VADISANIS & VADISANIS

FAMILY COURT OF AUSTRALIA

VADISANIS & VADISANIS

[2015] FamCA 161

FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Where there were a number of property dealings involving the husband, the wife and the intervener during the marriage – Where the wife claimed that the intervener was estopped from seeking repayment of loan monies advanced to the husband and the wife – Where the husband and the wife had misappropriated monies of the intervener, the husband’s sister and their own children – Where it was found that the husband and the wife did not come before the Court with clean hands – Where it was found that the intervener was not estopped by her conduct from seeking repayment of the loan monies – Where it was found that the husband and the wife were indebted to the intervener for the loan monies and the misappropriated funds – Where it was found that the husband and the wife were indebted to a Trust for their children due to their misappropriation of the trust funds – Where it was found that interim distributions to the husband and the wife, including a unilateral interim distribution by the husband, would be notionally added back into the asset pool.

FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – CONTRIBUTIONS – Where the husband and wife cohabited for eleven years and there are two children of the marriage – Where the husband’s financial contributions are greater than the wife’s – Where the husband’s family made significant financial contributions– Where the wife made a greater parenting contribution and was the primary carer for the children – Where the contributions of the husband were found to be greater than the wife’s, being 52.5 per cent to the husband compared to 47.5 per cent to the wife – Where there was a 5 per cent adjustment for the wife pursuant to s75(2) of the Family Law Act 1975 (Cth).

Family Law Act 1975 (Cth) ss75, 79
Family Law Rules 2004 (Cth)
Limitation Act 1969 (NSW)

Calverley & Green (1984) 155 CLR 242
Nelson & Nelson (1995) 184 CLR 538
Vadisanis & Vadisanis & Anor [2014] FamCAFC 97
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Warman International Limited and Anor & Dwyer and Ors (1995) 182 CLR 544

APPLICANT:

Mr Vadisanis

RESPONDENT:

Ms I Vadisanis

INTERVENER:

Ms J Vadisanis

FILE NUMBER:

SYC

6377

2008

DATE DELIVERED:

13 March 2015

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Rees J

HEARING DATE:

26 – 27 February 2015 and 12 March 2015

REPRESENTATION

THE APPLICANT:

In person

COUNSEL FOR THE RESPONDENT:

Mr Givney and Mr Alexander

SOLICITOR FOR THE RESPONDENT:

Campbell Paton & Taylor

THE INTERVENER:

In person

Orders

IT IS ORDERED

That Mr Vadisanis (“the husband”) and Ms I Vadisanis (“the wife”) forthwith do all things required to effect the payment to Ms J Vadisanis (“the intervener”) from the controlled monies account held by VRT Lawyers of the sum of $110,018 and the balance to the husband.
That the husband indemnify the wife and hold her safe in respect of any claim made by the husband’s sister for the repayment of money arising out of the sale of DD Street, Town D in the State of New South Wales or the payment into the husband’s bank account of the cheque payable to the husband’s sister in the sum of $24,711.
That within three calendar months of the date of these Orders, the wife shall:
(a) Pay to the husband the sum of $150,010;
(b)Pay the sum of $47,802.50 into an interest bearing account in the names of the husband, the wife and the intervener (jointly) on trust for the child M born … 1988; and
(c)Pay the sum of $47,802.50 into an interest bearing account in the names of the husband, the wife and the intervener (jointly) on trust for the child R born … 1999.
That upon the wife’s paying the sums in Order 3 by the due date, the husband shall do all acts and things required to transfer to the wife the whole of his right title and interest in the property at W Street, Town E Folio Identifier ....
That in the event that the wife does not pay the amount referred to in Order 3 by the due date, then the husband and the wife shall do all acts and things required to sell the property at W Street, Town E in the State of New South Wales Folio Identifier … and to distribute the proceeds of sale in the following manner and priority:
(a) In payment of selling costs;
(b)In payment of the sum of $150,010 to the husband together with interest from the due date until the date of payment at the rate prescribed by the Family Law Rules 2004 (Cth);
(c)In payment of the sums referred to in Order 3(b) and (c) in the manner there prescribed; and
(d) In payment of the balance to the wife.
That other than as provided in these Orders, each of the husband and the wife is solely entitled to any item of property in his or her possession at the date of these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Vadisanis & Vadisanis & Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6377 of 2008

Mr Vadisanis

Applicant

And

Ms I Vadisanis

Respondent

And

Ms J Vadisanis

Intervener

REASONS FOR JUDGMENT

An appeal by Ms I Vadisanis (“the wife”), against orders in relation to property settlement after a defended hearing, was determined by the Full Court by judgment handed down on 12 June 2014 and the matter was remitted for re-hearing.
The parties to the proceedings are the applicant husband, Mr Vadisanis (“the husband”), the respondent wife, and the husband’s mother (“the intervener”), who intervened in the proceedings seeking declarations that the husband and the wife were indebted to her as a consequence of various financial transactions.
The matter came before me for directions on 15 August 2014. On that day, the wife represented herself. Mr Malinkic, solicitor, represented the husband and the intervener appeared for herself. The wife told the Court that she did not want to file any further material. Mr Malinkic for the husband said that he might want to file further material and the intervener said that she wanted to file further material.
The matter was adjourned to 30 September 2014 for further mention, noting that it was intended on that day to fix the matter for hearing, and the parties were directed to file any further material by 4 pm on 16 September 2014.
When the matter came before the Court on 30 September 2014, Mr Givney of Counsel appeared for the wife and Mr Malinkic appeared for both the husband and the intervener.
No further material had been filed by the husband or the intervener. Mr Malinkic was unable to tell the Court why their material had not been filed.
The parties were asked why the matter should not be set down for hearing on the material then filed. No submissions were made against that course. I note that the proceedings, including parenting, commenced in 2008 and that between 2010 and 2014 the Court has delivered four judgments in applications in an appeal, one judgment in the substantive appeal and seven first instance judgments. The pool of property available for distribution is modest. The interests of justice require that the matter be heard and determined.
Accordingly the matter was listed for hearing and a direction was made that no further material be filed without the leave of the Court first obtained.
Despite those directions, each party filed brief affidavits updating their financial circumstances and those affidavits were read in the proceedings.
When the matter came before me for hearing, the wife was represented by Counsel and the husband and the intervener were unrepresented.
The Appeal Books, including the transcript of the evidence before Fowler J, were tendered in the hearing.
The husband and the intervener were cross-examined by Counsel for the wife and the wife was cross-examined by the husband. The intervener, who was assisted by a European interpreter, did not cross-examine.

