White and White
[2019] FamCA 13
•18 January 2019
FAMILY COURT OF AUSTRALIA
| WHITE & WHITE | [2019] FamCA 13 |
| FAMILY LAW – PROPERTY – Notional add-back – waste incurred by one party occasioned by the other – fraud –standard of proof – privilege claim – Jones v Dunkel inference. |
| Evidence Act 1995 (Cth) ss 60, 128 Jurisdiction of Courts (Cross-vesting) Act 1987 s 11 Family Law Act 1975 (Cth) ss 75(2), 79(4)(a), (b) and (c), 177 |
| Bevan v Bevan (2013) 49 Fam LR 387 Briginshaw v Briginshaw (1938) 60 CLR 336 In the Marriage of Pastrikos (1979) 6 Fam LR 497 In the Marriage of Pierce [1998] 24 Fam LR 377 In the Marriage of Money (1994) 17 Fam LR 816 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 HDM & MM and SJM [2006] FamCA 47 RPS v The Queen [2000] 199 CLR 620 Smith & Fields [2012] FamCA 510 Stanford v Stanford (2012) 247 CLR 108 Steinbrenner & Steinbrenner [2008] FamCAFC 193 |
| APPLICANT: | Mr White |
| RESPONDENT: | Ms White |
| FILE NUMBER: | CAC | 1775 | of | 2015 |
| DATE DELIVERED: | 18 January 2019 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Gill J |
| HEARING DATE: | 15-19 January 2018 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Self-representing |
| COUNSEL FOR THE RESPONDENT: | Mr G Howard |
| SOLICITOR FOR THE RESPONDENT: | Phelps Reid |
Orders
That all interim Orders made by this Honourable Court be discharged.
Pending compliance with these Orders the parties are restrained from further encumbering any item of real property the subject of these Orders, and drawing against loans secured against any item of real property the subject of these Orders, and from drawing against any joint loan facility, other than to give effect to these Orders.
Company and Trust and shares
Within 28 days of these Orders, the Wife do all things required to:
3.1Resign as a director of the C Pty Ltd and transfer any shareholdings in that company to the Husband; and
3.2Irrevocably disclaim her interest as a beneficiary of the C Family Trust.
From the date of the Wife’s compliance with Order 3, the Husband indemnify, and keep indemnified the Wife with respect to:
4.1Any past or current liability of C Pty Ltd or the Trust, howsoever arising including any liability which she may have guaranteed and any liability for tax, trade creditors, lease liabilities, GST, top up tax and retained profits, account fees or any other liability of C Pty Ltd or the Trust;
4.2Any liability for audit activity should it occur in relation to income tax returns (if any) lodged, or to be lodged by the Husband an any tax agent or chartered accountant on his behalf with respect to either C and/or the Trust; and
4.3Any financial liability which may arise by reason of her having held office in C.
That within 28 days of the date of these Orders, the Wife do all things to transfer any interest in any shares trading on the ASX to the Husband.
That the Husband receive, as against the Wife, the benefit from any tax losses accrued during the relationship associated with C Pty Ltd or the C Family Trust.
Real estate and associated loans
That, within 42 days of the date of these Orders, the Husband do all things and sign all documents necessary to transfer his right title and interest in the property known as Block …, Section …, on deposit plan, … Suburb B, more commonly described as 1 D Street, Suburb B in the Australian Capital Territory to the Wife, and the Wife shall indemnify the Husband and keep him indemnified in relation to all outgoings on the property.
That contemporaneous with the immediately preceding Order, the Husband and Wife will do all things and sign all documents necessary to refinance any loan secured by registered mortgage on 1 D Street to the National Australia Bank, into the Wife’s sole name.
That, within 42 days of the date of these Orders, the Husband do all things and sign all documents necessary to transfer his right title and interest in the property known as Block …, Section …, on deposit plan, … Suburb B, more commonly described as 2 D Street, Suburb B in the Australian Capital Territory to the Wife, and the Wife shall indemnify the Husband and keep him indemnified in relation to all outgoings on the property.
That contemporaneous with the immediately preceding Order, the Husband and Wife will do all things and sign all documents necessary to refinance any loan secured by registered mortgage on 1 D Street to the National Australia Bank, into the Wife’s sole name.
That, within 42 days of the date of these Orders, the Wife do all things and sign all documents necessary to transfer her right title and interest in the property known as Lot … Registered Plan … and Lot … Registered Plan …, more commonly described as E Street, Suburb F, in the state of Queensland to the Husband, and the Husband shall indemnify the Wife and keep her indemnified in relation to all outgoings on the property.
That contemporaneous with the immediately preceding Order, the Husband and Wife will do all things and sign all documents necessary to refinance any loan secured by registered mortgage on 1 D Street to the National Australia Bank, into the Husband’s sole name.
That contemporaneously with Orders 7, 8 9, 10, 11 and 12, the Husband and Wife will do all things and sign all documents necessary to refinance the Line of Credit Account with National Australia Bank #03 (“Mr G’s loan”) into the Wife’s sole name.
That contemporaneously with Orders 7, 8, 9, 10, 11, 12 and 13 the Husband and Wife will do all things and sign all documents necessary to refinance the Line of Credit Account with National Australia Bank #54 into the Wife’s sole name.
Money in bank accounts
That within 14 days the parties will do all things necessary to divide, and to cause it to be paid into an account nominated by each of the parties, the money held in the joint H Bank account #01 (“the Premier Foreign Currency Account”) being the remaining proceeds of the US litigation as follows:
15.1$777,000 AUD to the Wife; and
15.2$14,000 AUD to the Wife on account of the Costs Order of 21 September 2016; and
15.2The balance to the Husband.
That within 14 days of the date of these Orders, the Husband and the Wife do all things to cause all joint bank accounts held in Australian dollars to be closed, with the proceeds to be paid to the Husband.
