble with two men who were associates of his after a deal with some cars went wrong. She said that Mr F came to her for help and told her that the men were asking for large amounts of money or they would hurt him.
The wife annexed to her affidavit a newspaper report dated 11 August 2015 of the sentencing of a Mr FF and others following their conviction of intimidation in relation to a person. The wife said that Mr FF was one of the persons to whom she paid cash and cheques. She said that she knew this person and that he was extremely dangerous. The wife said that Mr F said to her “he will call you with directions of how to draw the cheques”. She said that on the directions of this person she paid approximately $385,000. She said that she does not want the fact that she made these payments to be made public because she is in fear of the extortionists.
During her cross-examination the wife said the following about this matter. Mr F asked her to lend him some money to buy a prestige car and he wanted $180,000. She informed him that she had the money in the Bank account to pay for the proposed development of duplex residences at 1 B Street, Suburb C. He said that it would be a quick turnaround and that he would have the money back to her before she needed to commence the building project. She said that she paid out the cheque and the next thing was that “they” wanted more money. She kept asking Mr F about the car and when it was going to be finished. He kept lying to her saying “Not yet, not yet. They want more money” and when she asked “What for?” he said “We need to get parts”. She said that the crunch time came after the second or third payment, which was approximately in the middle of 2005. She informed Mr F that she was not paying out any more money and he said “Well you’d better because they’re going to kill me”. When she gave the money to Mr FF she informed him that that was the last of her money and that she did not have any more money. She said to him “You’ve got to promise me nothing will happen to Mr F” and he said “Nothing will happen”.
She did not inform the husband about this matter because Mr F had asked her not to mention anything to his father. She said that Mr F said the reason for this was that he knows how erratic his father is and he said that his father would probably go after the extortionists and they would probably kill him. This was the reason why she deceived the husband about the existence of the Bank mortgage.
Mr F denied the wife’s assertions about this matter. He said that he never asked his mother to assist him to purchase a prestige motor vehicle. He also said that he did not request his mother to make payments to Mr FF and the other persons she alleged she made payments to.
In relation to the Bank mortgage over 2 B Street, Suburb C, Mr F said that when his mother was living with him she said words to the effect “We will just have to say, and you will have to say that I lent you the money for business”. He said to her words to the effect “Mum I can’t go under the bus for you. Don’t throw me under the bus for this. I am not saying that. I am not taking the (rap) for you”. He said his mother then said words to the following effect “Well we are just going to have to” and he said “Well whatever you did, you did but I am not taking the (rap) for you. Why should I take the (rap) for your mistakes”. The wife denied any such conversation.
Mr F also said that he knows Mr FF and said that he understood that his mother had (years previously) referred Mr FF to a firm of solicitors after Mr FF had had an accident outside the video store at Suburb C where he worked. He said that that was the family’s local video store. He said he knew Mr FF made a motor vehicle personal injury claim because Mr FF used to come to their house to fill in paperwork. He said that he is no longer in contact with Mr FF and last saw him perhaps in 2005 when he did some for him. He said that he was aware that there was a prestige car in Mr FF’s backyard. He said that he never expressed any interest to buy it. He said that prior to that time Mr FF was a client of his father in the business and he would come over to their house from time to time and speak to the wife. He said that she had helped Mr FF with his compensation claim. She denied this.
He said that he never told his mother to pay any money to Mr FF or his associates and has no knowledge of GG. (The wife annexed to her affidavit a Company S Staff Credit Union statement which showed that on 14 May 2004 she arranged a withdrawal of $20,000 payable by cheque to “GG” which she said was part of the payments to the extortionists).
In his oral evidence, Mr F said that Mr FF had been a customer of the business and the last time he saw him was 2008. He said that he had known him since he (Mr F) was 8 years of age because Mr FF used to work at the local video store. He said that he did not notice any change in Mr FF’s attitude to him between 2004 and 2008.
During cross-examination he said that his statement in his affidavit that the last time that he had seen Mr FF was perhaps in 2005 was incorrect. He said that this was because the last time he saw Mr FF was 2008.
He said that the prestige car in Mr FF’s backyard was red and that it was one of the latest models.
He was challenged about the alleged conversation in which he had asserted that he had asked his mother not to throw him under the bus. He said this conversation occurred towards the end of March 2015. He said that he had not spoken to Mr FF since the proceedings commenced and has had no communication with him whatsoever.
The husband said that in all his years of having worked within the area of Suburb C and the surrounding neighbourhood he has never met dangerous men who are gangsters and who are paid with cheques. He said that he has spoken to his son, Mr F about the wife’s allegations in this regard and that Mr F confirmed that he was unaware of any dangerous men to whom his mother had made payments by cheque on his behalf or at all.

