Sikorski & Sikorski - [2007] FamCA 487

FAMILY COURT OF AUSTRALIA

SIKORSKI & SIKORSKI

[2007] FamCA 487

FAMILY LAW - PROPERTY SETTLEMENT - Parties previously executed informal “Final Separation Agreement”- Property divided approximately equally - Husband expended funds he received in settlement - Unidentified amount spent by husband on gambling and prostitution - Husband claims agreement not what purports to be - Seeks 65% of assets retained by wife and parties’ daughter - Consideration of intention of parties as reflected in agreement - Whether property transferred to the parties’ daughter is held on resulting trust or whether presumption of advancement applies - Whether husband’s parents held an interest in a property sold by husband - Notional adding back of assets to asset pool - Outcome proposed by husband unjust, inequitable and unconscionable - Equal division of asset pool appropriate

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

Baumgartner v Baumgartner (1987) 164 CLR 137
Calverley v Green (1984) 155 CLR 242
Charles Marshall Pty Ltd v Grimsley (1965) 95 CLR 353
Crampton and Crampton (2006) FLC 93-269
De Angelis and De Angelis (2003) FLC 93-133
Jones v Dunkel (1959) 101 CLR 298
Muschinski v Dodds (1985) 160 CLR 583
Nelson v Nelson (1995) 184 CLR 538
Omacini and Omacini (2005) FLC 93-218
GWR & VAR [2006] FamCA 894
Z v Z [2005] FamCA 996

APPLICANT:

MR SIKORSKI

RESPONDENT:

MRS SIKORSKI

FILE NUMBER:

ADF

1910

2004

DATE DELIVERED:

5 April 2007

PLACE DELIVERED:

Adelaide

JUDGMENT OF:

BURR J

HEARING DATE:

14, 15, 16, 19, 20, 21 February 2007 & 8 March 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR DAVID HAINES QC

SOLICITOR FOR THE APPLICANT:

DI MOROSINI & CO

COUNSEL FOR THE RESPONDENT:

MR ROSS RICHARDS

SOLICITOR FOR THE RESPONDENT:

CLELANDS LAWYERS

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the Judgment of the Court delivered this day will for all publication and reporting purposes be Referred to as Sikorski & Sikorski

orders

That all previous Orders of this Court be and the same are hereby discharged.
That the Court declares that the parties’ daughter R is the sole legal and beneficial owner of the property at S.
That in full settlement of any claim that either party may have against the other by way of property settlement or variation of settlement of property:-
(a)The husband’s estate and interest (if any) both at law and in equity in the following be and the same are hereby vested in the wife:-
(i)The wife’s personal effects, clothing, jewellery and furniture;
(ii)The property at W1;
(iii)The net proceeds of sale of the property at D;
(iv)The net proceeds of sale of the property at L;
(v)The wife’s savings and investments;
(vi)The wife’s motor vehicle.
(b)The wife’s estate and interest (if any) both at law and in equity in the following be and the same are hereby vested in the husband:-
(i)The husband’s personal effects, clothing , jewellery and furniture;
(ii)The net proceeds of sale of the property at G1;
(iii)The net proceeds of sale of the property at G2;
(iv)The net proceeds of sale of the property at C;
(v)The net proceeds of sale of the property at F;
(vi)The husband’s savings and investments;
(vii)The husband’s motor vehicle and scooter.
(c)On or before 4.00 pm on Friday 18 May 2007 the husband vacate the premises at W1 and leave same in good repair and condition.
(d)Within seven [7] days of the husband vacating the premises at W1 pursuant to paragraph 3(c) hereof, the wife do pay to the trust account of Di Morosini & Co for and on behalf of the husband the sum of SIX THOUSAND DOLLARS [$6,000].
That henceforth each party shall discharge without calling upon the other to contribute thereto their debts and liabilities contracted for or by them and henceforth each party is restrained and an injunction is hereby granted restraining the parties and each of them from pledging the credit of the other.
That all applications be removed from the pending list.

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 1910 of 2004

MR SIKORSKI

Applicant

And

MRS SIKORSKI

Respondent

REASONS FOR JUDGMENT

The applications

The competing applications for my determination are as to property settlement. That bland statement somewhat belies the interesting and complex issues for my determination.
Background
The husband and the wife are respectively 58 years of age and 47 years of age. They were married on … April 1988. They are unable to agree whether or not they separated in late 2002, late 2003 or late 2004. In any event, it was a long marriage of some 14 – 16 years.
The husband had been previously married. He has two daughters, N and P, from that marriage but neither child lived with the parties to these proceedings during their marriage.
At marriage the husband owned a house property at O for which he had paid $92,500.00 in June 1986. Shortly after marriage the wife discharged the husband’s mortgage on that property to the extent of approximately $20,000.00.
At marriage the husband also had a car and some tools. The wife had the $20,000.00 which she used to discharge the mortgage on the husband’s O property.
Thereafter, the parties engaged in a significant number of real estate transactions. They purchased shop, house and rental properties at :-
·H1;
·H2;
·B;
·W2 (including the business operated on that property);
·W1;
·2 units at G;
·S;
·D; and
·C.
Various of those properties were sold to fund the purchase of others.
In 1989 the husband obtained employment with an engineering company in a central Victorian city at the end of which he received a termination payment of $5,800.00. The parties then returned to reside in South Australia.
On … February 1990 their daughter R (“[R]”) was born. Thus R is now 17 years of age.
In 1991 the husband secured work for a further three months with another engineering company.
The husband alleges that he purchased the two units at G jointly with his parents, in that they contributed one-half of the purchase price. The wife disputes this.
The wife alleges that the parties separated on 1 October 2002. An Application for Divorce was prepared by the husband, signed by both parties on 14 October 2003 and filed in the Federal Magistrates Court on 16 October 2003, using the separation date alleged by the wife. A Decree Nisi for dissolution of marriage was granted on 2 December 2003. That Decree became Absolute on 3 January 2004.
For his part, the husband contends that the application for Divorce did not reflect the true situation. He alleges that the application was prepared during turbulent times in their marriage and that it was not intended to proceed with the application. He contends that the parties remained married in all senses of the word until just before he instituted proceedings for property settlement in this Court on 9 December 2004.
On 14 October 2003 the parties executed an informal “Final Separation Agreement” (annexure “PK12” to the husband’s affidavit filed on 7 April 2006). It was a document which had been prepared by a solicitor, Mr Alan Carey who advised them it was not a binding document. On that day Mr Carey also witnessed their Application for Divorce. The wife contends that the informal agreement accurately reflects a settlement they had agreed between themselves earlier in 2003. The husband says that the document is not what it purports to be. He contends that the transfer of properties and informal agreement was simply part of a process to minimise land tax.
The effect of the informal property settlement alleged by the wife to have been confirmed by the separation agreement, was as follows:-
14.1.The property at W2 was sold and the net proceeds divided equally between the parties after the discharge of mortgages on the other properties still owned by the parties.
14.2.The S property was transferred to R.
14.3.The properties at W1 and D were transferred to or retained by the wife.
14.4.The G units and C house were transferred to or retained by the husband.
14.5.The husband retained a Nissan motor vehicle, caravan, trailer, tools, shares in a private company and some superannuation benefits.
14.6.The wife retained a Daewoo motor vehicle and some jewellery.
Upon settlement on sale of the property at W2 in May 2003 the wife used a significant proportion of her share of the net proceeds of sale to discharge the mortgage on the S property, by then registered in the name of R. The wife’s approximate half share of the net proceeds of W2 was in the sum of $170,000.00. She paid an amount of $141,264.00 to discharge the mortgage on S. It is the husband’s case that the S property is held by R in trust for the parties to the marriage and that it should constitute part of the asset pool for distribution between the parties. The wife says that the parties always intended that the property belong to R and that it is not held in trust. She points to a Declaration of Trust dated 6 September 1999 (annexure “PK5” to the husband’s affidavit filed 7 April 2006) and a “Discharge Notice” (Exhibit 6) dated 22 August 2003 in which the husband purports to relinquish in favour of R any interest he may otherwise have, in that S property. Further, the Memorandum of Transfer of the S property to R executed on 25 June 2003 is recorded as being pursuant to the aforementioned Declaration of Trust (Exhibit 7).
Subsequent to the informal agreement the husband purchased a property at F and the wife purchased a property at L. The wife acknowledges that the husband assisted her in renovations to the property at L. The husband maintains that he did a good deal more than is acknowledged by the wife by way of renovations. It was his contention that the parties were still very much within a marriage relationship at that time. It is the wife’s case that they were on amicable terms but not still pursuing a marriage relationship.
In September 2003 the husband left the S property which the parties had shared. The wife contends that for the whole time that they occupied S they were separated under the one roof.
In about November 2003 the husband commenced gambling, drinking excessively and using the services of prostitutes. At the commencement of the trial proceedings before me, as detailed in the husband’s counsel’s Outline of Case document, the husband contended that he had wasted an amount of $300,000.00 in this fashion (paragraph 2.10). By the conclusion of the trial, as again is demonstrated by the husband’s counsel’s written Outline of Submissions, he maintained that he had spent only $20,000.00 in that manner (paragraph 3.11). He contends that the balance was not in fact expended on gambling, drinking and prostitutes but in the support of the wife, R and in renovations and improvements to the wife’s properties.
During 2004 the husband sold all of his properties at C, G and F for a gross sales figure of some $1,181,000.00.
On 16 November 2004, the husband consulted a psychologist, Mr L who diagnosed him as suffering from reactive depression. The husband declined to take anti-depressants.
The husband has spent the entirety of the net proceeds received by him from the sale of those properties. He now has no assets.
The wife has now sold her properties at D and L. She retains W1 (at an agreed value of $490,000.00) and some $102,502.00 in the Commonwealth Bank. The S property remains in R’s name. The wife and R continue to reside in the S property.
In late 2004 the husband moved from the units at G to the wife’s property at W1. The wife says that it was without notice to her and that as a consequence she was deprived of much of the rental income being received on that property. The husband said that he needed somewhere to live after the sale of the G units. He went to Western Australia for a period in December 2004 but returned again to the W1 property in early January 2005.
The wife maintains that she was unaware in late 2004 that the husband had moved into the W1 property. The parties agree that there was an altercation between them on 2 January 2005 when the wife became angry and struck the husband. The wife says that it was because she had found out that the husband had moved into the W1 property without her permission. The husband said that it was because he told her that he had just instituted proceedings for property settlement.
On 25 May 2005 the wife attended at the W1 property, moved the husband’s personal property into the carport on the premises and then changed the locks. The husband alleges that on that day the wife took a number of things including $42,000.00 in cash that he had in a brief case and in potato sacks. The wife denies removing any cash. She says that the only things she removed were three guns and a ceremonial sword which she delivered to the X Police Station that same day (Annexure “AK8” to the wife’s affidavit filed on 17 August 2005).
The husband then issued proceedings for use and occupation of the property at W1. That application was granted and an order was made on 9 June 2005. The husband has remained living there since.
The evidence
Each of the parties relied upon identified affidavits filed by them. In the husband’s case he also relied upon the affidavit of psychologist Mr L filed on 18 April 2006. Each of the parties also gave oral evidence in support of their applications.
Issues of credit loom large in these proceedings, given the wide number of issues in respect of which the parties are in disagreement. I will in my Reasons identify specific areas where credit was significant. However, overall, where the parties’ evidence was in conflict, I prefer the evidence of the wife. The husband’s evidence was extremely unsatisfactory on many occasions on a wide range of issues. In fact, in at least one instance the husband acknowledged perjuring himself before this Court.
Issues
Apart from the overall question of what is an appropriate division of property between the parties, there are a number of preliminary issues requiring my determination and they are:-
29.1.The parties’ date of separation.
29.2.Whether the Se property is owned by R or held in trust by her for the parties.
29.3.Whether there were cash amounts taken by the wife or divided between the parties.
29.4.Whether the husband’s parents had an interest in the G units.
29.5.How the husband disposed of his share of proceeds of divided properties.
29.6.How the wife disposed of her share of proceeds of divided properties.
29.7.Whether or not it is appropriate to notionally add back various amounts to the asset pool.
Assets and liabilities
Those discreet issues need to be resolved in order to be able to identify the relevant net asset pool for distribution between the parties and how it should be distributed.

