Sulo and Colpetti
[2010] FamCA 493
•18 June 2010
FAMILY COURT OF AUSTRALIA
| SULO & COLPETTI | [2010] FamCA 493 |
| FAMILY LAW – PROPERTY – debts to relatives that are statute barred – contributions – s 79(4)(d) - (g) matters – just and equitable alteration |
| Family Law Act 1975 (Cth) |
| Biltoft & Biltoft (1995) FLC 92-614 Chidiac v Maatouk [2010] NSWSC 386 Jones & Dunkel (1959) 101 CLR 298 Ogilvie v Adams [1981] VR 1041 Robb & Robb (1995) FLC 92-555 Young v Queensland Trustee Ltd (1956), 99 CLR 560 |
| APPLICANT: | Ms Sulo |
| RESPONDENT: | Mr Colpetti |
| FILE NUMBER: | SYF | 2543 | of | 2006 |
| DATE DELIVERED: | 18 June 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 10 - 14 May 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Johnston |
| SOLICITOR FOR THE APPLICANT: | Simon Diab & Associates |
| SOLICITOR FOR THE RESPONDENT: | Litigant in person |
Orders
Pursuant to s 79 Family Law Act1975 (Cth), an order be made in accordance with paragraphs 2 and 5 below.
The parties forthwith do all acts and things and execute all documents necessary to authorize Simon Diab of Simon Diab & Associates to release to the wife the sum equivalent to 53 percent and release to the husband the sum equivalent to 47 percent of all funds held in the controlled monies account for the parties, including any accumulated interest (“the controlled monies account”).
The husband pay to R the sum of $20,000 from monies that he receives from the controlled monies account.
The husband indemnify the wife in relation to any liability to W Realty arising out of their tax invoice dated 3 September 2007 and the husband attend to the payment of that invoice (if he has not already done so).
Each party be declared the sole and beneficial owner of all other items of property in their respective possession custody or control including but not limited to superannuation entitlements.
In the event that either party shall fail, neglect or refuse to execute any deed, instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal then a Registrar or a Deputy Registrar of the Sydney Registry of the Court is hereby appointed pursuant to section 106A of the Family Law Act to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
The parties have liberty to apply on 7 days notice in respect of the implementation of these orders.
The husband pay to the Child Support Agency the sum of $20,000 from monies that he receives from the controlled monies account and that that payment is to be treated by the Agency as a credit against liabilities the husband has or will have for the payment of periodic child support for G born … February 1996.
IT IS NOTED that publication of this judgment under the pseudonym Sulo & Colpetti is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 2543 of 2006
| MS SULO |
Applicant
And
| MR COLPETTI |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The parties lived together for 18 years, although they were apart more often than they were together for the last three of them. The husband worked frenetically in his profession, making little taxable profit. He has suffered a mental illness since the early 1990s and although there has been some recent improvement, he is not yet fully recovered. He hopes to reinvent his professional career.
The wife was once the husband’s secretary who ran the office when he was engaged in business. R, the wife’s child who was 2 ½ years old at the date of the marriage, was a member of the parties’ household throughout the marriage. The parties had three other children, one of whom is still under 18. Another child was stillborn. The wife has been the primary carer throughout. The wife has now remarried and she and her new husband have a new baby. The wife has significant backing from her immediate family.
This case is about what assets and liabilities should be considered and how they should be adjusted between the parties.
APPLICATION
The wife originally filed an application in March 2006 and the husband filed a response in September 2006.
The minutes of order sought by the wife in her case summary document are in the following terms:
1.That the parties forthwith do all acts and things and execute all documents necessary to authorize Simon Diab of Simon Diab & Associates to release to the wife all funds held on trust for the parties to the wife.
2.Declare that otherwise each party is the sole and beneficial owner of all other items of property in their respective possession custody or control including but not limited to superannuation entitlements.
3.That in the event that either party shall fail, neglect or refuse to execute any deed, instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal then a Registrar or a Deputy Registrar of the Sydney Registry of the Court is hereby appointed pursuant to section 106A of the Family Law Act to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
4.That the parties have liberty to apply on 7 days notice in respect of the implementation of these orders.
5.That the husband pay the wife’s costs of and incidental to these proceedings.
It became clear in final submissions by counsel for the wife, that the wife did not maintain a position whereby she would receive the whole of the funds in the controlled monies account. Counsel for the wife sought, in the end, a 75/25 split in the wife’s favour of the assets on the balance sheet, based on the wife’s assertion, in respect of those values.
During final submissions, the husband was unable to say with any precision, what percentage division of the net assets (on his version of what should be placed on the balance sheet) should be ordered as a just and equitable outcome. He was able to say that there should be a 70/30 split in his favour based on contributions, but thereafter in terms of any further prospective adjustment, he was content simply to say that the court should do whatever was just and equitable. The husband did make it clear during final submissions that he intended to pay R a sum of $20,000. He also wanted an amount of $20,000, to be paid from his share of the controlled monies account, to be credited against future child support liabilities that he will have in relation to G.
SHORT HISTORY
The husband was born in Sydney in 1960.
The wife was born in Lebanon in 1966.
R, a child of the wife’s first marriage, was born in 1985.
The parties married and commenced living together in 1988. At that time the husband was 27 years of age and the wife was 23 years of age and R was 2 ½ years of age.
The first child of the marriage, J, was born in 1989 and he is currently 21 years of age.
The second child of the marriage, E, was born in 1990 and she is currently 20 years of age.
The wife gave birth to a stillborn child during 1993.
In February 1996 G was born and he is currently 14 years of age.
The parties finally separated on 9 March 2006 and divorced on 4 January 2008.
The wife married Mr L in May 2008 and in March 2010 N was born to the wife and her new husband.
CREDIT
Wife
The husband invites me to make adverse findings in relation to the wife’s credit. He relies on a number of matters.
The most significant matter relates to the wife’s application for a loan in respect of her acquisition of the current property in which she lives. There is in evidence, a loan application which the wife has signed. That loan application has significant and demonstrably false information on it, particularly about the wife’s level of income. Documents associated with the application also indicate that St George had been given, along with the loan application, a false group certificate for the wife and a false tax return. The wife sought and I initially indicated that I would be prepared to grant, a certificate under s 128. The wife then however gave evidence that she simply signed what her new husband put in front of her and/or what a broker had prepared without noting its contents. After that evidence was given, in conversation with counsel for the wife, I indicated that I saw no need to give a certificate under s 128 given that that was the evidence the wife had given under oath. The husband said I should not accept the wife’s evidence. I have some difficulty accepting that she had no knowledge or involvement in the finance application that was lodged by her (apart from putting her signature on the document). The wife had experience in running at least two of the husband’s professional offices. She is not an unintelligent woman. The property was acquired solely in her name. It is inherently unlikely that she had no knowledge of the blatantly false information that she was providing to St George and I am unable to accept her evidence that she did not know what she was doing.
The wife also made serious allegations in relation to the husband misappropriating approximately $1,400,000 as a result of the sale of the B offices. I am less confident that the wife was deliberately being mischievous in that claim. The claim was maintained by her lawyers in circumstances where they had information from the husband that would indicate that the claim was without any foundation. It was not until the eve of the hearing that the claim was withdrawn. A simple property search would have verified the information the husband had provided and made it clear that the claim was without any foundation. When faced between a choice of conspiracy and a blunder, I think on this topic, I would conclude that it was tardiness on behalf of the wife’s lawyers as opposed to any deliberately deceitful conduct on behalf of the wife.
The husband submitted that the wife’s demeanour in the witness box was evasive. I find that there was substance in that submission.
The husband pointed to the fact that the wife failed in an original financial statement sworn by her after she had acquired the K property, to disclose both her ownership of that property and the mortgage debt associated with that property. That was corrected in subsequent financial statements. Her explanation as to why she left this off the original financial statement was less than satisfactory.
The husband referred to a letter from the wife’s previous solicitors (Georgio & Co) which is exhibit R. This letter explained that they could not get in contact with the wife. No questions were asked of the wife in relation to this tendered letter. The husband says that due to the wife’s ‘reckless conduct’ in not telling her lawyers she was having a holiday in Lebanon, the matter had to be adjourned. This assertion has no relevance to credit and I make no findings against the wife, arising from what is in Exhibit R.
As will be discussed later, the wife made statements to Dr W, a forensic psychiatrist that she saw in relation to a compensation claim. The wife admitted that those statements were false and were made in the context of her attempting to maximise her compensation claim. The statements related to the value of a ring that she was wearing and her motivation for making the claim (which she was presenting to the doctor to be not a financial motivation). She asserted the husband was her representative at the time of this compensation claim. The husband handed up a bundle of letters from Consolidated Lawyers to the wife at Exhibit II. These were in relation to the wife’s compensation claim and were authored by Mr Bechara Shamieh, who was also named as the wife’s ‘contact person’. The part of the wife’s reference number traditionally associated with the initials of the lawyers working on her case was “BBS:VR” The parties however were married at this time and I have got no doubt that they spoke about what the wife might say to the doctor at this interview. Notwithstanding whatever conversations took place between the husband and wife, the fact is, it is the wife’s case she was prepared to lie to the doctor in these circumstances is not to her credit. I find the wife lied to the doctor about the value of the ring and the value of her other assets.
