Tuppence and Tuppence

[2009] FamCA 459

FAMILY COURT OF AUSTRALIA

TUPPENCE & TUPPENCE [2009] FamCA 459

FAMILY LAW – PROPERTY – set aside orders pursuant to s79A

Family Law Act 1975 (Cth) s 79A

APPLICANT: Mr Tuppence

RESPONDENT: Ms Tuppence

FILE NUMBER: SYF 4486 of 2003

DATE DELIVERED: 30 January 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan JR

HEARING DATE: 30 January 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stollier

SOLICITOR FOR THE APPLICANT: Somerville Laundry Lomax

RESPONDENT WIFE: In Person

Orders

1. That pursuant to s 79A(1)(a) and s 79A(1)(b), the orders made on 22 March 2006 for settlement of property are set aside.

2. That by way of property settlement, each of the parties retain, to the exclusion of the other, all items of property that are in their respective current possession, custody or control.

3. That otherwise the Applications and Response are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Tuppence & Tuppence is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4486 of 2003

MR TUPPENCE

Applicant

And

MS TUPPENCE

Respondent

REASONS FOR JUDGMENT

1. In these proceedings final property settlement orders were made by consent on 22 March 2006. The husband seeks to set aside those orders, pursuant to s 79A.  The parties are divorced, but for convenience I will refer to them as the husband and wife.

2. The husband seeks orders in accordance with his amended application filed    30 July 2008 as follows:

   (1)Pursuant to s 79A(1)(a) and/or (b) and/or (c), the orders made on 22 March 2006 be set aside.

   (2)That by way of property division order, that each party retain to the exclusion of the other, all items of property as are in their respective possession, custody and control.

3. The wife seeks orders in accordance with her amended response filed 9 October 2008 as follows:

   (1)That the amended application for final orders filed by [the husband] on 30 July 2008 be dismissed.

   (2)That the property settlement orders made on 22 March 2006 and 19 May 2006 be upheld.

   (3)That in orders made on 22 March 2006, cl 3 (default clause) be enforced.

   (4)That [the husband] pay the costs of [the wife].

4. There is also an application filed 13 April 2007 by the wife, an application in a case seeking that the husband be examined in relation to enforcement.

5. As to the hearing, the matter was listed for hearing over two days.  The wife was a bit late on the first morning and not legally represented.  The husband was represented by counsel.  Section 79A proceedings have a technical aspect and the wife was at an obvious disadvantage without legal representation.  It took until 12 noon on the first date to ensure that each of the parties had a complete set of the sworn documents relied on.  Despite a number of warnings, the wife focused much of her cross-examination on events long before the orders of March 2006.  Further, although the issue was directly brought to her attention, there was no exploration through cross-examination of the husband of a fund or mechanism that could be the basis of orders to enforce the property settlement orders if the wife was successful in opposing the s 79A application.

6. The fact that the wife was not represented meant that the identification of probative evidence and compliance with various rules of court was made impracticable.  Having said that, the wife showed an excellent command of the relevant facts and presented her case in a logical way. She was obviously frustrated with the consequences of the events related to the parties' business dealings and this litigation over the past eight years. Despite that she was both courteous and cooperative in her conduct of the case.

7. The parties agreed that the relevant applications are the ones that I identified. Therefore, the hearing relates to enforcement of property settlement orders and an application to set those same orders aside.  I told the parties that the evidence would be dealt with all at once but that logically, the enforcement application would be considered after the s 79A application, if necessary.

8. The wife's contempt application, filed 3 June 2008 was discontinued on 8 July 2008.  It is common ground that the wife's amended application for contempt, filed 24 September 2008, had been dismissed or, in any event, was no longer on foot.  I note that the amended application was not, in fact, amending any existing application.  It fails to set out the matters that are said to give rise to the contempt and the facts described in the affidavit in support would not establish, in addition to a breach of an order, a flagrant challenge to the authority of the Court.  Therefore, that application would have failed in any event.