Superannuation
The Orders relating to a split of the Wife’s superannuation interest will not enter into force until:
a)These Orders have been served upon the Trustee of the superannuation fund; and
b)An affidavit of service has been filed to establish that the service has taken place; and
c)One of the following events occurs:
i)A period of 28 days has passed since the service upon the Trustee without the Trustee indicating to the Court that the Trustee wishes to be heard in relation to the Orders; or
ii)The Trustee gives notice to the parties that the Trustee does not wish to be heard in relation to the Orders and a party files an affidavit attaching that notice, for which purpose the party will be permitted to annex documents to the affidavit; or
iii)In the event that the Trustee wishes to be heard, the matter is relisted for that purpose and the Court otherwise determines the orders that are to be made in relation to the Wife’s superannuation.
In the event that the Trustee wishes to be heard in relation to the Orders, the Trustee is to notify the Court and the parties within 28 days of being served with these Orders.
That in relation to the Wife’s entitlement in the J Super the follow Orders are made:
19.1The base amount of $234,082.82 is allocated, as required by Section 90MT(4) of the Family Law Act 1975 (“the Act”) to MR WHITE (“the Husband”) out of the interest of MS WHITE, date of birthday … 1953, reference number … (“the Wife”) in the J Super (“the JS fund”).
That in accordance with Section 90MT(1)(a) of the Act:
20.1The Husband is entitled to be paid, using the base amount allocated in the Order 19.1 herein, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
20.2The Wife’s entitlements and the entitlements of such other person to whom a splittable payment may be made to out of the Wife’s interest in the JS fund is correspondingly reduced.
That the trustee of the JS fund (the “Trustee”) do all such acts and things and sign all such documents as are necessary to:
21.1pay the entitlements whenever the Trustee makes a splittable payment out of the Wife’s interest in the JS fund; and
21.2calculate, in accordance with the Act and the Family Law (Superannuation) Regulations 2001the entitlements created by Order 19.1 herein.
Catch all
That except as provided in these Orders:
22.1Each party be responsible for payment of any debts attached to items of property that they receive pursuant to these Orders; and
22.2That the Husband be declared, as against the Wife, the sole legal and beneficial owner of all items of property including money, bank accounts, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in his possession or control or name; and
22.3That the Wife be declared as against the Husband the sole legal and beneficial owner of all property including money, motor vehicles (excluding any motor vehicle owned by C Pty Ltd and specifically excluding the Motor vehicle 1), insurances, equities, superannuation entitlements and personal effects currently in her possession or control.
Section 106A Order
That if either party refuses, fails or neglects to execute any document necessary to put these Orders into effect 14 days after being requested to do so, and any such refusal, failure or neglect is proved by Affidavits filed and served by or on behalf of the party alleging this, the Registrar of the Family Court at Canberra be and is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute such document in the name of such party.
That if the Husband has not already done so, within 28 days of these Orders that he effect the transfer of the Motor vehicle 2 to the parties’ son.
Note: The form of the Order is subject to the entry of the Order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym White & White has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the Order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 1775 of 2015
| Mr White |
Applicant
And
| Ms White |
Respondent
REASONS FOR JUDGMENT
This matter concerns competing property claims between the Husband, Mr White, and the Wife, Ms White, who married in 1977 and separated in February 2015. The relationship started with negligible property. Together they raised two children. The Wife, in 1989, 1990, and 2007, received bequests. The parties conducted business together, although the Husband took the primary role in steering those interests cooperatively with the Wife. By the time of separation the parties owned significant property in Australia and in the United States of America (‘USA’).
The parties used a number of corporate entities for the acquisition and maintenance of the property of the relationship. These were firstly C Pty Ltd, for which the parties held half of the shares each, and were each the directors. Secondly, the C Family Trust, the trustee of which is C Pty Ltd. The parties and their two children are the beneficiaries. Thirdly, C Pty Ltd LLC (the LLC), a company incorporated in the USA, through which the parties invested in property and conducted their business in the USA. Although the parties planned that they would both be the members of this company, the Husband was the sole member and director. Fourthly, K LLC, a company incorporated in the USA and used in relation to a business partnership between the LLC and their business partner Mr M. The parties do not suggest that they have an ongoing interest in this company.
The parties’ cooperation as to business involvement broke down shortly, but not immediately, after their marital relationship ended.
Each seeks an adjustment of property interests in their favour.
The parties are in dispute about the significance of their actions following separation. These primarily involve firstly transactions engaged in by the Husband following separation, where he withdrew $200,000 from a joint account and otherwise used the parties’ funds in the USA. Secondly, the Husband allegedly used a forged signature of the Wife’s to try to have $1.1 million dollars in the proceeds of litigation (the US litigation) which was the product of the parties’ business venture in the USA, paid to him. Thirdly, the Wife commenced ex parte litigation in the Supreme Court of the ACT, having a receiver appointed for the C Pty Ltd and the C Family Trust. The remainder of those proceedings were then transferred to the Family Court of Australia pursuant to the cross-vesting legislation. The parties have subsequently pursued litigation in relation to their property interests in this Court.
Each of the parties asserts that this post separation conduct of the other justifies a notional adding back of expenditures into the pool of property.
Since the transfer of the proceedings to this Court there have been family violence proceedings and criminal proceedings conducted in the Magistrates Court of the ACT. The parties are in dispute as to whether these proceedings constitute a form of waste such as to justify an adding back or adjustment of property interests.
While the identity and value of the current property was agreed by the parties, they are at odds in relation to whether items should be notionally added back on the basis that one or other of the parties has wasted or obtained a preliminary distribution of the property. The parties are also at odds regarding how their contributions to the property ought to be reckoned, and as to the significance of their future requirements, although they agree that their superannuation interests should be equalised.