Date of separation

Both parties agree that the relevant date for valuation of the asset pool is the date of trial. Whilst there are very few of the assets of the parties left, it is the wife’s contention that I should notionally add back all of the proceeds of sale received by her and by the husband after the informal property settlement agreed between them. It is the husband’s case that, as he expended those funds on supporting the wife, R and the wife’s properties, he is entitled to a share of what she now retains. He has nothing left. He admits that he has expended some hundreds of thousands of dollars since the parties’ informal property settlement.
Given the dispute between the parties it is important to establish when the parties separated and whether they effected an informal property settlement between them at around that time or subsequent thereto.
On the topic of the separation date, the husband has perjured himself. In the Application for Divorce (a copy of which is Exhibit 9) the husband swore on oath that the date of separation was 1 October 2002 (paragraph 11). He swore that at that time he regarded the marriage as over (paragraph 12(a)). He then nominated a date of 20 October 2000 as the date upon which he regarded the marriage as over (paragraph 12(b)). In paragraph 14(a) he swore that the parties had not lived together as husband and wife since the date of separation nominated. He further indicated, in paragraph 15, that he did not consider it likely that there would be a reconciliation.
On oath, during the trial proceedings, the husband said that he and his wife “lied” in the Divorce Application. Thus he either perjured himself when he swore the application, or he perjured himself in the trial proceedings.
His evidence in his Rule 15 Affidavit filed on 7 April 2006 at paragraphs 44 and 45 is as follows:-
“44.The wife and I had a turbulent marriage at times and sometimes the wife would talk about getting a divorce. During one of our periods of difficulty we in fact filed for divorce, stating the date of separation as the 1^st October 2002. At no time was it my intention to actually proceed with the divorce as I thought that the wife would withdraw the application. We in fact maintained a marital relationship throughout this period. I thought that the wife and I were playing games with each other and each trying to call the other’s bluff.
45.However, neither of us withdrew the application for divorce and the decree became absolute on the 3^rd day of January 2004.”
It was the wife’s evidence that the Divorce Application accurately reflects their separation date. She acknowledged that between the separation date of 1 October 2002 and the sale of the W2 in late May 2003, the parties still engaged in occasional sexual relations. She further acknowledged that they remained resident under the one roof in the S property until the husband left in June or July 2003. She said she maintained an amicable relationship with the husband because they had been together for 15 years and she knew he was “hurting”. She further acknowledged that the husband persistently pursued a reconciliation during 2004 but that she refused.
I accept the wife’s evidence that the sale of the W2 property enabled the parties to conclude the formalities of their earlier separation by dividing properties between them and enabling them to go their separate ways.
I prefer and accept the evidence of the wife for a variety of reasons including:-
38.1.The husband admitted that he obtained the appropriate form of Application for Divorce.
38.2.The husband admitted that it is completed in his handwriting and that he did in fact complete it.
38.3.The husband acknowledged that he filed the Application.
38.4.The husband acknowledged that he paid the fee on the filing of the Application.
38.5.Within 7 months the parties effected a division of their property holdings and transferred individual properties into their separate names.
38.6.Consistent with the parties having separated earlier, on 14 October 2003 they executed an informal “Final Separation Agreement” (Annexure “PK12” to the husband’s affidavit filed on 7 April 2006).
38.7.The informal property settlement agreement was signed on the same day as the Application for Divorce, namely 14 October 2003.
38.8.The husband admitted that the Final Separation Agreement was in his handwriting and that he prepared it.
38.9.Consistent with their separation having occurred earlier and the “Final Separation Agreement” reflecting their agreement on property division was the formal transfer to R on 25 June 2003 of the total proprietary interest in the S property pursuant to the Declaration of Trust executed back on 6 September 1999.
38.10.In his Form 1 Application seeking orders for property settlement filed on 9 December 2004 the husband again repeated 1 October 2002 as the separation date, consistent with the date given in the Application for Divorce. Again, on 6 December 2004, the husband affirmed the contents of the Form 1 Application to be true.
38.11.As on many other topics during the course of the trial, the husband’s evidence on the topic fluctuated, was inconsistent and not believable. He also said variously that:-
(a)they remained married throughout 2004;
(b)he spent more time with the wife in 2004 than at any other time during his marriage;
(c)the marriage ended on 6 December 2004, the day which coincided with him having removed the last of his funds from his bank accounts;
(d)he issued property settlement proceedings on 9 December 2004, only 3 days after the alleged final separation, the marriage in his words having “come to an abrupt halt about then”. It seems less than a coincidence given that 12 months from Decree Absolute and hence the date by which property settlement proceedings could be instituted without leave of the Court, expired on 2 January 2005.