9. No significant objections were taken to written evidence.  That is not to say that much of the written evidence is not objectionable.  At the commencement of the hearing yesterday, I suggested to the parties that if formal objections were taken, the trial would probably not be completed in the allocated time.  The wife's list of documents runs to 28 items, including both sworn and unsworn documents.  She relies on a notice of abuse, which is a document filed in proceedings in relation to children.  Item 24 of her list is "all of my affidavits filed from 18 August 2003 with annexures".  That includes affidavits filed in support of various applications, including the applications for contempt.  In at least one instance, the wife relies on an affidavit of another person, which is itself annexed to one of her affidavits.  The first mentioned deponent is not available for cross examination.  The unsworn documents in the wife's list included some documents that were also annexed to an affidavit of the wife.  Some of those were formally tendered in the wife's case. 

10. Many of the documents tendered by the wife do not provide evidence of proposition for which they were tendered.  For example, during cross-examination, the wife asked the husband if he was incapacitated for a period following an incident at B hospital, I think that was in 1998, when he was given an anaesthetic in the wrong sequence.  The husband said that he was not.  On that issue the wife tendered a solicitor's account for compensation proceedings.  Even accepting that the account supported the agreed fact, that the husband achieved a settlement in those proceedings, it did not reveal anything about the nature or extent of any period of incapacity.  Similarly, a business name search identifying a Queensland business with a similar name to one used by the husband is not of itself sufficient evidence of a connection between the husband and that business.

11. As to the sworn documents, the husband relied on his affidavit filed 19 December 2008, an affidavit of Mr C filed 29 June 2007 and his Financial Statement filed 19 December 2008.  The wife relied on her affidavits of 9 September 2004, 1 September 2006, 13 April 2007, 3 June 2008, two affidavits filed 15 September 2008, an affidavit of 24 September 2008, two affidavits filed on 19 December 2008, one sworn on 17 December and one sworn on the 19th, two Financial Statements 9 September 2004 and 18 December 2008.

12. The brief background facts are a husband and wife who are 43 and 44 years of age respectively.  They commenced cohabitation in 1989, were married in October 1990 and separated in March 2000.  The parties’ divorce was granted by the Federal Magistrates Court with effect from 18 August 2002.  Orders for property settlement were made by this Court at Sydney, by consent, on 22 March 2006 and those orders were varied by consent on 19 May 2006. 

13. The parties have two children, E, who was born in January 1992 and as at the date of the hearing was 17 years of age and J, who was born in September 1995 and as at the date of hearing was 13 years of age.

14. There is an agreement, to some extent, in relation to a relevant chronology.  I do not purport that this is either a complete chronology or the limit of the agreed facts.  The parties commenced living together in 1989.  The husband owned a drum kit and two surf boards.  The wife contends that he owed $10,000.  She had household contents and owned and ran a personal services business.  She had bought that in 1985 for $40,000, all of which was borrowed.  She ceased trading in that business in 1993 upon filing for bankruptcy, and the business was taken over by a person who had been, up to that date, an employee.  The wife continued to work in the business as an employee and was released from bankruptcy after three years, she says, having paid out her creditors.

15. At the commencement of marriage the husband was working as a salesman for T Company.  Subsequently the husband worked in various occupations.  The parties ran a number of businesses.  From 1992 the parties produced at home equipment for the mining industry and that business persisted for some time and resulted in a substantial amount of work and income. The wife says she did most of the work.

16. The wife says that in 1996 she invented a safety product.  The parties sold that product to T Company and other distributors and registered a partnership, P Partnership.  She says she manufactured the product at home, employed a sheltered workshop for a period to make it, but personally did 95 per cent of the work of that business.

17. The parties bought W property, in 1996, for $150,000.  They used vendor finance and borrowed from the St George Bank.  The parties had a number of motor vehicles.  Apart from work vehicles the husband might have had, they were largely or usually financed.

