WANG & GAO
[2015] FCCA 1861
•7 July 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WANG & GAO | [2015] FCCA 1861 |
| Catchwords: FAMILY LAW – Property settlement – de facto relationship – substantial gambling losses. |
| Legislation: Child Support (Assessment) Act 1989 Family Law Act 1975, ss.79, 90RD, 90RG, 90SB, 90SF, 90SM |
| Cases cited: Bevan v Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39] Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52 |
| Applicant: | MR WANG |
| Respondent: | MS GAO |
| File Number: | MLC 1846 of 2014 |
| Judgment of: | Judge Riley |
| Hearing dates: | 20 & 21 April 2015 and 4, 5, 6, 26, 27 & 28 May 2015 |
| Date of last submission: | 28 May 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 7 July 2015 |
REPRESENTATION
| Counsel for the applicant: | The applicant appeared in person until lunchtime on 20 April 2015, Mr Kuan appeared from after lunch on 20 April 2015 and on 21 April 2015 and on 4, 5 and 6 May 2015 and thereafter the applicant appeared in person |
| Solicitors for the applicant: | JHL Partners until 6 May 2015 and thereafter the applicant was not represented |
| Counsel for the respondent: | The respondent appeared in person |
| Solicitors for the respondent: | The respondent was not represented |
DECLARATION
The parties were in a de facto relationship from 1997 until 21 July 2010.
ORDERS
The husband retain for his sole use and benefit the properties situated at and known as Property B, and Property O, (“the properties”) and the Holden (omitted) car registered in his name.
The husband indemnify the wife against all liabilities in connection with the properties.
The husband forthwith establish for his own benefit a superannuation account with a commercial superannuation fund.
The wife forthwith establish for her own benefit a superannuation account with a commercial superannuation fund.
The husband and wife forthwith sign all documents and do all things necessary to sell the real property situated at Property E and upon completion of the sale, the proceeds of the sale be applied:
(a)firstly, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge any mortgage or any other encumbrance affecting the real property; and
(c)thirdly, to divide the balance equally between the husband’s superannuation account and the wife’s superannuation account established pursuant to these orders.
Pending completion of the sale of Property E any rental income from that property be applied to any rates and other legitimate expenses associated with the property and any balance be divided equally between the superannuation accounts of the husband and the wife.
Pending completion of the sale of Property E neither party encumber that property without the consent in writing of the other party.
The wife forthwith sign all documents and do all things necessary to sell the real property situated at Property D, and upon completion of the sale, the proceeds of the sale be applied:
(a)firstly, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge any mortgage or any other encumbrance affecting the real property; and
(c)thirdly, to pay 75% of the balance to the husband and 25% of the balance to the wife.
Pending completion of the sale of Property D, neither party encumber that property without the consent in writing of the other party.
The proceeds of sale of Property W, currently held by the wife’s former solicitor, Mr F, be applied:
(a)firstly, to pay any shortfalls, penalties or taxes associated with the parties’ self-managed superannuation fund, the Wang Gao Superannuation Fund; and
(b)secondly, after the Commissioner of Taxation has advised Mr F in writing that all shortfalls, penalties and taxes owing in respect of the Wang Gao Superannuation Fund have been paid in full, the balance be divided as to 75% to the husband and 25% to the wife.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)insurance policies remain the sole property of the owner/beneficiary named therein;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
THE COURT DIRECTS THAT:
The Registrar refer this matter to:
(a)Victoria Police for investigation of whether the respondent wife committed any crime in relation to the letter dated 27 February 2012 (exhibit 36) that she gave to the (omitted) Bank: see paragraph 7 of the reasons for judgment and pages 338 to 341 of the transcript;
(b)the federal Commissioner of Taxation for investigation into whether the husband and/or wife owe any money (whether by way of shortfall, penalty or tax) in relation to the self-managed superannuation fund, the Wang Gao Superannuation Fund; and
(c)the Department of Immigration for investigation of whether any corrective or other action ought to be taken in relation to the respondent wife’s birthdate appearing in her Australian passport as (omitted) 1974 when her actual birthdate is (omitted) 1971: see page 367 of the transcript.
Victoria Police, the federal Commissioner of Taxation and the Department of Immigration have liberty to inspect the court file and take copies of such documents as they may require to assist in their official duties in relation to this matter.
IT IS NOTED that publication of this judgment under the pseudonym Wang & Gao is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1846 of 2014
| MR WANG |
Applicant
And
| MS GAO |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application under s.90SM of the Family Law Act 1975 (“the Act”) for a de facto property settlement. The parties commenced a relationship in 1997. They had three children together, a daughter, born in (omitted) 1998, and two sons, born in (omitted) 2000 and (omitted) 2003. The husband and wife separated in 2010.
Following separation, the children initially lived with the wife. However, on 8 January 2013, the children were taken into the custody of the Secretary of the Department of Human Services (“DHS”). DHS records, which I accept as accurate, indicated that the wife was not looking after the children because she was often busy gambling. She asked the husband to look after them for a time, which he did.
However, the DHS records indicated that the husband then returned the children to the wife’s house and left them there, although she was not at home. The children then took a taxi to the husband’s home. He told them he did not want them and closed the door on them. The children then took to a taxi to the (omitted) Police Station. The police were unable to contact the wife. The husband told the police he did not want the children.
After some days, DHS was able to make contact with the wife by telephone. She said repeatedly that the husband should look after the children. The children were placed into foster care. Both parties told DHS that they would not be attending the court to determine what should be done with the children.
The current order giving custody of the children to the Secretary expires in October 2015. At that time, the children’s ages will range from 17 to 12. The wife maintains that the children will be returned to her care in October 2015. However, there is no objective evidence in support of that assertion and I do not accept the wife’s claims in that regard. I proceed on the basis that the children will not be returned to the wife’s care in October this year.
The conduct of the final hearing was extremely difficult. Each party was assisted by an interpreter. The wife was unrepresented throughout the hearing, though she was represented at some stages of the trial preparation. The husband was represented during most of the trial preparation, was unrepresented on the first morning of the hearing, being 20 April 2015, but was represented from after lunch on 20 April 2015, on 21 April 2015, and on 4, 5 and 6 May 2015. He was unrepresented on 26, 27 and 28 May 2015.
Credibility
The wife admitted that, in about 2012, she gave to the (omitted) Bank (“the (omitted) Bank”), for the purposes of borrowing $600,000 from that bank, a letter dated 27 February 2012 (exhibit 36). The letter said that the wife had been employed by (employer omitted) in China since October 2007 and had earned AUD$95,000 per year. The wife admitted to this court that she had never worked for that company and that the letter was false. I consider that the fact that the wife gave that letter to (omitted) Bank to obtain a loan is indicative of the wife being grossly financially dishonest. I consider that her financial dishonesty extends to this proceeding.
The wife also admitted to the court, in effect, that, although her real birthdate is (omitted) 1971, she told the immigration department in her passport application that her birthdate was (omitted) 1974. I consider that the wife will tell any lie for what she perceives to be her own benefit.
The wife said repeatedly that the husband was dishonest and a liar. There were some aspects of the evidence that supported that contention. For example, as discussed below, the husband may have attempted to perpetrate an insurance fraud. However, it appears that the matter was discovered before the husband was able to follow through with the fraud and the police did not pursue the matter. The husband also failed to give an adequate explanation for a borrowing post separation of about $454,000 against a property at Property O. He did not adequately explain the purpose of the borrowing or where the money had gone.