Orders sought by the parties
The orders sought by the Husband were set out in his Further Amended Initiating Application.[1] They are set out in full in the schedule to these reasons, but in summary call for a 60-40 division of the property in his favour, for there to be a division of the real property with him to receive the former matrimonial home and the corporate and trust entities, that the Wife would bear the responsibility for the costs associated with the Supreme Court proceedings, and that there should be a division of the parties’ cash reserves. He also seeks an adding back, in his favour in relation to various legal fees spent by him, including in relation to the family violence and criminal proceedings. He seeks the equalisation of the parties’ superannuation.
[1] Further Amended Initiating Application filed 30 November 2017.
The orders sought by the Wife were set out in her Further Amended Response to Initiating Application,[2] and are set out in full in the schedule to this judgment. In summary she seeks that there be a 60-40 division of the property in her favour, that the Husband receive the corporate and trust entities, that there would be a division of the real property with the Wife to receive the former matrimonial home, that there would be a division of the parties’ cash reserves and that the Husband would have responsibility for the costs associated with the Supreme Court proceedings. The Wife also seeks the adding back of monies spent by the Husband post separation. Like the Husband she seeks an equalisation of the superannuation interests.
[2] Filed by the Wife on 30 November 2017
Material relied upon
The Husband relied upon the following affidavit material:
a.The Husband’s trial affidavit filed 24 July 2017
b.The Husband’s response affidavit filed 23 October 2017
c.Ms L’s affidavit filed 24 July 2017
d.Ms L’s affidavit 23 October 2017
e.Financial statement filed in Court on 15 January 2018.
The Wife relied upon the following affidavit material:
a.The Wife’s affidavit filed 12 September 2017
b.The affidavit of Mr N filed 12 September 2017
c.Financial statement filed in Court on 15 January 2018.
What is the property of the parties?
The key to the exercise of jurisdiction in relation to the property of the parties is that it must be just and equitable, both to adjust the property interests at all,[3] and to adjust them in a particular manner.[4]
[3] Stanford v Stanford (2012) 247 CLR 108 per French CJ, Hayne, Kiefel and Bell JJ [35]
[4] Bevan v Bevan (2013) 49 Fam LR 387 per Bryant CJ and ThackrayJ [86]
The necessary first step in consideration of whether it is just and equitable to make an order is to identify “according to ordinary common law and equitable principles the existing legal and equitable interests of the parties in the property”.[5]
[5] Stanford [37]
At the commencement of the proceedings the parties handed up a Joint Balance Sheet which became exhibit C1. They invited a number of amendments to that Joint Balance Sheet to set out matters about which they are in agreement. They agreed that Exhibit C1 represented their admissions as to what items on the balance sheet were worth. The amended Balance Sheet is set out below showing areas of agreement and disagreement, in relation not only to the parties’ existing interests, but also as to liabilities and add-backs.[6] The balance sheet contained various assertions made by each of the parties along with the source of evidence each contended supported the assertion.
[6] Exhibit C61
It can be seen from the balance sheet that the parties intermingled issues of the identification and value of property, with whether particular sums spent by each of the parties ought to be notionally added back as though they still remained property, and also with whether particular dealings with the property were so wasteful of the property as to either justify a notional adding back or some other sort of adjustment.
Although these matters do not all fall within the notion of the identification of the current legal and equitable interests of the parties, it is convenient to deal with them together with the identification of those interests, by means of working through the contested items on the balance sheet.
The balance sheet also records, in italics, assertions made by the Husband in relation to various contested items, along with references by the Wife that are not italicised:
| Ownership | Description | Wife’s value | Husband’s value | |||
| ASSETS | ||||||
| 1 | H | 1 D Street, Suburb B | $1,300,000 | $1,300,000 | ||
| 2 | J | 2 D Street, Suburb B | $1,250,000 | $1,250,000 | ||
| 3 | J | E Street, Suburb F QLD | $1,260,000 | $1,260,000 | ||
| 4 | J | Money in bank – H Bank Canberra ($820,142.45 USD) … 101 (“Premier Foreign Currency Account”) H maintains position as stated at Notes, Item 4: AUD values ascribed by parties aren’t relevant as long as treated as a separate Pool – see HTA at 21.18-21.21, p64 and HRA at 29.2-29.3, p10; 93.3, p 43 Wife’s trial affidavit [150] | $1,035,741 | $1,035,741 | ||
| 5 | J | Money in bank – removed from US joint bank accounts by Husband (estimate) (USD E $200,000) Account: unknown to Wife No removal of funds has occurred: HTA at 51.10-51.20, pgs 40-42; and as to accounting for monies generally: HTA at 51.30-51.56, pgs 43-48, HTA Exhibits at p187 Wife’s trial affidavit [119] to [125] Affidavit of Mr N – annexure “D” | $143,092 | $0.00 | ||
| 6 | H | Money in bank – removed from NAB Line of Credit by Husband on or around 5 August 2015 Account: unknown to Wife The amount (USD$147,000 – WTA Ex at p372) is to be reduced to allow for USD$25,103.52 share of business expenses payable by w: HTA at 21.65-21.67, p86. H proposes that if adjustment is made in USD then no adjustment in the $200k need be made: HTA at 21.67, p86. As to expenditure of USD$62,000 case available as at October 2016 (refer HTA Exhibits at p187), Ms L will give oral evidence as to expenditures by her since October 2016. Wife’s trial affidavit [82] to [89] | $200,000 | $8,000 | ||