18. The wife says that in 1998 she invented moulds for the making of an outdoor product.  The parties retained Griffith Hack, patent attorneys, to secure a patent and through the husband, the wife says, they secured an exclusive contract with AT Company for Australia wide distribution. The wife says that she alone of the parties made the product.  She says that she agreed with the husband that she would have exclusive control of the business so that he could recover from an incident that occurred at B hospital.  As I said, he understands that he was given anaesthetic in the wrong sequence.  The wife says that he consulted subsequently psychiatrists and counsellors and he instituted proceedings for compensation which were later resolved.  The wife says that from October 1999 to May 2000, she made the product at the premises of M Products.  I think she says those premises were at V.

19. The parties also ran a sales business in conjunction with L Distributors.  The wife says the husband did the sales and she did the book work.  She says that business collapsed in 1998.

20. The parties sold the safety product business to T Company in 1999 for $50,000.  The wife says $25,000 of that was paid up front and was invested into the outdoor product business.  She understands that the husband received the balance by way of instalments and says that he never accounted to her for that balance.

21. She says that in early 2000, the husband was referred to the local mental health team.  She says that he was violent and threatening, including a nasty incident with the children at a cliff face.  She obtained an apprehended violence order.  The parties separated, following that event, in March 2000.

22. The W home was later rented out and subsequently sold for about $235,000, I gather in advance of a mortgagee sale or in fairly extreme circumstances, and there was a modest distribution of proceeds to the parties.

23. The wife says that from April 2000 she had no involvement in the outdoor product business.  She says that the husband tried to have the patent transferred to his name.  The parties reached an agreement with Griffith Hack, patent attorneys, that the parties would receive an equal distribution of income after the attorneys had deducted their fee from income received as a result of the patent.  The wife says she received $20,154.36 as at the date of the affidavit, since    July 2001.  She says that moulds were provided to three companies to manufacture the product.  She says that the husband has failed to account to her for income from the patent.

24. A Mitsubishi Pajero motor vehicle was repossessed in 2001.

25. I think there was an agreement between the parties in relation to the outdoor product patent business in 2002.  Griffith Hack, patent attorneys, represented to offer on behalf of the parties to surrender a petty patent.  Whatever that might mean, it transpires that there were aspects of a petty patent left in existence and that patent lapsed at the end of its term in October 2005.

26. The parties' divorce was granted by the Federal Magistrates Court, as I have said, effective August 2002.  Parenting orders were made in terms consented to by the parties in the Local Court on 16 July 2002.  The effect of those orders was that the children would live with the mother and have telephone contact with the father.  The parties agreed to facilitate contact between the children and members of the maternal and paternal extended families with the agreement of the children.  The parties retained long term decision making responsibility and the mother was responsible for enrolling them in B School. The Court was asked to note that the parties had reached an agreement about their property.

27. In 2004, H Pty Ltd, and I think that is an entity associated with a business or something of that nature in Perth, challenged the patent. It is an agreed fact that, at least, the effectiveness or extent of the patent was reduced.  The wife described what survived as a reduced version of the product profile left in the exclusive possession of the party.  The husband says that he has received no royalties from the patent after 2004.

28. In February 2004, the wife says she married Mr M.  Sadly, that relationship was short lived and the wife understands that her second husband may have been motivated to marry her by a desire to achieve resident status in Australia.

29. It is the husband's case that he only discovered that the patent lapsed in 2005 in June of 2008.  I think, in submissions, it was said that he discovered that in 2007.  It probably does not matter a great deal.  It is his case that after the orders were made in March of 2006, he discovered that the patent had lapsed. 

30. On 18 January 2006, the orders of the Local Court in relation to parenting were varied by discharging the provision in relation to the B School.

31. Then, orders for property settlement were made by this Court in Sydney, in terms agreed to by the parties on 22 March 2006.  Those orders provided:

    (1)       That within seven days from the making of these orders, the applicant will do all things and sign all documents necessary so as to transfer to the respondent her rights, title and interest in the Australian patent number […] and in the petty patent number […] and from the date of the transfer the respondent is declared the sole owner of the patent and petty patent and shall be entitled to deal with the same without reference to the applicant.

    Remembering the applicant is the wife, the respondent is the husband.