THE HISTORY AS FOUND BY THE FULL COURT

In the judgment of the Full Court, the background facts were set out and they are reproduced here:
7.        The husband, who was 41 years at the time of trial, and the wife, then 44 years, commenced cohabiting in November or December 1996. They married … 1997 and separated in September 2008. There are two children of the marriage born in … 1998 and … 1999.
8.        At the time the parties commenced cohabitation, the wife’s property consisted of a [Japanese] motor vehicle and savings of $6,000. At that time the husband’s property consisted of his interest in [Unit 1, Q Street, Suburb U] (“[Suburb U]”). [Suburb U] was purchased in April 1995 for $190,500. The intervener and the husband’s deceased father paid $50,000 (26 per cent) towards the purchase price. The husband contributed $140,000 (74 per cent) which he borrowed from the St George Bank. The husband’s and intervener’s (but not the intervener’s husband) interests in the property were registered as tenants in common as to 95 per cent and 5 per cent respectively. One of the pivotal issues in this case is whether the intervener’s 5 per cent legal interest reflected her beneficial interest, or whether, by virtue of a resulting trust, the husband’s legal interest was subject to an additional 21 per cent beneficial interest in her favour.
9.        In early 1997 the husband and intervener sold [Suburb U] for $250,000. The net proceeds of sale after discharging the husband’s mortgage were $110,000. Relevantly, the husband and wife retained the proceeds of sale.
10.      Shortly after they married, on … 1997 the husband and the wife purchased [Z Street, Suburb S] for $282,000 (“[Suburb S]”). They used the net proceeds of sale of [Suburb U] to partly fund the purchase.
11.      The same day the husband and wife executed a mortgage in favour of the intervener (but not the intervener’s husband) for the principal sum of $65,000 (plus interest at 10 per cent per annum). The mortgage was unregistered, unstamped and secured against [Suburb S]. The principal sum referred to in the mortgage is said to reflect the intervener’s interest in the [Suburb U] proceeds of sale which, according to her, “rolled” into [Suburb S] .   An issue to this appeal is the extent to which the 1997 mortgage could be relied upon to establish the intervener’s intention when she acquired her interest in [Suburb U], and whether any action that the intervener could take on the mortgage was statute barred.
12.      In October 2000, the husband and wife sold [Suburb S] for $455,000, following which they purchased [Unit 2 Q Street, Suburb U] (“[Q Street]”) for $400,000. This purchase was funded using part of the net proceeds of sale of [Suburb S] and $220,000 borrowed from a bank.
13.      In September 2003, the husband’s father received a compensation award of $220,200 from the [compensation] Tribunal of New South Wales. He passed away on 21 October 2003 with the intervener his sole beneficiary.
14.      In April 2004, the intervener received a second compensation award of $182,000 from the [compensation Tribunal].
15.      On 12 May 2004, $50,000 of the compensation money (“the Award monies”) was deposited into the joint account of the husband and the wife.
16.      In October 2004 the intervener gave the husband $100,000 cash. This was put towards the purchase of a property at [O Street, Town E] (“[O Street] loan”) in the husband’s sole name. At issue in the appeal is whether the Award monies and [O Street] loan were loans or gifts. If they were loans, a question arises whether the six year limitation for recovery of the Award monies had expired before recovery was sought in these proceedings.
17.      On 29 April 2010, well after the parties commenced proceedings in this court, the intervener wrote to the solicitors for the husband and the wife demanding payment of $451,397.63.
18.      On 30 April 2010, the intervener was granted leave to intervene in the proceedings.
19.      On 8 July 2010 the husband and the wife sold [Q Street] for $880,000. The mortgage of $548,893.10 was discharged with the balance of the proceeds of sale paid into a controlled monies account.

FURTHER HISTORY

Some of the property dealings of the husband and the wife were not the subject of the appeal and they are recorded here so the parties’ financial history is complete.
When the husband and the wife sold Suburb S , they invested $140,000 with the wife’s employer, Mr T, who was to provide them with a 30 per cent return on their investment. Only $40,000 of that sum was repaid and the husband and the wife lost $100,000. They did not receive the expected interest.
The funds were joint funds. They could not have been invested with Mr T unless both the husband and the wife agreed. As they would have expected to share the profit of 30 per cent, so they must share the loss.
In about January 2002 the husband’s parents (the intervener and her late husband) gave the husband and the wife $60,000 to be used to purchase two properties for the two children of the husband and the wife. There is no dispute that the husband and the wife held that money on trust for their children (“the Trust”). They purchased two properties at Property 1 and Property 2, X Street, Town D for $46,000 and $54,000 (“the X Street properties”) respectively, in their joint names. That the husband and the wife treated the X Street properties as their own as will be seen from the manner in which the proceeds of sale were ultimately applied.
To fund the purchases, the husband and the wife drew down $150,000 from their St George re-draw facility secured over Q Street (“the Portfolio Loan account”). Thus they had $210,000 available to complete the purchase of the X Street properties for $100,000. Neither the husband nor the wife raised as an issue the manner in which the balance was used and for the purpose of this decision I have assumed that they agree that the money was used for family purposes.
In March 2003, they purchased HH Street, Town D (“HH Street”) for $346,000, borrowing a further $360,000 from the St George Bank. The husband and the wife relocated to Town D and rented out Q Street.
In August 2004 the husband purchased O Street in circumstances set out in the judgment of the Full Court.
In October and November 2004, a total of $74,000 was paid into accounts in the name of the husband and the minor daughter of the husband and the wife. That money came from the sale of a property owned by the husband’s late father in Europe (“the European money”). The husband’s cousin (the intervener’s niece) handled the sale in Europe.
The husband’s father, before his death, told the family that the European money was to be divided equally between the intervener, the husband and the husband’s sister Ms JJ.
The husband instructed his cousin to send the European money to Australia in three separate amounts, one-third to the intervener, one-third to the husband and one-third to the husband’s sister, Ms JJ.
The cheque payable to the intervener was paid by either the husband or the wife into an account in the name of their daughter whose European name was “J”, the same name as the intervener.
The cheque payable to the husband’s sister, Ms JJ, was paid into an account in the name of the husband and the amount payable to the husband was electronically transferred into the same account. None of that money has been paid to the husband’s sister or to the intervener.
Thus the husband and the wife received the whole of the sum of $74,000 and retained it although they were only entitled to one-third of that sum.
In 2004 the intervener gave to the husband a sum of $110,000 which she instructed was to be used to purchase a property for his sister Ms JJ and for the benefit of her three children. The husband purchased a property at DD Street, Town D (“DD Street”) in the name of himself and his sister’s minor children. When DD Street was sold in 2005 for $135,000, the sale money was banked into an account in the name of the husband and the wife and the wife drew a cheque payable to the husband’s sister for $110,000. The husband and the wife retained $25,000 from that sale. There was no evidence before me of the basis on which it was suggested that the husband and the wife were entitled to retain any of the proceeds of sale.
In June 2005 HH Street was sold for $350,000.
In August 2005 Property 1 X Street was sold for $56,750.
According to the husband, from the proceeds of HH Street and X Street, $250,000 was paid into the Portfolio Loan account.
According to the wife the whole of the sale proceeds were applied to discharge the mortgage on HH Street.
I am unable to ascertain from the statements what was done with any surplus funds from the sale proceeds of Property 1 X Street and HH Street but the husband and the wife do not raise this as an issue and I assume, for the purpose of these reasons, that they agree that the money was used appropriately.
Also in August 2005 the husband and the wife purchased W Street, Town E (“W Street”) for $317,000. There is a dispute as to the manner in which the purchase was funded. The sum of $185,000 was borrowed from the St George Bank (“the W Street mortgage”).
The intervener deposes that she lent the husband and the wife $45,000 for the purchase of W Street and that the money was repaid to her in 2008. The wife disputes the asserted loan of $45,000.
In April 2006 the husband and the wife sold Property 2 X Street for $105,500 and the proceeds were paid into the Portfolio Loan account.
In September 2008 the husband and the wife separated, the wife remaining in W Street. The husband moved to Sydney with the children where they lived with the intervener.
The husband, from separation, received the rent from Q Street of $3,300 per month. However the husband did not always use the rent to pay the interest on the loans.
On 1 October 2008 the husband withdrew two amounts of $44,000 and $70,000 from the W Street mortgage and a further $18,000 from the Portfolio Loan account. Consequent upon the husband’s increasing the amount outstanding, the interest increased. The husband did not pay the whole of the interest.
The total amount withdrawn by the husband was $132,000.
On 20 January 2009 the husband’s solicitors advised the wife that the husband intended to pay $45,000 to the intervener in repayment of the loan asserted from her. The wife asked the husband for particulars including into which account the money from the intervener was deposited.
On 5 February 2009 the husband was ordered to repay $60,000 to the W Street mortgage and pay a further $10,000 to the wife’s solicitors, the payment to be characterised by the Trial Judge.
In July 2009 the tenants moved out of Q Street and the husband moved back into the property. The wife was not told.
On 22 October 2009 the St George Bank notified the wife and presumably the husband that the mortgage on Q Street was in default. The parties could not agree to sell Q Street or on the terms of sale until 4 May 2010. On 12 April 2010 the St George Bank commenced proceedings in the Supreme Court of New South Wales.
Q Street was sold at auction for $880,000. $548,893 was paid to the St George Bank and the balance of $308,213.88 was paid to a controlled monies account. Interim distributions have been made from the controlled monies account.