Neither party gave full disclosure in a timely manner. Both parties produced highly relevant documents during the course of the hearing that they had not previously disclosed. There are many aspects of the parties’ financial affairs that remain unexplained. The evidence of a forensic accountant would have been very helpful to the court, but neither party provided such evidence.
Neither party appeared in the witness box to be entirely reliable. The husband sometimes gave one version of the facts but, after he was presented with documentary evidence of them, he “remembered” another version. The wife basically told the court that she would admit nothing unless presented with documentary evidence.
Overall, the matters alleged against the husband were not as clear and unequivocal as the wife’s dishonesty in giving the letter dated 27 February 2012 to the (omitted) Bank.
In any event, because of the wife’s dishonesty in relation to that letter, where there is a difference in the testimony of the husband and the wife, I often prefer the husband’s evidence, but sometimes I simply prefer the evidence that strikes me as more plausible or find one party or the other more credible on a particular issue.
The legislation
Section 90RD of the Act permits the court to make a declaration that a de facto relationship existed between two persons. Under s.90RG of the Act, the court is only permitted to make such a declaration if it is satisfied that one or both of the persons were ordinarily resident in a participating jurisdiction when the primary proceedings commenced. There was no dispute about this issue. On the material before the court, I am satisfied that the applicant and the respondent were both ordinarily residents in Victoria, which is a participating jurisdiction, when the primary proceedings commenced.
Under s.90SB of the Act, the court may only make an order under s.90SM if the court is satisfied that:
a)the period, or the total periods, of the de facto relationship were at least two years; or
b)there is a child of the de facto relationship; or
c)the applicant made substantial contributions of the kind mentioned in s.90SM(4)(a), (b) or (c) and a failure to make an order under s.90SM would result in serious injustice to the applicant; or
d)the relationship is or was registered under a prescribed law of a State or Territory.
In this case, it is not disputed, and I am satisfied on the evidence before me, that the total period of the de facto relationship was more than two years and that there are three children of the relationship.
Section 90SM of the Act gives the court power to alter the interests of the parties to a de facto relationship in the property of those parties following the breakdown of their relationship. Sub-section 90SM(3) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 90SM(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
The matters to be taken into account under s.90SF(3) of the Act are:
(a)the age and state of health of each of the parties to the de facto relationship …; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i)a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
The approach to applications under s.90SM
In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act. Section 90SM mirrors s.79, except that it applies to de facto relationships. Accordingly, Stanford is applicable to the present proceedings. In Stanford, the High Court said the following:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth
v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. …(footnotes omitted)39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of
s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)(footnotes omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphases added)(footnotes omitted)
The High Court emphasised that the just and equitable requirement of s.90SM(3) of the Act is not necessarily satisfied merely by a consideration of the contributions of the parties as described in s.90SM(4) of the Act. However, in the usual case before this court, where the parties have separated, the High Court acknowledged at [42] that the just and equitable requirement would be “readily satisfied”.
Following Stanford, it is no longer appropriate to think of “contribution based entitlements” or the “adjustment” based on future factors. Rather, the court is required to take into account all the relevant matters and then determine what order, if any, is just and equitable. It is also no longer appropriate to think of a pool of assets.[1]
[1] Parkinson, Patrick Family Property Law and the Three Fundamental Propositions in Stanford v Stanford (2013) 3 Fam L Rev 80 at 88.
Additionally, the High Court emphasised that marriage, at common law, does not create a community of ownership: [39]. The rights a person might have in his or her partner’s property and income arise from the Act, notably s.90SM(4) and s.90SF(1) respectively.
In relation to income, s.90SF(1) of the Act provides that:
In exercising jurisdiction under section 90SE (after being satisfied of the matters in subsections 44(5) and (6) and sections 90SB and 90SD), the court must apply the principle that a party to a de facto relationship must maintain the other party to the
de facto relationship:
(a)only to the extent that the first-mentioned party is reasonably able to do so; and
(b)only if the second-mentioned party is unable to support himself or herself adequately whether:
(i)by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
(ii)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(iii)for any other adequate reason.
In other words, there is not an absolute right to share equally in the income of a partner. Rather, such a right only arises where a person is not able to adequately support himself or herself and the other party is reasonably able to support the first-mentioned party. Consequently, there is no obligation to contribute all of one’s earnings to the matrimonial endeavour. However, if one party to a marriage spends a substantial part of his or her income on extraneous pursuits, it will obviously have an effect on that person’s contributions to the parties’ assets.
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order. In most cases, it would seem rational to consider them in the order set out above. It does not seem to me to be possible to determine whether it is just and equitable to make an order altering the parties’ interests in their property without the other matters mentioned above having been previously determined. That seems to be clear from the opening words of s.79(4) of the Act, which are that:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account [the various matters set out in s.79(4)] … .
The approach outlined above is consistent with the decision of the Full Court of the Family Court in Bevan v Bevan (2013) 279 FLR 1;
(2013) 49 Fam LR 387; [2013] FamCAFC 116. I note that in that case, the Full Court said at [89]:
In our view, it will be less likely that the separate issues arising under s 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
I also note that, in Bevan, at [79] the Full Court said, in relation to addbacks:
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amendable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
The four step approach
In Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39], the Full Court of the Family Court described the preferred four step approach in property matters as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….
In the light of the High Court’s decision in Stanford, it seems that the basic steps stated in Hickey v Hickey remain correct. That is, the court is required to:
a)identify the assets owned by the parties, jointly or separately, and the liabilities to which the parties are subject, jointly or separately;
b)take into account the contributions made by each party;
c)take into account the so called “future factors”; and then
d)determine what order, if any is just and equitable.
However, following Stanford, it is no longer appropriate to think of “contribution based entitlements” or the “adjustment” based on future factors. Rather, the court is required to take into account all the relevant matters, consider the matter holistically, and then determine what order, if any, is just and equitable.
Date of separation
There is a dispute about the date of separation. The husband initially said the parties separated in April 2010 and the wife said they separated on 10 August 2010. The husband later said that they separated on 21 July 2010.
There is a police record saying that, on 20 July 2010, the parties argued but agreed to try to save their relationship. There is a marriage certificate showing that the husband married his current partner on 2 August 2010.
The court told the husband that there is normally a requirement to give one month’s notice before marriage. The husband told the court that he just did what the agent required. I assume, by “the agent”, the husband meant the marriage celebrant.
In any event, I find that the parties separated on 21 July 2010. For the reasons previously given, I do not consider the wife to be a credible witness. Although the husband could have married his current wife while in a de facto relationship with the wife in this proceeding, I consider that to be unlikely in all the circumstances of this case.
STEP 1: The assets and liabilities
The parties agreed that their joint assets at the time of trial consisted of the proceeds of sale of Property W, being $389,762. That sum is held in a trust account by the wife’s former solicitor, Mr F.
The parties agreed that they had no joint liabilities at the time of trial.
The parties agreed that the wife’s individual assets at the time of trial consisted of Property D, which was worth $1,100,000.
The parties agreed that the wife’s individual liabilities at the time of trial consisted of a $670,000 mortgage on Property D.
Consequently, the wife’s total assets less liabilities at the time of trial were worth $430,000.