I do not find as credible the evidence given by the wife as to conversations she alleges she had with the husband's father and the husband’s mother in 1995 to the effect that an advance at that time of $150,000 was a gift rather than a loan. I refer later to a document dated 16 November 1995 prepared by Bond & Bond, the husband’s father’s lawyers which leads me to find that the specific evidence given by the wife at paragraphs 32 and 33 of her affidavit is not truthful.
The husband raised the issue of the letter written to the child support agency which is part of Exhibit N. The CSA received a letter from the wife in relation to a $10,000 payment from the husband to the wife and whether that should be treated as child support or property distribution. In this letter from the wife were the assertions that “Judge Watts has found [the husband] guilty of fraud; hoarding; embezzlement; forge [sic] and deception”, that I was to make a statement to the ‘Queen Prosecutor’ that “the information is relevant and accurate as evidence is proven” and that I chose a former employee of the husband’s to give evidence in this regard. Clearly, these assertions are incorrect. The husband believes that the wife sent this letter, telling blatant lies. The wife said in cross-examination that the wife’s daughter R sent this letter. The husband said that even if this is so, the wife played a part in the production of the letter. I find that, even if R was the primary author of the letter (and I have significant doubts as to whether I accept that is true), the wife was not totally ignorant as to the contents of the letter. The fact that the letter was sent reflects poorly on the wife’s credit.
Husband
As noted above, the husband successfully submits that the wife appeared evasive at times in the witness box. The husband of course suffers from a significant mental illness. He too had difficulty in the witness box with recollecting matters and although I do not think the husband was deliberately attempting to mislead the court at any time, from time to time I was unable to have confidence in the accuracy of what he was telling me.
The husband still exhibited some apparently paranoid thoughts during the time that he spent in the court room during the hearing.
Dr A said in the last six months there has been a surge in the husband’s recovery. Any paranoid thoughts that the husband may have demonstrated during his evidence, Dr A said, had not been evident during therapy but Dr A said that the husband was still marginal and open to suggestions made to him and if suggestions were made to him of a negative nature he may well adopt them. He is certainly on the border of thinking about such things.
Counsel for the wife attacks the husband’s credit, not only on the basis of evasive answers from time to time (which I find were in large measure due to the husband’s current mental status), but in relation to specific matters.
The most important of those matters relates to the transfer of the Z property for no consideration to Mr I. The wife contends that the husband forged her signature on the transfer document when the parties were together in 2002. During a period of separation in 2005, the wife reported the alleged forgery to the police.
The husband refused to answer questions about the transfer and the conveyancing transaction between the wife and Mr I generally on the grounds that answers to those questions may tend to incriminate him. I draw no inference in relation to any impropriety in respect of the conveyancing transactions as a result of the husband refusing to answer questions about the transactions. The signature on the transaction does not bear any real resemblance to the wife’s current signature on her affidavits. On the balance of probabilities I am left with the wife’s version, namely that she wasn’t the person who put a signature on the transfer. That finding reflects poorly on the husband’s credit, although as I later say, the wife cannot be said to have suffered any significant loss as a result of the husband’s actions on this occasion and the husband’s behaviour has to be seen in light of the fact that he was probably suffering from a mental illness at the time and secondly, the wife has otherwise given evidence that she usually signs things that the husband has put in front of her, although on this occasion the husband seems to have cut out the “middle man”.
Counsel for the wife also referred to the contents of a letter written by the husband to the wife. The husband was cross examined about some of the things he said in this letter. This letter was written in the context of the marital separation by the husband in circumstances where clearly he had a significant mental illness. The evidence was allowed simply on the issue of the husband's credit. It was put to the husband that on 16 June 2008 he wrote a letter to the wife’s former solicitors (Georgio & Co) in which he made some very serious allegations, including an allegation that the wife was involved in the “drug and sex culture”. He accused the wife of taking drugs.In cross-examination the husband admitted “yes I said that” and that in relation to the drugs, “well I never saw her take it” but went on to describe his reasons for believing that she took drugs. When pressed on the nasty contents of the letter the husband said “the matters raised there are unpleasant…they’re of great concern”. There was no evidentiary basis to underpin the allegations the husband made and I conclude these statements made by the husband adversely impact upon the husband’s credit.
Conclusions as to credit
I have difficulty in preferring the reliability of one party’s evidence over that of the other. This means that where there is a direct dispute between the parties as to some conversation that they had with one another, I am really not in a position to make a finding as to which version I accept. So far as I am able to, I will make findings about disputed matters based on objective evidence or which version of events is more inherently likely.
CHRONOLOGY
The husband was born in 1960 in Sydney and is currently aged 50 years.
The wife was born in 1966 in Lebanon and is currently aged 43.
R was born in 1985 and is the biological child of the mother, although she was raised in the household of the parties from the age of 2 ½ years old.
On 20 December 1985 the husband purchased a property at M for $68,000.00 partly paid by a $10,000 gift from his father. The husband also purchased properties at C1 and C2.
The parties met in 1987 and married and commenced cohabitation in 1988.
J was born in 1989.
In 1989 the husband started his own professional practice at U, and the wife worked there as a secretary.
E was born in 1990.
On 25 September 1989 the husband purchased a property at O in wife’s name for $115,000.
In 1991 the husband leased offices in Sydney and employed 3 professional, support staff and full time interpreter. This continued until 1998.
In 1992 the husband leased and opened office in a Sydney suburb along with Mr OA. This arrangement continued until 1996/1997.
In September 1992 the husband purchased a property at Z in the wife’s name for $25,800.
On 17 December 1992 the husband and wife purchased the property at P for $80,000 and utilised it as professional office, with 2 to 4 professionals.
On 29 March 1993 the husband and wife purchased a property at H for $255,000.
On 20 May 1993 the husband and wife purchased a property at C Street, B for $147,500.
In May 1993 the parties received $150,000 from the husband’s father. There is a dispute between the parties as to how this advance should be treated.
In 1993 R received $20,000 compensation for accident at school. The wife says the husband caused R to bank the funds into his account when she turned 18 and the husband has kept the money. The husband intends to pay $20,000 back to R and for that to be confirmed by an order.
The husband sold C1 and C2 properties in 1993. He also purchased a BMW for $67,000 during this year.
The wife gave birth to a still born child during 1993.
The parties moved to wife’s mother’s home in 1994.
In 1995 the parties purchased 6 office suites at B for $297,500 as joint tenants. This was assisted by an advance from the husband’s father in the sum of $150,000.
G was born in February 1996.
In 1996 the husband and wife travelled to China and set up referral professional arrangement which continued until 1998.
On 21 April 1997 the properties at C Street, B were sold for $310,000.
On 26 February 1999 the husband purchased an office at 45 T Street for $130,000 and established “Consolidated Lawyers”. Wife says she worked there as office manager and oversaw running of the practice. The husband says he borrowed $213,000 for this purchase.
On 2 June 2000 the husband purchased 44 T Street for $215,000. The husband says he borrowed $215,000 for this.
On 21 September 2002 the parties sold O property for $251,000. This money was applied to purchase of Y property.
On 29 September 2002 the husband borrowed $230,000 from his father by way of unsecured loan which was applied to discharge the mortgages on T Street property and a loan document was drawn by Bond and Bond, the husband’s father’s lawyers.
On 17 October 2002 the parties purchased the former matrimonial home at Y for $1,650,000. The amount $1,250,000 was borrowed from HSBC and $500,000 from The Rock Building Society.
On 14 December 2002 the wife contends the husband forged her signature and sold Z property for no consideration to Mr I, who was a friend. The wife reported forgery to the police in 2005, during a period the parties were separated. I have mentioned this when referring to the husband’s credit and I will deal later with this transaction in more detail.
On 24 December 2002 the parties sold H property for $485,000.
Husband says he discharged $500,000 to The Rock Building Society and paid HSBC $233,836.22 on 18 February 2003.
On 11 November 2003 the Husband sold 44 and 45 T Street for a total of $500,000 and his business for $100,000.
The wife says in 2003 the husband established another professional practice at B which was subsequently sold to Mr F. Also in 2003 the husband traded in his BMW for a new Jeep with changeover price of $15,000.
The wife alleges that the husband took R’s pay from her employer and did not return it. This totalled $6,000 to $7,000. The Husband says this occurred early October 2003. He agrees he had assistance from R of a few weeks wages but says R was to be repaid from monies held on sale of Y home.
In September 2003 the Wife received $10,083 compensation for hair damage. The money was applied toward debts.
In 2005 the husband and wife sold P property for $181,500.
In 2005 the husband leased a Mercedes, giving it to the wife for her birthday. It was soon after repossessed and sold. The residual debt was about $39,855.
In 2005 the wife and children moved into the Y property, which the wife says was in poor condition. Property was re-mortgaged and works to a total of $80,000 undertaken by the wife’s brother and Mr G. The wife claims that approximately $20,000 to $25,000 is still owing to them.
The wife says in 2005 Husband withdraw $12,000 from joint funds to pay his visa and a $600 cheque signed by the wife for home contents was banked by the husband to pay visa debt.