THE ISSUES

At the commencement of the hearing the parties were handed a list of issues for their consideration. The list is reproduced below:
·    What was the legal and beneficial interest of the intervener in Suburb U?
·    As a consequence of the source of the funds used by the husband and the wife for the purchase of Suburb S being, in part, from funds due to the intervener from the sale of Suburb U, did the intervener acquire an interest in Suburb S and if, so, what interest?
·    What was the effect of the 1997 mortgage?
·    Is any action that the intervener could take under that mortgage statute barred?
·    Is the intervener estopped from seeking repayment of the sum advanced, either by promissory estoppel or estoppel by conduct?
·    Do the parties [the husband and the wife] hold $30,000 on trust of each of their children and, if so, how should that money be treated?
·    What was done with the sum of $150,000 drawn down by the parties [the husband and the wife] on the Q Street mortgage at the time of the purchase of the X Street properties, noting that only $40,000 was needed to complete the purchases?
·    Was the transaction in which the parties [the husband and the wife] received $50,000 on 12 May 2004 from the intervener a loan or a gift?
·    If the sum of $50,000 was lent, is recovery statute barred?
·    Did the parties [the husband and the wife] receive $74,000 from Europe? What was the ownership of that money and what was done with it?
·    If the parties [the husband and the wife] received $74,000 from Europe, is the recovery of that money by the intervener and the husband’s sister statute barred?
·    Was the advance of $100,000 applied to the purchase of O Street a loan or gift?
·    If the sum of $100,000 was lent, is recovery statute barred?
·    How was the purchase of W Street funded? Did the intervener advance any money, whether $40,000 or $45,000 as variously asserted by the husband or $45,000 as asserted by the intervener?
·    What money was paid by each of the parties [the husband and the wife] to service the mortgage over Q Street after separation?

In the course of the hearing, further issues arose:
· How should the Court treat the sum of $24,117.36 being the cheque payable to the husband’s sister deposited into the husband’s account on 23 November 2004 and retained by the husband and the wife?
· How should the Court treat the sum of $25,000 retained by the husband and the wife from the proceeds of sale of DD Street?
Some of these issues have been determined by the Full Court. Those determinations are binding here.
Some of the issues involve a determination of whether a party’s version should be accepted, where they disagree. The matter before me was conducted on the transcript before Fowler J, with further cross-examination of the intervener and the husband by Counsel for the wife. There was no further cross-examination by the intervener and limited further cross-examination of the wife by the husband.
The intervener at all times needed the assistance of an interpreter although she appeared to understand some simple questions. Great caution needs to be exercised in making credit findings based on oral evidence and this is especially so in circumstances where a witness is speaking through an interpreter. The preferable course is to consider the extrinsic evidence that supports or does not support each version of the events to determine which version should be accepted. If there is no extrinsic evidence to guide the decision, then the determination is whether the party bearing the onus of proving a fact has discharged that onus.

THE INTEREST OF THE INTERVENER IN SUBURB U

The Full Court at paragraph 49 of the Reasons said:
…When the manner in which title to the property was recorded is taken into account, the appropriate finding would have been that the husband, his father and the intervener intended that her legal and beneficial interests in [Suburb U] were the same; namely 5 per cent and that by the time of purchase the balance of what was originally intended to be a loan was in fact given to the husband.
And at paragraph 51:
This evidence and the manner in which the intervener’s interest in [Suburb U] was registered, indicates that other than as to 5 per cent, she formed no intention at all as to the remaining beneficial ownership of the property. In other words, the evidence does not reveal that the intervener had an actual intention that she should be beneficially entitled to 26 per cent of the property.
And at paragraph 58:
…The effect of this is that the intervener’s beneficial interest in [Suburb U] was no greater than her legal interest and the balance of the $50,000 constituted a gift to the husband.
And at paragraph 64:
…As we observed earlier, the intervener’s interest in [Suburb U] was no greater than her legal interest and was thus $12,500.

THE INTEREST OF THE INTERVENER IN SUBURB S

As the Full Court found $12,500, being funds of the intervener, was advanced by her towards the purchase of [Suburb S] . The advance was secured by a mortgage and was clearly intended to be repaid.

THE 1997 MORTGAGE

The Full Court found at paragraph 70 of the Reasons that the husband and the wife were not indebted to the intervener in the sum of $65,000 but rather, at paragraphs 68 and 91, that the amount advanced was $12,500.

IS ANY ACTION BY THE INTERVENER PURSUANT TO THE MORTGAGE STATUTE BARRED?

The Full Court found that the intervener’s claim was instituted within time and that simple interest on the principal of $12,500 is payable at the rate of 10 per cent per annum. Interest runs at $1,250 per annum or $3.42 per day.
The wife argued that interest should be charged only from the date of the demand made by the intervener. The basis for this submission was the wife’s claim based on estoppel, which will be considered later in these reasons.
Thus, subject to the wife’s claim based on estoppel, the parties are indebted jointly to the intervener and the amount outstanding at trial (inclusive of simple interest accruing at a rate of 10 per cent per annum from the date of the mortgage) is conceded by the wife, and not disputed by the husband and the intervener, to be $35,902.

IS THE INTERVENER ESTOPPED FROM CLAIMING REPAYMENT OF THE SUM OF $12,500 PLUS INTEREST?

The wife claims that the intervener is estopped from claiming repayment of the principal sum and the interest by virtue of her conduct. As the Full Court recorded:
96.      It was asserted that the estoppel arose in several ways – first, by the intervener’s conduct. The wife gave evidence that on several occasions the intervener said that any money from the purchase of [Suburb U] was not to be repaid…
97.      Secondly, it was said that the intervener, in continuing to advance money to the parties and in not seeking repayment of the loan on the sale of [Suburb S] or at all until the relationship between the husband and wife had broken down, had conducted herself in a way that led the wife to understand that no money was owing or, at least, she was not liable to the intervener for a loan on which was accruing compound interest.
98.      The equitable doctrine of estoppel will operate where, after a contract is made, the parties conduct themselves in a way so as to treat the contract as varied or the rights under the agreement in some way suspended, in which case equity will intervene to prevent a party from seeking to rely on their strict legal rights where such reliance would be inequitable.
99.      In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at pages 428-9 Brennan J said:
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
It must be recalled that the wife, seeking equitable relief, does not come to the Court with clean hands.
As outlined earlier in these Reasons, the husband and the wife removed $50,000 in May 2004 from the intervener’s bank account without her knowledge and deposited the money into their Portfolio Loan account for their own benefit. The money has never been repaid and the intervener’s claim is statute barred.
The husband and the wife retained $24,117.36 due to the intervener from the European money. These funds were the property of the intervener and the husband and the wife used that money for their own purposes as is explained later in these Reasons.
In Nelson & Nelson (1995) 184 CLR 538, the High Court dealt with the principles which apply when an applicant seeking equitable relief does not come before the Court with clean hands. In that case, the applicant had defrauded the State of revenue. In my view, the present case is no different. The husband and the wife have deprived the intervener of her money. The wife, as a consequence, cannot seek the intervention of equity until the intervener’s funds have been repaid to her.
If I am wrong in that formulation of the law, I would not accede to the wife’s application because I am not satisfied that the six planks set out in the decision of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 have been established.
The evidence establishes that the wife executed the 1997 mortgage.
It is the wife’s case that the intervener has induced her to adopt the expectation that the 1997 mortgage would not be called upon. She relies upon the fact that the intervener stood by when the husband and the wife sold Suburb S , purchased Q Street and purchased and sold various properties in Town D and Town E.
The wife also relies on this conduct, in addition to the intervener’s conduct in advancing money at other times to the husband and the wife without requiring interest to be paid, in support of her submission that the intervener is estopped from demanding interest on the sum of $12,500 from the date of the mortgage in June 1997. The wife submits that interest should not accrue until the date of the intervener’s written demand for repayment on 29 April 2010.
The intervener’s evidence is that she regularly asked the husband and the wife when she would receive her money and was regularly assured by them or by the wife that the money was safe.
The wife denies that those conversations took place but says that the intervener regularly assured her that she did not require repayment of the funds.
The factual circumstances could support both contentions. The intervener may have sat by while the husband and the wife bought and sold properties but that is not inconsistent with her evidence that she nevertheless sought repayment.
I am unable to accept one version of the conversations between the intervener and the husband and the wife over the other.
The wife bears the onus of proof of establishing that the intervener is estopped from demanding repayment of the $12,500 and the onus has not been discharged.
Similarly, the wife has not established that the intervener is estopped, by her conduct, from claiming simple interest (at a rate of 10 per cent per annum from the date of the mortgage) on the monies owing to her.