    (2)       The respondent agrees to pay to the applicant $76,800.  Such sum to be paid by way of minimum weekly payments of $200 commencing the date that the transfer in (1) is affected by the applicant and with the total to be paid by 20 July 2013.

    (3)       That if the respondent defaults in any way in any weekly payment and remains in default 14 days after being served of such default by the applicant, the unpaid balance of the agreed total sum in (2) shall become immediately due and payable to the applicant.

    (4)       That the applicant remain entitled to the royalty payments payable from [C] Pty Ltd, for that company's use of the patent and petty patent, up until the date of the transfer in (1).

    (5)       That all or any other agreements made between the parties in      May 2001 and relating to the patent and petty patent is hereby set aside.

    (6)       That any partnership agreement between the parties whether explicit or implied is hereby dissolved.

    (7)       That the respondent shall indemnify and save harmless from liability or suit the applicant in respect of any dealings under any partnership between them, including [P Partnership] and [AR Business].

    (8)       That within 30 days of the making of these orders, the respondent will pay to the applicant the amount of $11,038, save that if the respondent pays to the applicant the sum of $2500 on the date of making these orders and a further $2500 within a further 28 days, the applicant shall waive her right to the balance of $6038.

    (9) That within 14 days of the making of these orders, the applicant will make a separate application to the Registrar of the Child Support Agency under s 38A, Child Support Registration Collection Act 1988 (Cth) to have the respondent's liability, as assessed under the Child Support Assessment Act 1989 (Cth), no longer enforced under that Act.

    (10)     That the orders made by the Local Court […] on 19 July 2002, a copy of which is attached to these terms of settlement and marked "1" are hereby confirmed.

    (11)     That the respondent and applicant do all acts and things and give all consents to execute all documents in writing necessary to give effect to the orders made herein.

    There is an order under s 106A and then a notation that the parties intend to end their financial relationship.  The patent numbers referred to in para 1 of those orders are incorrect.

32. It is an agreed fact that the wife took all steps available to her to cause the transfer of the patent to the husband in accordance with her obligations under the orders.  It is asserted in the husband's case that the patents office purported to record the transfer but, in fact, it is common ground in the proceedings before me that the patents had lapsed in 2005.  The husband made payments to the wife in accordance with Order 2 for about six months, he says.  He made the payment of $5000 within 28 days of the order in accordance with Order 8.  On 19 May 2006, orders were made by consent in this Court in Sydney in the following terms:

    That the orders in the Family Court at Sydney on 22 March 2006, a copy of which is attached to the minutes of consent orders and marked attachment A, be varied as follows:

    (1)      That O 8 be and hereby is discharged.

    (2)      That O 9 be and hereby is discharged.

    (3)      That the case remains registered with the Child Support Agency.

33. On 29 July 2008, Registrar Campbell ordered a joint expert into the value of the patent and for the payment of expert's fees.  On 17 September 2008, Fowler J revoked that order on review, leaving it to the husband to adduce evidence in support of his case and the wife to reply.

The evidence of the parties

1. The only witnesses cross examined were the parties.  There are some relevant factual disputes, although, I think the main basis of the case comes through in the agreed facts. 

2. To the extent that it is relevant, the husband was not a good witness.  He was asked in cross examination if he believed the patent had a significant value when the property settlement orders were made in March 2006 and he said, "No".  He later tried to say something else, including an answer to the same question put in re-examination, a question that I disallowed.  The husband conceded that he knew from 2004 that annual fees had to be paid to maintain the patent.  He was asked a series of questions about the annual fees.  At first, his case was that he did not personally make the payments but did not know that they had not been made.  He agreed that he had offered, at one point, to pay half the fee, with the wife to pay the rest.  He then said that he thought that the arrangement between the accountants and Griffith Hack, patent attorneys, would result in the annual fees being paid by those attorneys and yet later he agreed that he had seen a number of letters which said that the payments had, in fact, not been made and he said then that because there was no income from the patents, he took no further action to pay the fees.

1. On the other hand, the husband was not successfully challenged about the level of his business income, the extent of his impairment after a mistake with anaesthetic at B hospital, or about any income from the use made by him of the patent since the property settlement.  Nor was he successfully challenged in relation to his current financial circumstances.

