Vranic and Vranic & Ors

[2011] FamCA 130

FAMILY COURT OF AUSTRALIA

VRANIC & VRANIC AND ORS [2011] FamCA 130

FAMILY LAW – PROPERTY – Transaction to defeat claims

APPLICANT: Ms Vranic

RESPONDENT: Mr Vranic

SECOND RESPONDENT: Ms Muncic

THIRD RESPONDENT: M Pty Limited

SEVENTH RESPONDENT: Mr P as Trustee in Bankruptcy of the property of Mr Vranic

FILE NUMBER: SYF 6740 of 2002

DATE DELIVERED: 3 March 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Cohen J

HEARING DATES:

29 November 2007;

28-31 July 2008;
1, 4-8, 11 August 2008;
3 September 2008;
7 December 2009;
11 February 2010;
2 July 2010;
2, 28 September 2010;
25 October 2010;
12, 16 November 2010;
10, 14-15 December 2010;
9 February 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Rayment QC & Mr Locke

SOLICITOR FOR THE APPLICANT: Oliveri Attorneys

COUNSEL FOR THE RESPONDENT: Ms Black

SOLICITOR FOR THE RESPONDENT: Van Houten Solicitors

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: Mr Todd

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: ERA Legal

COUNSEL FOR THE SEVENTH RESPONDENT: Mr JT Johnson

SOLICITOR FOR THE SEVENTH RESPONDENT: Sally Nash & Co Lawyers

Orders

1. It is hereby declared that the third respondent M Pty Limited holds its legal interest in the real property at and known as Property at N being the whole of the land comprised of Lot … in Deposited Plan … in trust for the husband.

2. That within one month M Pty Limited shall do all things and execute all documents necessary to transfer the whole of its estate at law and in Equity in the land described in Order 1 herein and shall transfer such estate to Mr P as Trustee in Bankruptcy of the property of the husband.

3. Costs in the proceedings to date including costs of and associated with the issue decided by these orders are reserved to the judge who makes final orders in these proceedings.

4. The matter is to be transferred to the docket of a judge in the Sydney Registry of this Court other than the Honourable Justice Watts.

It is noted that publication of this judgment under the pseudonym Vranic & Vranic and Ors is approved pursuant to s 121 (9) (g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF6740 of 2002

Ms Vranic

Applicant

And

Mr Vranic

Respondent

And

Ms Muncic

Second Respondent

And

M PTY LIMITED

Third Respondent

And

Mr P as Trustee in Bankruptcy of the Property of Mr Vranic

Seventh Respondent

REASONS FOR JUDGMENT

1. These proceedings originally had, at their heart, a claim by the wife for property settlement against the husband. Because of the manner in which they have evolved they have largely been concerned with the wife’s claim that the husband has, in attempted fraud on her, engaged in a conspiracy with the second respondent involving the third respondent and has otherwise attempted to hide his assets and present himself as one whose liabilities exceed his assets by a considerable amount. When the hearing commenced the latest statement of financial circumstances sworn and filed by the husband; that of 23 May 2007, claimed that he was unemployed, had no income, weekly outgoings of about $1,500, having gross superannuation of $11,602, property worth $1,000, liabilities in excess of $1.34 million and no financial resources other than superannuation. The only real estate he then claimed to own is at R and was said to be worth nothing due to it being security for a loan made to him.

2. The property he admitted to comprise solely of a 1979 car. The former matrimonial home had already been transferred to the wife for the consideration of $1.0m. In the wife’s statement of financial circumstances of 24 May 2007, she states that this home was worth $1.5m but that an $830,000 debt was secured by mortgage over the home. The home has since been sold and after payment of her legal fees nothing was left for her.

3. The wife was, at the hearing, represented by Mr. Rayment QC. Although the case was set down on the basis that Mr Richardson SC instructed by solicitors was representing the husband, he was at first unrepresented at the hearing but was after the first few days represented by Ms Black who had been Mr Richardson’s junior when acting for the husband at other times in these proceedings.

4. The second respondent, Ms Muncic, who had once been a bookkeeper or officer manager of a group of companies owned or controlled by the husband, and the third respondent, a company in which the second respondent is the sole registered shareholder which I shall refer to as M Pty Limited, were represented by Mr Todd of Counsel, instructed by a solicitor who had only recently been engaged. Mr Hughes QC was brought in to lead Mr. Todd on one occasion.

5. I had received lists of documents to be relied on from the wife and the second and third respondents. On the first day of the hearing, Mr Rayment QC opened for the wife. In doing so, he compared an affidavit of Ms Muncic with an annexed bank statement with the copy of the record of the transactions on the same account for the same period produced by the bank.

6. The second and third respondents’ reaction to the wife’s Counsel’s opening address, especially to the material I have just referred to, had a dramatic effect on the conduct of the proceedings. The whole situation changed. It is appropriate in order to fully appreciate the nature of the proceedings which followed to be specific about what led to the change and analyse the effect of the change on proof of the matters in issue.