In his evidence the husband’s explanation for the preparation of the “Final Separation Agreement” and division of properties between them was that it was because the wife was “sick and tired of looking after properties”. The illogicality of that statement is plain. By dividing the properties between them, properties were vested in the wife absolutely and thereafter became her sole responsibility. The wife admitted getting some assistance from the husband in relation to her properties subsequent to the separation and the “Final Separation Agreement” but that assistance was certainly no more than prior to the division of the properties between them. If the wife was “sick and tired of looking after properties” then practical arrangements could have been easily made without the execution of a Final Separation Agreement and the division of properties between them.
The parties’ actions in selling a major asset (W2), dividing other properties between them and transferring them into their individual names, discharging the mortgages on all their properties and then dividing equally the balance of the net proceeds of sale from W2 (approximately $170,000 each), are all indicative of a couple attending to the final detail of separating their affairs and going their individual ways. As the husband acknowledged in evidence, thereafter all rentals from the wife’s properties were received by her and paid into her account (for example, Exhibit 19). He received the relevant payments from his properties into his accounts. Prior to that all property rental payments were paid into a joint account. He further admitted that the wife paid the bills on her properties after 22 July 2003. Quite simply, they were not the actions of a married couple.
As I describe elsewhere in these reasons, the husband submitted invoices to the wife (Exhibit 14) for labour that he undertook in assisting the wife with the renovation of her L property. His evidence was that he expected her to pay those invoices. Such an action appears entirely inconsistent with the husband’s suggestion that, although they were living in separate houses, they were happily married.
I am thus satisfied both that the parties separated on the date stated in the Application for Divorce, namely 1 October 2002 and, whilst for a period of months thereafter continued to reside under the same roof, went about resolving their property issues leading to a final agreement being achieved between them on 14 October 2003. I am satisfied that the informal property settlement recorded by them in the “Final Separation Agreement” reflects the intentions of the parties. Whilst they were clearly advised by solicitor Mr Carey that it was not a binding agreement, I am satisfied that they treated it as being the agreement reached between them as a consequence of being separated and shortly to be divorced. I am satisfied that thereafter the wife always acted as if they were permanently separated and had effected a permanent and final property settlement between themselves.
I am further satisfied that for a lengthy period the husband also accepted that to be the true position and acted accordingly. As I detail later in these reasons, I am satisfied that he only changed his position in that regard once he had frittered away all of his funds after the sale of all of his assets.
S property
Prima facie, there is no question that the property belongs to R. The parties agree its value at $270,000.
The property was purchased in September 1999 by the parties. A copy of the Memorandum of Transfer on the purchase of same is annexure “PK4” to the husband’s affidavit filed on 7 April 2006.
In paragraph 40 of the husband’s said affidavit, the husband said this:-
“40.We purchased the property for our daughter [R]. We purchased the property as trustees for and on behalf of [R] pursuant to a Declaration of Trust dated the 6^th day of September 1999. We had made an agreement with [R] that we would purchase the [S] property on her behalf and that this was to be her property. We entered into an agreement dated the 20^th day of August 1999 to this effect.”
The parties, at the date they purchased the property, executed a Declaration of Trust in favour of R in respect of the S property (annexure “PK5” to the husband’s affidavit filed 7 April 2006). That Declaration was formally stamped by the Commissioner of State Taxation on the date of settlement on purchase.
In May 2003 the property at W2 was sold and the proceeds divided equally between the parties. At that time the wife used her share of the net proceeds of sale to discharge the mortgage on the S property and at the same time the parties executed a Memorandum of Transfer of their interest in the S property to R (Exhibit 7). The husband states that the reason for the transfer to R was to reduce liability for land tax (paragraph 52 of his said affidavit).
On 22 August 2003 the parties executed a “Discharge Notice” (Exhibit 6) which further purported to declare that they had no interest in the S property and that it was in all respects the property of their daughter R.
Only within the context of these Family Court proceedings did the husband assert his claim to S. He did not raise that assertion with anybody else subsequent to the execution of the Declaration of Trust, Memorandum of Transfer to R or Discharge Notice.
In the Application for Divorce prepared by the husband and filed in the Federal Magistrates Court on 16 October 2003, he stated his address (paragraph 22) as being:-
“[R] house (name on title) [S property]”
He admitted in his evidence that the statement was intended to indicate that R owned the S property. He then changed his evidence to indicate that “No, it was just to record her address” and that he and his wife were always the real owners.
In the said Application for Divorce, in providing information about R’s housing in paragraph 24 of that document, the husband said:-
“(Child owns house) [R’s] name is on title of [S property]”
In his evidence the husband said that he did not know why he put all of that unnecessary information about the house being R’s, in the Application for Divorce.
If the property was not intended by the parties to be R’s and was done to “minimise” land tax, then it appears to be a fraud upon the State Revenue by the husband.
The husband’s explanation for executing the “Discharge Notice” (Exhibit 6) on 22 August 2003 was entirely implausible. At first he denied that he executed it for the reason that the wife wanted him to acknowledge that S property was R’s. Subsequently he admitted that the wife had said that she wanted that confirmation. He further admitted that the “Discharge Notice” is expressed as confirmation of that position but denied that it represented the true position. He said that it was simply to satisfy the wife at the time. I do not accept his evidence.
Although tending to confuse the situation, further evidence of the parties’ intention that the S property be R’s is found in two documents annexed to the husband’s affidavit filed on 7 April 2006 and marked annexure “PK7”. That document purports to set out an agreement that the Title to the S property would be transferred to R when she attains the age of 21 years. That document was executed on 2 May 2003. Less than two months later, on 25 June 2003, the parties nonetheless executed the Memorandum of Transfer to R.
The second page to annexure “PK7” also supports the fact that the parties viewed S as belonging to R in that it is a document purporting to be a rental agreement whereby the parties pay R rent of $220 per week, which was to be applied towards the discharge of the loan they provided for the original purchase of the property.
It was the husband’s evidence further that both prior to and subsequent to the transfer of the S property into the sole name of R, he instructed his accountant to prepare taxation returns for R reflecting her beneficial ownership of the property.
Mr Haines QC of Counsel for the husband argued that R holds the whole of the S property on trust for her parents. He cited the High Court decision in Baumgartner v Baumgartner (1987) 164 CLR 137. He contended that the effect of the decision was that the Courts are now only to look at contributions made by parties to a property both financially and otherwise in determining what legal and beneficial rights persons have in respect of that property. Mr Haines pointed out that R was 9 years of age at the date of purchase and 13 years of age when the property was transferred to her. He also pointed out that there was no financial contribution made by R in any sense to the purchase, maintenance, improvement or conservation of the S property at acquisition or at any time thereafter. The parties provided the purchase price by providing some funds and arranging a mortgage for the balance. They met all the expenses of the property.
Baumgartner v Baumgartner (1987) 164 CLR 137 involved a couple in a de facto relationship. The couple had pooled their earnings during their relationship and upon the breakdown of the relationship, the man asserted the property, which was in his name and acquired during the relationship, was his alone. Mason CJ, Wilson and Deane JJ, at 149, found that the man’s assertion that the property was his alone amounted to unconscionable conduct, which attracted the intervention of equity and the imposition of a constructive trust. The High Court held the man held the house on trust for the parties in the proportions they contributed to its acquisition.
Mason CJ, Wilson and Deane JJ, at 147- 148, made reference to Muschinski v Dodds (1985) 160 CLR 583 also involving a couple living in a de facto relationship who had made unequal contributions towards a property. In that case, the court found the parties held their respective legal interests upon trust to repay each his or her respective contribution, with the residue to be divided equally between them. Deane J stated, at 613, that the constructive trust:
“…can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.”
These cases, however, involving the imposition of a constructive trust as a remedy to unconscionable conduct in circumstances where both parties had made contributions to the property, can be distinguished from the facts of this case. The parties expressly declared that they held the S property on trust for their daughter, and later transferred the title to her.
These circumstances require consideration of whether a resulting trust arises in favour of the parties or whether the presumption of advancement applies to the transfer.
Ordinarily, where legal title of property is vested in someone other than the purchaser, the property is held on resulting trust for the purchaser.
The presumption of a resulting trust in such circumstances can be rebutted in certain cases by the presumption of advancement, for example where property is transferred from parent to child or husband to wife.
The position was outlined in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 where Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ at 363 stated:
“We are in the presence of the familiar problem that arises whenever a person purchases and pays for property, real or personal, whatever its description may be, the legal title to which is transferred by his direction into the name of another person. If that person is a stranger, the presumption of a resulting trust arises and he holds the property on trust for the purchaser. But if the purchaser is the father of or a person in loco parentis to the legal owner, the presumption arises from the relationship of the parties that the father intended to purchase the property to advance his child and to make the child not only the legal but also the beneficial owner of the property.”
In Calverley v Green (1984) 155 CLR 242, Gibbs CJ, at 247, confirmed that “[t]he presumption arises when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands in loco parentis.” He continues at 250: “The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred ,whether or not the purchaser owed the other a legal or moral duty of support.”
Deane J states at 266, that the presumptions are “too well entrenched” as landmarks in the law of property to be discarded by judicial decision.
In Nelson v Nelson (1995) 184 CLR 538 the High Court confirmed the presumption of advancement applies where property is transferred between parent and child, and found it applied equally between mother and child and father and child.
In Z v Z [2005] FamCA 996, the Full Court of the Family Court addressed the presumption of advancement in relation to a home unit purchased by the husband’s father and registered in the joint names of the husband, wife, husband’s father and husband’s brother. Coleman and Boland JJ, at para 143, confirm:
“[t]he law relevant to the presumption of advancement is well settled and applies only to a limited range of relationships. The presumption was explained by Gibbs CJ in Calverley at 247 as arising ‘when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands loco parentis.’ The presumption also applies between a mother and child (Nelson) and to a purchase by a man in the name of his fiancée (Wirth v Wirth (1956) 98 CLR 228)”
On those authorities, the presumption of advancement applies to the facts of this case wherein the parties transferred the S property to their daughter. The presumption arises that they intended to advance to their daughter the beneficial as well as the legal interest in the property.
In Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 the High Court outlined that the presumption of advancement can be rebutted by evidence of the actual intention of the parties. At 365:
“The presumption can be rebutted or qualified by evidence which manifests an intention to the contrary. Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase ... or so immediately thereafter as to constitute a part of the transaction.”
The evidence recited above with respect to this property does not support the contention that the parties intended for R to hold the property on trust for them. In summary:-
72.1Upon purchase of the property, a Declaration of Trust was executed by the parties in favour of R and stamped.
72.2The husband states in his affidavit filed 7 April 2006 that an agreement was made with R that the property was to be purchased on her behalf and would be her property.
72.3A Memorandum of Transfer was executed on 25 June 2003, formally transferring the S property to R.
72.4The parties executed a “Discharge Notice” on 22 August 2003 further purporting to declare they had no interest in the property.
72.5The husband indicated in his Application for Divorce that R owned the S property.
72.6In a document purporting to be a rental agreement, the parties agreed to pay R rent, which was to be applied to discharging the loan over the property.
72.7The husband instructed his accountant to prepare taxation returns for R reflecting her beneficial ownership of the property, both before and after the formal transfer of the property to her sole name.
I am satisfied that the presumption of advancement is not rebutted by any evidence of an intention of the parties to the contrary. Rather, the evidence supports the view it was intended that the property was to belong to R.
I am satisfied therefore that the S property is not held on trust by R for the parties.
Cash
The husband contends that prior to 25 May 2005, he had accumulated $77,000 in cash, all of which was kept in the property at W1. He said that the cash was represented by an amount of $35,000 in a brief case, $4,500 in gambling chips, another $7,500 in cash and $30,000 in cash hidden in potato sacks. He said that the source of the funds was probably from the sale of various properties. He alleged that the wife took the $42,000 in gambling chips and cash, including the $30,000 from the potato sacks, when she attended at the W1 property on 25 May 2005 to move his property from the premises and change the locks. The wife denies that she did. The wife denies that there was any cash, or if there was, that she had any knowledge of it. It was the husband’s evidence then that the remaining $35,000 he used in part to pay his legal costs and retained a balance of $10,000.
The husband’s evidence on this topic is simply not to be believed, for a wide variety of reasons including:-
76.1In the husband’s Form 13 Financial Statement filed on 9 December 2004, there is no mention of any cash of any amount, be it $77,000, $42,000, $30,000 or otherwise.
76.2In an affidavit sworn by the husband on 3 June 2005, only some 9 days after the husband alleges that the wife removed the sum of $42,000, there is no mention of the sum of $30,000 being present in the house and certainly no mention by him or allegation by him that the wife took that sum. In paragraph 39 of that affidavit he refers only to the gambling chips and $7,500 in cash. The only allegation of the removal of anything contained in potato sacks in that affidavit, is as to “a quantity of potatoes”. That affidavit was filed by the husband in support of his application to occupy the property at W1, which application was granted by the Court on that day. The whole tenor of the affidavit is that the husband had no money and hence needed to live in the wife’s house at W1.
76.3The husband alleged in his evidence at trial that he reported the theft to the police in April 2006, some 12 months later. However, he did not report the theft of $30,000. He said though that he did report the theft of the potato sacks. His reason for not reporting the theft of the $30,000 he expressed as being because he did not want to be a “laughing stock”. It seems he had no such concerns upon reporting the theft of potato sacks. Paragraphs 43 and 44 of his affidavit filed 11 July 2006 offer a different version again of his contact with police over the alleged theft.
76.4The husband made no mention of the $42,000 in his Rule 15 trial affidavit prepared when the matter was first listed for trial and filed on 7 April 2006.
76.5In his second Rule 15 trial affidavit filed on 11 July 2006, he makes no mention of the alleged $30,000 kept in potato sacks. At paragraph 42 he mentions the $7,500 in cash and $4,500 worth of gambling chips, but no mention of the alleged balance of $30,000.
76.6In annexure “PK7” to his affidavit filed 11 July 2006 there is a page headed “MAY 2005”. It purports to suggest that the wife stole gambling chips worth $4,500 and cash of $7,500. Again there is no mention of a further $30,000 in cash.
76.7The husband’s evidence as to why he did not mention the cash in either of his affidavits was quite simply implausible. He said that he did not mention it as he “thought he would be a laughing stock if he did mention it”.
76.8The husband first mentioned the alleged removal of $30,000 by the wife in his evidence in the trial of the proceedings.
76.9One answer provided by the husband by way of explanation amounted to abject nonsense. He said that he only raised the issue later during the trial as it was only when he looked at all of his expenses he realised that there were some gaps and he knew that the gaps amounted to the sum of $42,000.
76.10Initially he said that the $30,000 was contained in 3 envelopes. Later he said he realised “the more he thought about it” that he had four envelopes at one stage, one of which he took out for costs. He then said he was “pretty sure” he had three left. He said that it “probably” came from the sale of properties at F, G or C.
76.11The husband purported to offer by way of proof Exhibit 1 which is two pages stapled together. The second page is a photocopy of paragraphs of his affidavit filed on 3 June 2005. The other page is one that the husband acknowledged that he prepared only the night before. He said that he constructed it from memory only. It affords no proof of anything.
76.12The husband’s constantly changing stories and demeanour when giving evidence on this topic makes it impossible to accept his evidence on this issue.
76.13The wife denied any knowledge of the money and denied taking any money. I believe her.