| 7 | H | Money in bank – removed from various NAB joint bank accounts by Husband between 21 September and early October 2015 Account: unknown to Wife The evidence as to how this money was sourced and used (for living expenses) HTA at 51.43, pgs 44-45 and 21.75 at p87 Wife’s trial affidavit [108] to [110] Ultimately not independently pressed by the Wife | $29,000 | $0.00 | ||
| 8 | W | Money in bank – removed from NAB Line of Credit by Wife applied to pay O Lawyers fees Wife’s trial affidavit [15], [112], [211] to [215] | $65,000 | $65,000 | ||
| 9 | J | Money in bank - $10,000 Frozen H Bank account Wife’s trial affidavit [164] to [167] | $10,000 | $0.00 | ||
| 10 | J | Money in bank – NAB (as at 22 December 2017): … #03 … #68 (Super Fund) … #83 (C i/net) … #04 (Trust i/net) … #85 (CT M/L) … #36 (C M/L) … #07 (C PtyLtd) … #86 (Chq Acct) … #75 (DP i/net) … #83 (connected to portfolio facility) … #09 (investment account) | $1.30 Closed $14.82 $13.53 $18.75 $7.75 $39.11 $5.18 $13.43 $0.59 $333.84 | $1.30 Closed $14.82 $13.53 $18.75 $7.75 $39.11 $5.18 $13.43 $0.59 $333.84 | ||
| 11 | W | Money in bank – NAB (as at 31 October 2017) … #46 (Litigation) … #06 (personal account) … #63 (MSW Director) | $12,820 $0.00 $6,596 $6,224 | |||
| 12 | W | Money in bank – H Bank (as at 22 December 2017) ... #12 (Wife’s personal day to day account) … #40 (Wife’s personal USD account) (USD: $100,000 – from Court orders) | $26,825 $3,605 $23,220 | |||
| 13 | J | Money in bank – H Bank (as at 6 August 2016) … #18 (Premier Case Management Account) … #32 (H Bank Advance Savings) (USD: $285.08) – USD$175.08 … #11 (H Bank Premier) (USD: $1,276.77 – USD$31.89 … #37 (US credit card) Credit card is accounted for under ‘Liabilities’. H Bank balances are as at 22 December 2017. | E$218.83 E$39.86 | E$218.83 E$39.86 | ||
| 14 | H | Money in bank – Husband’s personal accounts (as at 22 December 2017) Account: unknown to Wife H Bank … 090 AUD – 221.15 Item 14 USD balance 82,006.89 NAB … #16 as at 22 December 2017 | $221.15 $7,893.59 | $221.15 $7,893.59 | ||
| 15 | H | Money in bank – from Court orders (USD$100,000) Account: unknown to Wife | $142,857 | $142,857 | ||
| 16 | J | Household antiques, furnishings, etc W agreed value $29,000 H agreed value $1,000 as per 29 May 2017 orders | $29,000 | $1,000 | ||
| 17 | J | Shares Value at 22 December 2017 | $18,018 | $18,018 | ||
| 18 | J | C Pty Ltd Motor vehicle 3 (used by Husband) (2015 tax return) Motor vehicle 1 (used by Wife) (2015 tax return) Motor vehicle 2 to be transferred to w at agreed value $4,000: 29 May 2017 orders | $41,434 | $41,434 E$5,426 E$19,781 | ||
| 19 | C Pty LLC U Bank … #42 U Bank … #12 U Bank … #72 Accounts were closed Dec 2015: $0.00 balance of USD accounted for: HTA p187 | $0.00 | $0.00 | |||
| 20 | J | C Family Trust NAB … #66 (22 December 2017) | $94.64 | $94.64 | ||
| 21 | W | Jewellery Yellow & white metal diamond earrings (03.03.2011) Jewellery valued agreed as per 29 May 2017 orders is $60,000 and is agreed to be w property | $60,000 | $60,000 | ||
| Total | $5,770,794 | $5,239,259.58 | ||||
| ADDBACKS | ||||||
| 22 | W | Legal fees – O Lawyers Wife’s trial affidavit – [14], [15] and [211] | $99,900 | $0.00 | ||
| 23 | H | Legal fees (to date) H’s total was amended during interlocutory hearing 2016 (mathematical error by H) | $0.00 | E$120,338 $107,656 | ||
| 24 | J | Payment to Receiver H’s position is that this liability is solely the w’s Wife’s trial affidavit [114] | $111,638 | $111,638 | ||
| 25 | Interest incurred on the LOC account Wife’s trial affidavit – [47], [140], [141], [168] Affidavit of Mr N – Annexure B | $79,701 | $0.00 | |||
| 26 | Monies spent on legal fees and other expenses in US, after not accepting offer of Mr M Wife’s trial affidavit – [160] to [163] | $0.00 | $0.00 | |||
| Total | H claims addbacks in addition to legal fees: HTA at 21.53 – 21.58, pgs 83-84. Amounts, if allowed will have to be calculated as at date of orders | Insert | Insert | |||
| LIABILITIES | ||||||
| 27 | J | NAB Line of Credit Account (as at 4 August 2016) … #54 Balance as at 22 December 2017 | $1,179,569 | $1,179,568 | ||
| 28 | J | NAB Line of Credit Account (as at 4 August 2016) … #03 (Mr G’s loan) Balance as at 22 December 2017 | $84,223 | $84,223 | ||
| 29 | J | H Bank Mortgage over E Street, Suburb F … #58 Balance as at 22 December 2017 | $397,445 | $399,111 | ||
| 30 | W | NAB Credit Card (as at 9 August 2016) … #24 | $288 | |||
| 31 | J | D Street Loan (as at 4 August 2016) … #90 Balance as at 22 December 2017 | $95 | $91.87 | ||
| 32 | J | H Bank Credit Card … 5743 Balance as at 22 December 2017 | $17 | $17 | ||
| 33 | H | Credit Card NAB credit card … #97 28 Degree credit card … #51 | $358.90 $1.24 | $358.90 $1.24 | ||
| Total | $1,661,997 | $1,663,371 | ||||
| SUPERANNUATION | ||||||
| Member | Name of Fund | Type of Interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||
| Ownership | Description | |||||
| 34 | W | JS | Defined Benefit – payment phase | $616,642 | $616,642 | |
| 35 | H | JS | Defined Benefit – payment phase | $131,554 | $131,554 | |
| Total | To be recalculated as at final orders and as equalised pensions: HTA at 21.35.14, p77 | $748,196 | $748,196 | |||
| FINANCIAL RESOURCES | ||||||
| Ownership | Description | Wife’s value | Husband’s value | |||
| 36 | J | Carried forward tax losses as at 30 June 2015: Company – $1,371,375 Trust – $320,907 HTA at pgs 81-82 Wife’s trial affidavit – [12.1] to [12.2] Affidavit of Mr N – Annexure “E” | $1,692,282 | $1,692,282 | ||
| Total | $1,692,282 | $1,692,282 | ||||
The parties agreed on various other matters not set out in the balance sheet. At Item 18 there is reference to a Motor vehicle 2. It is accepted that the funds for this motor vehicle form part of the line of credit that has been held by the parties. Those funds were in turn loaned to the parties’ son, Mr G, who owes them a corresponding sum. While the Motor vehicle 2 is owned by Mr G, as far as the parties are concerned, it is formally still in the Husband’s name. The parties agreed that orders should be made such that the vehicle is taken out of the Husband’s name and such that the Wife holds the responsibility for the loan relating to Mr G. This is on the basis that the Husband and Wife both accept that it is a zero value item on the Balance Sheet. That is, the liability is equally offset by the money owed by Mr G.