7. The affidavit of Ms Muncic was not originally included in the affidavits she relied on at the final hearing. It was sworn on 7 October 2005 in support of applications by herself and M Pty Limited for summary dismissal of the wife’s claims against them. This claim was essentially that the husband was carrying on business through the second respondent in the name of the third respondent and had undermined his assets partly by diverting more than $450,000 to the second and third respondents which was then used to purchase commercial premises in the name of the third respondent at N for $3m, with $300,000 being used essentially for the deposit, $150,000 to pay stamp duty, smaller sums to pay costs of the purchase and the balance borrowed from a bank. In the affidavit of 7 October 2005, Ms Muncic swore that she had withdrawn $250,000 from her bank account, in her name with Westpac Bank for the deposit and that the other $50,000 came from a finance broker. A bank statement was obtained from the Westpac Bank in 2005 which led to a serious questioning of the truth of Ms Muncic’s affidavit evidence on this issue. I shall return to it. The affidavit became Exhibit “O”.

8. It appeared to be clear by the end of the first day of the hearing that either the statement which is part of Exhibit “O” is a forgery which Ms Muncic must have known about when she swore the relevant affidavit and that she had committed perjury or the bank’s own records were in error or she would have to explain any error she has made. However, at the beginning of the second day of the hearing, counsel for the second and third respondents opened his clients case by informing the Court that, whereas they had previously stated they would be relying on 2 affidavits of the second respondent respectively sworn 20 September 2005 and 23 May 2007, now the respondent wished to put no affidavit material before the Court. The second and third respondents intended to conduct the case solely by putting the wife to proof of her case against them. The inference from these matters is that they tend to help the proof of the wife’s case because Jones v Dunkel (1959) 101 CLR 298 would apply to raise the inference that Ms Muncic’s sworn evidence would not assist her case and that of M Pty Limited.

9. The husband had been given the opportunity to open his case before the second and third respondent. His case was that he had no property or resources other than those in his statement of financial circumstances. It was appropriate to hear the opening address of each party before any witnesses were introduced into the witness box because the parties’ affidavit evidence had already been filed and was available to be read. Thus, each party had already theoretically called that part of his or her evidence in chief which was to be given by witnesses. It is of assistance to the Court to be able to appreciate the case of each party while reading the affidavit evidence; evidence I do not usually read until I have heard all opening addresses. In this instance, I had not read the parties’ affidavit material before the second and third respondents informed me they did not wish to rely on it. There was no basis, in my view, for any refusal to permit them to withdraw the material. I permitted it to be withdrawn and have not read the affidavits in the second and third respondents’ list of documents.

10. To this time the second and third respondents had not filed or been ordered to file any statements of financial circumstances as required by Chapter 13 of the Family Court Rules, specifically rule 13.04. It might have been thought that their financial situations were not relevant to the issues in dispute and did not have to be disclosed because of rule 13.02(2). However, as the case progressed, I was informed that the wife would allege that M Pty Limited, which was the registered proprietor of the land at N, had refinanced its business operations and that the debt secured by mortgage over the land had been greatly increased since the wife’s claim that M Pty Limited held it in trust for the husband and should either transfer it to him or directly to the wife had been served on it and Ms Muncic. She was and still is M Pty Limited’s only director and only registered shareholder.

11. In the light of this assertion, the wife sought that I order the second and third respondents to file a statement of financial circumstances. I took the view that the financial circumstances of these respondents were relevant to the issue because I might have to make orders requiring either or both to make up any difference between  the sum which  would have been owing on the mortgage if there had been no refinancing and the amount which was actually owing after the refinancing because  the refinancing, if established as alleged, could have had no effect other than to improperly reduce the assets available for division between the husband and wife under s. 79 by a considerable sum. Ms Muncic complied with this order by filing a document in the usual form being the affidavit provided for by rule 13.05 and form 13. She also swore an affidavit on behalf of M Pty Limited which purports to disclose its financial situation. On their filing I read these documents and included them in the evidence in the case.

12. There is very little authority on the evidentiary status of documents which have been filed as a result of Orders 13.01 to 13.05 inclusive. This may be because there is an obvious tension, if not complete inconsistency, between the fact that these statements of financial circumstances are either wholly in the form of affidavits or are in the form of affidavits with annexures, yet much of the contents which are required to be disclosed cannot be disclosed by their deponents in properly admissible form. The values for property, resources and debts which must be provided are, in many instances, derivatives of other sources or estimates made by non-experts or guesses made without reference to their admissibility. In any other type of affidavit they would be the subject of successful objection to their admission as evidence. In the Family Court of Australia, statements of financial circumstances are necessary for justice to be done and are relied on by the Court to the extent it is appropriate to do so in each particular case.

13. As I have already said, the ordinary principles of proof and conduct of proceedings are to be applied to assertions in financial statements filed under Chapter 13 of the rules. One of those principles is the rule in Browne v Dunn (1894) 6R67 at 70. An unusual situation which leads to the need to consider this rule arose in these proceedings.