The parties agreed that the husband’s individual assets at the time of trial were as follows:
Property O
$625,000
Property B
$385,000
Holden (omitted)
The parties were in dispute about the value of the Holden (omitted). The husband said it was worth $20,000. The wife said it was worth $30,000. Neither party produced a sworn valuation regarding the value of the Holden (omitted). They agreed it was bought in 2010 in the husband’s name for $42,000. In the absence of any evidence either way, I consider that it is reasonable to treat the husband’s estimate of the value of the car as an admission and attribute a value of $20,000 to the Holden (omitted). Consequently, the husband’s total individual assets at the time of trial were worth $1,030,000.
The parties agreed that the husband’s individual liabilities at the time of trial were as follows:
Mortgage on Property O
$454,296
Mortgage on Property B
$300,000
Consequently, the husband’s total liabilities at the time of trial were $754,296. The husband’s total assets less liabilities were worth $275,704 at the time of trial.
The parties agreed that Property E, is owned by a self-managed superannuation fund for both of them equally. They agreed that, apart from that property, neither of them had any superannuation. They agreed that Property E was worth $550,000 and was unencumbered.
The combined total of the assets of the husband and wife, including superannuation, is $1,645,466. Consequently, the wife presently holds about 26% of the parties’ combined assets, the husband presently holds about 17%, the self-managed superannuation fund holds about 33% and a solicitor holds about 24% on trust for both parties.
Contributions
a. Initial contributions
At the commencement of the relationship in 1997, the husband had a Mazda (omitted). He said that he owned it outright. The wife said it was leased. I prefer the wife’s evidence on this issue. There was no evidence about the value of the car. However, being eight years old, it was probably of modest value.
Also at the commencement of the relationship, the husband said that he had $30,000 in savings which he used later in 1997 as the 40% deposit on the parties’ first house, being a house in (omitted), which cost $75,000. The wife disputed that the husband had provided a 40% deposit but agreed that he had bought the house in (omitted) in his sole name. I prefer the husband’s evidence on this issue.
The wife said that, at the commencement of the relationship in 1997, she had a Mazda (omitted). She said that she owned it outright. The husband said that it was leased. I prefer the wife’s evidence on this issue. There was no evidence about the value of the car. However, being 10 years old, it was probably of modest value.
The wife also said that, at the commencement of the relationship, she had savings of $20,000. The husband disputed that. I prefer the husband’s evidence on this issue.
The parties agreed that they had no debts at the commencement of the relationship, with the exception of the car lease that they each alleged the other had, but which I have not accepted.
b. Contributions during the relationship
The husband said, without contradiction, and I accept, that between 1990 and 2000 he worked as a (occupation omitted). The husband said that, during the relationship, he was the principal breadwinner and earned on average about $50,000 each year. The wife said that, initially, he earned about $40,000 per year. I prefer the wife’s evidence on the amount of the husband’s earnings. I accept that the husband was the principal breadwinner for the family.
The husband said that he ran several businesses and bought and sold properties. The wife said that the first property that was bought, being the (omitted) property, was her decision, and the rest of the property purchases were joint decisions. The husband said the first property was his decision, but conceded that the rest were joint decisions. I prefer the husband’s evidence on this matter.
The husband said that the parties sold the (omitted) property in 1998 and bought a house in (omitted). The husband said that the parties bought another house, in (omitted), and sold it six months later for a $50,000 profit. That evidence was not challenged and I accept it.
The wife claimed that her mother lent her $100,000 in 1998, which was repaid after separation with a borrowing against Property D. The husband said that, in about 1998, the wife’s mother lent the wife $20,000 only which was repaid within two years. The wife disputed this, saying that the loan could not have been repaid at that time because the husband was on Centrelink benefits then. However, she later said that the husband was actually on Centrelink benefits between 2000 and 2002. That is not inconsistent with the husband’s evidence on this matter, which I accept.
The husband initially denied that he was on Centrelink benefits between 2000 and 2002. However, he eventually conceded that he was on Austudy during that time. It also seems that the wife went back to China between 7 December 2001 and April 2002 for health reasons. During that time, the husband cared for the two older children. The youngest child had not yet been born.
The husband initially said that, in 2000, the parties bought a (business omitted) in (omitted). He later recalled that they bought the first (business omitted) in late 2002. He said that they later sold that business and bought another (business omitted) in (omitted). That evidence was not challenged and I accept it.
The husband said that, in 2003, the parties bought the house at Property D, in the wife’s sole name. He said that the whole family moved there together. The wife agreed with those claims, except that she said that the house was bought in May 2004 for $492,600. The 2004 date appears to be a typographical error, because later the wife said that she lived in the house with the children until January 2004. Otherwise, I accept both parties’ evidence on these matters.
The wife claimed that the husband left her and the children in 2004. She said he left them with a shop, which she sold. She said her mother lent her $70,000, which she used to buy the Property D property. The wife said that she repaid that money with borrowings against the Property D property after separation. The husband denied that there was any such loan and denied that there was any separation. I prefer the husband’s evidence on this matter.
The husband said that, in 2004, he bought a (business omitted) in (omitted). He said he went to (omitted) first, then the whole family joined him and they bought a house there. The wife agreed with that, saying that she lived in Property W with the children until separation in 2010.
The husband disputed that the wife and children remained in Property W until 2010. He said that the parties established a second (business omitted) in (omitted), and both shops were doing very well. He said that the family lived in Property W until 2008. He said that the wife by then had started losing a lot of money gambling at the TAB. I accept the husband’s evidence about these matters.
The husband said that he decided to move back to Melbourne to break the wife’s gambling habit and so that the children could learn Chinese at school. He said that the parties sold the two (omitted) businesses in (omitted) and the wife and children moved back to the house in Property D. Except for the date, the wife did not dispute that evidence and I accept it.
The husband said that he was unable to find a suitable business in Melbourne. He said that he decided to open a (omitted business) in (omitted), South Australia. He said he went there alone in 2009 and established the business. The wife did not challenge that evidence and I accept it.
The husband said that he rang home every night and found that the wife was almost never at home. He said that she was at the TAB gambling and losing more money than she had lost in Property W. He said that he telephoned the police at least 10 times and asked them to check on the children. He said the police would eventually locate the wife who told them that she had been at the TAB. He said that the police called DHS, which was involved with the family on numerous occasions. The wife did not challenge that evidence and I accept it.
The husband said that, after less than one year in (omitted), he sold the (business omitted) and returned to Melbourne. He said that the business had been in the wife’s name. He said that he returned to Melbourne with the proceeds of sale of the business, which consisted of a cheque for about $100,000 in the wife’s name. He said that the parties went to the bank together and deposited the cheque in the wife’s (omitted) Bank account. The wife agreed with that. The husband said that, two months later, the wife told him that she had gambled away the whole $100,000. The wife disputed that. She said that the two of them gambled the money away. The husband denied that. I prefer the husband’s evidence that the wife lost the whole $100,000 herself.
The husband conceded that he did not do much around the house and conceded that the wife was the primary homemaker and parent. The wife said he did nothing at all. I accept that he did next to nothing, except for a period of several months when the wife went to China and left the two older children in the husband’s care.
The husband claimed that he, with the wife, took the children to school most mornings. The wife said that he went with them once or twice per year. I accept the wife’s evidence on this matter.