The parties further accept that each received $100,000 USD from Item 4, which constitutes settlement monies from litigation engaged in the USA in relation to the business conducted there. That litigation was settled for $1.1 million USD. The $100,000 USD paid to each party was converted into Australian dollars in the sum of $142,857 AUD.
It was further agreed between the parties that the Country P property obtained by the Wife from her family (described later in the judgment), constituting two blocks that comprised half of a property known as Q, had a value of $350,000 AUD when received by the Wife.
While at the commencement of the trial there had been an outstanding issue as to how the parties would divide their chattels, this having been an issue during the interim proceedings, during the final hearing the parties came to an agreement as to a list of chattels dividing such property between them.
The parties are agreed that the disposition of the property will involve the transfer of the company C Proprietary Limited and the C Family Trust to the Husband along with the accumulated tax losses of approximately $1.7 million held within the trust. The Husband accepts that under current tax law those tax losses would mean that any income received through the trust would be received on a tax-free basis.
Discussion regarding the balance sheet
While there are some differences between the parties as to the liabilities, the disparity is not significant in the determination of just and equitable orders. The overall disparity of approximately $1,500 does not have significance in determining the distribution of property between the parties.
The area of significant disparity was in matters that each party said should be added back as a result of their receipt and use, or as a result of waste. While in the balance sheet the parties recorded tables for assets and for add-backs, issues in relation to adding back amounts also covered Items 5 - 8 of the assets. For example, while Item 8, being expenditure of funds to meet legal expenses, was recorded as an asset, it was not contended that the amount is still in existence. Rather, it forms a sum that has been disposed of, and which it was asserted should be notionally added back into the pool of assets. Item 8 also overlaps with Item 22.
Other than the issues as to adding back and waste, the disputed value matters can be dealt with briefly.
Item 9 referred to $10,000 frozen in a bank account. The Wife referenced this in her trial affidavit at [164-167]. [164, 166 and 167] were struck out and [165] did not support the amount. This amount should be excluded.
Items 11 and 12 related to cash the Wife described as held by her in various bank accounts. Although there was no direct evidence about these matters, the Wife’s assertion in the balance sheet constitute admissions against interest (in the sense that the admission of such decreases any claim the Wife might make for adjustment in her favour). They totalled respectively $12,820 and $26,825.
Item 18 contains an assertion as to the value of two motor vehicles, being a Motor vehicle 3 used by the Husband, and a Motor vehicle 1 used by the Wife. They form assets of C Pty Ltd, which the parties agree has a value of approximately $41,000. Unless there is to be a transfer of the assets from the company, there is no need for an independent value to be assigned to either.
This leaves the current position of the parties, disregarding the add back/waste issues, of a pool of $5,189,013 where the Husband currently holds $1,451,971 and the Wife $128,645, and jointly $3,607,396.
The current liability position, disregarding the inconsequential amounts (inconsequential as the disputed amounts do not have significance in the context of the overall pool in determining what is just and equitable), consists of three joint liabilities, an NAB line of credit of $1,179,569, a further NAB line of credit at $84,223 and a joint mortgage over the Suburb F property of approximately $399,000. Of those liabilities the parties agree that the Wife will take responsibility for the second line of credit, on the basis that the loan actually relates to the parties’ son and he will be responsible for payment of the loan to the Wife. That is, while there is a loan on the balance sheet of $84,223, it is effectively a zero line item with the son’s responsibility to pay the loan cancelling out the liability. The liabilities therefore total approximately $1,579,000.
It remains necessary to resolve the parties’ contentions regarding notional add backs, premature distributions and waste.
The Husband’s removal of funds
The Wife asserts that the Husband, by removing particular sums of money, has taken a premature distribution of the property of the parties that should be notionally added back into the pool. This amount, she said, totalled $372,000, less an amount of $44,000 that the Wife accepts constituted both an established and appropriate disposal of the funds. The total amount sought by the Wife to be added back in relation to these funds is therefore $328,000.
As was set out by Murphy and Kent JJ in Grier & Malphas (2016) 55 Fam LR 107 at [128]-[129]:
Each of the parties used funds available to them in the approximately four years between separation and trial. Included in purposes for which the sums were used were the reasonable living expenses of each. So-called “addbacks” are the “exception and not the rule”. Further, although always of course a matter of discretion it can be said that, in the usual course of events, amounts spent on reasonable living expenses would not often be added back.
As the Chief Justice points out, with those principles in mind, the trial judge adopted a broad-brush approach to the parties’ respective expenditure. No error is established by reason alone of that approach; authority eschews “overly pernickety analysis” and s 79 demands neither an audit nor an exercise in accounting. However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.