14. Browne v Dunn is really a rule of professional practice which can affect proof. After the wife and husband closed their cases, Mr Rayment indicated he did not wish to cross examine Ms Muncic. It was clear that she opposed being required to enter the witness box for cross examination. I pointed out that it was my tentative view that as each had given evidence in chief, he might have an obligation to put to Ms Muncic any version of the facts and circumstances upon which he relies where that version significantly differs from that disclosed in the affidavits of financial circumstances. Mr TEF Hughes QC then came into the matter on behalf of the second and third respondents for the purpose of arguing that the second respondent could not be required to enter the witness box for cross examination. He did not advance any substantial argument to support this position.

15. I ruled that Ms Muncic was obliged to make herself available for cross examination. I held that the Court had statutory power to impose the obligation on a party to file and serve a sworn statement of financial circumstances which must candidly disclose all matters which would allow the Court and the other parties to appreciate the financial situation of that party. I had in mind ss. 38(1) and 42(1) of the Family Law Act and Part 13.1, particularly rules 13.04 and 13.05, of the Rules of Court.

16. It is obvious that those advising the wife as well as those advising the second and third respondents took the view, for quite different reasons, that their clients’ interests would be best served if the second respondent was not cross-examined. They came to an agreement that the wife would not require the second respondent to enter the witness box to be cross-examined and that the second and third respondents would not rely on Browne v Dunn or otherwise suggest that I should accept her evidence because the wife’s version of the facts was not put to her where it differed from hers and/or her version was not challenged in cross-examination. This agreement was adhered to. I do not regard it as other than proper for the Court to accept that the proceedings were deliberately conducted on this basis, so I shall come to all conclusions on issues of disputed fact on the evidence without applying Browne v Dunn because the parties agreed that I should not apply it.

17. As must already be appreciated, the credit of the husband and the second respondent was at the heart of these proceedings. The wife’s credit was not the subject of any concerted challenge and is virtually irrelevant to the issue I must determine. As she did not have much specific knowledge of the business affairs of the husband or the other respondents, but challenged the truth of their cases, she was largely left to rely on the husband’s evidence in chief and cross-examination and such documents she could gain access to. These have been sufficient to satisfy me to a very high degree that the husband and Ms Muncic have been complicit in a long standing attempt to deceive the Court and wife over the husband’s interest in or involvement with M Pty Limited and the land at N and that the credit of both the husband and Ms Muncic is so lacking I could not believe anything either said which is in issue, has been challenged and would otherwise assist their cases.

18. From the outset of these proceedings, the husband clearly demonstrated from his initial oral evidence that he is a calculating deliberate liar on oath. The first question his counsel asked him was answered with what I regard as part of his attempt to deceive. He told a ludicrous lie. All that was asked of him by his counsel was his name and residential address. Relevantly he replied “I don’t really have fixed address but at the moment I live [G Street in G]”.  I then asked him where else he lived. His answer was “most of the ….a lot of times are just at motel or Formula 1, but don’t have fixed address. This is all temporary here and there”. Within a few more questions he, in effect, admitted that he was deliberately lying. He had been asked to provide the other addresses where he had lived. He nominated the address of a friend, Ms U whose husband will later feature in this judgment, then said, on being asked to provide other addresses “most of the time is Formula 1”. Formula 1 is a well known chain of budget priced motels.

19. I then asked the husband if he understood that a subpoena could be issued to Formula 1 to produce its guest register. After one more question to identify which Formula 1 motel he stayed at, I asked him when he last stayed there. His reply disclosed the falsity of his earlier evidence. He said “About three years ago” then, within a few more questions said he really lived at G Street and had been living there for the last three years. He was no longer portraying himself as being an impoverished itinerant, but he continued portraying himself as impoverished. In answer to questions about his mode of support, he disclosed he was not in any paid employment, had no income, yet was not claiming the dole. He said he was living by borrowing from friends.

20. This stance was unusual and incongruous, given his known circumstances at that time. In an affidavit he swore on 1 June 2006, the husband disclosed that he was the plaintiff in Supreme Court of NSW proceedings against Mr S, his former accountant. The proceedings were to establish an entitlement to interests in four companies in which he had once been the registered owner of shares. The proceedings were then part heard. The companies are Business 1 Pty Limited, Business 2 Pty Limited, Business 3 Pty Limited and Business 4 Pty Limited. He explained that he had not declared any interest in these companies because he was not the registered owner of any shares in them. Of course, he must have been claiming to have a chose in action in relation to them and this was declarable and should have been declared as should any equitable interest in them. He was claiming in the Supreme Court that Mr S held half the shares in them in his name on trust for the husband. The value of these shares was very substantial.

21. When he swore his financial statement of 24 May 2007, he did not refer to any interest in these companies. A very short time afterwards, on 15 June 2007, the Supreme Court made declarations and orders which, in effect, made the husband the legal owner of half the issued shares in each company, ordered the winding up of each company and appointed a liquidator for that purpose.