THE MONEY HELD ON TRUST FOR THE CHILDREN - SALE OF 98 AND Property 2 X Street

In about March 2002 the husband and the wife purchased Property 1 X Street for $46,000 and Property X Street for $54,000.
They used the money which had been given to them on trust for the children by the intervener and her husband. Thus the Trust contributed $30,000 to each purchase and the husband and the wife contributed the balance.
The effect of that transaction is not in doubt. In Calverley & Green (1984) 155 CLR 242, Gibbs CJ said:
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such - not, for example, as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money: Robinson v. Preston[1858] EngR 426; (1858) 4 K & J 505, at p 510 [1858] EngR 426; (70 ER 211, at p 213); Ingram v. Ingram [1941] VicLawRp 20; (1941) VLR 95 and Crisp v. Mullings (1976) EGD 730 (a decision of the English Court of Appeal).
There is no presumption of advancement from child to parent or from the Trust to the husband and the wife. Thus when the husband and the wife purchased the property in their names using money from the Trust, a resulting trust arose in favour of the Trust to the extent of its contribution.
In the case of Property 1 X Street, the Trust was beneficially entitled to 65.2 per cent of the property. In the case of Property 2 X Street, the Trust was beneficially entitled to 55.55 per cent.
When the X Street properties were sold, the husband and the wife deposited the whole of the proceeds of sale into the Portfolio Loan account.
Property 1 X Street was sold for $56,750 in August 2005. Prima facie, the share of the sale price attributable to the Trust was $37,000.
Property 2 X Street was sold in April 2006 for $105,500. Prima facie, the share of the sale price attributable to the Trust was $58,605. Accordingly, the total of the sale proceeds from the sale of the X Street properties was $95,605.
Counsel for the wife referred the Court to the decision of the High Court in Warman International Limited and Anor& Dwyer and Ors (1995) 182 CLR 544 (“Warman”) and submitted that the Trust should be repaid no more than the amount of $60,000 which was initially invested into the X Street properties, or, alternatively, if the Court determined that the value of the Trust was proportionate to the percentage of its contribution toward the purchase price (as outlined above) the matter should be adjourned to allow the wife to put evidence before the Court of money spent by the husband and the wife on improvements to the X Street properties.
That a resulting trust arose in favour of the Trust on the purchase of the X Street properties must have been apparent to those representing the wife in the course of their preparation of her case. It was open to the wife to put before the Court any evidence that was relevant to the issue of the resulting trust.
She chose not to do so. The only evidence in the wife’s affidavit is found at paragraphs 135 and 136 of her primary affidavit where she refers to the purchase of the X Street properties and the fact that one of the houses was knocked down as it was planned to redevelop the land. The redevelopment did not eventuate.
The husband, in his trial affidavit, refers to the purchase of the X Street properties at paragraph 31. At paragraph 41 he lists work done on the X Street properties on which he deposes that “approximately” $59,200 was spent. Included in that table is the sum of $20,000 for a utility vehicle. Various amounts are specified to have been paid in cash and some are not specified as to the manner of payment. For the purpose of these proceedings, it is not possible to determine with any accuracy what sums were actually spent by the husband and the wife on the X Street properties however I can comfortably find that the amount did not exceed $39,200.
Added to the difficulties in assessing the interest of the Trust is the fact that there is no evidence from the husband and the wife of the amount of rent that was received during the period between January 2002, when the X Street properties were purchased, and August 2005 and April 2006 when they were sold.
The intervener’s evidence is that she was told by the husband that the rent on one of the cottages was $150 per week. If the rent received and retained by the husband and the wife equalled or exceeded the sums they spent, then there may be no net expenditure.
In Warman the High Court said at pages 561 - 562:
It is for the defendant to establish that it is inequitable to order an account of the entire profits. If the defendant does not establish that that would be so, then the defendant must bear the consequences of mingling the profits attributable to the defendant's breach of fiduciary duty and the profits attributable to those earned by the defendant's efforts and investment (44), in the same way that a trustee of a mixed fund bears the onus of distinguishing what is his own (45).
In the present proceedings, if the wife disputes that the Trust is entitled to the proceeds of sale of the X Street properties in the same proportion as its contribution to the purchase price, the onus was on her to establish that case.
There is no lack of procedural fairness occasioned to the wife. She at all times had the opportunity to bring evidence if it was her case that she and the husband were not required to account to the Trust for the whole of the share of the Trust in the increased value of the X Street properties.
Prima facie, the husband and the wife were, at the time of each sale, indebted to the Trust for its share of the proceeds. After the sale of both of the X Street properties, the husband and the wife were indebted to the Trust for a total amount of $95,605.
The wife in submissions disputes that the Trust is entitled to the whole of that amount. She contends that the amount due to the Trust should be limited to $60,000, that being the amount of the original advance by the Trust to the purchases.
The wife contends that the $60,000 of the Trust’s money should be invested in W Street where she hopes to continue to live and provide a home for the children.
The husband and the intervener contend that the money should be separately invested and available to the children when they reach their majority.
The contentions of all the parties ignore the fact that since August 2005 and April 2006 respectively, the Trust has been deprived of any income from its funds and the husband and the wife’s liabilities have been reduced by reason of their misappropriation of the Trust’s funds.
It was submitted on behalf of the wife that the Court should look to the intentions of the settlor of the Trust in order to determine how the funds should be held. The evidence of the intervener is that her husband gave the money to the Trust with the intention that it be used to invest in property for the parties children. The intervener’s unchallenged evidence is that her late husband said to the husband in the presence of the wife “This money is for the children. Go and find a property for the children”. Further the intervener deposes that when her late husband was told by the husband that he had purchased properties in Town D he said “That’s good. They will go up in value by the time my little children will grow up”.
Nothing in the evidence suggests that it was the intention of the settlor that the funds of the Trust should be invested in property owned and occupied by the husband and the wife or either of them.
The Trust is not a party to these proceedings and nothing in the orders that can be made in the Family Court precludes any action that the children might take when they reach their majority to recover the funds which are due to them. However, the Orders will secure for the Trust the funds which, prima facie, it should have received consequent on the sale of the X Street properties in which it had an interest.
When the children each reach their majority, they can each take such steps as they are advised in relation to those funds but the funds should be secured until that time. Nothing in the Orders that will be made will preclude the ability of the husband and/or the wife to bring an action, when the children reach their majority, in respect of any allowance that they assert is due to them from the Trust funds as a result of the monies and works expended by them on improving the properties. In the event that it is determined that the funds held in trust exceed the amounts ultimately determined or agreed to be the funds to which the Trust is entitled, those excess funds can be returned to the husband and the wife in the same proportions as the matrimonial property is divided pursuant to the Orders.