On 30 October 2005 the husband paid wife’s parents $50,000. He also says HSBC mortgage was down to $430,000.
During 2005 the wife expended about $25,000 on cosmetic surgery.
In 2006 the husband traded in his Jeep for a Mercedes receiving a credit of about $15,000. The husband’s Mercedes was purchased for $160,000 from M motors.
The agreed date of final separation is 9 March 2006, although it is agreed that the parties were apart more than they were together between 2003 and 2006.
In June 2006 the Bank repossessed the Y property and the wife and children moved in with wife’s parents.
On 20 June 2006 the Orders of JR Johnston prescribed that the proceeds of sale of P property were paid as to $40,000 to the ATO for husband’s debt and balance to wife.
In 13 October 2007 the former matrimonial home was sold for $1,699,000. The proceeds of sale were applied to the HSBC mortgage, and an additional amount of $5,500 to HSBC. HSBC honoured a garnishee order to the ATO of a further $82,533.53. The sum of $25,000 was paid to Farrar Lawyers for the husband and $165,000 was paid to the wife. The balance of monies is held with wife’s solicitor’s trust account, now in a controlled monies account.
In 2007 the husband leased a new Lexus for $85,000 and gave it to R. The car was eventually repossessed.
On 6 November 2007 the orders of FM Henderson determined child support arrears to be paid to Commonwealth of $5,573.82 plus costs of $2,000.
On 4 January 2008 the parties were divorced.
The wife was remarried to Mr L in May 2008.
On 27 July 2007 the husband was served with Bankruptcy notice issued by Farrar Lawyers instructed by Toyota Finance.
In March 2010 N was born to the wife and Mr L.
APPROACH TAKEN
In this matter my task is to:
88.1.Identify and value the property, assets, financial resources and liabilities of the parties;
88.2.Identify relevant contributions and assess them;
88.3.Consider relevant matters referred to in Section 79(4)(d) – (g) FLA;
88.4.Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.
BALANCE SHEET
A number of different versions of the balance sheet were generated during the course of the preparation for the hearing and the hearing itself. Along the way, a number of items were abandoned, particularly by the wife. Submissions were made in relation to items set out in the balance sheet contained in the applicant wife’s case summary document at pages 10 through to 15. Whilst following the same sequence of items, my item numbering is different. The husband during final submission, added a number of items that had not until that point been raised as being items to be placed on the balance sheet. I set out a final version of the balance sheet below. In relation to disputed items, the amount for that item as determined by me appears in bold in the agreed/determined column. The reason for my determination in relation to each disputed item is set out below.
| Assets | ||||||
| Item no. | Title | Description | Husband | Wife | Agreed/ Determined | Value |
| 1 | J | Proceeds of sale of matrimonial home | $932,680.00 | $932,680.00 | Agreed | $932,680.00 |
| 2 | H | monies paid from proceeds of sale of former matrimonial home and paid out by husband by way of child support | $10,000.00 | $10,000.00 | Agreed | $10,000.00 |
| 3 | W | Wife's paid legal fees | $35,000.00 | $35,000.00 | Agreed | $35,000.00 |
| 4 | W | Improvements to and furniture for K property | $61,292.00 | $61,292.00 | Agreed | $61,292.00 |
| 5 | W | balance of monies received by wife from partial distribution of the sum of $165,000 | $59,000.00 | $0.00 | Determined | $59,000.00 |
| 6 | J | An amount of $40,000 paid to ATO by husband | $0.00 | $0.00 | Agreed | $0.00 |
| 7 | H | Monies received from joint funds which he used to pay lump sum child support | $30,000.00 | $30,000.00 | Agreed | $30,000.00 |
| 8 | H | The amount of $25,000 released to the husband from which he paid Toyota Finance Australia Ltd | $810.20 | $25,000.00 | Determined | $810.20 |
| 9 | W | wife's 2006 Mazda | $10,000.00 | $10,000.00 | Agreed | $10,000.00 |
| 10 | W | Wife's 2008 Mazda | $15,000.00 | $15,000.00 | Agreed | $15,000.00 |
| 11 | W | K property | $635,000.00 | $635,000.00 | Agreed | $635,000.00 |
| 12 | W | Contents | $50,000.00 | $2,000.00 | Determined | $2,000.00 |
| 13 | W | Diamond ring and jewellery | Agreed | $0.00 | ||
| 14 | H | Husband's professional practice | $0.00 | $0.00 | Agreed | $0.00 |
| 15 | H | Husband's diamond ring | $11,000.00 | $11,000.00 | Agreed | $11,000.00 |
| 16 | H | Z property | $0.00 | $25,800.00 | Determined | $0.00 |
| 17 | H | 6 units in C Street, B | $0.00 | $0.00 | Agreed | $0.00 |
| 18 | W | Wife's superannuation | $0.00 | $0.00 | Agreed | $0.00 |
| 19 | H | Husband's superannuation | $638.00 | $638.00 | Agreed | $638.00 |
| Total assets | $1,802,420.20 | |||||
| Liabilities | ||||||
| Item no. | Title | Description | Husband | Wife | Agreed/ Determined | Value |
| 20 | H | Monies lent by the husband's father | $830,000.00 | $0.00 | Determined | $0.00 |
| 21 | H | Monies owing to R | $20,000.00 | $20,000.00 | Agreed | $20,000.00 |
| 22 | H | Debt to Mercedes Benz Financial Services | $47,916.87 | $0.00 | Determined | $47,916.87 |
| 23 | H | CBA MasterCard | $11,000.00 | $0.00 | Determined | $0.00 |
| 24 | H | American Express | $15,000.00 | $0.00 | Determined | $0.00 |
| 25 | H | Fee to W Realty for unsuccessful attempt to sell Y property | $3,955.00 | $0.00 | Determined | $3,955.00 |
| 26 | W | Wife's home loan owing on K property | $560,000.00 | $560,000.00 | Agreed | $560,000.00 |
| 27 | W | Loan to M Sulo | $170,900.00 | $170,900.00 | Agreed | $170,900.00 |
| 28 | W | Monies owed to T Sulo and Mr G | $0.00 | $5,000.00 | Determined | $20,000.00 |
| 29 | H | Monies owed to ATO | $41,000.00 | $0.00 | Determined | $0.00 |
| 30 | H | Pacific Premium Funding | $3,000.00 | $0.00 | Determined | $0.00 |
| 31 | H | Attorney-General's Dept | $5,040.00 | nk | Determined | $5,040.00 |
| Total liabilities | $827,811.87 | |||||
| Total net assets | $974,608.33 | |||||
Item 1
Exhibit T is a document indicating that the amount currently held in trust from the proceeds of the sale of the former matrimonial home as at the date of hearing was in the sum of $932,680. This amount is an agreed figure.
Item 2
It was not disputed that an amount of $165,000 had been distributed to the wife from the proceeds of the sale of the former matrimonial home prior to the hearing. It was agreed that $10,000 of that amount was a payment by the husband for child support. As such, an amount of $10,000 of the amount of $165,000 should be treated as having been received by the husband.
Item 3
Of the balance sum of $155,000, the wife concedes that an amount of $35,000 was taken from that amount to pay her legal fees and that amount should be added back onto the balance sheet on account of the wife’s legal fees.
Item 4
The remaining amount was $120,000 (165 - 10 - 35 = 120). It is the wife’s case that $61,292 of that amount was used by her to carry out improvements to the home in which she and her current husband live at K. The purchase price of the K property is included in the balance sheet at item 11 but the payment for these improvements is not. The figure of $61,292 also includes payments for furniture that was purchased by the wife for her new property. The wife also agrees this item should be placed on the balance sheet.
Item 5
There remains an amount of approximately $59,000 of the amount that the wife received. The monies were received in July 2009. The wife asserts that in less than one year she has expended those monies on reasonable living expenses and this balance should not be added back. In that period as noted, the wife had received an amount of $10,000 from the husband by way of lump sum child support. The wife remarried in May 2008. Her current husband’s evidence, which I will deal with elsewhere, is that his income is $250 per week. I have some reservations in relation to accepting that evidence uncritically. The husband submits that the wife has not accounted in even a general way for how she has expended the distribution and as a result it should be added back. Addbacks are a matter of a discretionary nature. I accept that the wife has not explained how the money has been expended. This is particularly so given that the husband has not spoken with any vigour against adding back the whole of the monies lent to the wife by her brother M Sulo as a debt to be included on the balance sheet against the wife. M Sulo has lent an amount of $170,900 to the wife between 2006 and March 2010. During the period that is relevant in terms of the discussion in respect of this item, M Sulo lent money to the wife by way of $15,000 on 23 June 2009 and $15,000 on 2 March 2010. In the relevant period therefore the wife received $40,000 apart from the $59,000 which she seeks not to have added back. Her current husband was working during this period. No proper explanation has been given by the wife as to why it was that she needed $59,000 in this period for reasonable living expenses. Given the lack of evidence I intend to add back the amount of $59,000.
Item 6
The husband received an amount of $40,000 which he says he paid to the Australian Tax Office for capital gains tax on the sale of M property. This was a joint debt and in final submissions counsel for the wife conceded that that amount of $40,000 should not be added back.