2. The wife has a good recall of dates and documents.  Much of her evidence was given from her perspective and she had some difficulty separating out what she thought from what she knew.  On some issues, such as her contention that the petty patent existed after 2004, the wife was proved correct and counsel for the husband was required to withdraw a line of questions. There was no challenge to the wife's evidence about the balance of effort made between the parties during the marriage.

3. As to the approach in proceedings under s 79A – relevantly, s 79A says:

   Where on the application of a person affected by an order made by a Court under s 79 in property settlement proceedings the Court is satisfied that:

   there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, including failure to disclose relevant information, the giving of false evidence or any other circumstances; or

   in circumstances that have arisen since the order was made that it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or

   a person has defaulted in carrying out an obligation imposed on the person by the order and in the circumstances that have arisen as a result of the default it is just and equitable to vary the order to set the order aside and make another order in substitution for the order.

   In any of those instances the Court may, in its discretion, vary the order or set the order aside and if it considers appropriate, make another order under s 79 in substitution for the order so set aside.

4. There are a number of other provisions dealing with consent arrangements, the parties being bankrupt, the proceeds of crime. They are not relevant to the case today.  What one does then, if the application is successful, is turn to s 79 and in that regard the effect of s 79 is that there is to be an identification of the property of the parties and an adjustment identified by reference to s 79(4), including the contribution elements in (a), (b) and (c) and the matters in (d), (e), (f) and (g) and, in particular, by reference to (e), those matters referred to in s 75(2) to identify an adjustment that should be made of that property and then finally, having regard to those things, the Court is to identify a just and equitable settlement of property.

5. In this case the husband relies on each of the three elements of s 79A(1).  His contention is that there has been a miscarriage of justice because he was at that time ignorant about the lapse of the patent.  That is a complicated case to argue in this case because what the husband’s case boils down to is - he knew the patent was not worth anything on the day the orders were made, he agreed to some orders that would, in his mind, address his child support obligation, he has entered into an agreement that describes some of that payment as a payment for property settlement for the value of the patent and the effect of it is, I think I am asked to accept, that he thought there may in the future be some value out of the patent, him at that time not understanding that the patent had lapsed.

6. There is authority for the proposition that, in effect, mistake, whether it is unilateral or mutual, whether it is a mistake by a legal practitioner or a mistake by a party, can constitute a basis for an order to be set aside because of a miscarriage of justice under s 79(1)(a).  In a decision of Marzec, the Full Court dealt with earlier authorities of Bigg & Suzy and Lowe & Harrington and from Lowe & Harrington quoted:

   The circumstances in which a Court may find that there has been a miscarriage of justice under 79A are not necessarily limited to those in which a Court of equity would set aside consent orders.  However, if, as we have concluded, it can be shown that there has been a unilateral mistake by one party known to the other, such that a Court of equity might set aside orders, we cannot see how it could possibly be argued that there was not a miscarriage of justice within the section.

   The Full Court in Marzec went on:

   The judicial process involves many elements.  It involves giving parties a fair hearing.  It involves procedural regularity.  It involves arriving at a just decision based on evidence properly put before it.  There is a heavy reliance upon the conduct of counsel and concessions and agreements reached by counsel.  In our view, where a concession is made or an agreement is reached based on a fundamental misunderstanding by counsel of the nature of his or her or their instructions, then, if that misunderstanding has led to a result which is neither appropriate nor just and equitable in property proceedings, it is properly within the discretion of a Judge hearing an application under s 79A to find that there has been a miscarriage of justice.  The effect of that miscarriage of justice on the outcome of the proceedings will, of course, depend on the magnitude of the error as well as other factors, including, the timeliness of its discovery and the hardship that may befall either or both of the parties if the order is or is not made.