22. The first attempt by the husband to inform the Court or the wife of this significant change was a short time before the hearing, when a solicitor who temporarily acted for the husband sent some material to the wife’s solicitor which might alert them that something was happening or had happened with the husband’s claim of an interest in the companies, but which tended to show the husband’s financial situation was even worse than he has previously claimed. The affidavit of the husband filed in Court on 28 July 2008 and sworn 25 July 2008 was the first real attempt by the husband to inform the Court and the wife that the husband had benefited by the Supreme Court proceedings.

23. Nevertheless, after judgment has been reserved in late 2009 in what were the

    
    

    s. 79 proceedings, I was informed that the husband had become bankrupt on 3 May 2010. Because the extent of his creditors could not be determined before I am due to retire, I was asked to decide one essential issue which arose at the s. 79 hearing and to stand the balance of the s. 79 proceedings over to be reheard by another judge when they are ready for hearing. The issue I am left with is the claim by the wife that M Pty Limited holds any interest it has in the commercial property at N on trust for the husband.

1. The husband, Ms Muncic and M Pty Limited deny that the husband has any interest in this land. Its registered owner is M Pty Limited. It has been since it purchased the property from a company which has no interest in these proceedings on 25 June 2005 after M Pty Limited and the vendor contracted the sale by a standard form contract for sale of land on 16 April 2002. The vendors agent was B and M Pty Limited’s solicitor was T, (“T Solicitors”).

2. The settlement statement from T Solicitors discloses that, at settlement, $2,721,212.50 was due to the vendors and, of this, $2,590,811 came from Bankwest and the balance came “from [C] ([M Pty Limited])”, of which $130,337.58 was in a bank cheque paid to the vendor, $30,360 was paid to P Pty Limited and $17,272.68 was paid to T Solicitors. There is no doubt that the husband, Mr Vranic, was usually known casually as ‘C’ or ‘M’.

3. Exhibit “T” was tendered on 1 August 2008 during the hearing when Mr. Todd was appearing for Ms. Muncic and M Pty Limited. It was tendered as a document signed by Ms Muncic without objection from Mr. Todd. It seems to bear a signature like those on her affidavit and financial statement in evidence. It is dated 11 February 2002 and headed “Assets and Liabilities for [Ms Muncic] as at February 2002”. It discloses her asset situation to be:

   Assets            House            $398,000

   Unit               $265,000

   Car                 $20,000

   Furniture       $60,000

   Bank              $20,000

   Total              $763,000

   Liabilities      House            $255,684

   Unit               $89,911

   Car                 $4,000

   Credit Card    $3,000

   Total              $352,595

   Thus she had net assets of about $410,405 and net easily liquidatable assets of $330,405. There is no mention of any interest in M Pty Limited which had been incorporated some years earlier. This may be because she claims to hold the share registered in it in her name as trustee of a trust for the benefit of her children.

4. On 3 May 2005, Ms Muncic was publicly examined on oath before a deputy registrar in the Supreme Court of NSW pursuant to the Corporations Act 2001. She said she had been the sole director and company secretary of M Pty Limited since 14 May 1999. She was asked if S Pty Limited, the company about which the examination was being held, had paid the stamp duty on the purchase by M Pty Limited of the property at N in the amount of about $150,000. To say she was evasive is an understatement. However, she was represented by a Mr. R, and he clearly admitted at p 22.8 of the transcript of the examiniation, which is Exhibit “LV1” to the wife’s affidavit sworn and filed 12 August 2005, that the $150,000 stamp duty was paid by S Pty Limited. The cheque from S Pty Limited for the stamp duty had a notation written on it to the effect it had been received on behalf of B, the estate agent on the sale. The cheque was signed by the husband. The cheque itself was made out to B. It was obviously so this firm could pay the stamp duty on the contract. Ms Muncic at first (p 22.2TS) tried to assert that the payment by S Pty Limited was a repayment of a debt to her.

5. She then said during the same examination (p 24.2TS to p 24.9) that the funds for the cheques on settlement of the purchase of the property at N for $130,337.58 and for $30,360 came from her and that she did not know where the $17,272.68 cheque for T Solicitors came from. She denied it came from the husband and suffered a supposed loss of memory or relied on ignorance to answer further questions about where she might have obtained the funds for such a significant transaction.

6. Eventually, she said (at TS p 29.6) the words “from [C]” in the settlement statement meant that the husband delivered the cheques to T Solicitors on her behalf. This is a facile, ridiculous and clearly untruthful answer. Solicitors are not in the habit of attributing the source of settlement moneys to the person who physically delivered them. I do not accept that this answer was anything other than a cynical perjury. The ownership of S Pty Limited was, as to 900 of the 1000 issued shares, in the husband’s hands. He was its director and he controlled it. The wife owned the other 100 shares. S Pty Limited, before it went into liquidation, was, according to the husband, the owner of property at G and conducted no business other than that of landlord.