Item 7
Between the date of separation and the date of hearing the husband from joint monies paid to the wife by way of child support an amount of $15,000 and a further amount of $15,000 to the Child Support Agency. Those two amounts totalling $30,000 should be added back against the husband.
Item 8
From monies released to the husband prior to the hearing, an amount of $25,000 was released to the husband. It is not a matter of dispute that from that amount the husband used an amount of $24,189.80 to pay a liability arising from a contract with Toyota Finance Australia Limited. A bankruptcy notice had been served on the husband in respect of this debt.
Counsel for the wife relied upon the principles in Kowaliw (1981) FLC 91 - 092 to assert that this amount of $25,000 should be added back against the husband. The husband contends the amount for this item should be $810.20 (being $25,000 - $24,189.80).
Although in general terms the parties agree on how the debt arose, they differ on the detail.
At paragraph 57 of the wife’s affidavit filed 3 November 2009, the wife states:-
“57. In 2007, [the husband] leased a new Lexis for about $85,000 and gave it to [R]. After one month, [the husband] stopped paying the loan and it was repossessed by the finance company.”
The husband’s evidence at paragraph 45 of his affidavit filed 31 August 2009 is in the following terms:
“45. On 20 September 2005 [R] purchased a Lexis IS 2004 Sedan motor vehicle registration number […]. I said to [the wife] ‘We will get [R] a car’. [The wife] said, ‘ok’. [R] was the registered owner of the vehicle but the purchase of the vehicle was completely financed through Toyota Finance Australia Ltd was in my name only. The amount payable was about $50,000. I soon had financial difficulties. At all time the vehicle was with [R]. [The wife] said to me ‘[R] should have brought a BMW and why black’. I replied, ‘She picked this car’. The car was repossessed in June 2006 and sold. The amount due was about $25,000.”
The husband’s assertion that the motor vehicle was repossessed in about June 2006 is supported by annexure E1 to his affidavit. That document indicates that the original agreement was dated September 2005. It is clear that the husband’s version of the actual transactions are more reliable than the wife’s recollection.
Counsel for the wife refers to Exhibit CC. That exhibit shows that the husband’s taxable income in the 2005 financial year was only $10,601. At that time Exhibit CC shows that the husband had a debt to the Australian Tax Office of somewhere between about $129,000 (Notice of Assessment for the 2005 Financial Year) and $142,580 (the notice of intended legal action/garnishee is dated 21 December 2005). The submission made by counsel for the wife is that “no one in their right mind” would have entered into this arrangement. Counsel for the wife submits that there is no evidence before the court that the husband’s mental status was compromised at this time.
In relation to that submission, the husband points to a statement in Dr ER’s report (Exhibit GG) to the effect that since the 1990s the husband’s mental status has in fact been compromised.
The husband gave evidence that R was working at the time that this transaction was entered into and part of the husband’s motivation in acquiring this motor vehicle for her was to develop R’s sense of responsibility. The father indicated that the original agreement with R was that if there was any shortfall in funds that he could make available from month to month and R would make it up through her employment. Counsel for the wife put to the husband that R was not in employment at this time but I find that that is not accurate. The mother gives evidence on another topic about the husband going to R’s place of employment when she was 18. R was 18 in 2003.
I am not satisfied that the wife has established that the husband was reckless in entering into this transaction on R’s behalf. I am not satisfied that this amount which the wife alleges the husband wasted should be added back. I am not satisfied on the balance of probabilities that the husband when he entered into this transaction did so recklessly in the knowledge that he would not be able to continue to make payments on this motor vehicle. I conclude that item 8 should be $810.20.
Item 9
The wife’s 2006 Mazda has an agreed value of $10,000.
Item 10
The wife’s 2008 Mazda has an agreed value of $15,000.
Item 11
The property at K is in the wife’s name. It has an agreed value, consistent with its purchase price, in the sum of $635,000.
Item 12
In relation to the contents of the wife’s home, the husband relied upon evidence that the wife had insured the current contents of her home at $50,000. Evidence of the value of insurance is not evidence of value of contents and I do not place any reliance upon that evidence for the purposes of determining the value of this item. This item has already been taken into account as part of item 4, apart from an amount of $2,000 that the wife concedes she received from the contents of the matrimonial home when she sold items at a garage sale. The determined figure will be $2,000.
Item 13
Wife’s jewellery includes diamond ring, bracelet and necklace. Evidence about this item took up considerable time and was the subject of some focus during the hearing.
The acquisition of these items of jewellery were said to have taken place in the early 1990s.
The issue in relation to the jewellery was raised in a procedural hearing before me on 3 August 2009. Notation 14 of that date is as follows “the husband asserts that there are a woman’s diamond ring, a diamond necklace and a diamond bracelet in the possession of the wife which he seeks to have valued but the wife has indicated that those items do not exist”. In fact the wife at trial indicated that those items never existed. During her oral evidence the wife tendered pieces of jewellery that she says that she had in her possession which were a ring and a necklace (Exhibit C).
The husband’s evidence at paragraph 55 of his affidavit filed 31 August 2009 is that the wife had, during the marriage, a women’s diamond ring, a women’s diamond necklace and a women’s diamond bracelet (matching the necklace).
The husband’s evidence is that in the early 1990s the wife said to him “[…] (the wife’s brother) has a beautiful diamond for $14,000. I want to make my own ring”. The husband said he said, “ok”. The wife’s brother was the proprietor of a jewellery shop in Sydney. The husband alleges that he gave the wife, from his office account, a cash cheque for $14,000. He says that subsequently the wife showed him a diamond ring and said “I designed it myself”. The husband said that the wife wore the ring on a near daily basis during the course of the marriage. The husband was unaware as to the cost or the quality of the ring. He asserts that the wife said to him on a number of occasions “This ring has four carats”. The husband described the ring as having one large diamond surrounded by boutique diamonds in a white gold setting.
The husband also says that the wife’s diamond necklace was worn by her on special social events such as weddings but that the diamond bracelet was worn by the wife more often than the necklace. The husband says that in the mid 1990s the wife said to him “[my brother] has this beautiful diamond necklace and bracelet for only $25,000”. The husband said that he agreed to the purchase and gave the wife an office cash cheque for $25,000. The husband described the bracelet and the necklace as consisting of what appeared to be 18 carat gold and many diamonds. The husband alleged that the wife’s parents, together with all her brothers, have been present when the wife has worn the necklace and bracelet. The husband asserts that the wife has retained this jewellery.
Apart from the evidence about initial acquisition costs, the husband also refers to statements made by the wife to a Dr W, a forensic psychiatrist the wife saw in relation to a compensation claim she made arising out of damage to her hair at a hairdressing salon. In a report by Dr W dated 19 March 2003 (a document which annexed as part of annexure “01111” to the husband’s affidavit filed 31 August 1009) the following statements appear (at page 3) “She (the wife) then said that the ring she was wearing on the day that I saw her was worth $170,000, she indicated that she has a large amount of money”. Included in the doctor’s file is a poor quality photocopy (exhibit B) of the wife taken by the doctor at the time of the interview for the report. It is conceded that the wife is wearing a large ring on her left hand. The wife claims that it is costume jewellery (cubic zirconia) and that the ring that she was wearing at the interview with Dr W on that day was fake. It is the wife’s evidence that she told Dr W that the ring was worth $170,000 because she was coached by the husband to say that.
Notwithstanding the statement in the husband’s affidavit that the wife’s relatives would have seen this ring, the only one of the wife’s relatives to give oral evidence was the wife’s brother M Sulo who denied ever seeing such a ring. The wife’s other brother was not called to give evidence. The husband did not produce in evidence any accounting record of the drawing of the cash amount of $14,000 from his office account nor did he produce any accounting record of the drawing of the $25,000 from his office account. This was notwithstanding that it was an agreed fact that although the husband had produced receipts from 1992 to 1999 associated with his practice, he had not produced any payment ledgers. Consequently there is no objective documentary evidence of these payments being made to the wife’s brother.
On the balance of probabilities, I accept that it is inherently likely the wife did acquire items of jewellery from her brother who owned a jewellery shop using monies given to her by the husband. I am however unable to say, firstly, how much was paid for the jewellery and secondly, how much that jewellery might be worth today. These items cannot be added back onto the balance sheet as I am unable to assign any value to them. Nor am I sufficiently confident in placing reliance in this instance, on what might be inherently likely to say the wife has failed to make a proper disclosure about her jewellery.
Item 14
Counsel for the wife agreed that the husband’s professional practice had no value.
Item 11
The husband’s diamond ring will be added to the balance sheet at a value of $11,000 at an agreed figure.
Item 16
Item 16 relates to the property at Z. This property was registered in the name of the wife. The wife wishes to have added back an amount of $25,800 onto the balance sheet as against the husband on the basis that that was the amount expended to acquire the property. In December 2002, the property was disposed of by the husband to Mr I who was a friend of the husband. The transfer was at nil value. The wife claims that the husband forged her signature on the transfer (I have discussed this allegation when dealing with the husband’s credit). Counsel for the wife says it follows that I should add back the full amount of the acquisition costs of the property against the husband. I do not see that that necessarily follows as a matter of logic. The husband’s evidence is that this property was losing money and an amount of money was owed by way of rates. These rates were increasing. At paragraph 13 of the husband’s affidavit of 31 August 2009 he refers to a valuation of this land as at 1 July 2000. That valuation was $5,400. That valuation was admitted not on the basis that it proved the value of the land at that time but rather that the husband was given that information in 2000.