   Speaking about Marzec again, the Full Court went on:

   In our view, Burr J's analysis of the present case was correctly concluded at para 76 of his judgment where he said, "In the trial proceedings before Strickland J, the judicial process was flawed in that it took into account an incorrect version of the husband's financial situation.  Thus, the integrity of the judicial process was clearly undermined by the innocent mistake of counsel.  I am therefore satisfied, on the aforementioned authorities of this Court, that in the circumstances of this case there has been a miscarriage of justice within the meaning of s 79A(1)(a)."

   In a later decision of Bowman and Bowman, the Full Court expressed that outcome in these terms in para 72:

   A mutual mistake or misunderstanding based on a concession made or an agreement reached leading to a result that is not appropriate nor just and equitable can lead to a finding that there has been a miscarriage of justice under s 79A.

7. The wife says there was a valuation of the patent at $200,000 at the end of 2005, relying on the fact that three licenses had been provided.  Subsequently, two of them were cancelled. Therefore she knew that the valuation was not right, but nevertheless she thought the patent was something of significant value.  There is unchallenged evidence in the husband's case that the patent has no value. There is no dispute between the parties that it has no value today. The husband believed that there was the potential for some value in that patent. He was not then aware that the patent had lapsed. He should have known, but he did not know. In my view those facts are capable of giving rise to a miscarriage of justice.

8. The next question is, in the circumstances that have arisen since the order was made, was it impracticable for the order to be carried out or impracticable for part of the order to be carried out?  That certainly applies.  We have a wrapped up order that depends to some extent on an agreement the parties reached about child support.  For reasons that we do not need to go into here, that part of the agreement was frustrated.  The Child Support Agency would not accept the parties' agreement to waive $6038 worth of child support arrears.  The parties' property settlement was made in the same document and, no doubt to some extent, based on the fact that there was a settlement of child support.

9. Next, the orders included an order that the wife transfer the patent and the petty patent to the husband.  That was not practicable.  They did not exist.

10. Finally, and, as I said, not the strongest part of the husband's case, there is said to be a default and the default was the fact that the transfer did not occur.  Well, it was initially wrongly recorded as having occurred but I do not think this is a case to which s 79A(1)(c) applies.  It is not necessary that there be three grounds or two grounds.  One ground is enough.

11. The husband has made out a case, in my view, under s 79A(1)(a) and perhaps more strongly, under s 79A(1)(b).  There is related case that could be made that said that the husband had made an agreement based on certain amounts going out.  On the face of the agreement, the payment of $5000 put an end to his arrears obligations and he was moving forward with an obligation to pay out $200 a week.  Even if he has not accepted that there would still be an ongoing recurrent child support payment, not the $200 that is referred to in the early orders, in addition to the obligations he had lined himself up for under the orders, there was also going to be then an obligation to pay $6000 of arrears.  There is no evidence that he had the wherewithal to make all those payments.  So it may be that there is a second limb to (b) relating to that issue.

12. I think those matters are fundamental and, in the Court's discretion then, the orders of 22 March 2006 as varied by the orders of May 2006, should be set aside.

13. Turning to s 79 and what we should do now, the first step, as I said, is to identify the property of the parties.  The parties were not cross examined in any way in relation to the detail of their Financial Statements. They do not have any property.  The husband has $50 in the Westpac Bank, a Toyota Camry motor vehicle 1992 model which he says has a value of $2500, furniture and effects which he puts at $2000, superannuation interest, remembering he is 43 years of age, with Suncorp that he estimates might be $5000.  There was some cross examination about this.  He has represented at different times that it might be $8000 or a bit more.  In relation to what he has spent or disposed of, he says he sold a Kombi motor vehicle for $6000 the week before he swore this document on 19 December, paid a tax debt of $3500 and bought the Camry.  He says he sold a business, PS Business, in June of 2007 for $19,500.