Which of these versions is to be preferred?

The wife’s Company S staff credit union statement for the relevant period shows that the wife arranged for cheques to be drawn in favour of Mr FF for $40,000 on 14 May 2004, $50,000 on 25 May 2004 and $135,000 on 17 June 2004 which is a total of $225,000. In addition, the statement also shows a cheque drawn in favour of “GG” for $20,000 on 14 May 2004, a cheque drawn in favour of “Mr HH” for $45,000 on 7 June 2004 and a $5,000 cash withdrawal on the same day. This is a total of $295,000. The wife asserted that she also paid other amounts which brought the total money paid concerning this matter to $395,000.
It is the wife who has alleged that she paid this money to the extortionists. She bears the onus of establishing that which she asserts. I did have a more favourable view of the wife as a witness than I had of the husband and Mr F Sfakianakis in this regard. As indicated above, the wife produced her credit union statement which showed cheques drawn on the account for substantial amounts in favour of Mr FF and Mr HH. There is no other suggestion about why the wife was arranging payments in favour of these persons.
As indicated above, Mr F Sfakianakis has denied the wife’s assertions. But he has been estranged from his mother and is close to, and aligned with, his father whose case in these proceedings would not be served by a finding in favour of the wife‘s assertions. Also, there was no suggestion of any attempt by the husband to find Mr FF and call him as a witness for the husband.
In my view, there is some consistency between the wife’s assertions about paying initial money to Mr FF and then following with subsequent payments, including to Mr HH and the sequence of payments out of the wife’s credit union account. Although the total paid out as identified appears to have been $295,000, there were various withdrawals identified as “cash”. The wife said she advanced $385,000 to the extortionists.
In all the circumstances, I am prepared to find that the wife paid sums of money to criminals as asserted by her.

Proceedings in the Supreme Court of NSW

In early 2005 the wife made arrangements for the parties to borrow a substantial sum of money from the Bank. The parties had decided to develop the property at 1 B Street, Suburb C by demolishing the house and building a duplex on the land.
Before the wife had withdrawn the funds from her credit union account to make the payments to the extortionists referred to above, there had been sufficient monies in that account to fund the duplex development project. But that account became depleted. So the wife approached the Bank and made arrangements to obtain a loan.
Apparently the Bank required security over the husband’s interest in 2 B Street, Suburb C. This required the husband’s signature on the Mortgage.
The wife presented the Mortgage document to the husband for his signature and he signed. She said that she “put the document in front of him and said the Bank wants you to sign this” and he signed it. The wife said that she suggested that he take it to one of their neighbours who was a Justice of the Peace and ask him to sign it (as attesting witness). The wife said that the husband said that he would not do so and suggested that she ask one of her work colleagues to “witness” it. The wife did this and Ms DD signed as witness to the husband’s signature. It is clear that she did so without having seen the husband place his signature on the document.
I am satisfied that the wife made the arrangements for the Bank loan without involvement by the husband other than by him placing his signature on the document she presented to him. I am satisfied that the husband had no idea that the purpose of his signature was to enable substantial money to be borrowed from the Bank.
Upon the husband becoming aware that the wife had arranged this loan he filed proceedings in the Supreme Court alleging fraud and negligence. The defendants to his claim were the Bank, the Registrar-General, Ms DD (who purported to attest the husband’s signature on the Mortgage) and the wife.
The husband subsequently discontinued the proceedings against the Registrar-General. Both Ms DD and the National Australia Bank sought that the claims by the husband against each of them be summarily dismissed. Those matters were determined by the Supreme Court and orders were made summarily dismissing both claims in July 2017. As might have been expected, costs followed the event and the husband has incurred liabilities of approximately $109,000 for the costs of Ms DD and approximately $179,000 for the Bank’s costs.
The parties are at issue about how the Court should deal with the very substantial costs of the husband arising from the Supreme Court proceedings. The husband said that he brought the Supreme Court proceedings because of the actions of the wife. Initially the husband alleged that the wife forged his signature on the mortgage. But the report by Mr EE, forensic document examiner, dated 12 April 2017 opined that there is “very strong support” that the signature on the mortgage is that of the husband. As indicated above, it was conceded by counsel for the husband that the signature on the Mortgage was that of the husband.
It was submitted on behalf of the husband that the wife raised the Bank loan without his knowledge and therefore she should be responsible for the costs of him taking the action that he did in the Supreme Court.
On the other hand, it was submitted on behalf of the wife that the husband conceded that it was his signature on the Mortgage and it would be most unfair in all the circumstances for any part of the costs of the husband’s litigation in the Supreme Court to be required to be borne by the wife.
In my view, it is the husband who should bear the legal costs of the litigation which he pursued in the Supreme Court. The decision by the husband to pursue the above defendants in the Supreme Court was entirely his decision. He has been completely unsuccessful against the Bank and Ms DD. So far as his claims in those proceedings were made against the wife, whatever concerns he had about her involvement in obtaining the Bank loan would have been matters which he could have properly ventilated in this Court in these proceedings. Accordingly, in my view, it was unnecessary for him to pursue the wife by way of his proceedings in the Supreme Court. In these circumstances, I can see no case whatsoever for this Court to require the wife to meet any part of the costs which the husband has sustained in the Supreme Court proceedings. But I shall take the fact that he has costs liabilities arising from the Supreme Court proceedings into account pursuant to s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”).