Both of the husband and the wife have acted with complete disregard of their fiduciary obligations.
Having regard to the orders which will be made, the wife may not be in a position to retain W Street and thus her proposal that the Trust money be charged against that property will be impracticable.
In submissions, it was conceded by all of the parties that, if the funds were to be secured in an interest bearing deposit, the appropriate trustees should be the husband the wife and the intervener jointly.
Having regard to the different ages of the children, the funds should be invested in two accounts, half of the fund for each child.

THE EXCESS FUNDS DRAWN DOWN BY THE PARTIES AT THE TIME OF THE X STREET PURCHASES

There is no evidence before me to establish how those funds were used.
They may have been part of the transaction whereby the husband and the wife lent money to Mr T but that has not been established.
Neither the husband nor the wife raises the use of those funds as an issue.

THE ADVANCE OF $50,000

The Full Court found that the intervener’s claim in relation to the sum of $50,000 was statute barred.
However the sum must be treated as a contribution on behalf of the husband.

DID THE HUSBAND AND THE WIFE RECEIVE $74,000 FROM EUROPE AND HOW SHOULD THOSE FUNDS BE TREATED?

The factual background of this issue is related at paragraphs 21 to 26 of these reasons. The facts are not in dispute.
The husband and the wife have retained, for their own use, the funds which were the property of the intervener and of the husband’s sister. There was no evidence from the husband and the wife about what was done with the funds but an examination of the statements for the Portfolio Loan account shows that on 4 January 2005 the sum of $50,000 was paid into the account, I infer from the European money. In any event, it is not suggested that either the intervener or the husband’s sister received her money.
Before me, the husband and the wife both conceded that the intervener’s share of the European money should be repaid.
The amount of the European money which should have been paid to the husband’s sister will be considered later in these reasons.

THE O STREET ADVANCE - $100,000

The intervener’s evidence is that between October 2003 and December 2003 she withdrew $33,759 and a further $112,319 from her bank account and took the money home where she kept it in a drawer.
The intervener’s case is that she then gave $100,000 in cash to the husband because the husband and the wife asked her to do so.
There is no issue that the husband received the money.
The wife denies that she asked the intervener for money. It is the wife’s case that the $100,000 was a gift from the intervener.
The husband’s case is that the transaction was between himself and the intervener and the wife was not a party to it.
The wife’s case is that, although she was not a party to the discussions preceding the advance, the intervener had given the same sum to the husband’s sister and had given the parties’ two children $60,000 and that the advance to the husband should be treated as a gift.
The presumption of advancement applies to any advance from the intervener to the husband who is her son.
The onus is on the intervener to establish, by evidence, that the presumption of advancement is rebutted.
Thus the issue is whether the advance was a loan or a gift and whether, if the transaction was a loan, recovery is statute barred.
It is the subjective intention of the intervener which is relevant.
There is no loan document evidencing the terms of the asserted loan or its conditions of repayment.
The intervener, in her affidavit sworn 14 December 2011, deposes to a conversation with the husband in mid to late 2004 where the husband told her that he wanted to purchase a property in Town E. The intervener says she offered to lend the husband $100,000. She says that she gave the husband $100,000 in cash from money she had in a sack at home. The intervener says that the husband said to her “I will pay you back when I sell it” (referring to O Street).
The husband in his affidavit sworn 21 December 2011 deposes, in relation this transaction, to a conversation with the intervener when she said to him that he should buy a unit and that he could pay back the money she would lend him when the unit was sold.
The husband also deposes:
I received a total sum of $150,000.00 from my mother which assisted me with the purchase of the [O Street] property in 2004. This was purchased by me in my name for the sum of $100,000.00 inclusive of stamp duty and legal fees. I recall that I did not borrow any funds for the purchase of this property.
I do not interpret the husband’s evidence set out in the preceding paragraph to contradict his evidence that the money was borrowed from the intervener but rather, that he was not required to borrow further money from the bank.
Neither the husband nor the intervener deposes to any agreement for the payment of interest.
The intervener agreed in her oral evidence that she gave $110,000 to her daughter, Ms JJ. The money was physically given to the husband who was instructed to purchase property for the benefit of Ms JJ and her three children. The money was a gift to Ms JJ. She gave two bases for giving the money to Ms JJ but not to the husband. Firstly she said that the husband was working and doing well and Ms JJ was not. Secondly she said that Ms JJ had been her support during the period of her late husband’s illness.
In cross-examination, the husband agreed that he had a conversation with the intervener where he said to her that he should be treated equally with Ms JJ (in relation to the gift of $110,000) and that the intervener agreed. This conversation was not put to the intervener in those precise terms but it was clearly put to the intervener that the advance to the husband was a gift.
The husband said in his oral evidence that when the intervener gave him the $100,000 in cash, she did not specify whether the advance was a loan or a gift; she just gave him the money. The husband’s oral evidence contradicted his affidavit evidence and therefore I must disregard the entirety of the husband’s evidence about this transaction.
I am left with the evidence of the intervener which was unshaken.
The intervener was adamant that the advance was a loan. In answer to the proposition that she was giving the husband his half of her late husband’s estate, she said that she was the sole beneficiary of the estate.
The intervener strongly denied any suggestion put to her in cross-examination that the advance was a gift.
In her affidavit sworn 4 December 2011, the intervener deposes to a conversation where the husband said to her:
Mum I have found an apartment. It is only $100,000. I need the rest of the money you have given me to buy furniture and to have some extra cash. I will pay you back when I sell it.
The intervener deposes that she replied “Okay”.
The intervener also deposes to a conversation with the husband and the wife when she was told that O Street had been sold. The intervener deposes that she said to the husband and the wife “What is happening to the money I lent you? And the husband said “We will give it back”. The wife said “We need to fix up the kitchen in W Street and the verandahs and to re-paint it. We will pay you back. I will be finishing nursing soon and I will be working to pay you off”. The intervener deposes that she replied “Okay”.
The wife gave no evidence about that conversation before Fowler J when she was represented by Counsel. The intervener was not cross-examined about that evidence before me when the wife was represented by Counsel.
I am thus left with the unchallenged evidence of the intervener that the husband and the wife promised to repay the loan.
The contract for the purchase of O Street was exchanged on 8 October 2004 and presumably settlement took place sometime later.
Ms JJ had been given $110,000 by the intervener and her late husband. The husband had been advanced $50,000 by the intervener and her late husband for the purchase of Suburb U. Subject to the mortgage for $12,500, that advance had been carried over into the Suburb S purchase. The husband and the wife had been given $60,000 for the purchase of property to be held on trust for their children and they had taken $50,000 from the intervener’s bank account on 17 May 2004 and paid that money into their Portfolio Loan Account.
Thus the husband and the wife had received the benefit of $160,000 (subject to the mortgage and interest accruing from the date of the mortgage in June 1997) and Ms JJ had received $110,000.
In so far as it is argued that the advance of a further amount of $100,000 was to put the husband in an equal position to Ms JJ, he and the wife had already received amounts in excess of those received by Ms JJ. With the advance of $100,000, the husband had the benefit of a total of $260,000 (subject to the mortgage).
By the time of the advance of $100,000, it is unlikely that the intervener was content to give away a further sum of $100,000, having already advanced $50,000 toward the purchase of Suburb U, given the husband and the wife $60,000 for their children and having been relieved of $50,000. I am satisfied that the intervener was prepared to assist in the purchase of O Street but that she expected that, at some time after the sale, the money would be returned to her.
I am not satisfied that the extrinsic evidence to which the wife refers supports her argument that the funds should be regarded as a gift. Nor am I satisfied that the extrinsic evidence rebuts the clear and unambiguous evidence of the intervener as to the conversations which took place between her and the husband which demonstrated her intention at the time of the advance.
I am satisfied that the intervener lent the husband $100,000 in 2004 for the purchase of O Street. The loan was repayable on the sale of the property.
O Street was sold in 2007, settlement occurring on 29 August. On that day the loan from the intervener was repayable.
The intervener’s response was filed on 13 September 2010, within the six year period specified in the Limitation Act1969 (NSW).
The wife conceded that the intervener’s claim is not statute barred.
The amount of $100,000 will be included in the balance sheet as a joint liability of both the husband and the wife since they both benefited from the advance.