The husband said that the wife helped him in the business about
20 hours per week. The wife said that she worked 10 hours a day, seven days a week in the business. She claimed that she did 70% of all the work in the business. I do not accept the wife’s claims in this regard. She was not in (omitted) when the husband ran the (business omitted) there. Earlier, she was in China for several months. She complained of debilitating back problems. I accept the husband’s evidence about this matter. That is, when the wife worked in the business, she worked about 20 hours per week.
The wife said that she received no payment for her work in the business. The husband conceded that, saying that neither of them was paid a wage. He also conceded that he controlled the family finances. I accept the husband’s evidence about these matters.
The wife said that the husband transferred $100,000 to China in April or May 2007. The husband denied that. A police record shows that the husband alleged that a burglar stole over $100,000 in cash from his house. An Austrac report indicated that, two days later, the husband used his employee to deposit $100,000 in cash into the husband’s bank account. The police appear to have suspected an intention to commit an insurance fraud but the husband did not follow through with it and the police did not pursue the matter.
The Austrac report did not indicate that the $100,000 was sent overseas. The wife provided no other evidence that the husband transferred $100,000 to China in 2007. The wife appears to have misunderstood the role of Austrac. She seems to have thought that Austrac only records overseas transactions. However, as is well known, Austrac also records large cash transactions within Australia. Consequently, I do not accept that the husband sent $100,000 to China in April or May 2007.
The husband claimed that, between 2006 and 2010, with the wife’s knowledge, he lent $200,000 to his aunt and nephew and $250,000 to his uncle. He said that the loans were with interest and repayable on demand. The wife did not dispute those claims and I accept them.
Towards the end of the relationship, the parties acquired and fitted out a (business omitted) called (business omitted) in (omitted). The wife initially said that the parties spent $260,000 on the refurbishment and fit out. The husband said they spent $150,000. Invoices tendered to the court substantiate that about $190,000 was spent on the fit out (exhibit 20). Eventually, the parties agreed that they spent about $210,000 on the fit out but (omitted) gave them $55,000 to assist with it, on condition that the business ran for at least five years. I accept that evidence. That is, the fit out cost about $210,000 but (omitted) contributed about $55,000 meaning that about $155,000 of the parties’ money was spent on the fit out. It was not explained to the court whether that money was borrowed or was in the possession of the parties prior to separation. In the absence of a claim that the money was borrowed, I assume that the parties had that money from their own resources prior to separation.
The wife said, and the husband appeared to accept, that in addition to the $155,000 spent on the fit out, another $22,000 was spent on a (omitted) machine.
The lease for the (business omitted) indicated that it commenced on 29 July 2010 (exhibit 19). According to an email from a building company, which I accept, the fit out was completed in late August or early September 2010 (exhibit 20). There was no evidence about the value of the (business omitted) at the time of separation. However, it was eventually sold for $20,000, so I will attribute that value to it.
The parties separated at around the time the (business omitted) opened. The husband initially claimed that he met his new wife in (omitted) 2010. However, he subsequently agreed with the wife in this proceeding that he started a relationship with his new wife on (omitted) 2010, shortly before separation.
The parties owned a house in Property W which they sold for an unspecified sum after separation. Treating the proceeds of sale of the Property W property as its value at separation, the parties agreed that, immediately prior to separation, they owned the following assets with the following values:
a)Property W $389,762
b)Property E $550,000
c)Property O $625
d)Property D $1,100,000
e)the (business omitted) $20,000
f)the husband’s Holden (omitted) $20,000
g)loans to relatives (including interest) of about $500,000
The parties owned a house in Property W which they sold for an unspecified sum after separation. Treating the proceeds of sale of the Property W property as its value at separation.
Immediately prior to separation, the parties agreed that there were no mortgages on any of the properties. Consequently, their combined assets, including superannuation, on present values, were worth about $3,205,000 at the time of separation.
The husband said that, during and after the relationship, the wife lost at least $1,000,000 gambling on slot machines. The husband said that, during the relationship, the wife had lost $100,000, being the proceeds of the parties’ business in South Australia, plus other monies. The wife admitted that she had gambled but said that she had lost less than $1,000,000 but more than $200,000.
The wife said that the husband lost $1,000,000 on gambling during and after the relationship. The husband admitted that he gambled but said that he had lost only about $1,000. He claimed that he stopped gambling in 2008. However, a player activity statement from Crown Casino showed that in (omitted) and (omitted) 2013, the husband’s account at the Casino had winnings of $20 and $700 respectively. He said that he had not gambled at that time. He said he took his new wife and her mother to the Casino and they gambled on his account. I do not accept the husband’s evidence about stopping gambling in 2008. I do not accept that he would have had an account at the Casino in 2013 if he had stopped gambling in 2008.
I will return to the issue of gambling later in these reasons.
c. Contributions post separation
The wife produced a record of an interview on 28 April 2011 of the husband’s new wife with the immigration department. In that interview, the new wife said that the husband had paid to her father’s bank account $5,000, then another $5,000 and then $10,000, making a total of $20,000. (exhibit 14). The husband’s new wife was not called to give evidence. The husband disputed the evidence contained in the immigration department records. However, as giving false information to the immigration department is a serious matter, I prefer the evidence contained in the record of interview. That is, I accept that, shortly after separation, the husband gave $20,000 to his new wife’s father.
I also note that the wife conceded to the court that, prior to the trial, when she was inspecting subpoenaed records, she removed the document that became exhibit 14 from the court registry. Consequently, the husband’s legal advisers were unable to inspect it until the trial was underway. The wife told the court that she did not think it would be a problem to remove a subpoenaed document from the registry.
After separation, until October 2010, the husband lived at Property E. On 31 July 2010, the husband signed a contract to purchase, in his sole name, Property B (exhibit 4). In October 2010, the husband moved into that property with his new wife. The husband bought the Property B property for $365,000. He said that he acquired it with a mortgage of $300,000. However, (omitted) Bank records (exhibit 21) show that, on about 27 August 2010, the husband acquired a loan of $590,000, consisting of two separate loans of $219,000 and $371,000 which were secured over Property B and Property O. It is not clear, but the $219,000 was presumably secured over Property B and the $371,000 was presumably secured over Property O. The husband conceded that the borrowing against Property O at the time of trial had increased to $454,296.
The husband claimed that his new wife contributed $30,000 to the additional $146,000 that was required for the purchase of Property B. The wife argued that that claim did not make sense, because the husband had paid $20,000 to the new wife’s father by 24 April 2011. I accept the wife’s argument on this point. That is, I do not accept that the husband’s new wife contributed $30,000 or any money to the purchase price of Property B. I am reinforced in that conclusion by the fact that Property B is registered in the husband’s sole name and by the fact that his new wife was not called to give evidence.
It is not clear whether the additional $146,000 for the purchase of
Property B, came from the borrowing on Property O or from other funds that the husband had.
The parties agreed that the husband controlled the family finances until separation. However, it was not suggested that he had other funds in the bank at the time of separation, and I do not find that he did.
The husband claimed that the $219,000 was held in an interest offset account to offset against other borrowings. That is clearly not true. Exhibit 24 shows that the $219,000 was drawn down. It is unclear what the husband did with the balance of the $371,000 that was borrowed against Property O. That balance was $225,000. It may have been that amount that the husband intended to claim was in a mortgage offset account. He said that some money was just sitting in the account. It is unclear what was done with that money. However, I proceed on the basis that the husband has or had the use of that money for his own purposes, whatever they might have been. As previously stated, the borrowing against Property O had increased to $454,296 by the time of trial.