The Applicable Law

Sub-section 79(1) of the Act provides to the effect that in property settlement proceedings the Court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property.
Sub-section 79(2) provides that the Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Sub-section 79(4) sets out various matters which must be taken into account in considering what order (if any) should be made under the section. These matters include direct and indirect contributions, financial and otherwise by or on behalf of a party or a child to the acquisition, conservation or improvement of any property of the parties, contributions by a party to the welfare of their family including as a homemaker or parent, relevant matters referred to in s 75(2) and the other matters referred to in s 79(4).
The operation of s 79 was the subject of consideration by the High Court in the case of Stanford v Stanford (2012) 247 CLR 108. In this case the majority said in referring to ss 79(2) and 79(4) as follows:
35.… The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. … while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
The High Court said that the first of these propositions is for the court to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The second is that although s 79 confers a broad power on the Court, it is not a power that is to be exercised according to an unguided judicial discretion. It must be exercised in accordance with legal principles, including the principles which the Act itself lays down.
The High Court said that the third fundamental proposition is that the question of whether the order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters set out in s 79(4). To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2) would be to “conflate” the statutory requirements and ignore the principles laid down by the Act.
And the High Court majority went on to say as follows:
41.… The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.

The Parties’ Existing Legal and Equitable Interests in Property and Superannuation

The parties were unable to reach agreement on the value of the wife’s household contents and personal effects so I shall accept $5,000 as an admission by her. Similarly, they were unable to reach agreement on the value of the wife’s jewellery so I shall find this to have a value of $10,000 as admitted by her.
Accordingly, the parties’ legal and equitable interests in property and superannuation are as follows:

$
1. Joint interests in 1 B Street, Suburb C	900,000
2. Husband’s interest in 2 B Street, Suburb C	1,000,000
3. Husband’s Company S Credit Union Visa card	1,908
4. Husband’s vintage motor vehicle	7,000
5. Husband’s Sedan motor vehicle	2,750
6. Husband’s 2 x Hatchback motor vehicles	300
7. Husband’s tools and machinery	2,000
8. Husband’s household contents	5,000
9. Husband’s partial property settlement (addback)	225,000
10. Wife’s 2014 motor vehicle	15,000
11. Wife’s Commonwealth Bank account #..16	100
12. Wife’s Household contents and personal effects	5,000
13. Wife’s Jewellery	10,000
14. Wife’s Partial property settlement	244,000
15. Wife’s Superannuation	4,000
^{_____________}
$2,422,058

There are the following liabilities:

$

1.         Joint Company S Credit Union mortgage

326,000

2.         Joint Bank mortgage

362,407

^{_____________}

$688,407

  Net

$1,733,651

The above liabilities are the joint responsibility of the parties.
There are other liabilities which will not be brought to the Balance Sheet. As I have said, the husband has a liability owing from his Supreme Court proceedings to pay the Bank’s legal costs which are $179,333. The husband also has a liability to pay the legal costs of Ms DD in the Supreme Court proceedings of $109,562. The husband also has to pay his legal costs. The wife has her legal costs to pay and a liability to her brother for a loan of $2,500.
I regard such liabilities as personal liabilities of each party and shall not include these in the Balance Sheet.