Cash at vault

The husband alleged that the parties accumulated further cash of some $60,000 in their days of trading at the W2 business. He said that at a meeting in their bank’s vault after the sale of W2 they took $25,000 each and gave $7,000 to R. This was mentioned for the first time by the husband during cross-examination. He had never previously mentioned it in any of his affidavits or Form 13. The wife denies his version of events. The state of the evidence is too unsatisfactory for me to make a finding that the $60,000 extra cash existed. If it did then in any event on the husband’s own evidence the parties shared it equally at a date after their separation and informal property settlement.
Husband’s parents
When the husband sold the property at G1 the husband received net $251,275 (“PK15” to the husband’s affidavit filed on 7 April 2006). Settlement was effected on 29 October 2004. The husband said that he provided all of those proceeds of sale to his parents in order that they could complete the purchase of the property now owned by them at V in Victoria. “PK16” to the same affidavit is a statement of adjustments in respect of the V property. It shows a deposit of $10,000, an amount which the husband said that he paid. The timing is right. The statement of adjustments is dated 5 November 2004 only some 7 days after the sale of the unit at G1. There is no dispute that the husband paid the balance of the purchase price in total of $215,000 for the purchase by the husband’s parents of the V property. Exhibit 10 records the payment on the settlement date on G1 (namely 29 October 2004) of $210,000 to the brokers or solicitors handling the V property purchase for the husband’s parents.
The husband contends that his parents were entitled to receive that money. He alleges that they had a 50% interest in the G units as a consequence of an agreement he reached with them in 1997. “PK3” to the husband’s aforesaid affidavit is a document purporting to be a “contract agreement” between the husband and his parents dated 3 April 1997 wherein they agreed to provide him with the sum of $50,000 in exchange for a 50% interest in the G units. The payment by them was to be made after they had sold their property at M in Victoria. Despite the husband’s contention, he proceeded to purchase the G units in 1997 for $95,000 in the joint names of himself and his wife. He did not register any interest to his parents.
The husband’s parents’ M property was not sold until late 1997 with settlement on 8 May 1998 (“PK2” to the same affidavit). They received $85,000. The husband alleges that his parents then provided $50,000 of the M proceeds to honour the agreement reached earlier. The husband alleges that his parents subsequently contributed a further $10,000 for the renovation of the G units. A document signed by the husband and his parents dated 20 July 1999 purports to confirm this arrangement (“PK3” to the said affidavit). Also forming part of “PK3” is another document dated 17 February 2005 signed by the husband’s parents only, again purporting to confirm their joint ownership of one of the units at G.
It was the wife’s contention that the only discussion she ever had with her husband in relation to his parents was to the effect that they were proffering the funds in order to live in one of the units rent free for the rest of their lives. She said this was the only discussion she had with the husband. She said that there was never any discussion that they would acquire an interest in the properties at G or that they would ever be transferred to his parents. She acknowledged that they contributed an amount of $40,000.
I do not accept that the husband’s parents acquired an interest in the G units for a number of reasons, including:-
82.1The husband acknowledged that there was no document purporting to evidence the agreement between himself and his parents that was ever executed by the wife.
82.2Upon purchase, despite the alleged agreement with his parents, the husband registered the properties in the names of himself and his wife.
82.3The property remained registered in the joint names of the parties until their informal division in 2003.
82.4The property was then transferred to the husband and not to his parents or to himself and his parents jointly.
82.5The husband said that it was transferred to his name solely in order to minimise revenue issues. He acknowledged though that a transfer of the property to his parents would have solved his revenue issues in respect of the G properties for ever.
82.6A little later in his evidence the husband said that he did not wish to transfer the properties to his parents in order that there would be no transfer fees payable when his parents died.
82.7The husband provided inconsistent evidence as to the exact amount provided by his parents. In his affidavit filed on 3 June 2005 (paragraphs 19 and 20) the husband alleged that his parents had provided $50,000 in three separate amounts plus a further $10,000 later for renovations, being a total of $60,000. In “PK3” to the husband’s affidavit of 7 April 2006, there is reference only to a total of $50,000. In his oral evidence the husband said that his parents provided two cheques of $20,000 each plus a further $15,000, being a total of $55,000.
82.8There was no documentary evidence provided by the husband at all, be it in the form of bank statements, withdrawal slips, deposit slips or the like, indicating that his parents ever paid an amount of $60,000, $55,000 or $50,000. However the wife acknowledges a payment by them of $40,000.
82.9The original of “PK3” forms part of Exhibit 5. The other part of Exhibit 5 is a document headed “Notification of Change of Will” dated 20 March 2000. The husband admitted that both pages came from the same writing pad but denied that the documents were prepared at about the same time even though they are dated 3 years apart. He denied that they were prepared by his parents to assist him with his case before this Court and he further denied that they were prepared after the dates shown on the documents. I am not satisfied by the husband’s explanation.
82.10The husband chose not to call his parents to give evidence which would have assisted the Court in making a determination on this issue. There is no evidence before me as to the age of the husband’s parents but given that the husband is 58 years of age, I accept that they must be in their 80’s. Even if they were ill or frail, arrangements could have been made for them to give evidence by video link or telephone. However the husband chose not to call them to support his case.
82.11The High Court decision of Jones v Dunkel (1959) 101 CLR 298 has been cited numerous times in decisions of this Court. As the Full Court summarised recently in the unreported decision of GWR & VAR [2006] FamCA 894 at paragraph 29:-
“The decision of the High Court in Jones v Dunkel does little more than confirm what common sense suggests would be the case, namely that where it would be reasonable to expect a party to have called evidence from a witness in relation to an issue, the unexplained failure to do so could justify drawing the inference that the evidence of that witness would not have assisted that party’s cause.”
82.12The settlement statements for the two G units are annexed as “PK15” to the husband’s affidavit filed 7 April 2006. The net proceeds of sale of G1 totalled $251,275 and the net proceeds of sale of G2 amounted to $92,159, being an overall total of $343,434. Even if the payment to the Australian Taxation Office of $20,000 upon settlement of the sale of G2 is added to that total, it is $363,434. One-half of that amount would be a little less than $182,000. The husband afforded no explanation to the Court as to why he paid his parents, allegedly for one-half of their interest in the G properties, a sum of at least $215,000 but almost certainly more like $255,000.
82.13The husband’s evidence was again unsatisfactory on the question of what amount he actually paid his parents on sale of the G units:-
(a)At paragraph 34 of his affidavit filed 3 June 2005, he said the amount was $191,305.
(b)At paragraph 72 of his affidavit filed 7 April 2006, he said the amount was $261,874.
(c)In his oral evidence, he said the amount was $255,000, an amount of $35,000 of which he alleged was paid in cash. He admitted that he had never before mentioned paying them cash of $35,000.
(d)He admitted he could not substantiate any figure apart from $220,000.
(e)Annexure “PK14” to the husband’s affidavit filed 7 April 2006 is the settlement statement for the sale of the husband’s property at F on 12 November 2004. It discloses that the husband forwarded a further sum of $20,000 to his father at that time.
82.14I accept the wife’s evidence that any payment made by the husband’s parents was in order to afford to them the right to live in one of the G units for the rest of their lives.
82.15I am satisfied therefore that as a notional add back it is appropriate to add to the net pool of assets for distribution between the parties and as being an amount retained by the husband as against his entitlement, the figure of $363,434 being the total net proceeds of sale of the two units plus the $20,000 paid by the husband to his father from the proceeds of sale of the F property.
Gambling / Payments to Wife
When the matter first came before me for trial on 20 and 21 June 2006, upon which latter date the trial proceedings were adjourned from the list, counsel for the husband contended that the husband had lost considerable sums of money gambling and in the payment of prostitutes (paragraph 83 of the husband’s affidavit filed 7 April 2006). That remained the husband’s position at the commencement of the trial proceedings before me on 14 February 2007. In his Case Outline document provided to the court on that day, the husband’s counsel contended that the amount wasted in that fashion was an amount of $300,000 (paragraph 2.10) although to be fair to the husband his counsel appears to have overlooked paragraph 37 of his affidavit filed 11 July 2006 which nominates instead a figure of $20,000.
The husband further resiled from that position during his oral evidence to the Court. His position became that he had instead expended most of those funds in payments to the wife and his daughters, such that at the conclusion of the trial it was the submission of his counsel that he had only expended an amount in the order of $20,000 on gambling and prostitutes (paragraph 3.11 of the husband’s counsel’s written outline of submissions).