On or about 9 April 2015, the husband and his new wife rented out the property at Property B, for $1,390 per month. The husband is now living at an address that he did not want the wife to know. It was not disputed that the husband was using the rental from Property B for his own purposes, which presumably include paying the mortgage on that property.
After separation, the wife lived in the former family home at
Property D. Initially, the wife lived there with the children. However, the children were placed in foster care on 8 January 2013, where they have remained. At the time of trial, the wife said that she was living with her new husband in (omitted). She said that the house she lived in was owned by her husband and his former partner, who were involved in a family law dispute. There was no suggestion that Property D was being rented out.
Shortly after separation, the parties entered into an agreement written in Chinese whereby:
a)the husband agreed to give to the wife the properties situated at Property W, and Property E;
b)the husband agreed to assign to the wife solely the debts owed to the husband and wife jointly by the husband’s aunt and uncle being respectively $250,000 plus 15% interest per annum and $200,000 plus 15% interest per annum;
c)the parties agreed that the three children would be left in the care and custody of the wife; and
d)the parties agreed that all child support payable to the wife would be covered by the money and property mentioned above.
It seems to have been implicit in the agreement that the wife would retain Property D, and the husband would retain Property O, and the (business omitted).
The husband accepted that an English translation of the agreement was accurate, except that it omitted one sentence, which provided for the wife to receive all of the money and property in the superannuation fund. The property at Property E was held by the Wang Gao Superannuation Fund. The wife conceded that the English translation should have included the additional sentence.
In any event, the husband said that he had signed the agreement under duress. He said that the wife went to his business, knelt on the floor and begged, loudly and in front of customers, that he sign it. The wife disputed that. In any event, the agreement was not binding on the parties for the purposes of this proceeding.
Subsequently, Property W, was sold and the proceeds were placed in the trust account, of the wife’s then solicitor, Mr F.
The husband said that the wife would not give him the title to Property W to allow the property to be sold and he had to spend $1,000 to get a replacement title. The wife agreed that she had taken the title but said it was useless (because the husband had sold the property) so she “probably chucked it”. The wife maintained that she no longer had the title to Property W. For present purposes, I accept the wife’s claims in that regard. In any event, I accept the husband’s evidence that the wife’s obstructive behaviour resulted in him unnecessarily spending $1,000 for a replacement title.
The husband sold the (business omitted) in May 2013 for $20,000. Consequently, the husband was required, on or about 14 May 2013, to repay about $26,600 of the $55,000 that (omitted) had contributed to the fit out on condition that the business continued for five years. The husband also said that, following separation, he was also obliged to pay lawyer’s fees of $3,000 for the sale of the business. The wife disputed that claim, demanding hard evidence. Exhibit 10 indicates that $1,100 of the sale price was used for solicitor’s costs. In the absence of any other documentary evidence, I conclude that $1,100 was the extent of the solicitor’s fees for the sale of the business.
The husband conceded that he retained all of the proceeds of sale of the (business omitted) business. However, after payment of a commission of $9,900, marketing fees of $990 and solicitor’s fees of $1,100, the husband said that he received only $4,100. He tendered a real estate agent’s settlement statement (exhibit 10) for “sale of business - … chattels”. It showed that the agent had received a deposit of $15,000, and after payment of the amounts mentioned previously, there was to be a cheque for the husband of $3,010. None of that explained the other $5,000, being the $20,000 purchase price minus the $15,000 deposit. There was no suggestion of any other expenses associated with the sale. In the circumstances, I consider that the husband received about $8,000 net for the sale of the (business omitted) business, which he retained.
In addition, the husband conceded that he returned the (omitted) machine to the manufacturer as a second hand item. He conceded that he received about $10,000 for it, which he retained.
The husband said that his aunt and uncle paid the wife the $250,000 and the $200,000 plus interest in October 2010. The wife accepted that the aunt and uncle had been lent $250,000 and $200,000 respectively. At the commencement of the hearing, the wife said that the husband (or his aunt and uncle) repaid her less than $100,000 and later said that they gave her between $10,000 and $20,000.
The husband said that the wife signed a receipt in Chinese for $265,000. The husband said that the receipt acknowledged payment of the $200,000 loan to his aunt with interest of 15% per annum over three years. The wife acknowledged that an English translation of the receipt provided to the court was accurate. However, at the commencement of the hearing, the wife said that it was not her signature and she had not been repaid that money.
The husband’s aunt, Ms W, affirmed an affidavit on 5 March 2015. She said that she and her son had borrowed “a huge sum of money” from the husband in 2008. She said it was repayable on demand with interest. She said that in September 2010, the husband told her to repay the money to the wife. She said that she repaid part of the money on 6 September 2010 and the balance on 20 September 2010. She exhibited to her affidavit a document in Chinese which she said was a description of the loan and a receipt signed by the wife.
In oral evidence, through an interpreter, Ms W said that the document said that:
a)on 25 June 2008, she and her son had borrowed $200,000 from the applicant at 15% interest;
b)on 5 September 2010, the $200,000 debt was transferred to the wife and interest of $65,822 was paid to the wife;
c)on 6 September 2010, $100,000 was repaid to the wife;
d)on 28 November 2010, a further $100,000 was paid to the wife together with interest for two months and 13 days of $3,034.
Ms W also said that she had seen the wife sign the document to acknowledge receipt of the payments.
After that evidence was provided to the court, the wife retracted her denial and conceded that the signature on the document was her signature. When asked by the court whether she had been repaid the money as described in the receipt, she said, through an interpreter, “That should be it.” She later said that she did not remember receiving the money. However, having seen Ms W give evidence, I accept that her evidence was truthful. That is, I accept that between September and November 2010, the wife received about $268,856 from Ms W. As the wife has not disclosed any savings in the bank, I assume that she has either spent that money or lost it gambling or has hidden it somewhere.
The husband’s uncle, Mr J, affirmed an affidavit on 5 March 2015. He said that the husband and wife lent him “a huge sum of money”. He said that, in September 2010, the husband told him that the debt had been assigned to the wife. He said that the wife demanded payment by telephone and text message and in person in his (business omitted) in front of customers. He said that, on several occasions, she asked him to deliver money to her at a TAB, which he did. He said that, after a time, he sold his shares in the (business omitted) and repaid her more than $300,000.
The wife cross examined Mr J. He said that he repaid the wife in various amounts of $2,000, $5,000, $10,000 or $20,000. He said that he had cash from his (omitted) business, which he would take to the wife when she called him. He said that she often telephoned in the middle of the night and he would take money to the wife at a TAB in places such as (omitted), or (omitted). He said that he had kept a record of the repayments but lost it when he renovated his house a couple of years ago.
The wife disputed Mr J’s evidence, largely on the grounds that there was no documentary evidence to substantiate it. However, having seen Mr J give evidence, and having formed a very poor view of the wife’s credibility, I accept Mr J’s evidence. That is, I accept that he repaid the wife in excess of $300,000, being the original loan of $250,000 plus interest. As the wife no longer admits to having that money, I assume she has spent it or lost it gambling or has hidden it somewhere.
Since separation, the husband has borrowed $454,296.20 against the property at Property O. The husband did not disclose what he has done with that money. In the absence of any evidence to the contrary, I consider that he probably still has it.
Since separation, the wife has borrowed $600,000 against the Property D property. As mentioned previously, the wife provided a false document to (omitted) Bank to enable her to secure that loan.