14. The wife's financial statements says that she has $17 in the Westpac Bank, $7 at the National Australia Bank, a $500 Ford Laser motor vehicle 1989 model, about $2000 she thinks in household contents, no superannuation.  She has some debts but there are no significant assets.  The Court's obligation under s 79 is to divide the property that exists today. There can be read back into the pool of assets, and this is much of the wife's case, assets that do not exist today or might exist today but cannot be identified where there has been a total failure of disclosure, where somebody has had the benefit of assets and have not properly accounted for them. However, at the end of the day, orders under s 79 have to be enforceable. They must be capable of payment. Payments can only be made out of existing assets or resources.  So for that reason, all of the arguments about s 79(4) are wasted. There is a great deal of evidence of the wife, largely unchallenged by the husband, about her undertaking the preponderance of homemaker and parent role, the husband's inability to undertake proper aspects of those roles for periods during the marriage, the husband's absence working as a travelling salesman, the fact that she did the lion's share of the work associated with most of the businesses, the fact that she alone was the inventor of the safety product invention and the mould that led to the patent that has been the main subject of proceedings. There is all that evidence that goes into the mix together with adjustments under s 75(2) and the other non-contribution aspects of s 79(4) to determine what would be a proper distribution of the assets. There are no assets.  The wife said that if she had four days to argue her case, she might have been able to prove it.  She could not tell me why she had not asked for the matter to be listed for four days.

15. Her case boils down to this: the husband had the stewardship of several of the parties’ enterprises and he did not ever properly account to her for them. She thinks that properly run and probably in fact, they were capable of generating a good income and had a value.  There are payments that the husband has received, the wife says, that he has not accounted to her for at all.  She says that his evidence about the most recent business he ran cannot be true because the calculation of his income, ultimately made by an accountant, which he says accommodated by attributing to drawings or income, living expenses that he drew directly from business income, that the records cannot be right. She says that the estimate cannot be right, in part because there are remarks on bank statements from the accountant in relation to some of those records, not in relation to others. 

16. The husband was challenged about this and he said, as far as he knew, the way the accountant undertook that task was that he only took as business liabilities those liabilities shown in the bank statements that could be reconciled against invoices or receipts, and the rest were recorded as drawings.  The problem with this is, the husband has an obligation of disclosure.  He provides disclosure then the forensic onus shifts to the wife and it is put to her to make a challenge and she has not successfully done that.  The way that is done is an accountant looks at the books and says, no, that is not right, it is not $5000 worth of income, it is not $12,000 worth of income, it is in fact $140,000 worth of income because we read these things back in and we use a capitalised earnings method and therefore, the business was worth $200,000. Suspicion is not enough. 

17. The other problem, although I could not attract much interest in this argument from the wife, is that the wife describes a husband who was not successful at all leading up to or since the marriage.  I do not mean to be awful about this but she says that he did not have any assets when they met.  She says that he did not take meaningful part in many of the enterprises.  She says that he kept his income from being a salesman and did not take any meaningful part in the family.  She says from the point of his incident at B hospital, he was mentally unstable and violent.  She does not point to any incident during the marriage or circumstance during the marriage.  She was bankrupt herself for three years.  It was not as though there were huge incomes or businesses or whatever that could have been used to defray the costs of all of that.  So she does not point to the husband as a person of significant income during the marriage. I do not mean to be offensive about it, but to some extent, the past must be of some guidance for the future.

18. So the wife's case is built on her anger, I think, that she was the initiator, the inventor, the creative person who generated some businesses.  She worked very hard in other businesses.  She thinks that any one of those businesses may well have been a successful business going on into the future. It is her case that for various reasons they were left with the husband and he destroyed them.  It is clear from her cross examination that she equated the patent process with the husband's most recent business and it is his case and it is his evidence that there was no aspect of that patent going forward after the orders were made, that was relevant to his recent business.

19. I have identified the assets. There are debts that balance even those modest assets.  The facts, unchallenged, would favour an argument that perhaps the wife made a greater contribution than the husband. Sadly, the children spend no time with the father and that is a tragedy. The husband is in paid employment and earns about $36,000 or $37,000 a year.  The wife is not. That would suggest that if there were funds to divide, there may well be a s 75(2) adjustment back to the wife.  But those adjustments are made out of assets. At the end of the day, there is no significant property.

20. For those reasons, the orders that are proposed on behalf of the husband are appropriate.

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate: 

Date:  2 June 2009