Quite which version or story of the husband’s to believe becomes more difficult upon consideration of the evidence he put before the Court in the form of the affidavit of psychologist Mr L filed on 18 April 2006. In his annexed report dated 17 June 2005, Mr L makes various references to the husband’s gambling and expenditure on prostitution but always in terms of it being a large amount of money, for example:-
Page 1
“That he was gambling heavily, drinking and visiting prostitutes and that this has been a ‘regular thing for the past twelve months’”.
Page 2
“His current excessive gambling had only been evident for the past twelve months, and appears to coincide with the separation from his wife and daughter.”
“He had lost vast sums amounts of money, and had sold a number of properties to fund his gambling.”
“….. that his wife was unaware of his gambling and unaware that he had been loosing (sic) such vast sums of money.”
“That he had ‘sold four properties over the past twelve months’ and had lost most of that money gambling.”
Page 3
“However, he would eventually end up at the casino gambling.”
“All he had was his clothes and car, and that he had to sell his car to pay his gambling debts”.
“[The husband] stated that he gambled not for the thrill of winning for ‘as you know, a gambler always looses (sic).”
Page 4
“[The husband] does not see himself as a gambler. He stated, ‘I am not a gambler’ and when asked Why are you doing it? He stated that it was ‘a self destructive thing’. He explained that he believed in god and the devil. That ‘maybe the devil has gotten into me.’”
“He began to drink and gamble heavily (visiting prostitutes to alleviate the frustration, hurt and anger). He lost a fortune (most of his savings and properties).”
Page 6
“The decisions that he had make (sic) (i.e. to sell his properties and gamble the money away)….”
The vastly different stories told by the husband during the course of these proceedings, and to his psychologist, make it impossible to accept his evidence on the topic.
The husband purported to produce a number of documents and summaries to demonstrate the amount of money he had expended on the wife, on his daughters and on the wife’s behalf. Those documents are contained in Exhibits 12 to 18 inclusive.
Exhibit 12 is a folder detailing expenses incurred in relation to the C property. The total expenses for the period 30 June 2003 to 19 May 2004 are alleged to have been $35,929. C was one of the properties received by the husband at the time of the parties’ informal property settlement effected in 2003. Whilst those documents go some way to supporting the husband’s latter position that he did not expend all of the sum of $300,000 or $400,000 on gambling and prostitutes, it does not demonstrate that any of that sum of $35,929 was expended for the benefit of the wife and R. All decisions about expenditure were unilaterally made by the husband. Nor does he account for any offset income received in that period.
Exhibit 13 is a folder of documents relating to expenses incurred in relation to the F property. That property was purchased by the husband after the informal agreement as to property settlement reached between the parties and subsequent to the division of properties between them. Those alleged total expenses were $14,336. Again, it demonstrates that the husband did not expend all of his funds on gambling and prostitutes. However, it does not support his contention that he spent those funds on his wife and daughter. Again too he offers no evidence of rental income received and from which those expenses might have been met.
Exhibit 16 is comprised of two folders for expenses incurred in relation to the two G units for the period 30 June 2003 to 1 November 2004. Those alleged expenses total $44,660. Those documents again support the fact that the husband did not expend all of his funds on gambling and prostitution but do little to assist his case in suggesting that he expended the moneys on his wife and daughter R. The G units were also part of the property pool that the husband received after the division of assets between the parties in 2003 and for which he received all of the rental income. The ultimate beneficiaries were his parents who received much of the net proceeds of sale.
Exhibit 17 is comprised of four folders. Again the husband’s case seems to be afforded no assistance by the first two of those folders marked “111” and “118” as they relate to expenses incurred in the 2004 year for the properties at G and F. They allegedly total $4,577. A perusal of the contents of the files further demonstrates that the husband has sought to improperly claim expenses that had nothing to do with the parties or R. There are a number of invoices or receipts that relate to his parents. There are also a number of documents relating to expenses that could not possibly be suggested as having been incurred for the benefit of the wife or R, for example the registration and insurance of a trailer and something odd titled “17/10/03 dogs died”. It appears to relate to the euthanasia of two dogs. A number of invoices for relatively minor amounts do appear to relate to the wife’s property at D, the property in R’s name at S and health insurance.
Folder “BB” comprises part of Exhibit 17. Again a number of relatively minor items relate to the wife’s property at D, but most relate to the husband’s properties at F and C. Those expenses allegedly total $7,350. Others relate to the property in R’s name at S. He provided no evidence of offset income.
Exhibit 18 is a folder containing expenses alleged to total $7,381. That folder comprises a hotchpotch of documents. Some relate to expenses incurred before the parties’ division of properties, although they are relatively minor. Some relate to the period after the parties’ separation but when they were still residing under the one roof. Some relate to the G properties for the period January to March 2005. Some relate to dental expenses he incurred for himself in February 2005. Others relate to medical expenses and telephone bills, all incurred for himself. Thus at best they point to the fact that the husband expended moneys over that period on the items mentioned in the Exhibit and not on gambling and prostitutes, but do not demonstrate that any funds of any significance were spent by him for the benefit of the wife and R. Again, no evidence of income from which he may have been able to meet those expenses, was provided.
In summary, the aforementioned Exhibits, if the totals are accurate, suggest that the husband spent a maximum of some $114,233 of the proceeds of sale of the properties received by him after the informal settlement, on costs associated with those properties or other miscellaneous costs. However, it was likely that he spent considerably less than that as he has not accounted for rental income received and hence not all moneys spent would have come from sale proceeds. I am satisfied that he has demonstrated that he did not spend all of the sale proceeds on gambling and prostitutes. However, the state of his evidence was so unsatisfactory as to make it impossible to make any findings as to the exact amount from sale proceeds that he expended in any of the ways alleged by him. Further, I am not satisfied that he has demonstrated through those Exhibits or by any other means that he has expended anything other than relatively modest amounts on the wife, the wife’s properties or the property at S registered in the name of R.
That leaves me with the allegations of the husband that he spent considerable sums on the property purchased by the wife at L after the division of properties had occurred between them.
The husband’s allegations as to what he did on the wife’s property at L are contained in paragraphs 92, 93 and 94 of the husband’s affidavit filed on 7 April 2006 and in paragraphs 5 to 15 inclusive of his affidavit filed on 11 July 2006. Annexures “PK1” and “PK2” to the latter affidavit purport to detail the expenditure incurred by the husband on the wife’s L property. However, those annexures have been superseded by Exhibits 14 and 15. The total amounts alleged by the husband to have been spent in that manner as purportedly demonstrated in those Exhibits is $27,319. Thus, that would appear to be the husband’s best case scenario in relation to moneys expended on the L property.
However, Exhibit 14 purports to provide detail of the labour provided by the husband over a three month period. Invoice numbers “03”, “04” and “49” are all signed by the wife. Invoices “29”, “30” and “31” are not signed by the wife. They all allegedly total $20,965. The wife said that she signed the invoices presented by the husband as she understood them to be for tax purposes. Thus Exhibit 14 does not demonstrate the expenditure of any money by the husband in relation to the wife’s property at L. However, the wife acknowledged that the husband did indeed assist her to a very real extent in relation to the L property. She acknowledged:-
97.1The husband first found the property at a time when she was not interested in buying it.
97.2Subsequently the wife thought it would be a good investment and purchased same.
97.3The husband agreed to help her with the renovations.
97.4She was present every day that the husband worked there.
97.5The husband’s father helped once.
97.6She did not pay him for the labour he undertook.
97.7She purchased most of the materials but the husband may have also purchased materials but not told her.
97.8She paid for the advertising for the tenants but the husband interviewed prospective tenants.
97.9He did a lot of work to get the property ready for the first tenant. She denied though that the husband did as much as he claimed in the aforementioned paragraphs of his said affidavit. The husband acknowledged as much under cross-examination. In relation to paragraph 93 of his affidavit filed on 7 April 2006, the husband admitted that:-
(a)He had not “gutted the interior” as stated.
(b)He had not “polished all the floors” as stated but rather arranged a polishing contractor.
(c)He did not install skylights but rather he cut a hole where one would go.
(d)He did not undertake “all of the painting” and admitted that the wife assisted him.
(e)He had not “laid a new driveway” and instead had repaired portions of the driveway.