Murphy and Kent JJ noted that “a very significant disparity in the sums expended by the parties” called for the examination of that disparity and of the “purposes for which the money as used.” Such an examination may then reveal the necessity to add-back or “as has been suggested as often preferable by decisions of the Full Court, by reference to s 75(2)(o)”.
The assessment of the Wife’s claim therefore requires an examination of the use of the funds by the Husband.
These funds were initially contested Items 5, 6 and 7 of the Balance Sheet, relating to money removed from accounts by the Husband.
The Wife’s position in the trial came to be that if regard is had to the total sums taken from the accounts and measured against legitimate expenditure, that the extent of the add-back becomes apparent. This means that the extent of the premature distribution is to be reckoned from transfers made by the Husband out of the USA accounts between August 2015, by which time the Wife had clearly communicated to the Husband, as set out later in the judgement, that she no longer wish to conduct their business interests cooperatively, and those in December 2015, totalling approximately $273,000 USD ($372,000 AUD). These amounts may be derived from the total of the withdrawals from the U Bank account for the US LLC shown at Exhibit W4 and the US H Bank account records at Exhibit H8.
The parties engaged Mr N as a single expert to report upon various financial matters. The amounts were also dealt with in the N report. The Report dealt with monies going into the relevant accounts prior to the period of time identified by the Wife, and then with the monies coming out of the accounts during the period. The report identified money going into the US H Bank Checking and Savings accounts between 27 April 2014 and 5 August 2015 ($75,925.45 AUD transferred into the Checking account, and $108,942.82 AUD into the Savings account, totalling transfers together of $184,868.27) and importantly dealt with money coming out of those accounts on or after 6 August 2015. The report showed that $68,479.89 AUD was transferred out of the Checking account, and $303,612.82 AUD was transferred out of the Savings account. These transfers again totalled together $372,092.71 AUD.
The Husband was taken to pp 363 to 372 of the Wife’s affidavit that contained H Bank statements for the parties’ accounts between July 2015 and December 2015. From that the Husband accepted that he had removed $274,000 USD during this period. This equated to $372,000 AUD.
It was thereby uncontroversial this money had been removed by the Husband.
In assessing what should be done in relation to this amount, and whether there should be adding back, it is important to consider the circumstances of the Husband's withdrawal of $200,000 AUD from the parties’ NAB line of credit which formed part of these funds.
Through the marriage the Wife and Husband had been involved together in the financial decisions that were taken. The Husband said that he did not take any financial step without the agreement of the Wife.
The parties separated in February 2015 and on 25 February 2015 the Wife emailed the Husband indicating that she no longer approved of withdrawals taking place without their joint consent where the amount concerned was over $5,000.[7]
[7] [82] of the Wife's trial affidavit
On 5 March 2015 the Husband rejected this restriction and indicated that he would deal with the money as he chose. On 31 July 2015 the Wife emailed the Husband indicating that she did not want to continue in their business relationship and was not prepared to agree to further financial commitments. She told the Husband that she considered that it was “impossible to consider a longer term business relationship, when our personal relationship is disintegrating”.
This was followed by the Husband withdrawing $200,000 from the NAB line of credit within five days of that email, without reference to the Wife and without her knowledge. Despite the Wife's articulation to the Husband that she wished that there be limits on their drawings and that she no longer wished to be in a business relationship with him the Husband's explanation as to his withdrawal of $200,000, as set out in his affidavit of 6 January 2016 [38] was, “I originally made this transaction in the belief that it was consistent with what [Ms White] and I had agreed with respect to investing in the USA”.
The Husband further explained that “[Ms White] has since unilaterally repudiated that agreement”.
The Husband said that he acted to further their previous business plans and that shortly before the transfer of the $200,000 there had been a conversation between he and the Wife discussing the future “flipping” of properties, which he explained involved purchasing properties, renovating them and then selling them for profit. The Husband was asked to identify whether reference to such conversation occurred anywhere in his affidavit. He was unable to do so. I am unable to accept that such a conversation took place in the face of the Wife’s email as to the end of their business relationship.
Whatever plan had been in place for business activities during the relationship had been repudiated by the Wife prior to the withdrawal of the $200,000, at the latest when she indicated that she no longer wished to be in a business relationship with the Husband.
It should not be accepted that the Wife in any sense agreed to the removal of the $200,000 as part of a joint venture.
By his affidavit of 6 October 2016 at [52(e)] the Husband indicated that he ultimately held the $200,000 amount as cash (the money having passed through the H Bank account). He accepted that disclosure had been sought from him as to the money. He did not disclose to the Wife what he was doing with the sum, in stark contrast to their cooperative approach during the relationship.
This $200,000 AUD was converted into $147,000 USD.
In his oral evidence he said that only $6,000 USD of the AUD $200,000 was remaining, held in cash, probably in a cupboard in his home. Prior to the funds being in Australia, they were held in the USA by Ms L, the Husband’s partner. He accepted that he gave the Wife no proof as to the amount that was held in cash. He made a generalised assertion that sums had been expended on living expenses.
On how the cash was spent, the Husband initially referred to p 184 of his trial affidavit and to a list of cheque transactions bearing various descriptions, including for payment of the parties’ US lawyer’s account, electricity accounts, storage and the like. He asserted that he had deposited cash from the $200,000 for each of these withdrawals by cheque. For example, for the amount paid to the parties’ lawyers in the USA, R Lawyers, he indicated that he had deposited that approximate amount before drawing the cheque to pay the fees. The Husband sought to explain this odd manner of dealing with the $200,000 as due to difficulties dealing with the US banking system.