Sub-Section 79(2)

Sub-section 79(2) of the Act provides:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In their decision in the case of Bevan & Bevan (2013) FLC 93-545 the Full Court (Bryant CJ and Thackray J) said as follows at page 87,234:
In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
In the present case, the parties cohabited for more than 34 years. They purchased the properties for the benefit of themselves and their family, including in the case of 2 B Street, Suburb C to live in as a family home. They no longer do this.
If the Court was not to make an order under s 79, not only would the serious longstanding issues between the parties remain unresolved, but it would be most unfair to the wife.
In these circumstances, in my view it would be just and equitable to make an order under s 79 of the Act.

Contributions

As indicated above, at the time the parties commenced cohabiting the husband’s property consisted of his one-half interest in the Suburb N property, a motor vehicle and a taxi plate. The husband was working as a taxi driver and also in his home-based business. Within about a year the Suburb N property was sold for approximately $72,500 and the taxi plate was sold for approximately $32,500. The proceeds of sale were used towards the purchase of 2 B Street, Suburb C for $82,500. But as indicated above, the husband only had a one half interest in this property because he held the other half in trust for his two children Ms D and Mr E.
At the time cohabitation commenced the wife’s property consisted of the proceeds of a modest insurance payout following a car accident. The wife was working at a solicitor’s office.
After the parties married in 1981 the wife reduced her working hours to enable her to be present at home for the husband’s children before and after school. But the wife continued to work until the birth of the parties’ child, Mr F in 1983. After his birth the wife reduced her work hours to the point where she went into work three or four times per month.
Shortly after Mr F’s birth the husband purchased the car trailer and started his primary business. For many years the husband continued in this business and various vehicles were acquired for this purpose over the years. He also continued in his backyard business.
I have referred above to the employment histories of the parties. The wife has undertaken administrative work and done this throughout the marriage although she reduced her hours of employment for a period after the marriage as I have said. The husband has driven taxis, then he established and operated his primary business. He also operated his backyard business throughout the marriage.
Both parties have made substantial financial contributions. The husband brought to the marriage his half interest in the home and the taxi plate. He worked in paid employment as I have said. The wife has undertaken employment throughout the marriage. The earnings of both parties were paid towards the living costs of the family. Both parties received an inheritance and the funds received have been applied for family purposes.
Following separation the husband remained living in the property at 2 B Street, Suburb C. Initially the wife lived at 1 B Street, Suburb C but moved out five months later. Since then she has paid rent.
Following separation the husband has had the use of $30,000 and the wife has had the benefit of almost the entirety of her superannuation.
I am satisfied that the wife has made the overwhelming contribution to the welfare of the family constituted by the husband, the wife and the parties’ son, Mr F. It is the wife who was the child’s primary parent and in my view, she made a much greater contribution to parenting Mr F than the husband.
It was submitted on behalf of the wife that the Court should find her contributions overall to have been equal with those of the husband and that the final orders should reflect a position of equality between the parties.
Counsel for the husband agreed that the Court would assess the husband’s contributions overall as having been equal.
Accordingly, I find the contributions of the husband and wife overall during this very long marriage to have been equal.