Exhibit 15 though is in a different category. It contains documents purported by the husband to support his allegation that he expended some $6,354 on the wife’s L property. The contents of Exhibit 15, such of them as are readable, certainly appear to support the husband’s claim that he had expended moneys on the wife’s property at L. I accept that that amount was probably in the sum of $6,354 and he contributed his own labour and expertise.
Thus in summary, doing the best I can from the conflicting and at times, confusing evidence provided in relation to this issue, I am satisfied that at best the husband contributed an amount in the order of roughly $10,000 to the support of the wife, the wife’s properties and R after their informal property settlement and subsequent to their separation. He further contributed labour and expertise.
N and P
The husband alleges that he gave $10,000 to each of his adult daughters N and P upon the sale of C in May 2004. He said P’s $10,000 was towards her wedding. I do not accept the husband’s evidence on this issue. At paragraph 50 of his affidavit filed 7 April 2006 he said $10,000 was given to P as an engagement present. He further said in that paragraph that the funds came from the sale of W2 in May 2003 not C a year later. He said the affidavit was wrong.
N and P are both adults and could have been called by the husband to give evidence. He chose not to. (See Jones v Dunkel (supra)).
In any event, if he did pay those amounts to his daughters N and P it was after the informal property settlement between the parties and they were not amounts to which the wife agreed or over which she had any control.