However, Exhibit W4[8] contained U Bank records for the period between August and December 2015. They showed a different pattern of transfers to those described by the Husband in reference to p 184 of his trial affidavit. For example, there was a transfer from the H Bank to a savings account then to the cheque account referred to at p 184. That is, it was not the deposit of cash to fund the cheque. The Husband then explained that the next entry at p 184, where $150,000 is recorded as being removed from the account was the balance of cash that was removed and held by him as cash. That is, the earlier evidence given by him of cash deposits being made for the cheques required to be drawn, for example, for the R Lawyers account, was not accurate. The Husband then put this conflict in his evidence down to being a “sloppy answer.” The explanation that the answer was “sloppy” is in the context that the Husband exhibited precision in his approach to answering questions. If not deliberately deceptive as to how he dealt with the $200,000 cash, the Husband’s evidence should least be regarded as highly unreliable where not otherwise supported.
[8] Pages 20 to 24 of his affidavit of 8 January 2018
Of the withdrawn funds of totalling $372,000 the Wife accepts that a portion should not be added back, being an amount derived from p 184 of the Husband’s affidavit evidencing the payment of particular expenses by cheque. These sums total approximately $44,000 USD. The payment of these expenses could be characterised as relating to the ongoing business/property interests of the parties.
The expenses do not include, from p 184, the amount of $150,000 USD transferred to the Husband that he says was subsequently held in cash.
The Husband further sought to explain the amounts withdrawn by virtue of a document at p 187 of his affidavit entitled ‘USD accounting’ that, he says, sets out the USD purchased between 20 May 2013 and 22 September 2015, totalling approximately $1,300,000 USD. He adds to this amount a further $35,000 USD received by the parties in respect of the ‘S’ mortgage, relating to money reimbursed for one of the properties purchased in the USA.
Against this amount the Husband sets out various expenditures, which total the sum of the USD withdrawn across the May 2013 to September 2015 period. Of this amount he notes $62,000 retained by him as cash along with some living expenses.
However this approach to explanation of the $372,000 was flawed, given that a large part of the expenditures from the cheque account set out by the Husband predate the receipt of the $273,000 USD ($372,000) and in particular the $200,000 AUD. They do not explain the disposal of the particular monies that were the subject of the Wife’s claim for an addback.
The Wife suggested that there was a further indication of the incomplete nature of the ‘USD accounting’ document to be seen through the parties’ US dollar currency transactions,[9] which shows a further $75,000 USD being used subsequent to 22 September 2015 ($50,000 USD on 25 February 2016 and $25,000 USD on 16 June 2016) which was used to purchase Australian currency, to a total of $103,270. The Wife posed the question that if the ‘USD accounting’ document was meant to show all the currency transactions, where did the additional USD $75,000 come from?
[9] Page 180 (annexure H) of the Husband’s affidavit
In response the Husband says that these last purchases were made from the funds received by him as an interim property distribution in the sum of $100,000 USD (a corresponding amount being provided to the Wife). This amount was released to the parties by virtue of the Orders of Watts J, made 12 February 2016. This answered this particular criticism made by the Wife.
However, it still left the use of the $372,000, other than the $44,000 relating to the business inadequately explained.
As identified by counsel for the Wife, it was incumbent upon the Husband, having dealt with the resources of the parties post separation, to explain those dealings. Only part of the explanation that he has offered for the disposal of funds from August 2015, when the Wife indicated to him that she no longer agreed to continue their business relationship, should be accepted, being the cheque account transactions that the Wife has identified as accepted in the sum of $44,000.
The balance remains inadequately explained by the Husband. He had the money. He disposed of it. It was in his hands to explain what happened to it. It was by his choice that a large component was held in cash and, under those circumstances it was only the Husband who could provide evidence of its use. He did not adequately do so.
In this case the Wife argued this matter in terms of a notional add back. It may be accepted that notional add backs have been described by the Full Court as being the exception, with a preference expressed by the Full Court for adjustment pursuant to s 75(2)(o). It may be observed that a notional add back does not equate to a dealing with notional property, but rather constitutes a mode of reasoning for taking into account prior dealings with property in a manner that will achieve a just and equitable outcome. In this instance, whether the matter is dealt with as a notional add back or alternately as a consideration pursuant to s 75(2)(o) the same result should follow, being a full recognition of the benefit taken by the Husband by means of premature distribution.
These circumstances make it appropriate to treat the $328,000 ($372,000 - $44,000) as a premature distribution that favoured the Husband and to notionally add that amount back into the pool of property.
The Wife’s occupation of the matrimonial home and maintenance payments to the Husband
The Husband sought that an adjustment by means of an addback be made for the fact that the Wife has had the use of the former matrimonial home since separation (see the unnumbered item following Item 26 in the balance sheet). The Wife has not paid rent for that facility. She occupies it with the parties’ adult son. The Husband says that the Wife has benefited from the use of this property. The Husband accepted that, although the property is in his name, this was a benefit derived from the property pool acquired during the relationship.
At the same time the Husband accepted that by virtue of Orders made by Justice Watts he was receiving the sum of $495 per week towards his living expenses, which was paid from surplus rent monies received from the parties’ property. Again, he describes that the source of that money was half his in any event (mirroring the position that he accepted in respect of the Wife's enjoyment of the former matrimonial home).
The Husband ascribes a value for the Wife’s occupation of the home from a rent valuation provided by T Real Estate.[10] This report attributed a rental value, unfurnished at $1,100 per week. The Wife points to the valuation of the rent being for both 1 and 2 D Street. The T Real Estate report shows that 2 is rented at $495 per week, which it asserted is in line with the market. The notional rental attributed to the Wife’s occupation of 1 D Street is approximately $600 per week.
[10] Wife’s affidavit p 95.
The Wife says that her occupation is offset by payment to the Husband from joint resources to support him. That is, her accommodation, and his allowance for accommodation, both come from the resources of the relationship.
It may be observed that the joint resources of both of the parties were used for the support of each of the parties. The parties are each entitled, post-separation, to continue with their lives, and to use their resources to reasonably and properly support themselves.