The wife said that she borrowed the $600,000 on 1 April 2012. She said that she has used that money as follows:
a)$368,000 was paid to her mother by 5 June 2012 as repayment of loans;
b)$200,000 was lent in April 2012 to a cousin of the husband, who she was unable to name; and
c)the balance was spent on lawyers and living expenses.
The wife later said that she had lent a further $150,000 to the husband’s cousin, making a total of $350,000. When asked where that money had come from, because her figures exceeded the $600,000 that she had borrowed, she said that she had actually repaid her mother over a period of time. However, as stated above, I do not accept that the wife borrowed that money from her mother. Consequently, I do not accept that the wife repaid that money.
In any event, there is a schedule, which the husband said was prepared by his aunt, which showed the repayment of $350,000, with interest of about $29,000, by September 2013. The wife did not dispute that evidence. I accept that the lending to the cousin and the repayment occurred. The wife did not explain what had happened to the $379,000, other than to claim that some of it may have been repaid to her mother. I do not accept that evidence. The wife produced no evidence from her mother to substantiate that claim. For reasons previously given, I did not find the wife to be a credible witness. I consider that she has either gambled away the money, or used it for her own purposes or has it hidden somewhere.
The $350,000 lent to the cousin was part of the $600,000 borrowed from the (omitted) Bank. The only new money was the interest of about $29,000. I consider that the wife has either gambled away the interest, or used it for her own purposes or has it hidden somewhere.
The wife said that, since separation, she has lived on Centrelink benefits. She conceded that she has not paid the mortgage instalments on the money she borrowed from the (omitted) Bank and the loan has now increased to $670,000. She conceded that the bank was poised to foreclose on the mortgage but was waiting to see what happened in this proceeding.
The husband said that, since separation, he has worked as a (occupation omitted) in his own business, which is making a loss of about $6,000 per year. A letter from Centrelink to him dated 15 October 2014 indicates that his taxable income for the 2013-14 income year was $53,015. (exhibit 33). I accept the Centrelink letter as accurate. There was no suggestion that the business has any value and it was not included as an asset in this proceeding.
The wife said that, since separation, the husband has received rental income. She subpoenaed documents from real estate agents to establish her claim. The husband initially said that he had received about $30,000 in rental receipts since separation. However, after some documents were produced, he conceded that he had earned about $60,000 in rent since separation. After more documents were produced, he said that he had received about $82,000 in rent since separation, consisting of:
a)$24,000 in respect of Property E;
b)$28,000 in respect of Property W; and
c)$30,000 in respect of Property O.
At the end of the hearing, the husband conceded that, post separation, he had received all but the last $760 in rent for Property W, which went to the wife. The amount the husband received post separation totalled about $41,840. The wife produced statements from the real estate agent showing that certain deductions had been made by the agent for costs, including rates, water, and repairs. Post separation, and until 29 January 2013, the annual deductions amounted to $5,909.45, $5,157.17 and $2,583.80, making a total of $13,650.42. Deducting that from the gross receipts of about $41,840 leaves about $28,190.
The husband claimed that he had paid the last instalment for the council rates for Property W in 2013. He conceded that the agent had paid most of the rates from rental receipts but said there was no tenant at the end. He produced two rates notices for 2013, the second of which indicated that the first three instalments had been paid, and had a hand written notation indicating that the fourth instalment had been paid. He also produced a credit card receipt for $772.97 from (omitted) City Council, being the amount of the fourth instalment. In the circumstances, I accept that the husband paid the last instalment of the rates for Property W for 2013 in the total sum of approximately $770. That amount should be deducted from approximately $28,190 the husband received by way of rental for Property W. It leaves an amount of about $27,420.
The wife received the last $760 in rental payments for Property W, in about December 2012.
The parties agreed that, post separation, the husband received all of the rental payments for Property O. Documents produced by the wife showed that the total rental received from the time of separation in July 2010 until July 2013 amounted to $56,613. The deductions made each year by the agent for plumbing, repairs, agent’s commission and so on appear to amount to $1,320.50, $4,376.12 and $1,375.48, up to 30 June 2013, making a total of $7,072.10. Deducting that amount from the $56,613 leaves $49,540.94.
The husband also suggested that there should have been deductions for council and water rates and insurance. However, there was no evidence that the husband had paid those amounts. Additionally, there was no evidence of how much the rental receipts were post 30 June 2013. It seems likely that there was a substantial amount of rental received by the husband in that period, but in respect of which the wife was not able to subpoena documents. The husband did not admit to any additional rental receipts for Property O. In the absence of evidence, I make no findings about those matters.
The husband said that the rent for Property E went to the wife from separation until 20 January 2013, then to him until November 2014 and then to the wife after that. She said that, after November 2014, she only received two months’ rent before the husband directed the agent to place the rental income into a trust account to hold for the wife. I accept that evidence. However, I proceed on the basis that the wife has used that money, as she did not disclose any savings in the bank.
The property at Property E is owned by the Wang Gao Superannuation Fund. The rent should have remained in the fund.
Documents subpoenaed by the wife (exhibit 48) show that, for the period 12 October 2010 to 31 August 2012, there were rental receipts of $36,786.52 in respect of Property E. That figure was net of expenses such as letting fees and repairs. It was paid to the wife. As the wife did not disclose any bank savings, I assume that she has spent it on living expenses or lost it gambling or has hidden it somewhere.
Documents subpoenaed by the wife (exhibit 49) show that the rental for Property E for the period 19 January 2013 to 23 October 2014 amounted to $33,878.08, net of letting fees and expenses. That amount was paid to the husband. As the husband did not disclose any bank savings, I assume he has spent it.
Exhibit 49 also shows that the rental for Property E for November and December 2014 amounted to $3,949.41, net of letting fees and expenses. That amount was paid to the wife. As the wife did not disclose any bank savings, I assume that she has spent it on living expenses or lost it gambling or has hidden it.
A bank statement for the Wang Gao Superannuation Fund (exhibit 43), which owns Property E, shows numerous withdrawals post separation, many for sums of $1,000 and many during the small hours. The husband said that the wife withdrew those sums and lost them gambling. The wife denied that.
Statement 5, for February to March 2011, shows rental credits of about $4,000, a cash deposit of $30,000 and withdrawals totalling about $35,500. That means that, net, about $1,500 was taken from the account during that period. Of course, being a superannuation account, nothing should have been taken from the account, except to pay the legitimate expenses of the superannuation fund. In the absence of evidence about those expenses, I do not accept that any money withdrawn from the account was for the legitimate expenses of the fund. In the absence of evidence about the deposits, I accept that they were, in effect repayments of the amounts withdrawn.
Statement 6, for March to June 2011, shows credits of about $5,500 for rent and $25,000 by cheque, and withdrawals totalling about $35,000. That means that, net, about $4,500 was taken from the account during that period.
Statement 7, for June to September 2011, shows rental deposits of about $4,000 and withdrawals of about the same amount. As no money was replaced, the full $4,000 must be viewed as having been taken from the account.
Statement 8, for September to December 2011, shows rental deposits of about $2,700 and withdrawals of about the same amount. As no money was replaced, the full $2,700 must be viewed as having been taken from the account.
Statement 9, for December 2011 to March 2012, shows rental deposits of about $6,000 and withdrawals of about the same amount. As no money was replaced, the full $6,000 must be viewed as having been taken from the account.