By 2002 the husband received an advice from S Realty Limited dated 16 December 2002 that in the opinion of the branch manager of S Realty at Z, the dilapidated condition of the property was such that the house was both unrentable and unsalable and at its current stage was valueless (annexure M to the husband’s affidavit). Again I allowed that letter, not on the basis that it proved the property was worth nothing at the time it was transferred to Mr I, but rather, the husband had been given information to that effect.
Given that was the information the husband had and given that rates continued to accumulate on the property, I am not prepared to add back any amount for this property against the husband on the basis that some how this was an arrangement that the husband had entered into in a reckless or wasteful way. It was not put to the husband that at the time this transfer was made it was designed to defeat some claim that the wife might make by way of property settlement in the future.
I find item 16 should be added at nil value.
Item 17
The wife up until the eve of the commencement of the hearing had asserted that the husband had disposed of six units in B for a sum of approximately $1,550,000. The husband at all times asserted that the sale price for the totality of the six units was $310,000. He had annexed to his affidavit in August 2009 a copy of the front page of the contract with the six lots clearly identified being sold for a consideration in total of $310,000 (annexure FF to the husband’s affidavit). Notwithstanding that information, the wife carried out no real property search to satisfy herself as to the accuracy of the information provided by the husband but continued to allege what, in the context of this case, was quite a significant deception by the husband. In the end the wife conceded there was no basis for her to make the assertions that she had about the husband and in relation to the six units in B, during final submissions counsel for the wife withdrew the NK notation in his case summary document and that item will appear on the balance sheet as nil.
Item 18
Item 18 has an agreed value of nil.
Item 19
Item 19 has an agreed value of $638.
Item 20
Considerable time was taken at the hearing exploring the current nature of the debt by the husband to his father. It is not in dispute that in November 1995 the husband’s father advanced to him an amount of $150,000 and that that money was used to purchase properties in the joint names of the parties at 3, 4, 5 and 6 C Street, B (the settlement of those transactions taking place at the end of November 1995). It is not disputed that the $150,000 was a loan without interest and was “repayable on demand”.
It is the wife’s case that the payment of the $150,000 by the husband’s father was always a gift. At paragraph 32 of her affidavit the wife alleges that she was present when the husband and his father had a conversation about the $150,000. The wife alleges, but I do not accept, that the husband’s father said to the husband that “I have given gifts to my other five children. I want to give you [whilst looking at the husband and me] $150,000 or [N property]”. She says that she also recalls the husband’s mother saying words to the effect “[the husband’s father] has given $150,000 to all of the kids in land or money and now it is your turn”. There is in evidence an invoice prepared by Bond & Bond, on 16 November 1995, which refers to “your loan” and to the preparation of an acknowledgment of unsecured loan. I find that the wife is not being truthful when she gives evidence about specific conversations about the $150,000 being a gift.
A further sum was advanced by the husband’s father on 29 September 2002 in the sum of $230,000. On that date the husband and his father signed the document entitled “acknowledgement of unsecured loan”. The terms of that loan for the sum of $230,000 was that it was to bear interest at 10 percent per annum compounding and calculated at monthly rests to the date of payment and it was payable on or before 30 April 2003. The husband’s father agreed that in the event the loan was repaid by the due date then he would forego interest payable on the loan. The money borrowed from the husband’s father was used by the husband to discharge mortgages on lots 44 and 45 T Street.
Throughout the relevant transactions, Mr Maddick from Bond & Bond has acted on behalf of the husband’s father. The husband said he had never met Mr Maddick. There are a number of letters written by Bond & Bond to the husband. On 11 February 2004 Bond & Bond wrote to the husband in the following terms:
“We are instructed that the following loans advanced to you by our client are still outstanding:
(a) $150,000 advanced in about November 1995 and repayable on demand; and
(b) $230,000 advanced on 29 September 2002, bearing interest at 10% per annum compounding and calculated monthly and repayable on or before 30 April 2003.
We are also instructed to request that you advise us in writing of your intentions regarding repayment of these loans.
We look forward to your response.”
On 2 August 2007 Bond & Bond wrote to the husband in similar terms and noted that as at 29 July 2007 the amount owing on the second loan including interest was $372,191.98. The husband was again asked to advise when he proposed repaying the loans and a response was requested. I have no evidence that the husband responded to Bond & Bond at that time.
On 7 July 2009 Bond & Bond again wrote to the husband in similar terms on this occasion indicating that as at 29 June 2009 the amount owing on the second loan, including interest, was $437,651.54.
On 5 August 2009 the husband wrote to Bond & Bond asking for them to provide an affidavit from their client (the husband’s father) in support of the husband’s assertions in this case, that the debts existed and were repayable. On 6 August 2009 Bond & Bond wrote back indicating that their client was currently overseas and they would not be able to get instructions in relation to any such affidavit until later in August 2009. The letter then says “In the meantime we enclose an Acknowledgement of Debt which we request you to sign and return to us”. The acknowledgement of debt was in the following terms:
“I [the husband] of […] acknowledge that I am indebted to my father [Mr Colpetti Snr] the following monies which remain unpaid:-
(a) $150,000 being a loan advanced to me by my father in about November 1995 and repayable on demand; and
(b) $230,000 plus interest of 10% per annum compounding and calculated monthly from 29 September 2002 until payment, being loan of $230,000 which was advanced to me by my father on 29 September 2002 and which was repayable on or before 30 April 2003.
Dated 7 August 2009.”
The husband signed that acknowledgment of debt and sent it back to Bond & Bond.
The husband sought to tender a document that had been prepared by his father calculating the current level of the debt. I did not allow that document to be admitted into evidence. The husband provided no independent aide memoire to calculate the alleged debt.
Counsel for the wife submitted that there was no legal obligation whatsoever on the husband to make an repayment to his father, given that both loans were statute barred. Counsel for the wife referred to the statement by Fullagar J in Ogilvie v Adams [1981] VR 1041. In that case His Honour says:
“There is a long settled rule of construction that, where there is a present debt between the parties to a contract to repay money, and the only terms as to repayment of the debt are to be spelled out of a promise to repay on demand, or out of a statement that the money is to be repaid or repayable on demand (or on request), an instantaneous cause of action, upon the very creation of the contract, arises in the lender. Whether one calls it a rule of law or not does not seem to me to matter. The only reason why I have chosen the expression “rule of construction” is because other words or terms may appear in the contract which may be in the circumstances sufficient to show an intention that the cause of action is not to arise until some actual demand or some form of demand is made or until some period after demand has elapsed.”
Ogilvie & Adams was recently considered in the Supreme Court by Ward J in Chidiac v Maatouk [2010] NSWSC 386. At paragraph 182 of the judgment, there is the following statement:
“In Ogilvie v Adams [1981] VR 1041, Fullagar J (holding that, when money is advanced on terms that it is to be repayable “on demand”, then the cause of action for recovery accrues on the date of the advance without the need for any demand) said (at 1043):
The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor’s money, and this whether the creditor brought an action of debt or an action in indebitatus assumptsit. Therefore if A lends money to B, then instantly B is detaining A’s money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call) is not sufficient to contract out of that situation where all else that is known of the terms of the contract is that A has paid money to B by way of loan. The lender’s cause of action still arises instanter on the receipt of the money by the borrower, so that the lender’s cause of action becomes statute barred at the expiry of six years after the receipt of the money. (my emphasis)”
Counsel for the wife also referred to the unanimous dictum of the full High Court in Young v Queensland Trustee Ltd (1956), 99 CLR 560 at page 566.
The husband’s father is not a party to these proceedings and I am not of course asked by the husband and his father to make any determination about the quantum of debt (if any) that exists between them.
In the proceedings between the husband and wife however, counsel for the wife submits that the husband’s father’s cause of action against the husband has become statute barred as six years has expired from the date of the original loan and from 30 April 2003 in relation to the second loan.
There is force in that argument.
The husband says that the statute of limitations is only a defence that could be raised against the possible action and he would not seek to raise it. He feels morally bound to satisfy the debt to his father.
The wife readily concedes that the monies that have been provided by the husband’s father were significant contributions and need to be taken into account in a significant way but she says that should happen at the second step.
The difference as to whether or not they are added onto the balance sheet or taken into account at the second stage is not just an academic exercise. If the liability is added onto the balance sheet then the full weight of that loan together with accumulated interest is given, to the advantage of the husband, without any of its weight being lost, as will happen if it is weighed against the myriad of other contributions that are made during a long marriage like this one.
The other issue to consider is whether or not the father would ever press payment of the debt. The husband’s evidence is that his father has said to him from time to time, “I don’t want my money. I don’t want you living on the street”, but at other times he has said, when realising it might mean that his former daughter-in-law got some of the money, “No bloody fear”.
I accept that the husband does not enjoy a close and loving relationship with his father but I conclude there is no present intention in the husband’s father’s mind to attempt to recover monies against the husband. In fact, the husband during the trial indicated that his main fear was that after his father died his 5 siblings would attempt to enforce the debt. I do not have a copy of the husband’s father’s will. The husband’s father is 84 years of age and regularly holidays on an annual basis overseas.