7. On p. 63 of the Transcript of the husband’s examination in the Supreme Court on 6 December 2004 in relation to S Pty Limited’s affairs, the husband admitted that S Pty Limited paid the stamp duty on the sale of the property at N to M Pty Limited. He said it did this because S Pty Limited was indebted to M Pty Limited because Ms Muncic, through this company, did S Pty Limited’s administrative work when a receiver had been appointed to S Pty Limited in 2000. He changed his tune when he apparently realised the obvious; that the receiver would do what he said M Pty Limited was paid to do. Then he said that from 2000 to 2002 M Pty Limited made interest payments to St. George Bank which S Pty Limited was liable to pay.

8. In attempting to justify this claim in answer to further questions, the husband, who is a very intelligent and capable man but prone to tell foolish lies impulsively, was reduced to saying M Pty Limited was just helping S Pty Limited survive. One might see a very good reason for this if M Pty Limited was in fact the husband’s company or the property at N his land. Surely Ms Muncic would have known why S Pty Limited had paid the $150,000 if she had decided to pay St George Bank to help S Pty Limited and the husband out, even if it was done for the less altruistic reason of maintaining M Pty Limited’s source of work and income.

9. There are however associated transactions to the $150,000. They are the $30,360 paid to P Pty Limited for its commission in raising the Bankwest loan, the $130,337.50 paid to the vendor to make up the purchase price with the usual adjustments and the $17,272.68 in legal fees paid to T Solicitors. All three payments were described in the T Solicitor’s settlement sheet as coming from the husband with M Pty Limited in brackets. T Solicitors acted for the husband. He had been the husband’s solicitor for some time, including in proceedings which the husband had commenced in 2000 in the District Court of New South Wales with Business 5 Pty Limited, Business 6 Pty Limited, Business 7 Pty Limited and Business 8 Pty Limited when they successfully sued Ms Muncic’s brother and sister-in-law for a $135,000 debt arising from loans he and these companies had made to them.

10. It is a matter of some importance that these companies were the co-plaintiffs with the husband. It is important because when Ms Muncic gave evidence in the District Court by affidavit of 17 July 2001, she said the $135,000 in total came wholly from the husband and she could not make any of the numerous advances which made up the $135,000 without “[C’s]” permission. In evidence before me the husband said he received the whole $135,000, put it in his personal bank account (Exhibit “J”) and spent it. He therefore admitted, in effect, using the funds of companies he controlled as though they were his. The co-plaintiffs were joined because some of the money for the loans came from them.

11. One would expect the solicitor who acted on the purchase for M Pty Limited and who acted for the husband in the District Court and generally and who was responsible for the District Court affidavit, to know the precise details about the real purchaser of the property at N or the person or persons who were to be ultimately entitled to the property being purchased. He was referring to the husband when he wrote “from [C]” on Exhibit “Q”, the settlement sheet. He wrote to the husband on 12 August 2002 (Exhibit “J”) addressing him as “Mr [C Vranic”. In her affidavit in the District Court, Ms Muncic said that the husband was the owner of the S Group of companies; that is, the other plaintiffs, among others in that Group, in the District Court proceedings. The tax invoice from T Solicitors for its fees on the purchase of the property at N for $17,272.68, Exhibit “U”, notes that his instructions came from both the husband and Ms Muncic.

12. The $300,000 deposit was paid on 16 April 2002. On 12 April 2002, the husband had $51,872.53 in a personal bank account (Exhibit “C”). On that day he withdrew $48,000. That $48,000 was banked in an account of M Pty Limited on 12 April 2002 and $50,000 was withdrawn on 15 April, leaving $1274.26 in the account (see Exhibit “C”). In her affidavit sworn 7 October 2005, Exhibit “O”, Ms Muncic swears that on 12 April 2002 she drew a cheque on M Pty Limited for $50,000 to pay the selling agents, B, $50,000 of the $300,000 deposit and that the balance came from her personal account on 24 May 2002. She annexed a copy of the cheque butt. The cheque butt is dated 12 April 2002.

13. A photocopy account statement for Ms Muncic’s personal account from which she says she withdrew the $250,000 balance is annexed too. It looks suspicious at first sight. Analysis of the facts proves it is forged. It is from the same account that the bank produced on subpoena; account number … for the same period. The forged document shows three withdrawals on 24 May 2002 in the sum of $50,000, $100,000 and $150,000 with all other material except dates in the actual account blanked out for the purpose of copying.

14. In the document produced by the bank for the same account it shows no transactions on 24 May 2002, and that the account balance between 30 March 2001 and 19 June 2002 reduced from $156.29 to $126.31 solely by deduction of a $2 per month account keeping fee. On 19 June 2002, the account jumped to $226.31 because $100 was deposited. There is no transaction on 19 June 2002 in the statement which Ms Muncic purported to rely on when she swore her affidavit. The dates when the monthly $2 account fees were deducted as shown in Exhibit “B” do not coincide with the dates on the claimed account annexed to Exhibit “O”. On 24 May 2002, $250,000 came from S Pty Limited’s account (see Exhibit “H”). Thus, at least $298,000 of the $300,000 deposit came from the husband’s sources.