Disposition of funds by the husband

Thus it is not possible to determine exactly where all of the funds received by the husband subsequent to the parties’ informal settlement and consequent upon the sale of his various assets, have gone. The evidence suggests that he has paid:-
103.1an amount of $20,000 from the sale of the F property to his parents.
103.2a further amount of $255,000 to his parents from the sale of the G properties.
103.3some $10,000 approximately for the benefit of the wife and R.
103.4an unknown and unidentifiable net amount on his property and miscellaneous expenses.
103.5an unidentifiable amount on gambling and prostitutes.
103.6an agreed amount in costs of nearly $55,000.
That though does not provide the full picture. The husband’s evidence was evasive, confusing and unconvincing in relation to what he did with his moneys overall and certainly the balance of any moneys not dealt with by me above. Nor does he provide any proper or adequate explanation of the many withdrawals he made from his accounts of amounts of up to $10,000 at a time. Nor has he accounted for any income that he received over that period of time, namely rental payments from his properties.
Disposition of funds by the wife
The wife received from the sale of D and L in 2006, a total sum of $243,841. She acknowledges having savings presently of $102,000. Counsel for the husband suggested that she has not provided a full explanation for the balance of $141,841. However counsel agreed that her total costs of these proceedings is some $70,000. It is her case though that it is appropriate to notionally add back the total she received on sale of both properties and in that way is accounting fully for the whole amount.
The complexity of the issues surrounding expenditure by both and the inherent injustice incumbent in failing to take account of the position the parties were in at the time of their separation and informal property settlement, all point to the good sense in adoption by me of the wife’s suggested approach to the resolution of their property settlement issues. It is my view that the authorities support that approach.
G mortgage
The husband admitted that all mortgages on all of the properties that they owned at the time, were discharged upon the sale of W2. He admitted that he subsequently raised further finance on the security of mortgage on the property at G2. When that property was sold the amount paid to the Commonwealth Bank in discharge of that mortgage on 30 November 2004 was $161,480 (“PK15” to the affidavit of the husband filed on 7 April 2006). Thus in my view, it is clearly appropriate to notionally add back that sum of $161,480 to the asset pool as it would otherwise artificially decrease the net benefit received by the husband subsequent to the parties’ informal property settlement.
S mortgage
Similarly, it is appropriate to notionally add back the sum of $141,264 which was the amount the wife used from her share of the net proceeds of sale of W2 to discharge the mortgage on the S property registered in the name of R.
General summary
The only sensible and logical manner in which to approach the many issues presented by the parties for my determination in relation to property settlement is to take their present individually held assets and notionally add back the moneys received by them since their separation and informal property settlement in mid-2003.
A number of decisions of the Court, both at first instance and on appeal have dealt with the issue of when it is appropriate to notionally add back various assets or amounts in order to identify the relevant asset pool for division between the parties. Those decisions and authorities are conveniently summarised by the Full Court in Omacini and Omacini (2005) FLC 93-218 at pages 79,617 and 79,618 (paragraphs 30 and 31). There the Full Court said:-
“30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
‘11.6 For reasons set out in Farnell, s117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.’
(b)Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
‘In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.’
(c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
‘As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage, whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.’
31.As the Full Court said in Browne v Green (1999) FLC 92-873 at 86,360:
‘44.We agreed with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guidelines the use of which assists in the achievement of the important goal of consistency within the jurisdiction.’”
Doing the best I can from the unsatisfactory evidence led in these proceedings by the husband, I believe it can be appropriately said that the following represents appropriate notional add backs in respect of the following categories.
Legal costs
It is agreed between the parties that the wife has spent in the order of $70,000 on legal fees associated with the conduct of these proceedings. For his part, the husband has expended in the order of $55,000 on legal fees. Clearly it is appropriate to notionally add back those amounts although notionally adding back the total of the net proceeds that each of them received from the sale of properties after their separation, achieves that result. The parties agreed that they paid their legal fees from the net proceeds of sale received individually by them.
Premature distribution
Had each of the parties retained the properties which since separation they have sold and which properties were purchased from the net sale proceeds of W2 or were properties the subject of the division between them, clearly those properties would have been brought to account in the asset pool and in the distribution of assets between them. Logically and appropriately, so too must the net proceeds of sale of those properties. However counsel for the husband addressed me on the other factors raised by the authorities.
Course of conduct
One area where the husband has clearly embarked upon a course of conduct designed to reduce or minimise the net asset pool for distribution between the parties, is in relation to the amounts of at least $275,000 that he has paid to his parents. It could be said that for the purposes of these proceedings they are his bankers to that extent. That money, at least, still exists in the form of the investment in the V property and possibly otherwise. Also, in my view the husband’s regular and frequent withdrawals of large sums of cash, usually in the denomination of $10,000, ought appropriately to be seen as a deliberate course of conduct in order to maximise his entitlements for property settlement.
Reckless, negligent or wanton action
In relation to the funds spent on gambling and prostitution, the husband’s counsel argued that such conduct could not be viewed as being reckless, negligent or wanton given that, according to the evidence of his psychologist, Mr L, contained in his affidavit filed on 18 April 2006, the husband suffered at the relevant time, primary reactive depression. His counsel argued that on the authority of Crampton and Crampton (2006) FLC 93-269, his actions were not deliberate and were not designed to reduce or minimise the asset pool, nor could they be considered reckless, negligent or wanton given that it was not a voluntary or controllable course of conduct by the husband.
However, the diagnosis is not by a medical specialist. The diagnosis is by a psychologist, unlike the position in De Angelis and De Angelis (2003) FLC 93-133 where the Trial Judge there “had the advantage of evidence which permitted him to arrive at actual, or at least approximate, figures for the wife’s expenditure on gambling, and in addition he had expert psychiatric evidence regarding her propensity for gambling.” (paragraph 76). Further, the diagnosis by Mr L does not suggest that the husband was unable to control his gambling but rather that his behaviour was “out of character” (page 5) and that his “ability to make rational and appropriate decisions was clouded by his depressive state” (page 6).
Nor do I in this matter have any accurate or reliable evidence as to the exact extent of the husband’s gambling losses. As I said earlier, his evidence was confusing and contradictory. In any event, it was the husband’s position by the conclusion of the trial that he had only expended an amount of $20,000 on gambling and prostitutes. Thus that would be the maximum amount which the husband would claim ought not be notionally added back to the asset pool. However, for the reasons I have expressed above, I believe it and all of the net proceeds of sale received by the husband since the parties’ informal division of assets, ought to be notionally added back to the asset pool for division between them.
Summary of asset position
By the conclusion of the evidence counsel were agreed as to the net amounts that each of the parties had received on the sale of the various properties in their names and were further agreed as to the value of the wife’s property at W1. A summary of that position is as follows:-
Wife
L property settlement proceeds  $196,548.00
D property settlement proceeds  $42,293.00
Deposit received on D property  $5,000.00
W1 property  $490,000.00
S property mortgage discharge   $141,264.00
  $875,105.00
Husband
Sale proceeds G1 property  $251,275.00
Sale proceeds C property   $246,574.00
Sale proceeds G2 property  $92,159.00
Sale proceeds F property  $91,473.00
G property mortgage discharge  $161,479.00
Payment to father from F property proceeds  $20,000.00
  $862,960.00
Counsel for the wife urged me to further notionally add the sum of $60,000 which the husband said he had in cash, part of which he said had been taken by the wife. However, given that I found the husband’s evidence so unreliable and unconvincing, I cannot be satisfied that the sum actually existed. It would be unsafe for me to treat it as a further notional add back.
The wife’s counsel also urged me to add a further sum of $10,000 to the husband’s asset pool, being an amount acknowledged by the husband in evidence as being his present savings. However, the husband also said it was from earnings as a cleaner. I do not deem it appropriate to add it to the asset pool. He will need some interim funds to tide him over until he secures employment.
The Form 13 Financial Statements filed by the parties disclose that each has a motor vehicle. However, neither counsel asked me to take them into account. I assume therefore that each is to retain their respective vehicles without adjustment.
In my view then it is appropriate to treat the relevant asset pool as being a total of the two columns above, namely $1,738,065.
Contributions
Section 79(4)
At the commencement of their relationship some 19 years ago, the husband contributed more than the wife. He had a property at O in which there was equity of some $72,500. He alleges that he had savings of $20,000. He also had a car and some tools. The wife had $20,000 which she used to discharge the mortgage on the husband’s O property.
The husband was employed in only a couple of short term jobs after the marriage. The wife did not work outside of the home. Together though they worked in accumulating a significant real estate property pool. I find that they were both engaged in that activity to their joint benefit. They also worked extremely hard and for very long hours in the business operated by them at W2.
Given my earlier finding that the husband’s parents did not acquire an interest in the G units, it is appropriate to recognise as a contribution on the husband’s behalf, the sum of at least $40,000 provided by them in approximately 1998.
In the absence of any clear evidence to the contrary, I find that the parties also, until the time of separation, shared equally in their parental responsibilities in respect of R.
Since separation over 4 years ago, the wife assumed the predominant role in the care of R until the husband left the shared residence in mid 2003. Thereafter parental duties, functions and responsibilities fell solely to the wife. Her contribution in that regard was a lone one. As I discuss below, the husband only ever contributed child support of $1,600 in that time.
After separation each of the parties continued their contribution to the asset pool by administering the respective properties transferred into their individual names. I am satisfied too that the husband contributed to a modest degree in respect of the renovation of the L property purchased by the wife. However, the wife’s contribution in respect of the properties in her name continued in relation to the property at W1 until such time as the husband unilaterally assumed occupation of the premises and without notice to the wife. His position was subsequently supported by an interim decision of this Court but the effect of his actions was to deny the wife all of the income which she could have earned and which she had previously been receiving from the rented rooms in the W1 property.
The wife’s contributions continue and will continue for a little time in relation to R who is now 17 years of age.
Since the sale of the properties in his name and since the modest assistance he provided the wife in relation to L property, the husband has not been making any contribution to the maintenance or conservation of the asset pool identified above. He sold his properties and spent the proceeds.