Sub-section 75(2) matters

The wife is 65 years of age. She is in reasonable health although she described herself as a chronic asthmatic. Her income is $1,143 per week of which $868 is earned from her employment as a personal assistant with the II School in Queensland. The balance of $275 per week is obtained as rent from her son and daughter-in-law being the tenants of 1 B Street, Suburb C. The wife would like to retire but she said that depending on her financial situation following these proceedings, she might need to continue to work for a few years if appropriate employment was available to her. The wife finished with BB Lawyers in 2014. She then applied for approximately 20 jobs and succeeded in her application for the present position.
On the other hand, the husband is 67 years of age and has retired from income producing work. He has been suffering from a neurological condition for the last 9 years. In 2010 he suffered a heart attack and has had a stent inserted. He has given his truck to the parties’ son, Mr F who has been working with him in the business over many years. The husband’s weekly income is $500 which is derived from a pension of $320 and $180 which he receives from Mr F for using business and the truck.
I have referred to the parties’ property above.
The wife said that her weekly commitments come to a total of $1,259. These costs include a payment of the mortgage on 2 B Street and half the mortgage on 1 B Street, Suburb C. These commitments will change upon the making of orders in these proceedings.
The husband asserts that his weekly commitments are $817 per week but this includes $250 which he says he provides by way of assistance to his son, Mr F and his family.
The wife has approximately $4,000 superannuation.
There is little between these parties in terms of their age and, in my view, their respective income earning capacities. They have arrived at an age where most people in the community have retired. True it is that the wife would like to work a little longer but with respect to her, it is difficult to see that this would be likely to continue for more than a couple of years.
In my view, it is appropriate to consider pursuant to s 75(2)(o) of the Act that the wife was the primary caregiver to the husband’s children over approximately 10 years in circumstances where his former wife had died.
In my view, upon considering this matter, the very long cohabitation period of the parties (more than 34 years), together with all the relevant matters referred to above, as well as the fact that the husband will have to pay the substantial legal costs which have arisen from his unsuccessful claims in the Supreme Court against the Bank and Ms DD, it would not be necessary to make an adjustment of property in favour of one or other of the parties in order to achieve a just and equitable order.

Conclusion and fourth step

It was submitted on behalf of the husband that the husband has ended up having to accept there being two mortgages on the properties which he thought until recent years had been unencumbered and that this situation has come about because of a deception by the wife in raising the Bank loan without making him aware that she proposed to do so. In these circumstances, it was submitted that a just and equitable order would be to leave the parties’ property interests as they are, apart from a requirement that the wife transfer her interest in 1 B Street, Suburb C to the husband.
In my view, such an order would be most unfair to the wife. This Court takes the parties’ interests in property as it finds them and alters interests where it is necessary to do so to achieve the requirement of a just and equitable order. The wife explained what happened to the money withdrawn from the credit union account and I have accepted her explanation. In circumstances where I have accepted that she considered that Mr F’s life was threatened and the money has been lost to criminal activity, unfortunately that is the reality of the situation and the money which had previously been in the credit union account is no longer available to the parties.
So far as the Bank loan is concerned, true it is that the wife did not inform the husband about this, for the reasons referred to above, but the borrowed money was put to good use in funding the development of 1 B Street, Suburb C. This development has benefited both the wife and the husband.
The husband is to have 50 per cent of the available property and superannuation which is property with a value of $866,825. The husband has the following:

$

1.         50 per cent interest in 1 B Street, Suburb C

2.         2 B Street, Suburb C

3.         Company S Credit Union Visa card

450,000

1,000,000

1,908

4.         Vintage motor vehicle

7,000

5.         Sedan motor vehicle

2,750

6.         2 x Hatchback motor vehicles

300

7.         Tools and machinery

2,000

8.         Household contents

5,000

9.         Partial property settlement (addback)

225,000

^{_____________}

$1,693,958

But the husband also has the following liabilities:

$

1. 50 per cent of Company S Credit Union mortgage $326,000

163,000

2. National Australia Bank mortgage

362,407

^{_____________}

$525,407

Accordingly, the husband has property with a net value of $1,168,551 ($1,693,958 - $525,407 = $1,168,551).
To have property with a value of $866,825 the husband would need to pay to the wife the sum of $301,726 ($1,168,551 - $866,825 = $301,726).
On the other hand, the wife is to have 50 per cent of the available property and superannuation which is property and superannuation with a value of $866,825.
The wife has the following:

$

1.         50 per cent interest in 1 B Street, Suburb C

2.         Motor vehicle

450,000

15,000

3.         Commonwealth Bank account #...16

100

4.         Household contents and personal effects

5,000

5.         Jewellery

10,000

6.         Partial property settlement

244,000

7.         Superannuation

4,000

^{_____________}

$728,100

But the wife also has a liability for 50 per cent of the Company S Credit Union mortgage of $326,000 which is $163,000. Accordingly, the wife has property and superannuation with a net value of $565,100 ($728,100 - $163,000 = $565,100).
If the husband was to pay her $301,726 she would then have property and superannuation with a value of $866,826 ($565,100 + $301,726 = $866,826).
In relation to 1 B Street, Suburb C some orders will be required to disentangle the parties from the joint ownership of this property. The wife seeks orders that she transfer her interest in this property to the husband in return for a payment by him for her interest. I propose to make such an order and give the parties leave for a short period to further address me only in relation to the form of the orders, if either of them should so wish.
On the basis of the order I propose, each of the parties would have property, or in the case of the wife, property and superannuation, with a value of $866,825. If the husband is unable to pay the wife the amount of $301,726 and an amount equal to one half of the equity in 1 B Street, Suburb C, which would be $287,000 ($450,000 - $163,000 = $287,000, namely a total payment of $588,726 ($301,726 + $287,000 = $588,726), the properties at 1 B Street and 2 B Street, Suburb C will have to be sold as proposed by the wife in her application and the net proceeds paid to achieve the property settlement as determined.
The proceeds will be paid, after paying sale costs and discharging the mortgage, to the parties in accordance with what I propose. The wife is to be paid $588,726 which would be 48.591 per cent of the equity in both properties (value less mortgages). The total value of the properties is $1,900,000 and outstanding mortgages are $688,407 ($326,000 + $362,407 = $688,407) leaving total equity of $1,211,593 ($1,900,000 - $688,407 = $1,211,593). The sum of $588,726 is 48.591 per cent of $1,211,593. The husband would receive the balance which would be 51.409 per cent thereof.
Each of the parties has legal costs of these proceedings outstanding which they will have to pay and the husband will have to pay his liabilities pursuant to the Supreme Court costs order. Taking account of these matters and the fact that the $866,825 of property each is to receive included the partial property advances made to each of them, what will remain for each to enjoy will be modest indeed, and almost certainly far from sufficient to enable each to own a home. This is most unfortunate.
But, in all the circumstances, in my view, the orders I propose will reflect a just and equitable result.

I certify that the preceding one hundred and fifty-six (156) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 22 December 2017.

Associate:

Date: 22 December 2017

ANNEXURE “A”
Minutes of Orders Sought by the Parties
WIFE

That an Order by way of alteration of property interests pursuant to s 79 of the Family Law Act 1975 (Cth) be made in terms of paragraphs 2-8 herein in order to address the consequences of the breakdown of the marital relationship and the injustice that would occur given the circumstances of the relationship if legal and equitable title were not altered.
That within thirty-five (35) days of the making of these orders, the Husband pay to the wife an amount representing 55 per cent of the marital asset pool, being the sum of ~~$820,902.50~~ $665,000 (as calculated by the wife) or by way of bank cheque or cleared funds.
That within seven day after the making of payment in accordance with Order 2 of these Orders each party shall do all things necessary to cause the following simultaneously:
3.1Transfer of the property situated at and known as 1 B St Suburb C to the sole name of the husband at the husband’s cost, such that the wife shall sign all documents presented to her by the husband and the husband shall do all other things necessary for such transfer; and
3.2Discharge of all mortgages and encumbrances presently registered over the 1 B St property at the cost of the Husband and the Husband shall do all other things necessary to cause such discharge.
That, as between the parties, and provided the payment in Order 2 is made, the Husband is hereby declared solely entitled to the property situated at and known as 2 B St Suburb C and the Husband hereby indemnifies and shall keep indemnified the Wife in relation to all mortgage payments, statutory rates and charges, other expenses and liabilities in relation to the property whenever and however arising.
In the event the husband does not make the payment in Order 2 within 35 days of the making of these orders the wife be appointed trustee for sale of the properties situated at 1 B St Suburb C and 2 B St Suburb C and thereupon do all such things to execute all necessary contracts for sale, documents, instruments, transfers, discharge of mortgage documents, authorities, directions, and do all necessary things on behalf of the husband to:
a.Sell the said properties at 2 and 1 B St Suburb C;
b.Sign on behalf of the Husband all costs agreements with McNally Jones Staff Lawyers
c.Forthwith give 7 day’s notice in writing to any tenants or occupiers of 1 B St to vacate the property;
d.Issue a writ of possession to secure vacant possession of 1 B St.
The wife as trustee for sale have liberty to apply to the Court to relist the matter on 48 hours’ notice in the event the tenants or husband fail to perform any obligations attaching to delivering up vacant possession or in respect of the sale.
That, as between the Husband and Wife, and subject to the above Orders the Husband and wife shall each respectively retain all interest in and entitlement to:
7.1All personal property now in his/her respective possession or control.
7.2All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively.
7.3All interest in life insurance policies and superannuation funds standing in his/her sole name respectively.
That each party be solely liable for any debt, credit card, personal loan or other liability standing in their sole name as at the date of these Orders and indemnify and keep indemnified the other party in respect of same.
That both the Husband and Wife hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have had against the other for or by reason of or in respect of any act, cause, matter or thing, save and except for any matter relating to costs of the Supreme Court proceedings.
Pursuant to section 81 of the Family Law Act the parties intend these orders to finally determine all financial relations and issues between them and avoid further proceedings between them.
That each party shall do all things necessary including providing all consents to give effect to these Orders in the time periods prescribed in these Orders.
That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders then the Registrar of the Court shall be appointed pursuant to section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