I do not intend to add the amounts of the debt back onto the balance sheet. My reasons for that are as follows:
149.1.The debts are statute barred;
149.2.There is no evidence that the husband’s father is intending to actively pursue a claim against the husband for the monies (see Biltoft & Biltoft (1995) FLC 92 - 614).
Item 21
The parties acknowledge the husband has a responsibility to return $20,000 to R. That amount will be counted on the balance sheet as a liability which the husband has and an order will be made that he repay that sum to R. The background to this debt is that in 1993 R had received a compensation payout after she had broken her leg at school. The $20,000 was to be held in trust until she was 18 years of age. When she turned 18 the money was given by R to the husband. The initial cheque was for the sum of $17,517.46 but both parties acknowledge that a figure of $20,000 should be paid by the husband to R. The husband says the monies were used by him in early October 2003 towards debts or to maintain the office.
Item 22
The husband wishes to have acknowledged a debt of $47,916.87 (as at 20 August 2009) in relation to monies owed to Mercedes Benz Financial Services. The husband says that in June 2005 he purchased a new 2004 Mercedes Benz. The purchase was totally financed apart from a trade-in of a car that the parties had at the time (the trade-in amount was $15,000). The overall amount financed was $132,000. The husband asserts that prior to the purchase, the wife said to him words to the effect “we need to get a new car”. The parties then went to M Motors and the husband says the wife selected the motor vehicle that was eventually purchased and the wife took delivery of the motor vehicle. The husband says that he was separated from the wife at this time but returned home a month or two later. At the date of final separation (being 9 March 2006) the husband took the car. The car was sold for $74,500 in November 2007 after a threat had been made to the husband that it would be repossessed. The husband says that before he sold the car he had it valued. The whole of the proceeds were paid to the financier and the amount outstanding at that time was $39,854.96. The husband has requested the wife’s lawyers to release funds from the sale of the Y property to finalise the debt but that request has been refused. In the intervening period, with accumulating interest, the debt has risen to $47,916.87. The husband says that before the car was sold he was responsible for all payments in relation to the motor vehicle, including making regular repayments in relation to the financing of the motor vehicle.
The wife at paragraph 56 of her affidavit simply says “In 2006 [the husband] brought a new sports Mercedes Benz for $160,000. I accompanied [the husband] to [M Motors] where he acquired the car”. It is the wife’s case that husband was reckless in purchasing this motor vehicle at a time when the income from his professional practice was low and he owed money to the Australian Tax Office.
It may have been that the husband was attempting to impress the wife to effect a reconciliation. It might have been that the wife (as the husband asserts) overwhelmed him with her charm at the time in order to obtain the motor vehicle. Whilst the submission that the husband was reckless at this time has certain force, I am unable on the evidence to conclude that the husband was so solely reckless in this transaction for me to leave the entire debt with him. Accordingly the debt will be added back onto the balance sheet.
Item 23
The husband claims that a mastercard debt that he had at the date of separation (which as at 3 February 2009 was $11,244.34) should be added back. Exhibit DD indicates that that mastercard statement now has a current balance of $17,255.24. The parties were separated more than they were together between 2003 and 2006. The husband was cross examined about expenses on this card. Some of the expenses related to expensive restaurants and the use of hotels. The husband in his evidence tried to remember some of those expenditures and asserted that on occasions the wife and/or her family were at the restaurants and on occasions the wife was with him at hotels. Counsel for the wife asked the husband about a number of entries which the husband readily conceded were payments at brothels and those payments had no connection with the wife. The state of the evidence in relation to the debt on the visa card is such that I am not able to confidentially add it back onto the balance sheet as a matrimonial debt that existed at the date of separation.
Item 24
The husband claims an amount of $15,091 being an amount outstanding on an American Express card. The husband asserts that this card was cut up shortly after the separation and he has not used it for any purpose since. On the husband’s financial statement filed 31 August 2009 he says the debt to Amex is $15,000. Again I am unable with any confidence to say that the debts on that card were not incurred by the husband between 2003 and 2006 for his own purposes and I am unable on the evidence to confidentially place that liability onto the balance sheet.
Item 25
The husband claims an amount of $3,955 being costs paid to W Realty associated with the marketing of Y property in 2006, when Y property was passed in at auction. The letter from W Realty dated 5 August 2009 is annexure “U1” to the husband’s affidavit. I find it is appropriate to add that debt back onto the balance sheet as a liability for which the husband has been or will be responsible.
Item 27
The wife’s brother M Sulo works for a Bank. He has lent the wife considerable funds from time to time. In October/November 2006 he lent her $53,500. In November/December 2006 he lent her another $9,600. He lent her $70,000 between February 2007 and August 2007; $14,000 in August 2007; $15,000 in June 2009 and $15,000 in March 2010. He received two reimbursements in 2006. The overall outstanding amount is $170,900. He does not intend to charge his sister interest. The husband, after testing M Sulo in cross examination, conceded that the monies were owed to M Sulo and notwithstanding the fact that the wife had not in any specific way indicated what she had done with the money, the husband conceded that the debt should be added back onto the balance sheet.
Although this is an agreed figure, I mention it at this point because of submissions made against the husband in relation to post separation contributions. The effect of the husband conceding that this amount should be added back onto the balance sheet means that an amount of $170,900 has been made available to the wife post separation for her benefit and the fact that some of that amount has to be taken into account when considering matters going to contribution (whilst being mindful that the monies were advanced by the wife’s brother on an interest free basis).
Item 28
The wife claims an amount of $25,000 is owed to T Sulo and Mr G as a result of them doing work to the Y property during a period when the parties were separated prior to the final separation. The wife’s unchallenged evidence at paragraph 49 of her affidavit is that excavation work was needed to the Y property together with fencing, plumbing and pool maintenance. She said that T Sulo and Mr G took care of these jobs around the house “which cost about $20,000 - $25,000”. The husband at paragraph 32 of his affidavit says that the wife carried out work through a builder to the Y property without his consent and that payments in relation to that work were made to the builder by drawing on a loan with HSBC. The wife agrees that the builder’s work was completed at a cost of about $80,000 and was paid by remortgaging the property. The husband concedes that the wife organised a “very good job in renovating the property”. The husband made a Jones & Dunkel (1959) 101 CLR 298 submission that neither T Sulo or Mr G were called as witnesses in the wife’s case in relation to the alleged outstanding debt. The wife is fairly inaccurate in relation to the amount owing, claiming it to be “about $20,000 - $25,000”. In the end however the husband did not challenge the wife on her evidence. I have no evidence that the debt would be statute barred. I accept that the wife owes at least $20,000 to these two men and I will add that amount back onto the balance sheet.
Item 29
The husband claims that he currently owes the Australian Tax Office a number of amounts of money. His most recent financial statement filed 31 August 2009 indicates that tax due as at 5 June 2009 was $1,781.44. He indicates a total income tax assessed and unpaid in previous financial years is $29,280.23. In Part O the husband refers to an additional amount of $10,000 which is owed.
Exhibit Z is a printout from the Australian Tax Office of various accounts that they kept in relation to the husband. Exhibit KK is a garnishee notice dated 12 November 2007 indicating that the amount to be garnisheed by the Australian Tax Office in relation to an outstanding debt as at that date was in the sum of $82,533.53. That figure seems to be different from the figure that the Australian Tax Office actually took which was a sum of $73,219.48 I find that given that the Australian Tax Office was garnishing the proceeds of the sale of the Y property, the Australian Tax Office would have taken every dollar that they were owed as at November 2007. The husband conceded as much in cross examination. It follows that the husband’s tax debt would have gone back to zero as at November 2007 and any existing liability that the husband has to the Australian Tax Office has been accumulated since November 2007.
Consequently, no tax liability should be added back onto the balance sheet. Any tax paid or owed to the Australian Tax Office should not be added to the balance sheet in the husband’s favour, as it must relate to tax on income which has come into the husband’s hands since November 2007.
Item 30
The husband says he owes $3,000 in relation to his professional insurance premium to Pacific Premium Funding (that debt may be slightly less now). It is not a debt that should be added back onto the balance sheet as it is a current liability of the husband, to which the wife has no connection.
Item 31
The husband says that he owes $5,040 plus interest in relation to a transcript that he obtained in respect of a case in which I am satisfied he was involved in 2005. At the end of that case he ended up with a personal responsibility for paying transcript fees which are yet to be paid. In those circumstances I think it is appropriate to add that liability back. The husband’s financial statement filed 31 August 2009 says that that amount is estimated to be $5,040.
Miscellaneous matters raised by the husband about the balance sheet
At the end of final submissions, there were four matters raised by the husband, relating to the balance sheet, that were not the subject of any focus, either in balance sheets that have been drafted leading up to the hearing nor were these matters the subject on focus during the hearing.