15. Exhibit “G” standing alone seems somewhat bizarre and obscure. It is a handwritten statement signed by the husband and dated 24/05/01. It advises that “I have no further interest in the Westpac Bank account at Parramatta in the name of [Ms Radan] and I have instructed [Mr D] to destroy the declaration of trust in that account on 24/05/2001”.  Mr D had been his solicitor. When Westpac Banking Corporation was subpoenaed to produce records of accounts held by Ms Muncic, the subpoena also referred to her prior married name of Ms Radan and required production of account records in that name. The only account produced was that which I have referred to. It is in the name Ms Radan. Thus, the husband has in effect declared that the account Ms Muncic claims to have been the source of the $300,000 deposit to have been an account she held on trust for him. The additional $2,000 came from this account.

16. I am satisfied that the funds for the deposit and incidental costs on the purchase of the property at N came exclusively from Bankwest and the husband, irrespective of his sources. The second and third respondents say that, if this is established, because the mortgage debt repayments came from M Pty Limited, in Equity it would hold part of the ultimate title to the property at N in proportion to the sum Bankwest supplied out of the whole cost of purchase; $2,590,811 of $3,199,118.82, about 81%. Ms Muncic’s case is that the mortgage payments on the loan from Bankwest and its successors have come from rents and profits from M Pty Limited’s business activities and it, therefore, holds its legal title to the property at N as to 81% in trust for itself and the balance for the husband if the Court finds the husband supplied the original 19%.

17. By the time the purchase of the property at N was complete Ms Muncic was claiming to have conditional but executed leases for occupation of the property at N premises. Each was for 8 years. (See Exhibit “E”). The lessees were listed as:

    Business 9 Pty Limited

    Business 8  Pty Limited

    Business 10 Pty Limited

    Business 11 Pty Limited

    Business 12 Pty Limited

    AF Pty Limited

    Business 14 Pty Limited

    The reference to AF Pty Limited is a reference to Business 13 Pty Limited. (See Exhibit “AD”).

18. Although M Pty Limited is claimed to have been commenced as an office or secretarial administration business, there is evidence to suggest that, in addition to rents, its income came from the operation of a trucking or transport business once it purchased the property at N, and later from the purchase of one of the husband’s construction equipment businesses for about $750,000. M Pty Limited had done work for S Pty Limited before it was placed in liquidation. Ms Muncic, in her affidavit, claimed, like the husband did at his examination, that the $150,000 from S Pty Limited used to pay the stamp duty on the purchase of the property at N was obtained by way of a payment to meet the undebtness of S Pty Limited to M Pty Limited for M Pty Limited’s payment of S Pty Limited debts.

19. It is much more probable that payments for S Pty Limited were due to the close relationship between S Pty Limited, the husband and M Pty Limited, all really being the husband’s activities, than it is that M Pty Limited made the payments for S Pty Limited for M Pty Limited’s commercial benefit, especially as that benefit would have been more apparent than real because, although M Pty Limited was doing administration work for S Pty Limited, S Pty Limited did not pay fees for this work because it was failing financially, as is shown from the historical company extracts of S Pty Limited, between August 1998 and October 2003, when the petition to wind it up which resulted in its winding up was presented.

20. The tenants or most of them who were due to come to the property at N on its purchase had previously been tenants of a property at G which was owned by S Pty Limited. Most were either businesses of the husband or of his friends and business colleagues. The first actual tenants of the property at N were associated with or owned by the husband. Some used the property without paying any rent. The tenants which continued to occupy the property were much the same.

21. The property at G was also the place where M Pty Limited conducted its business. Ms Muncic, when being examined in the Supreme Court, said she decided to buy the property at N because S Pty Limited was selling the property at G and she had to find a place to run her business. She said she also had had a property at W on which she was storing construction equipment and that the property at N could be used in its place. S Pty Limited sold the property at G in June 2002. It was, according to Ms Muncic, “[C]” who introduced Ms Muncic to the property at N.

22. The husband and Ms Muncic have taken the stand in the Family Court that M Pty Limited was always Ms Muncic’s vehicle for operating her office administration business and was always independent of the husband. It is a common experience that litigants are caught out with their falsehoods by comparing what they have told the Court with what they have told their bankers. On 2 August 2007, a Credit Risk report was made by M Pty Limited’s bankers. It is exhibit “V”. Among the comments the report has made is this:

    “We have been made aware that [M Pty Limited] has been involved in 2 separate litigation matters that relate to previous owner of [M Pty Limited] (and in no way reflect on [Ms Muncic]). 1. being a defendant in a Family Court matter 2. being a defendant in a Supreme Court matter.”

23. The Family Court matter referred to is these proceedings. The comment went on to say “we are advised the Family Court matter has been brought by the ex-wife of previous director/shareholder of [M Pty Limited] (sold over 5 years ago)…”. There is no rational doubt that the supplier of the information on which these comments are based was Ms Muncic. It seems to me that she told more of the truth to the bank than she has to the Court and that the husband has much more of an interest in M Pty Limited than they would have the Court believe. She in the Supreme Court asserted that she created M Pty Limited as a vehicle for her business when she was examined on the affairs of S Pty Limited.