HUSBAND
[deleted]

An Order for the purposes of section 79 of the Family Law Act directing the Wife to transfer to the Husband or to Mr F Sfakianakis, (as the Court may so ~~declare~~ order), all of her right, title and interest in the property known as Duplex B 1 B Street Suburb C;
Orders declaring the parties to the marriage to be the sole owner(s) both at law and in equity of all goods, chattels, records of account, securities, interests or investments, and items of personal property presently in their respective possession, custody or control;

[deleted]

Orders otherwise dismissing the Wife’s applications as has been filed by her in this action and in these proceedings;
Such other Orders or directions or declaration(s) as in the opinion of this Honourable Court are justified;

[deleted]

That otherwise than as provided for in these orders, that each party be declared the exclusive owner of all accounts or deposits, investments, securities or assets held in their sole name;

That the property 2 B Street vest in the Husband as an asset, exclusive of any claim or interest in relation to it as is alleged by the Wife for the purposes of these proceedings, or at all;
That the Wife is directed to remove ~~her~~ the caveat from title that she has caused to be placed on the title over the 2 B Street property;

[deleted]

An Order for the purposes of Section 79 of the Family Law Act, ~~That the court order~~ that the Husband pay to the Wife, by way of final property settlement, and in determination of all issues in these proceedings in so far as concerns the Husband’s obligation to the Wife, the sum of $225,000;
An Order that the sum of $225,000, already paid by the Husband to the Wife for the purposes of property settlement, be taken as payment and satisfaction for the purposes of the order described above, which amount ~~That~~ the Court notes ~~that the $225,000 sum~~ has already been paid by the Husband to the Wife;

[deleted]

Such other Order(s) as this Court thinks fit;
Costs;

[deleted]

[2017] FamCA 1103

22 December 2017

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Injunction

Costs

Consent

Procedural Fairness

$
1. Joint Company S Credit Union mortgage	326,000
2. Joint Bank mortgage	362,407
^{_____________}
$688,407
Net	$1,733,651

$
1. 50 per cent interest in 1 B Street, Suburb C 2. 2 B Street, Suburb C 3. Company S Credit Union Visa card	450,000 1,000,000 1,908
4. Vintage motor vehicle	7,000
5. Sedan motor vehicle	2,750
6. 2 x Hatchback motor vehicles	300
7. Tools and machinery	2,000
8. Household contents	5,000
9. Partial property settlement (addback)	225,000
^{_____________}
$1,693,958

$
1. 50 per cent of Company S Credit Union mortgage $326,000	163,000
2. National Australia Bank mortgage	362,407
^{_____________}
$525,407

$
1. 50 per cent interest in 1 B Street, Suburb C 2. Motor vehicle	450,000 15,000
3. Commonwealth Bank account #...16	100
4. Household contents and personal effects	5,000
5. Jewellery	10,000
6. Partial property settlement	244,000
7. Superannuation	4,000
^{_____________}
$728,100