The first of those matters was a complaint that about $21,500 worth of interest had been lost as a result of the wife’s lawyer’s failure to invest the monies from the proceeds of the Y property in an interest bearing deposit upon receiving them. There was a further complaint that there was a considerable delay in telling the husband that that had not happened. At paragraph 39 of his affidavit the husband complains that the monies were received by Simon Diab & Associates in December 2007 but were not invested until 19 March 2008 and that Simon Diab did not tell the husband about it until 25 April 2009. Annexed to the husband’s affidavit is a copy of a letter from Simon Diab & Associates to the husband dated 25 April 2009. It is in the following terms:
“I advise again that the reason why the settlement monies was in our trust account for about three months before investing it, is that we received the money into our trust account on terms that it remain in our trust account until we either receive written request from both parties as to how to disburse the monies or by order of the court. We received your written request to invest the monies on 20 December 2007 and later received your former wife’s request to invest the monies on 10 March 2008. The reason for your wife’s late instructions to invest the money is because we were holding negotiations with you to settle the matter and which included settlement conferences. Our client was hopeful that the matter would settle in the short term without the need to invest the money in a controlled account. When those negotiations broke down without a result, your former wife instructed us to invest the money, so we did.”
Given that there was no testing during the hearing of the statements made by Mr Diab, I accept them as being accurate. The question is, whether or not the wife was reckless in not requiring the monies to be invested while the parties attempted to resolve the matter on an overall basis. I note that the monies came into the solicitor’s office shortly before the Christmas vacation. There were “negotiations” and there were “settlement conferences”. I infer the wife had in her mind that there might have been a quick resolution of the matter. I am not prepared in the circumstances to add any amount for lost interest back against the wife because the wife failed to provide immediate instructions to her solicitors to invest the money.
The next matter that the husband wished to raise was an assertion that in breach of a court order the wife had failed to pay instalments under the mortgage on the property in which she was living. The amount the husband claims was about $10,000. A notice dated 31 August 2006 (Exhibit H) says that the June, July and August payments of 2006 were not paid (the total outstanding was $8,374.93). Whilst that document does show the wife did not pay the mortgage for three months, I have got no indication as to whether or not those payments remain outstanding or whether or not she made them. That was not something that was properly tested during the hearing. I note the mortgagee did not exercise a power of sale until over a year after this notice. It would be unsafe for me to add back anything onto the balance sheet on the basis that the wife had failed to comply with a court order, given the state of the evidence on that topic.
The third thing the husband raised at the end of final submissions was a claim that the wife was the reason why a mortgagee sale had to happen in relation to the Y property and that she therefore should bear the legal costs and maintenance costs in relation to the mortgagee sale. The amount of those costs seemed to be quantified on annexure Q to the wife’s affidavit in the sum of $10,137. I am not however satisfied that the wife was the sole reason that the Y property had to be sold and I am not prepared to add that amount back against the wife.
The fourth claim that the husband made at the end of submissions in relation to the balance sheet related to an amount of $50,000 which he says was paid to the wife’s parents on 31 October 2005. He was not challenged about what he said in that paragraph of his affidavit. However, it seems clear on the face of the husband’s own evidence that the $50,000 paid to the wife’s parents was a repayment to them of monies that had been provided by the wife’s parents. There is no indication as to when the wife received these monies from her parents, although it was in the period between 2003 and 2006 when the parties were separated more often than they were not and I infer that the wife had borrowed money from her parents in order to get by during that period and the husband was paying that money back to them during one of the periods of reconciliation during that period. There is no basis upon which that amount of $50,000 should be added back against the wife on the balance sheet.
CONTRIBUTIONS
The husband submitted that he was entitled to a 70/30 division of the net assets based upon the contributions made by each of the parties.
In final submissions, counsel for the wife submitted that I should view the contributions made by the parties to the marriage in three distinct periods. The first period being from the date of the marriage in April 1988 through to the first separation in 2003. The second period being the period from 2003 to 2006 where the parties were separated more than they were together and the period from 2006 to the date of hearing where the parties were separated. Counsel for the wife submitted that the husband’s contributions in the first period should be viewed on the basis that he had made a 60 percent contribution to the wife’s 40 percent contribution. His submission was that by the end of 2006 that had come back to equilibrium. He finally submitted that viewing the contributions made in the last four years would lead to a conclusion that a finding should be made in the wife’s favour on an overall basis that she had made a 60/40 contribution to the current net assets in the property pool.
The wife points to her initial contributions which comprised of a Commodore worth $20,000 and $25,000 proceeds from a compensation claim. The wife was given a $10,000 wedding gift by her parents.
From 1989 the wife worked as a secretary for the husband as he attempted to establish himself in professional practice and during that time she attended to less complex matters under the husband’s supervision and became a justice of the peace.
In 2003 the wife received a compensation payment in relation to damage to her hair at a hairdressing salon in the sum of $10,083.
There is no dispute between the parties that the wife, particularly in the early years, was the primary homemaker and carer for the three children of the marriage and also for R.
During 2003 to 2006, the wife points to financial assistance given to her by members of her family, particularly her brother M Sulo, and other assistance given by T Sulo and a friend Mr G who undertook improvement work on the former matrimonial home. However the debts to M Sulo, T Sulo and Mr G have been recognised in full on the balance sheet, as a liability against the wife, and there should not be double counting by giving them value as a contribution in addition to the value that they have been given on the balance sheet.
Counsel for the wife recognises that significant contributions were made towards the current asset pool by the husband’s father. It is not disputed that the husband’s father gifted an amount of $25,000 that went towards the acquisition of the H property. The husband’s father provided an amount of $150,000 in 1995 towards the acquisition of the units in B and a further amount of $230,000 that went towards discharging the mortgage on the T Street properties. These are very significant contributions early in the marriage that were an important foundation upon which the parties built their assets. Even in today’s dollars, $450,000 ($25 + $150 + $230) is over 40 percent of the current net assets of the parties.
In addition, at the commencement of the cohabitation, the husband claims that he had equity in real estate at the date of marriage. The properties were situated at M; C1 and C2. The husband had purchased the M property for $68,000 in December 1985 and at the date of the marriage the mortgage was about $30,000. The property was sold in 2004 for $510,000. No valuation as at the date of marriage however was obtained by the husband.
In December 1986 the husband had purchased a one half interest in unit C1 for $23,250 with a $15,000 debt to St George Building Society (these amounts were one half of the overall costs of the acquisition of the property). In August 1990 (two and a half years after the marriage) the husband acquired the whole of that property for a further $25,000. The property at C2 was acquired in October 1987 for about $45,000 and the husband seems to have borrowed the whole of the purchase price. That property was sold in 1994 for $88,500.
At Exhibit CC, the wife’s lawyers have prepared an aide memoir detailing the husband’s income from 1994 to 2007. I accept the husband’s taxable income was in the following amounts:
| 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 |
| $44,787 | NK | NK | $60,649 | $18,705 | $41,821 | $90,152 |
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |
| $14,401 | $57,194 | $28,243 | $262,578 | $10,601 | $62,742 | $39,430 |
There seems to be no controversy that both parties up until at least 2003 put in their best endeavours both in attempting to generate income for the family and also by making indirect contributions towards the family and contributions in the role of homemaker and parent.
The wife has sought to highlight the lack of financial assistance given by the husband, particularly in the period between 2003 and 2006 and even more so in the period from 2006 to date of hearing.
The wife has an equity in her current property in the sum of $75,000 ($635,000 - $560,000) to which the husband has made no contribution. That equity has primarily been established as a result of the monies borrowed from M Sulo (see the first sentence in paragraph 85 of the wife’s affidavit). Of the $170,000 owing to M Sulo therefore, $70,000 of that is a contribution towards the equity the wife has in her current home.
The wife however has received significant funds during that time which have been counted already on the balance sheet as liabilities that she will pay back. In the period from 2003 the wife has received through to the date of hearing (consistent with the discussion of items on the balance sheet) $100,000 from her brother. In addition, the wife received three lots of child support from the husband totalling $40,000 ($10 + $15 + $15 - for discussion about two of these lump sums see items 2 and 7 above). The money the wife received from partial distribution of funds from Y property has already been fully accounted for on the balance sheet.
It follows that the wife received approximately $140,000 ($100,000 + $40,000) for her support after the separation (which amount is not counted against her on the balance sheet). This significantly weakens the submission made by counsel for the wife that an adjustment should be made based on the husband’s lack of contributions in the post separation period.
Nonetheless, some recognition needs to be given to the fact that since 2006 the wife has had the primary responsibility for caring for the three younger children who were 17, 16 and 10 at the date of separation.
When assessing contributions, I also acknowledge that monies advanced by both sides of the parties’ respective families have been interest free.
Conclusions in relation to contributions
I conclude that on an overall basis, that contribution favours the husband in the ratio 55/45.
SECTION 79(4)(d) - (g) MATTERS
As earlier indicated, the wife (having sought a 60/40 split in her favour) sought a further 15 percent adjustment for s 79(4)(d) - (g) matters. The husband (having sought a 70/30 split on contributions in his favour) was not able to formulate what should be the adjustment for prospective factors.
The husband is 50 years of age and the wife is 43 years of age. The wife will have the ongoing primary responsibility for caring for G.
The wife has remarried and currently is not in paid employment. She has recently had a new baby. Her current husband is in the construction industry. His enterprise turns over approximately $600,000 a year and he says that he takes home an average of $250 in his hand per week. The company pays for some of his expenses. The wife’s husband says he works on very slim margins. The wife’s new husband is in good health, has considerable extended connections in the building industry in Australia and I find he has, looking forward, an earning capacity greater than his current stated income.