24. On 9 December 2004 when the husband was being examined about the affairs of S Pty Limited he told the Supreme Court that after 1998, when Ms Muncic ceased working at S Pty Limited, she entered into an agreement on behalf of M Pty Limited with the husband on behalf of S Pty Limited. It was for M Pty Limited to pay some bills for S Pty Limited; in effect a loan agreement, but that otherwise between 1998 and February or March 2001 there was no agreement between him and Ms Muncic. The husband was therefore denying that he had sold shares in M Pty Limited to Ms Muncic. By inference, it would also mean that, from 1998, Ms Muncic was the owner of M Pty Limited. (See Exhibit LV2 to the affidavit of the wife of 12 August 2005 pp4 and 5 of TS for 9/12/04).

25. The parties separated in August 2001 but lived under the same roof until 2003. The wife decided to divorce the husband in March 2002 when she discovered his notes about a new will which would make Ms Muncic his executor. In March 2002 S Pty Limited owned a property at G. It was attempting to sell it and buy the property at N (see TS p. 8 for 9/12/04 in Exhibit LV2). The property at G was sold in June 2002. The proceeds of that sale provided the $150,000 stamp duty on M Pty Limited’s purchase of the property at N (TS p 9). At all relevant times, the husband owned and was the only director of a dormant company called ‘M’A Pty Limited. The use of “M” in the title of M Pty Limited suggests the husband had more of an interest in this company than the husband and Ms Muncic admit.

26. The property at G had been tenanted. When it was sold its tenants moved en masse to the property at N. One of its tenants was M Pty Limited. The others were those already listed as having conditional leases.

27. There is no doubt that the husband owned and controlled Business 13 Pty Limited and Business 15 Pty Limited (see Exhibit “AD”). The husband signed the leases on their behalves. His signature is identifiable. Business 15 Pty Limited was a transport business with eleven trucks. The trucks were sold to M Pty Limited in May 2003. The husband denied Business 15 Pty Limited was ever a tenant at the property at N but later admitted it was a tenant. To the bank in 2002 and 2003 this company was represented by Ms Muncic as the property at N’s cornerstone tenant. Later, M Pty Limited bought construction equipment worth $740,000 or $750,000 from Business 16 Pty Limited. By 17 August 2005, M Pty Limited was operating transport and construction equipment businesses in addition to its rental business.

28. Business 14 Pty Limited is registered as having being owned and controlled by Mr U. Its accountants are the accountants used by the husband. Mr U is a friend of the husband. The husband had lived with him and his wife. The husband owned a block of land at R. At the beginning of 2004 it was formally valued at $65,000 for the purpose of mortgaging it. It secured, by way of mortgage, a loan of $65,000 which is alleged to have been made by Mr U to the husband at the beginning of 2004. Mr U was in fact a truck driver for Business 15 (Aust) Pty Limited. Mr U was not happy with this company according to the husband, so the husband had intended to take it over. It is much more likely that Mr U was a front for the husband in relation to this company.

29. The husband has, since he arrived in Australia, been involved in the building industry. On 10 June 2004 the husband and Business 12 Pty Limited sought a US patent for an invention the husband and another person had made. The husband had assigned the benefit of the invention to Business 12 Pty Limited. Yet he said in oral evidence he had no interest in it but that Ms Muncic controlled it. This seems to indicate that he holds an interest, possibly secret, in the company. It is unlikely that he would seek a patent but give the benefit away. There is no suggestion he sold it. It is not a coincidence that in 2004 two what would otherwise be valuable assets for him ceased to have any value to him. They are the property at R and the patent. Nor does it seem to be coincidental that he sold his construction equipment to M Pty Limited.

1. Business 11 Pty Limited was a construction company in which the husband has been its director and secretary. He had been from 22 November 2002 until April 2003. Its registered office was the former matrimonial home. The husband’s accountants were its accountants as late as 26 February 2005 when the Australian Taxation office sent documents to it. He claims to have become its director because its owner, a friend, Mr Z, spent a lot of time in Melbourne. It went into liquidation six months after the husband agreed to take it over and became the director in place of Mr Z. When Business 11 Pty Limited was wound up, UV Pty Limited became the tenant in its place. This name consists of the first letters of Mr U’s name combined with the first letters of the husband’s name.

2. Another company, Business 6 Pty Limited, was certainly owned and controlled by the husband when on 17 July 2001, Ms Muncic swore a District Court of NSW affidavit in support of the proceedings for debt against her sister and brother-in-law, brought by the husband, Business 5 Pty Limited, Business 6 Pty Limited, Business 7 Pty Limited and Business 8 Pty Limited for money the plaintiffs lent the defendant. In that affidavit she swears she had been employed by the S Group of Companies since 1997 as the office manager and financial controller. She does not mention M Pty Limited. She does swear that her brother, the first defendant in the District Court, asked her for money. Her response was “I can’t release that amount of money without [C’s] permission. I’ll have to go and ask [C] first”.  She said that C; the husband said “Alright, I’ll give him the money …” She said the husband, who was the owner of the S Group of companies lent further moneys to her brother, the total loan amounting to $96,630. (See Exhibit “F”).