Conclusion on contributions

I am satisfied that the overall contributions of the parties have been equal. Thus each of them is entitled to property or payment to the value of $869,000.
Section 75(2) factors

(a)the age and state of health of each of the parties;

The husband is 58 years of age and the wife 47 years of age. Apart from two brief periods of engagement in the engineering industry, the husband has not worked in paid employment. Nor has the wife. Each of them devoted their efforts to their investment properties and the W2 business. Each of them still possesses those skills which do not appear to be impeded by issues of health. There is no evidence before me that the husband’s depressive condition continues. The wife is in good health.

(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

The husband is unemployed and receives no Social Security benefits. He resides with his fiancée who he says has no income either. His evidence was that he has survived on the strength of a cleaning contract he secured with a retail chain which earned him some $12,000 over a ten week period. He has also completed a course at TAFE and holds a diploma as a food technologist. Thus he has a number of avenues available to him for gainful employment, be it as a food technologist, a cleaner, a shop keeper or shop assistant.
The wife is not employed either. She resides with her new partner who is also unemployed and has no assets. The wife continues to live on the balance of the net proceeds of sale that she has. If she retains the property at W1, she will have rental income from that property. She has also undertaken a programme of further education and will shortly gain her diploma in counselling and mediation. She hopes to secure employment in that area once these Court proceedings are concluded. Her evidence was that she has found the proceedings too distressing to pursue employment up until now.

(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

The wife continues with her parental obligations in respect of R who is now 17 years of age. There was no evidence provided as to what R’s future plans might be and whether or not she intends to continue in education.

(d) commitments of each of the parties that are necessary to enable the party to support:-
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain

and
(e)the responsibilities of either party to support any other person

No matters of relevance emerge for my consideration pursuant to these sub-sections.

(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party

I cannot see any reason why the husband and possibly the wife would not be eligible for a pension or allowance even with a full disclosure as to the circumstances of their respective cohabitation arrangements.

(g)whether the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable
and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant
and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party

There are no additional matters of relevance for my consideration pursuant to these sub-sections.

(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration

The parties’ marriage was a long one and each of them exhibited considerable entrepreneurial skills during the marriage. There is no suggestion that they have lost those entrepreneurial skills and could not use them again in the future. Additionally, each has acquired recent qualifications in other areas which they could pursue.

(l)the need to protect a party who wishes to continue that party’s role as a parent

The wife still continues in her role as parent to R but her obligations in that regard will diminish in the not too distant future.

(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation

As I have mentioned, each party is cohabiting with a new partner. Neither of the new partners brings any income, assets or wealth to the relationships. Each of the couples appears to be supporting each other where they can.

(n)the terms of any order made or proposed to be made under section 79 in relation to the property of the parties

The effect of my proposed Orders will be that the wife will retain what assets she has and which she has preserved since the separation of the parties and the division of properties between them. The husband has access to the $275,000 or greater amount which he has given to his parents. He may well have some other cash reserves but apart from the acknowledged $10,000 I cannot make any finding in that regard.

(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage

I accept the evidence of the wife that the husband, since separation over 4 years ago, has only ever paid to the wife in respect of R’s child support an amount of $1,600 (Exhibit 8). I also earlier made the finding that the husband has contributed something in the order of $10,000 to the wife, the wife’s properties and R. However, given the amount of money disposed of by the husband upon the sale of his various properties and the income he must have earned from them, his contribution towards R’s child support is appallingly low. The total burden has effectively fallen to the wife.

(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
and
(p)the terms of any financial agreement that is binding on the parties

No additional relevant matters emerge upon consideration of these sub-sections.
Conclusion on Section 75(2) factors
In my view, the factors are balanced and do not indicate that any further adjustment ought to be made in favour of one party or the other. Neither is employed although each has acquired some new qualifications which could lead to employment. Each has other skills which they could use in the pursuit of gainful employment. The wife will be left with a greater amount in assets thanks to the husband’s unilateral actions in divesting himself of all of his. The husband though still has access to considerable funds which he has given to his parents. The wife has ongoing commitments in relation to R’s care and has done so with effectively no financial support from the husband since the separation of the parties.
The total asset pool for distribution between the parties is valued at $1,738,000 (paragraph 122). An equal division, as found by me to be appropriate, would result in the parties each receiving assets to the value of $869,000. The value of the assets received by the husband totals $863,000 and thus there is a payment due by the wife to the husband of $6,000.
Just and equitable
It remains for me to consider whether or not my determination represents a just and equitable outcome in these proceedings (Section 79(2)).
Stripped to its barest, the husband’s case before the Court is essentially that:-
148.1I should ignore the informal settlement reached between them in mid-2003 after their separation in October 2002.
148.2I should ignore the fact that he received an approximate equal division of the parties’ net property pool at that time.
148.3I should ignore the fact that he expended the totality of his funds in various ways, some explained, including an amount spent on gambling and prostitutes, and some unexplained.
148.4I should ignore the fact that the wife retained most of her share of the assets received in mid-2003.
148.5I should take back the S property from his daughter R in order to pay for his excesses.
It is difficult to contemplate a more unjust or more inequitable outcome than that proposed by the husband. To accede to the husband’s application would be to reward him for four years of extravagant and wasteful behaviour. It is the husband’s view that he should receive 65% of the assets retained and accumulated by the wife and R as a just settlement of his claim. His application is preposterous.
In monetary terms, the husband’s claim can be summarised as follows:-
150.1W1 property (registered in the wife’s name)   $490,000.00
150.2Accumulated savings of the wife represented in large
part by the proceeds of sale of L and D properties                $102,000.00
150.3R’s S property  $270,000.00
Total  $862,000.00
If the husband was to receive 65% of that figure, he would receive additional assets to the value of $560,300. He asks the Court to transfer the W1 property to him requiring the wife then to pay him an amount of $70,300 to make up the balance. If that is added to the totality of the assets retained by him since the mid-2003 informal settlement (being an amount of $863,000 – paragraph 118), he would receive in total $1,423,300. If the additional sum sought by the husband of $560,300 is deducted from the property retained by the wife after the mid-2003 informal settlement and subsequent investment made by her, she would be left with $314,800. Another consequence of the husband’s application is that the wife would lose to him the W1 property and with it her only present source of income.
In those circumstances, not only would the outcome for the wife be unjust and inequitable, it would be unconscionable.
I have no difficulty whatsoever in being satisfied that the settlement proposed by me represents a just and equitable outcome between the parties in all of the unusual circumstances of this case.

I certify that the preceding one hundred and fifty-two [152] paragraphs are a true copy of the reasons for judgment of the Honourable Justice Burr.

Associate:
Date:5 April 2007