The wife’s financial statement indicates that J is still at home and is earning an income of about $370 per week and is paying board of $210 per week. E is still at home but does not appear to be making any contribution to expenses. The wife still receives support from her parents for living expenses on a regular basis.
The husband has slightly more capital than the wife (about $100,000 more) as a result of the findings I have made on contributions.
The wife has considerable family support. It is clear that M Sulo, amongst others, is prepared to financially back her almost on an unconditional basis.
An example of the family support that is available to the wife through her current husband was the evidence her current husband gave about his ability to contact his aunty and to raise $50,000 very easily.
Counsel for the wife points to the husband’s alleged wasteful conduct in defaulting on various debts and incurring interest and penalties. The husband’s tax debt was paid out of the proceeds of the sale of the Y property but a considerable amount of that debt legitimately arose from or is connected to activities during the marriage.
The husband is currently living in boarding accommodation. An assertion made by the wife that the husband “lives with his landlord” turned out not to be accurate.
Counsel for the wife asserted throughout the hearing that the husband’s father is a considerable financial resource. As already mentioned, the husband’s father is 84 years of age but holidays overseas annually. He was not called by the husband to give evidence, nor was he subpoenaed by the wife to give evidence. I do not have any information about what his current testamentary intentions are. I have no information about his health. The husband has five siblings.
The wife disputed the husband’s assertions about the number of times they interacted with the husband’s father during the marriage. I do, however, on an overall basis accept that the husband does not have a close relationship with his father. He presents as a “dutiful” son who will come to his father when he is requested by his father. He said however their last meeting was particularly unpleasant. Dr A was asked, without objection, whether or not he thought the husband would challenge his father’s will if he was left out of it. Dr A was of the view that the husband would challenge the father’s will in those circumstances.
I have however very little detail as to what is the husband’s father’s life expectancy, nor do I have any detail about what is his current wealth. The one piece of information I have is that he owns a property of approximately 20 acres on which he lives. I am unaware of what the value of that property might be. The husband gave evidence about other properties that his father might own but again, I am unaware as to their value, whether they are encumbered and if so, to what level. It would be unsafe in the circumstances to place any great weight on an assumption that the husband’s father is a financial resource for the husband whilst he was alive or on an assumption that his estate being a significant financial resource for the husband in the event that the husband’s father dies before the husband.
I note that the husband is generally committed as far as possible to repaying his father’s debt from the balance of the proceeds of the property adjustment. I accept he fears a moral responsibility to do so.
It is not accurate to assert that the husband has not attended to his obligations in respect of child support. He has paid about $40,000 to the wife since separation in three lump sum amounts. He has made it clear that he wishes to have an amount of $20,000 earmarked from monies he would otherwise receive from the adjustment of property to go to the wife as a lump sum towards G’s child support.
The analysis carried out by counsel for the wife in relation to the husband’s recent income indicates a less than impressive earning capacity (with 2004 being an exceptionally good year and 2000 being an unusually good year).
Dr A, the husband’s psychiatrist reported on the husband’s mental state in an affidavit sworn 30 October 2009. Dr A has been treating the husband since February 2009 and sees him once a week. He says that the husband suffers from depression, anxiety and stress. His physical symptoms include headaches, tiredness, memory loss, mispronunciation of words, and a lack of concentration, energy and motivation. He has not accepted medication for his depression. Dr A says that the husband has ‘paranoid tendencies’ but does not express any further diagnosis in that area.
At the date of the report (27 October 2009) Dr A says that the husband does not have the capacity to function as a professional full-time. This is due to his depression, stress, and lack of financial resources required to have his own office. Dr A reported that the husband feels he cannot focus on his career until the family law matter and the property settlement have been finalised.
At trial, Dr A said that he holds out some hope for the husband’s ability to reinvent himself in his profession. Dr A was of the view that the husband is thinking more rationally now and he is capable of currently doing some small jobs and he hopes that his health will continue to improve so that he is able to establish himself again in practice. His therapy will probably consist of weekly sessions for another three years. The husband’s diagnosis is somebody who has had major depression and he has paranoid ideas. The husband is not psychotic at the moment. The husband still declines to take any medication. The therapy will be bulk billed and consequently I infer will not be a major financial impost on the husband. Certainly the husband wants to attempt to reinvent himself as a professional. His evidence is, and I accept, that his mental state at the moment does not enable him to obtain employment as an employed professional. He consequently intends therefore to “hang up his shingle” and to attempt to attract work. He intends to do work at a pace which he feels comfortable. I am unable to be certain as to whether or not the next three years of treatment by Dr A, together with the end of his litigation, will create a situation where the husband will be able to re-establish himself as a professional who can earn himself a living. I am however, on balance, prepared to make an assumption in the wife’s favour that that will happen. If it does happen, of course, the wife will receive an increased level of child support commensurate with the husband’s increased level of income.
There is no doubt that the husband became R’s psychological father and provided for her from the age of about 2 ½ through to the date of final separation by which time she was an adult. The husband’s contributions in that regard should be recognised pursuant to the provisions of s 75(2)(o) FLA (see Robb & Robb (1995) FLC 92-555).
Conclusions about s 79(4)(d) - (g) matters
In my view, the most significant matter is the wife’s ongoing responsibility to look after G. There is some disparity in assets after the contribution assessment in the husband’s favour. The financial support of the wife by her new husband and her wider family support is more certain than that of the husband’s, although as I have said, I assume, in favour of the wife, that he will be able to reinvent himself as a professional. Having considered all the matters discussed above, I find the wife is entitled to a 12.5 percent adjustment based upon s 79(4)(d) - (g) factors.
JUST AND EQUITABLE
An alteration of the net assets of the parties based on my findings in relation to contributions and s 79(4)(d) - (g) matters, would lead to the result that the wife would receive 57.5 percent of the net assets and the husband would receive 42.5 percent of the net assets.
That distribution could be achieved in the following way:
| H gets 42.5% | |||
| Assets | |||
| Item No. | Description | Percentage | Value |
| 1 | Proceeds of sale of matrimonial home | 100% | $438,672 |
| 2 | Monies paid from proceeds of sale of former matrimonial home and paid out by husband by way of child support | 100% | $10,000 |
| 7 | Monies received from joint funds which he used to pay lump sum child support | 100% | $30,000 |
| 8 | The amount of $25,000 released to the husband from which he paid Toyota Finance Australia Ltd | 100% | $810 |
| 14 | Husband's professional practice | 100% | $0 |
| 15 | Husband's diamond ring | 100% | $11,000 |
| 16 | Z property | 100% | $0 |
| 17 | 6 units in B | 100% | $0 |
| 19 | Husband's superannuation | 100% | $638 |
| Liabilities | |||
| Item No. | Description | Percentage | Value |
| 20 | Monies lent by the husband's father | 100% | $0 |
| 21 | Monies owing to R | 100% | $20,000 |
| 22 | Debt to Mercedes Benz Financial Services | 100% | $47,917 |
| 23 | CBA mastercard | 100% | $0 |
| 24 | American Express | 100% | $0 |
| 25 | Fee to W Realty for unsuccessful attempt to sell Y property | 100% | $3,955 |
| 29 | Monies owed to ATO | 100% | $0 |
| 30 | Pacific Premium Funding | 100% | $0 |
| 31 | Attorney-General's Dept | 100% | $5,040 |
| Husband receives | $0 | ||
| Net Assets to H | $414,209 | ||
| W gets 57.5% | |||
| Assets | |||
| Item No. | Description | Percentage | Value |
| 1 | Proceeds of sale of matrimonial home | 100% | $494,008 |
| 3 | Wife's paid legal fees | 100% | $35,000 |
| 4 | Improvements to and furniture for K property | 100% | $61,292 |
| 5 | balance of monies received by wife from partial distribution of the sum of $165,000 | 100% | $59,000 |
| 9 | wife's 2006 Mazda | 100% | $10,000 |
| 10 | Wife's 2008 Mazda | 100% | $15,000 |
| 11 | K property | 100% | $635,000 |
| 12 | Contents | 100% | $2,000 |
| 13 | Diamond ring and jewellery | 100% | $0 |
| 18 | Wife's superannuation | 100% | $0 |
| Liabilities | |||
| Item No. | Description | Percentage | Value |
| 26 | Wife's home loan owing on K property | 100% | $560,000 |
| 27 | Loan to M Sulo | 100% | $170,900 |
| 28 | Monies owed to T Sulo and Mr G | 100% | $20,000 |
| Wife pays Husband | $0 | ||
| Net Assets to W | $560,400 | ||
Standing back and looking at this distribution of the assets, I consider that this overall result is just and equitable.
I am unaware of what the current balance is of the funds in the controlled monies account held in trust for the parties by Simon Diab & Associates (given that I do not have precise details in relation to accumulated interest). On the above table, the wife would be entitled to 53 percent of those funds ($494,008 ¸ $932,680) and the husband would be entitled to 47 percent ($438,672/$932,680).
I certify that the preceding two hundred and thirteen (213) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.
Associate:
Date: 18 June 2010
2
1