3. Business 8A Pty Limited is another tenant which transferred from the property at G to the property at N. I do not know if this is the same company as that which was a co-plaintiff in the District Court and was controlled by the husband. Mr U was Business 8A Pty Limited’s director or secretary. At the least, it is highly likely to be a company in which the husband was involved at all relevant times and probably had an interest in. The names are so similar and, in the circumstances, this is likely.

4. Business 9 Pty Limited is the final proposed tenant. Its director, Mr L, was known to the husband for 14 or 15 years. They had used the same accountant. In 2008 the husband replaced Mr L as its director.

5. Thus, the husband was involved with or had an association with each company which moved from the property at G owned by S Pty Limited to the property at N. By 7 December 2009, Business 12 Pty Limited, Business 8A Pty Limited and Business 14 Pty Limited were all still tenants at the property at N with leases until mid 2010.

6. M Pty Limited’s activities have changed over the years in concert with the activities of companies associated with the husband. It commenced businesses those companies gave up or sold. There was really a transfer of business operations associated with and controlled by the husband to M Pty Limited. Originally its income came from the supplying of office services then rentals were added. Subsequently it obtained a fleet of trucks and considerable amounts of construction equipment, using equipment purchased from Business 16 Pty Limited and using transport once operated by Business 15 Pty Limited (see Exhibit “AC”, a bank memorandum of 18 August 2003) For some reason, the bank’s comments indicate that Business 15 Pty Limited and Business 13 Pty Limited will remain “in the building for the foreseeable future” but should not be registered as tenants. This indicates a relationship between the real owner of the companies; the husband, and M Pty Limited.

7. The conclusion the Court cannot fail to reach is that the purchase by M Pty Limited of the property at N was a warehousing operation for funds or businesses of the husband through various companies he controlled but which were at risk financially when he, too, was at such a risk. Later, there was the added advantage of depriving the wife of her rights under s. 79. M Pty Limited’s continuing ability to meet mortgage payments seems to have been wholly based on the businesses it in effect took over from the husband. That both the husband and Ms Muncic have habitually told false stories about the true situation makes this more probable. These stories have been inconsistent with what they have said at other times as the circumstances suited them. The whole of the initial deposit and associated costs of purchase came from sources controlled by the husband. Although the mortgage instalments have been paid by M Pty Limited, the funds for these have probably come from the transfer by him of property to M Pty Limited which wholly came from entities he controlled and probably owned and from the transfer of tenants he owned and controlled from property his company owned to the property at N.

8. Mr Todd’s argument that there is, in any event, a resulting trust in favour of M Pty Limited because it supplied the balance of the purchase price to the extent of that supply and or was liable for it after the initial payments were made by or on behalf of the husband, would be valid if it was not contrary to the intention of those involved; M Pty Limited through Ms Muncic and the husband. In all the circumstances, I am satisfied on balance that the real intention of the husband and Ms Muncic on behalf of M Pty Limited was to create a situation where any failure of the husband’s companies or bankruptcy of the husband, which on the evidence of their interdependency and their financial tribulations was highly predictable, would not result in loss to the husband. It was also convenient for the husband in his s. 79 case against the wife. The land purchase occurred after separation. What was really intended was an asset stripping and money laundering or warehousing exercise with the intention to shift a sizeable fund from the seeming control of the husband or companies he owned to M Pty Limited to be held in trust for him.

9. It is not the first time he has done this. On 12 September 2001 he transferred the former matrimonial home to the wife from S Pty Limited because S Pty Limited was in financial difficulties. S Pty Limited owed a Ms W $100,000 and $30,000 was owed by it for land tax. T Solicitors acted on the transaction.

10. I am quite satisfied I should regard the intention to create the trust in favour of the husband as ousting any creation of a resulting trust in favour of M Pty Limited because it was the immediate supplier of part of the purchase price. It is particularly enlightening that in 2004, after the wife had commenced s. 79 proceedings, M Pty Limited obtained further businesses of the husband, the transport business and the construction equipment business. Even his interest in land at R became valueless with the involvement of Mr U who, in my opinion, not by coincidence, was the apparent operator of a business with a name which one would ordinarily expect to be part of the husband’s empire because of its name, type of business activity and the fact that it, too, was one of the tenants of S Pty Limited which moved to the property at N. Mr U was not called by the husband and no explanation for not doing so was given. There was no documentary evidence relating to his alleged loan to the husband which the husband could produce. Yet, despite Mr U’s security over the land, the husband eventually sold it, obviously with Mr U’s consent, and did not pay him back.

11. I shall not order transfer of the land from M Pty Limited to the husband but to the trustee in bankruptcy. The matter should otherwise be transferred to the docket of a judge in the Sydney Registry other than Watts J who was a partner in Watts McCray, Solicitors, when that firm acted for the wife. Costs of the whole hearing to date including the issue I have decided should be reserved to the judge who finally decides the balance of this matter. I shall make orders accordingly.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen delivered on 3 March 2011.

Associate:     

Date:              3 March 2011