HOW WAS W STREET FUNDED – DID THE INTERVENER LEND FUNDS AND, IF SO, HOW MUCH?

The husband and the intervener assert that the intervener lent the husband $45,000 to pay the deposit for the purchase of W Street.
The intervener gave evidence that she gave the husband the money in cash from money she had withdrawn from the bank to pay for the marble for her late husband’s grave.
The intervener relied on a handwritten document which she said was drawn by her daughter Ms JJ dated June 2005. The document is signed by the husband and the intervener and acknowledges the advance and the agreement to repay.
It was the wife’s case that the document had been prepared at some later date to shore up the claim. Both the intervener and the husband denied that suggestion. The person who drew the document, Ms JJ, was not called in the intervener’s case nor that of the husband.
The intervener was given every opportunity to provide a bank statement or passbook evidencing a withdrawal referable to that amount or a slightly greater amount and she was unable to do so.
The husband gave evidence that he banked the money and later drew a cheque for the deposit. He was unable to produce any bank statement or passbook demonstrating the deposit and subsequent withdrawal.
The purchase price of W Street in August 2005 was $317,000. The settlement date for the purchase was 9 August 2005.
On 12 July 2005 the agent issued a receipt for $31,700 being the deposit. Statements of the Portfolio Loan account show a cheque withdrawal of $31,700 on 15 July 2005.
There were two further withdrawals of $1,395 and $9,757 on 4 August 2005. I infer the larger amount to be the stamp duty. That proposition was put to the husband.
Most of the balance of the purchase money was drawn from two sources. The parties drew $98,236.08 from the Portfolio Loan account on 8 August 2005 and they borrowed a further $185,000 by a separate mortgage with the St George Bank on that same day. The total amount drawn from those two sources was $283,236.08.
On settlement, the husband and the wife were required to provide a cheque to the Town E City Council for that amount together with a further cheque of $1,817.90 for rates. The husband and wife were also required to provide three cheques of $1,853.62, $1,748.67 and $99.25 for costs. (Therefore, the total amount due was $288,755.52.)
The balance required to complete the purchase, apart from the $283,236.08 drawn on 8 August 2005, was $5,519.44, being the amount outstanding for the council rates and costs. The Portfolio Loan account statements show that the sum of $1,853.62, being the amount of one of the three cheques required for costs, was withdrawn from the account on 8 August 2005. The respective amounts of $1,748.67 and $99.25, being the amounts required for the further two cheques for costs, were withdrawn from the Portfolio Loan account on 9 August 2005.The final amount of $1,817.90 required to be paid to the council for rates was withdrawn from the Portfolio Loan account on 10 August 2005. The available credit in the Portfolio Loan was in excess of $18,000.
The husband and the wife had no need to borrow $45,000 from the intervener to complete the purchase of W Street.
The husband has paid $45,000 to the intervener from money withdrawn by him from the Portfolio Loan. That payment should be regarded as a premature distribution to him.

WHAT MONEY WAS PAID BY EACH PARTY AFTER SEPARATION TO SERVICE THE MORTGAGES

While the husband and the wife lived together the rent from Q Street was paid into the Portfolio Loan account and was used to service that loan.
There was a separate mortgage for the purchase of W Street (“the W Street mortgage”). The payments on that mortgage, in the sum of about $600 per month, were made by direct transfer from, the husband says, his account until July 2008.
In August 2008 there was a payment of $44,000 into the W Street mortgage. That payment coincides with a withdrawal of $44,000 from the joint account in the name of Mr & Ms I Vadisanis with St George Bank ending in 6548 (“the 6548 account”).
The passbook shows that on 5 August 2008, there was an internet deposit of $44,000 into the 6548 account. On 6 August 2008 there was a withdrawal of $44,000 and a payment into the W Street mortgage of the same amount.
There is no evidence of the source of the deposit of $44,000. The husband in his oral evidence said that this was the $45,000 that the intervener advanced for the purchase of W Street. W Street was purchased in 2005. The intervener does not suggest that she gave the husband $44,000 in 2008. I can only assume that the deposit came from other funds of the husband and the wife.
After separation the wife made some repayments to the W Street mortgage. The statements were tendered. Counsel for the wife submitted that the total paid was about $3,500.
From the date of separation, the husband stopped the Q Street rent being paid into the Portfolio Loan account and received the rent of about $3,300 per month himself.
The statements for the Portfolio Loan account show payments into the account in October 2008 and December 2008 to July 2009 of amounts in the vicinity of the interest accruing. Those payments were made by the husband.
In July 2009 the tenants vacated Q Street and the husband moved in without the knowledge or consent of the wife.
The husband stopped making regular payments from August 2009. Interest accrued at variable amounts of about $1,600 to $1,650 per month.
The statement for the Portfolio Loan Account shows an arrears letter fee on 6 November 2009 followed by a deposit of $7,109.51 on 23 November 2009. The wife does not suggest she made that payment. The account statement for the W Street mortgage shows that there was a corresponding withdrawal of that same amount on 23 November 2009. The funds used to pay down the Portfolio Loan account in this instance were apparently sourced from the W Street mortgage. A further payment into the Portfolio Loan account of $400 was made on 14 December 2009 by the husband. There are no corresponding withdrawals from the W Street mortgage on that day.
The St George Bank took action to recover arrears and, ultimately after protracted negotiations and applications to the Court, Q Street was sold in July 2010 for $880,000. On sale both the Portfolio Loan account and the W Street mortgage were discharged. The sum of $548,893 was paid to the St George Bank. $150,526 was attributable to the W Street mortgage and the balance of $398,367 was attributable to the Portfolio Loan account.
The balance of the Portfolio Loan account shortly after separation (after the withdrawal of $18,000 by the husband in October 2008) was $371,312. At settlement of Q Street on 18 August 2010 the balance of the Portfolio Loan account was $398,367. The amount of increase in the Portfolio Loan account from October 2008 to August 2010 attributable to the non-payment of interest was therefore $9,055.
The balance of the W Street mortgage shortly after separation (after the withdrawal of $114,000 by the husband in October 2008) was $183,782. At settlement of Q Street the balance of the W Street mortgage was $150,526 (after the repayment of $60,000 by the husband on 12 February 2009). There is a difference of $33,256 between the amount of the W Street mortgage shortly after separation and the amount that the mortgage was ultimately discharged for in August 2010. However this difference must be attributable, at least in part to the withdrawal of $114,000 by the husband and the repayment of only $60,000.
I cannot quantify the loss incurred as a result of the husband’s failure to pay the Portfolio Loan or the wife’s failure to pay the W Street mortgage but those matters will be taken into account when assessing contributions.