Altogether, during the period covered by statements 5 to 9 in exhibit 43, about $18,700 was taken from the superannuation fund. I consider that the wife took that money and lost it gambling or has hidden it. The evidence was not at all clear, but I assume that the $18,700 was part of the $36,786.52 received by the wife during the period
12 October 2010 to 31 August 2012.
The account for the Wang Gao Superannuation Fund was closed in April 2012, after having a balance of under $10 since February 2012.
During 2012, when the wife was receiving the rent for Property E, the tenants complained about a leak in the roof, which resulted in water running down an internal wall. The tenants took the matter to VCAT, and obtained an order against the husband and wife in this proceeding for the payment of money. The husband said he knew nothing about it as he was in China at the time. The debt was not paid.
The wife had said that her family name was the husband’s family name and she gave the husband’s address in Property B as her address. The sheriff went to the husband’s address to recover the judgment debt. The sheriff threatened to take the husband’s car. The husband paid the judgment debt, which amounted to about $4,100.
The husband said that, post separation, he paid the rates for Property E. The wife required hard evidence of that. She conceded that she had not paid the rates. The husband tendered rates notices for instalments two and three due on 30 November 2012 and 28 February 2013. Both notices indicate that the rates were in arrears. However, as there was no evidence that either party has been pursued by the council for the rates, I accept that the husband has paid at least the 2013 council rates for Property E in the sum of $2,316. There was no evidence about other years so I disregard them.
The husband also claimed that, post separation, he had paid the water rates for Property E and produced a bill due on 5 September 2013. However, there was no evidence that he had paid that bill so I disregard it.
The husband claimed that, on 9 February 2012, the wife signed a document indicating that she had borrowed $15,000 from the husband and promised to repay him $30,000. The husband said that the wife had borrowed some money from someone else, had lost it gambling and the person had threatened to kill her. The wife denied all of that, including that the document bore her signature. I prefer the husband’s claims about this matter.
(business omitted) was sold in about 2013. The husband said it made a loss. He received a refund of bond monies in the amount of about $13,000. The husband conceded that he has used that money for his own purposes. I accept the husband’s evidence on these matters.
Prior to the children being taken into foster care on 8 January 2013, the husband paid the wife child support. Neither party was sure how much but they agreed that it was very little.
Since separation, the husband has had the use of the Holden (omitted).
After separation, the wife was involved in a car accident which resulted in her car, a Toyota (omitted), being written off. She said, without challenge and I accept, that she received $6,000 as an insurance payout. She conceded that she has used that money for her own purposes.
The husband said that, since separation, the wife had gambled and lost over $1,000,000, consisting of:
a)$268,850 paid by the husband’s aunt to the wife;
b)$340,000 paid by the husband’s uncle to the wife; and
c)$600,000 borrowed against Property D.
The wife said that she had lost gambling only about $200,000 or $300,000. She also said that the husband had lost over $1,000,000. She tendered various bank accounts of the husband which she said showed frequent and significant withdrawals. The husband said that he had spent the money on fitting out the (business omitted) or transferred it to another account, which he did not produce.
Unfortunately, there was no analysis of the husband’s bank accounts, such as a lawyer or accountant would have been able to undertake. Certainly, some of the withdrawals from the husband’s bank account (exhibit 29) were in the small hours of the morning. On the husband’s own case against the wife, such withdrawals are indicative of gambling. There were also numerous credits. All in all, in the absence of an analysis provided by the wife, and in the absence of more complete bank statements, it is not possible to ascertain how much the husband might have lost gambling.
On 16 April 2015, the husband paid $6,500 for repairs to the roof at Property E. The wife accepted that. She also conceded that she had made no contribution to the cost of the roof repairs.
In broad summary, following separation, the husband:
a)acquired Property B, in which he has equity of $85,000;
b)received $10,000 for the (omitted) machine;
c)received $8,000 for (business omitted);
d)received $13,000 for the repayment of the bond for (business omitted);
e)received about $27,400 rent for Property W;
f)received about $49,500 rent for Property O;
g)received about $33,000 rent for Property E;
h)borrowed $454,296.20 against Property O;
i)paid $26,600 to (omitted) as a pro rata repayment of fit out expenses;
j)paid about $20,000 to his new wife’s father;
k)paid about $1,000 to get a new title for Property W;
l)paid about $6,500 for the roof repairs on Property E;
m)paid about $4,100 for the VCAT order in respect of Property E; and
n)paid about $2,300 in rates for Property E.
That is, the husband has received about $140,900 since separation from the parties’ assets. He has paid about $40,500 for expenses associated with the parties’ assets. He has borrowed $454,296.20 against Property O. He has paid about $20,000 to his new wife’s father. He has acquired an asset with equity of about $85,000.
In broad summary, since separation, the wife:
a)borrowed $600,000 against Property D and that debt has increased to $670,000;
b)received about $269,000 repaid by Ms W;
c)received about $300,000 repaid by Mr J;
d)received about $15,000 borrowed from the husband;
e)received about $29,000, being the interest on the loan to the husband’s cousin; and
f)received about $37,000 rent for Property E.
The wife did not claim to have retained any of that money. I assume that she has lost it gambling or has hidden it somewhere for her own use. It totals $1,250,000. If the $70,000 interest owing to the (omitted) Bank is also included, the total is $1,320,000.
The s.90SM(4)(d), (e), (f) and (g) and the s.90SF(3) factors
The husband and wife are both 44 years old. The husband said that he was in good health except for back pain, which did not stop him working. The wife conceded that the husband had suffered from back pain for 20 years.
The wife said that she had pain in her bones all over her body. The husband disputed that. The wife provided no medical evidence in support of her claim. She said that she received treatment for her pain in China. Given my view about the wife’s credibility, and in the absence of any expert evidence, I do not accept the wife’s health claims.
The husband in his financial statement said that he now earns about $15,000 per year as a (occupation omitted). The wife disputed that claim. She said that he earns cash in hand. During the relationship, the husband said that he earned about $50,000 or $60,000 per year. That is consistent with the Centrelink letter mentioned above and I consider that to be a more accurate reflection of the husband’s earning capacity.
The wife said that she was on Centrelink benefits of about $250 per week. The husband accepted that but said that she was well able to work, in any non-professional occupation. The wife agreed that she could get a job but could not nominate any suitable job or estimate her pay rate. The husband said that she could earn more than $1,000 per week. I consider that the wife could probably earn a modest income as an employee or a moderate income if she chose to run her own business. She is clearly quite capable.
The children of the relationship are currently in the care of the Secretary of DHS. The mother may have applied to the Children’s Court to get them back but has not been successful to date. The current order expires in October 2015. There is no reason to believe that the children will be returned to the wife in October this year or ever. To conclude otherwise would be entirely speculative.
Before the children were taken into the custody of the Secretary of DHS, the husband paid the wife a small amount of child support. It is unclear if or when the children will be returned to their mother. Therefore, the question of child support is presently irrelevant.
The husband cohabits with his new wife and their three year old child. He said that his wife works as a (occupation omitted) and earns about $36,000 per annum. That evidence was not challenged and I accept it.
The wife cohabits with her new husband. The wife said that he does not work and is not in receipt of Centrelink benefits. She said that he receives about $3,000 to $5,000 per year from his parents in China. She said that he owns a half share of a house in (omitted). She said his former wife owns the other half. She said their son lives in the property. She said there are ongoing legal proceedings between the wife’s new husband and his former wife. The wife said that her new husband has a car but she did not know what sort.