$132,000 REMOVED BY THE HUSBAND FROM THE MORTGAGE ACCOUNTS

On 1 October 2008 the husband withdrew $44,000 and $70,000 (a total of $114,000) from the W Street mortgage.
Also on 1 October 2008, the husband withdrew $18,000 from the Portfolio Loan account.
The total of the husband’s withdrawals was $132,000.
The wife sought the repayment of the money to the relevant accounts.
On 5 February 2009 the Court made orders that the husband repay $60,000 into the W Street mortgage and pay a further $10,000 to the wife’s solicitors. The husband paid $60,000 into the W Street mortgage on 12 February 2009.
Thus from the $132,000 withdrawn, the husband retained $62,000.
This was an interim distribution to the husband of the property of the marriage.
The husband and the wife agree that the interim distributions of $25,000 to the husband and $55,000 to the wife pursuant to Orders made on 6 June 2011, the interim distribution to the wife’s solicitors of $10,000 pursuant to the Orders made 5 February 2009 and the interim distribution to the wife pursuant to the Orders made 10 April 2013 should be notionally included in the pool. There can be no distinction between the Court ordered interim distributions and the informal unilateral distributions made by the husband to himself and each should be treated in the same manner.
Accordingly the distribution of $62,000 retained by the husband will be notionally added to the pool.
The husband asserts that from that amount he paid $45,000 to the intervener. He had no obligation to do so and the money is deemed to be in his possession for the purpose of assessing the asset pool.

HOW SHOULD THE SUM OF $24,117.36 BEING THE CHEQUE PAYABLE TO THE HUSBAND’S SISTER AND DEPOSITED INTO THE HUSBAND’S ACCOUNT BE TREATED?

It is not disputed that the cheque payable to the husband’s sister Ms JJ was deposited into the husband’s account and the money was retained by the husband and the wife.

The money had and received by the husband and the wife was not their money.
The husband’s sister would be entitled to seek its recovery.
The money was received in Australia on 23 November 2004. No demand for its return has been made by the husband’s sister.
She is not a party to these proceedings. The evidence does not establish whether she is aware of the transaction.
The claim may be statute barred but an argument could be raised that the limitation period runs from the time when Ms JJ became or becomes aware of the transaction.
The safest course is to treat the money due to the husband’s sister as a contribution on behalf of the husband and to require the husband to indemnify the wife against any claim for the repayment of the money.

HOW SHOULD THE SUM OF $25,000 RETAINED BY THE HUSBAND AND THE WIFE FROM THE SALE OF DD STREET BE TREATED?

When DD Street was sold for $135,000, the sale proceeds were paid into an account in the name of the husband and the wife. The wife drew a cheque payable to the husband’s sister Ms JJ for $110,000 and the husband and the wife retained the balance of $25,000
There was no evidence before me which suggested that the husband and the wife were entitled to those funds.
For the reasons I have expressed above, the safest way to treat those funds is as a contribution on behalf of the husband and for the husband to indemnify the wife in respect of any claim for the funds.

SECTION 79(2)

The principal asset of the marriage is W Street which is owned in joint names and the husband and the wife each ask the Court to separate their interests.
Their joint interest in Q Street has been liquidated and is held in a controlled monies account pending the determination of these proceedings. This fund, too, needs to be divided between the parties.
Both the husband and the wife ask the Court to determine their respective interests in the pool of assets.
Neither party can have access to the funds unless the Court makes a determination and therefore it is just and equitable to do so.

THE BALANCE SHEET

At the commencement of the hearing, a proposed joint balance sheet was handed up by Counsel for the wife. This document had been completed by the wife’s solicitors and the husband’s former solicitors. The husband’s former solicitors withdrew the day before the hearing. The husband did not agree with some of the concessions made on his behalf by his former solicitors. Whether he was aware of those concessions when they were made is not clear.
The significant area of dispute was the value of W Street, which the wife wishes to retain.
Counsel for the wife submitted that the Court should adopt the 2011 valuation which was agreed before Fowler J. Clearly this is not an available course. The obligation of the Trial Judge is to identify and value the assets at the date of the hearing.
Accordingly, by consent, the wife was given leave to instruct the Single Expert to prepare an updated valuation. It is that figure which is adopted here.
When the valuation was completed and the matter was listed before me for further submissions on 12 March 2015, Counsel for the wife handed up an amended balance sheet, which is set out below. I note that it was conceded in the course of submissions before me that although the amount of the interim distribution to the wife pursuant to the Orders of 6 June 2011 was initially stated in the balance sheet to be $50,000, the amount to be paid to the wife pursuant to those Orders was actually $55,000. It is this revised figure which is adopted in the balance sheet below.

Ownership		Description	Wife’s value	Husband’s value
1	Joint	W Street, Town E	420,000.00	500,000.00
2	Joint	Funds held in Trust Account at VRT Lawyers	139,252.77	231,648.01
3.	~~Wife~~	~~Motor vehicle 1~~	~~62,000.00~~
3	Husband	Motor vehicle 2	1,500.00	1,500.00
4	~~Husband~~	~~Household contents~~	~~10,000.00~~	~~10,000.00~~
5	Wife	Shares	6,018.00	6,018.00
6	~~Wife~~	~~Household contents~~	~~3,000.00~~	~~3,000.00~~
7	Wife	Funds in Bank Accounts	1,630.00
8	Husband	Diamond ring [in husband’s possession]	1,000.00	1,000.00
9	Husband	Property in Europe	NK	Nil
Total		$569,400.77	$740,166.01

Ownership		Description	Wife’s value	Husband’s value
10	Husband	Money withdrawn by the husband from joint account unaccounted for	62,000.00	Nil
11	Husband	Rent from Unit 2 Q Street	NK	Nil
12	Husband	Interim distribution pursuant to Orders of 6 June 2011	25,000.00	25,000.00
13	Wife	Interim distribution pursuant to Orders of 6 June 2011	55,000.00	55,000.00
14	Wife	Interim distribution pursuant to Orders of 4 February 2009	10,000.00	10,000.00
15	Wife	Distribution pursuant to Orders of 10 April 2013	50,000.00
16	Intervener.	Distribution pursuant to Orders of 10 April 2013	50,000.00
Total		$252,000.00	$90,000.00

Ownership		Description	Wife’s value	Husband’s value
17	Joint	Claim by Ms J Vadisanis	12,500 plus interest	451,397.00
18	Wife	E School	11,688.00
19	Wife	Loan from parents (total $45,000) to renovate W Street	15,500
20	Wife	Loan from parents (total $45,000)	29,500.00	Nil
21	Wife	Credit cards	50,678.00	Nil
22	~~Wife~~	~~Esanda Finance~~	~~63,255.00~~
23	Wife	Legal costs	250,000.00	Nil
24	Husband	Loan to Commonwealth Bank	41,000.00
25	Husband	Credit Card – American Express	3,500
26 H	Husband	Legal fees to Lisa Ruggero, Solicitor	95,000
27 H	Husband	Legal fees to Johnston Vaughan	30,000
28	Join	Children’s money	$60,000.00
Total		$429,866.00	620,897.00

Ownership		Description	Wife’s value	Husband’s value
29	Wife	AMP [accumulation interest]	5,326.00	5,105.00
30	Wife	Care Superannuation [accumulation interest]	3,408.00	3,525.00
31	Wife	First State [accumulation interest]	33,254.00	17,400.00
32	Wife	Scottish Life (UK)	5,841.00	4,335.00
33	Husband	Colonial Super Retirement Fund	780.00	780.00
34	Husband	HESTA	35,893.00	35,893.00
Total		$84,502.00	$67,038.00