Given my view of the wife’s credibility, and given the inherent implausibility of her evidence about her husband’s financial circumstances, I do not accept the wife’s evidence about these matters. I consider that the wife has failed to disclose a significant matter, being the financial circumstances of her cohabitation with her new husband, even though she pressed the husband for details of the financial circumstances of his cohabitation. I consider, in the absence of proper disclosure by the wife, that her new husband earns at least average wages.
The financial resources of each of the parties are discussed elsewhere in these reasons.
The husband has an obligation to support his new wife and child.
It was not suggested that either party has any obligation to support any other person, on the understanding that, while the children of the parties are in the custody of the Secretary, they are being supported by the taxpayer.
The wife is in receipt of Centrelink benefits. It appears that the husband is not in receipt of any pension or allowance.
In all the circumstances of this case, a modest standard of living would be reasonable. It is not suggested that either party wishes to undertake a course of education or training.
It appears that there are sufficient funds to pay the creditors of the parties, including the (omitted) Bank for the wife’s borrowing and the Australian Taxation Office for the money taken from the self-managed superannuation fund.
Neither party claimed to have contributed to the earning capacity of the other or to have had their earning capacity affected by the relationship. Neither party is undertaking the role of parent to the children of the relationship. The husband did not suggest that his role as a father of his new child had any bearing on this matter.
As mentioned, the wife has not disclosed the financial circumstances of her current marriage. The husband’s wife earns $36,000 per annum.
No other relevant orders have been made known to the court. There are no relevant facts or circumstances that are not mentioned elsewhere in these reasons.
Whether it is just and equitable to alter the parties’ property interests
The parties agreed that it would be just and equitable to alter their property interests in this case. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a de facto relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.
The wife’s proposal
The wife proposed that:
a)she keep Property D;
b)she receive 100% of the proceeds of Property W;
c)Property E and Property B be sold and she receive 65% of the proceeds; and
d)the husband keep Property O.
The husband’s proposal
In his closing submission, the husband expressed the concern that the wife had taken the rent from Property E and used it for gambling. The husband said that, as the rent was superannuation money, the Australian Taxation Office might penalise both the husband and the wife for the removal of the rental receipts. Neither party provided any evidence about the likely amount of any such penalty. As described above, the husband also took rental receipts from the self-managed superannuation fund.
The husband also said that, as the self-managed superannuation fund had not paid any tax, the husband and wife might also be liable for that. Again, neither party provided any evidence about the likely amount of any such tax.
The husband said that:
a)it was for the court to decide what should happen to Property D and the proceeds of sale of Property W;
b)he opposed the sale of Property B, as he wanted to keep it;
c)he consented to the sale of Property E;
d)he wanted to keep Property O; and
e)he opposed the wife getting 65% of anything because he said she would just gamble it away.
What order is just and equitable
This matter is very difficult, not least because the parties have not provided full and frank disclosure about their financial history and present financial circumstances.
In this case, the husband contributed a little more at the outset. However, the significance of his somewhat greater contribution diminished over time. During the relationship, the contributions of the parties were roughly equal, except that the wife lost gambling at least $100,000, being the proceeds of (business omitted). Since the relationship ended, the husband has borrowed about $454,000 against Property O, without adequate explanation. He may have lost, hidden or spent that amount. Since the relationship ended, the wife has lost, hidden, incurred unnecessarily or spent about $1,320,000. Consequently, I consider that the husband’s post separation contributions have been significantly greater than the wife’s. This is especially so as neither party is presently caring for their children.
The husband is able to work and earn about $50,000 to $60,000 per year. I also consider the wife to be able to earn a modest income. The husband has a child from his new relationship to support. Neither party is supporting the children from their own relationship, who are in foster care. The wife has a husband whose financial circumstances she did not disclose. She is living with him in (omitted). In the absence of adequate disclosure of the financial circumstances of her new relationship, I consider that the future needs of both parties are about the same.
Viewing the matter holistically, I consider that the following arrangements are just and equitable.
a.the superannuation fund
The first matter that must be attended to is the Wang Gao Superannuation Fund. Both parties have taken money that belonged to the self-managed superannuation fund. That money must be repaid to the fund. There may also be penalties owing to the Commissioner of Taxation for the mismanagement of the fund.
The evidence was not entirely clear. However, it seems that the husband has taken from the superannuation fund and used for his own purposes rent of $33,000 from Property E less about $12,900 that he paid for expenses associated with that property. That leaves about $20,100 that the husband owes to the superannuation fund.
The wife has taken about $37,000 in rent from Property E. She owes that money to the superannuation fund.
Unfortunately, because of the way the hearing was conducted, it was not possible for the court to precisely determine the amount of the debt owed by each party to the superannuation fund. Nor was it possible for the court to determine the precise amount of any penalties that the parties might be liable for to the Commissioner of Taxation for mismanagement of the superannuation fund.
It seems to me that the proper course is to refer the matter to the Commissioner of Taxation for the determination of the amount of the debt owing by each party to the superannuation fund and the amount of the penalties, if any, owing by each party to the superannuation fund.
It also seems to me that it is just and equitable that the amount owing by each party to the superannuation fund, and the money owing by each party as a penalty, if any, be paid from the money held on trust from the proceeds of Property W. It seems likely that those funds will be more than enough to pay the required amounts.
It also seems to me to be just and equitable that the property at Property E be sold forthwith and the proceeds be divided equally between the husband and wife and be rolled over into a superannuation fund for each of them.
b.Property B
I consider that it is just and equitable that the husband retains Property B. It has equity of about $85,000. He bought it after separation. He probably used some funds earned during the relationship to purchase it. However, that is more than offset by the wife’s extraordinary use of $1,250,000 of funds earned during the relationship or from relationship assets plus $70,000 unnecessarily incurred in interest charges.
c.Property O
I also consider that it is just and equitable that the husband retains Property O. It currently has equity of about $170,000. The husband has borrowed about $454,000 against that property without adequate explanation. However, again, that is more than offset by the wife’s use of funds.
d.Property D
I consider that it is just and equitable that the husband receives 75% of the equity in Property D, which is about $430,000. On the material before the court, the wife is not in a position to buy out the husband. Consequently, the property will have to be sold.
e.Proceeds of Property W
As mentioned above, the proceeds of sale of Property W should be used firstly to repay the amounts of superannuation taken from the parties self-managed superannuation fund, and any penalties owing in respect of the mismanagement of the fund. As indicated by the husband, there may also be a liability for tax. Both parties were responsible for the mismanagement. The balance, once the Commissioner of Taxation has indicated that all outstanding amounts have been ascertained and paid, should be divided 75% to the husband and 25% to the wife.
f.Holden (omitted)
I consider that it is just and equitable that the husband retains the Holden (omitted).
Conclusion
There will be orders to give effect to these reasons.
In addition, I consider that the matter should be referred to the Victoria Police for consideration of whether the wife has committed any crime in relation to providing the letter dated 27 February 2012 to the (omitted) Bank.
Also, I consider that the matter should be referred to the Department of Immigration for consideration of corrective action in relation to the wife’s birthdate in her passport and for consideration of whether the wife has committed a passport offence.
I certify that the preceding one hundred and ninety-six (196) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 7 July 2015
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Tax Law
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