The disputes in relation to balance sheet items will be dealt with using the item number on the balance sheet.
1. The W Street property
The husband disputed the Single Expert’s valuation of the property at $420,000. However, he declined the opportunity to cross-examine the valuer on this figure. In these circumstances, the figure of $420,000, which is opined by the Single Expert valuer to be the current fair market value of the property, will be adopted for the purposes of these proceedings.
2. The controlled money account
Documents produced verify the balance as at 23 February 2015 at $139,253.
3. Wife’s Motor vehicle 1
The Volvo is subject to finance in at least an equal sum. It will be removed from the balance sheet.
4. The husband’s Motor vehicle 2
The only evidence of value is the husband’s admission against interest of $1,500.
5. and 7. Contents
There is no evidence of the value of contents and the items will be removed from the balance sheet.
9. The diamond ring
The only evidence is the husband’s evidence that he sold the ring for $1,000. It will be included at that value.
10. Property in Europe
There is no evidence that the husband has any property in Europe and this item will be removed from the balance sheet.
18.      Money owed to the intervener
I am satisfied, as set out earlier in these Reasons, that the parties owe the intervener the following amounts:
·    $35,901 pursuant to the 1997 mortgage;
·    $24,117 from the European money; and
·    $100,000 advanced to the husband to purchase O Street.
Total: $160,018. The intervener has already received an interim distribution of $50,000 so a liability of $110,018 will be included in the balance sheet.
19. to 24. Wife’s liabilities incurred after separation
Counsel for the wife conceded that these liabilities should be taken into account in the consideration of s 75(2).
25. To 28. Husband’s liabilities incurred after separation
Consistently with the treatment of the wife’s liabilities, these will be taken into account in the consideration of s 75(2).
An additional liability is the debt owed by the husband and the wife to the Trust in an amount not less than $95,605.
I therefore find the asset pool to be:
ASSETS

1.	Joint	W Street, Town E	$420,000
2.	Joint	Controlled monies account	$139,253
3.	Husband	Motor vehicle 2	$ 1,500
4.	Wife	Shares	$ 6,018
5.	Wife	Bank accounts	$ 1,630
6.	Husband	Diamond ring	$ 1,000
7.	Wife	Interim distributions pursuant to Court orders	$115,000
8.	Husband	Interim distributions (unilaterally from joint funds)	$ 62,000
Husband	Interim distributions pursuant to Court orders	$25,000
TOTAL	$771,401

LIABILITIES

9.	Joint	Debt to the intervener	$110,018
10.	Joint	Trust money to be secured in interest bearing deposit pending the children’s majority	$ 95,605
TOTAL	$205,623
NET ASSETS	$565,778

SUPERANNUATION

The husband and the wife agreed that their respective superannuation entitlements are:

11.	Wife	AMP	$5,518
12.	Wife	Care Superannuation	$3,479
13.	Wife	First State Superannuation	$54,942
14.	Wife	Scottish Life	$5,841
TOTAL WIFE	$69,780
16.	Husband	First State Superannuation	$49,005
TOTAL HUSBAND	$49,005

CONTRIBUTIONS

At the commencement of the relationship the husband had an interest as to 95 per cent in Suburb U. When that property was sold, he received $110,000 but that sum was subject to the loan to the intervener which was found by the Full Court to be $12,500. The husband contributed $97,500 from the sale of Suburb U.
The wife had savings of $6,000 but the husband asserts that she had a HECS debt of $5,000. The wife denies that assertion. I cannot find that the wife had any significant assets at the commencement of the relationship.
The intervener made a contribution, albeit not a willing one, of $50,000 which was the money the husband and the wife removed from her bank account and put into the Portfolio Loan account in May 2004.
The husband’s sister made a contribution of $24,711, again not a willing one, from the money due to her from the European money.
Until separation the husband was the primary wage earner, although there were periods when he was not in full time employment, and the wife was the primary carer for the children although she worked in the later years. Their physical contributions were therefore equal.
After separation, the husband retained the rent for Q Street of $3,300 per month until July or August 2009, a period of ten or 11 months representing about $33,000.
The husband had the benefit of the occupation of Q Street, not paying the mortgage, from July or August 2009 to July 2010 when the property was sold.
The wife had the benefit of the occupation of W Street between separation and July 2010 (1 year and 10 months). In that period the mortgage payments were therefore about $13,200 and she paid $3,500.
From July 2010 when Q Street was sold and the mortgage on W Street was discharged, the wife has had the benefit of occupation, with the children, of the unencumbered property which was and is the only significant asset of the parties.
After separation the children lived with the husband from October 2008 until August 2009, a period of about ten months. Thereafter they have lived with the wife and the husband saw the children on two occasions between August 2009 and 2012. In 2013 the children spent more time with the husband when they visited him in Sydney about once every six weekends. The wife has been the almost sole carer for the children for six years.
The husband has paid child support in accordance with the assessments of the Child Support Agency from time to time. After the children returned to live with the wife in 2009 the amount paid was insignificant. From March 2014 the amount was increased and the contribution was significant. Before March 2014, the wife financially supported the children.
Counsel for the wife submitted that the appropriate adjustment, having regard to all of those factors, was an adjustment of contributions as to 47.5 per cent in favour of the wife and 52.5 per cent in favour of the husband. The husband submitted that he should receive 60 per cent of the net assets but did not specify a proportion specifically referrable to contribution.
Having regard to the greater direct financial contributions on behalf of the husband on the one hand, and the wife’s greater parenting contributions on the other, I accept the submission of Counsel for the wife.
Contributions will be assessed 52.5 per cent to the husband and 47.5 per cent to the wife.

SECTION 75(2)

The wife is working and earns $76,000 per annum.
The husband is in employment and earns $79,000 per annum.
The husband pays child support and there is no reason to assume he will not continue to do so.
The wife will be required to provide housing for the children however the oldest child is 17 years and will be 18 years in March 2016 and the youngest child will be 16 years in June 2015.
The wife has a debt for the children’s school fees. The husband and the wife agreed to educate the children at a private school and the wife has taken responsibility for the payment of the fees. She has other liabilities but those liabilities were incurred without consulting the husband and are discretionary.
The wife’s superannuation entitlements exceed those of the husband by $20,000. They are of similar ages and their working future is approximately the same. Neither asks for a splitting order so each will retain his or her entitlements.
The wife has substantial liabilities incurred after separation, including legal fees
The husband has less significant liabilities.
There should be a small adjustment in favour of the wife, primarily because of the fact that she will have to house the children who are aged 17 years and almost 16 years pay the school fees. I consider an adjustment of 5 per cent to be appropriate.

CONCLUSION

The husband will receive 47.5 per cent of the net assets and the wife will receive 52.5 per cent.
The wife wishes to have an opportunity to retain W Street.
The intervener will receive $110,018 from the controlled monies account in repayment of the debts owed to her by the husband and the wife.
The husband will receive the remainder of the funds of approximately $29,235 from the controlled monies account. He has other personal assets (including the interim distributions) of $89,500. For the husband to receive 47.5 per cent of the pool, he is to receive $268,745 in net assets. Therefore he must receive a further sum of $150,010 from the wife.
In the event that she is unable to pay that amount, W Street will be sold. The husband will receive a sum certain and the wife will take the risks attendant upon the sale.
The sum of $95,605 will be preserved for the Trust, either from funds raised by the wife if she retains W Street or from the proceeds of sale.

I certify that the preceding two hundred and fifty (250) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 13 March 2015.

Associate:

Date: 13/3/2015

[2015] FamCA 161

13 March 2015

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Contract Law

Legal Concepts

Estoppel

Remedies

Fiduciary Duty

Constructive Trust

Reliance

Breach