Noting the comments earlier referred to by Murphy and Kent JJ in Grier v Malphas, a sufficient reason, as driven by the pursuit of a just and equitable outcome, is not identified for an add-back or reckoning in respect of these matters. While there may be a disparity, neither expenditure constitutes a premature distribution, or a waste, such as to mean that such a course is necessary to achieve justice and equity. The disparity in the value of what each received in this manner, by their use of the matrimonial property, either to live in or to fund living expenses, is not of such significance as to justify a notional add back nor should it result in any other form of adjustment.
Waste
The Wife raised a number of issues relating to waste on the part of the Husband.
In Kowaliw Baker J said “evidence of wantonness or recklessness having economic consequences is clearly a matter which the court may take into account pursuant to the provisions of s 75(2)(o)”.
At item 25 of the balance sheet, the Wife says that the insistence by the Husband on retaining the proceeds of the US litigation ($1.1 million AUD - Item 4 in the Balance Sheet) in USD and refusal to use them to pay down the parties’ LOC (the funds being enough to almost pay out the LOC), has meant that, even in a period limited to February 2016 to June 2017, the parties have accrued an additional $80,000 in interest.
This, she says, is accentuated by the Husband’s drawing of the $200,000 from the LOC and subsequent holding of a large portion of that in cash (see above).
While the Wife has shown the opportunity cost of not paying down the line of credit, she has not demonstrated that the Husband’s retention of the funds in USD was wasteful in the sense contemplated by Baker J. For example, it is not been shown the decision to retain as USD was other than an astute currency investment by the Husband.
The evidence is not sufficient to demonstrate that the conduct of the Husband in retaining the sum in USD was of such a wasteful character to justify an adding back of the interest paid, that would otherwise not have been payable on the paying down of the NAB LOC.
However, as noted previously, the drawing of the $200,000 from the LOC is of a character that justifies an addback. The interest component related to that amount should likewise be taken into account.
Noting that $200,000 formed between 18 per cent ($200,000/$1,103,040 at February to April 2016) and 17 per cent ($200,000/$1,166,000 at March to June 2017) of the line of credit balance across the period of the N calculation,[11] the $200,000 may be conservatively taken at 17 per cent of the interest paid across the period 12 February 2016 to 30 June 2017 ($79,701), that is $13,549.
[11] Annexure B to the affidavit of Mr N
Waste and the ACT Supreme Court litigation
Each of the parties seeks that the other bear the responsibility for the expenditure of money by each, both by way of legal fees, and of the expenses relating to the appointment of a receiver, that relate to the conduct of litigation in the Supreme Court of the ACT by the parties. In order to consider these claims it is necessary to understand how those proceedings came about.
During the marriage the parties formed the LLC. This was the vehicle by which they conducted their United States business activities. Although they had agreed to hold the Company in both names, all shares were held in the Husband’s name. Until August 2015 the Wife was included by the Husband in decisions made for the US company and was involved in litigation engaged in by the LLC.
The end product of the parties’ business was a litigation settlement sum of $1.1 million (the US litigation). That involved a dispute between the parties and their business venture partner in the USA. This dispute was resolved by means of litigation and settlement that resulted in the payment of $1.1 million into the parties’ United States lawyer, Mr R’s account.
The ACT Supreme Court litigation commenced by way of Originating Application in 2015 at which stage the Wife sought and obtained ex parte relief that included the appointment of a receiver for C Pty Ltd.
The ACT Supreme Court litigation was resolved on the basis that the US funds (the remainder of which is at Item 4 of the balance sheet) which were the product of the parties’ business exploits in the United States, be transferred into an Australian joint account, pending the resolution of Family Court proceedings, and that the receiver be paid either by the parties, or from the joint account containing the US funds. The receiver’s entitlement was ultimately fixed by court order at $111,638.98, and paid out of the US funds pursuant to court orders dated 23 November 2015.
What prompted the Supreme Court proceedings?
Three matters led to the Wife's commencement of the ACT Supreme Court proceedings. The first was the withdrawal by the Husband from the line of credit of the $200,000 against her expressed wishes and against her indicating to the Husband that their business relationship was at an end (as described above). The second was that the Husband asserted to Mr R, a legal practitioner in the United States who was dealing with the parties’ litigation in US that, as the Husband was the sole member of the LLC, that Mr R had to act on his instructions alone even if they were contrary to the Wife's. The third was that Mr R, who had control of the proceeds of the US litigation in the sum of $1.1US million was provided with an authority for the release of those sums held in his trust account, such authority purporting to have the Wife's signature. The Wife denied having provided such a signature and asserts that it was forged.
Given that each of the parties says that the expenses related to the litigation should be borne by the other, being the product if a waste of the property by the other, it is important to examine the circumstances surrounding the settlement funds and the purported signature.
Both of the parties were parties to the US litigation. The Husband asserts that there was no necessity for the Wife to be joined, but that he did so. This is consistent with the parties’ commonly held position that they made decisions about their business interests together.
A settlement was entered into, to the benefit of the parties of US$1.1 million.
The Husband’s directions regarding the settlement funds
The Husband asserted that it was a condition of the settlement under the Rule 11 Agreement that the sums received from the litigation be deposited into the LLC’s company account or the Husband's account. A copy of the Rule 11 Agreement was attached as annexure ‘Ex 3-F’ at p 250 of the Husband’s trial affidavit. It provided, relevantly, that:
[Mr M] will pay $1,100,000 to [C Pty, LLC] and [Mr White] within 25 days of execution of this agreement. Settlement funds will be held by me [Mr R] in my firm trust account. I will provide wire instructions.
The Husband says that initially he agreed to keep the proceeds of the settlement in the parties’ United States lawyer’s (Mr R) trust account. On 28 August 2015 (Wife’s affidavit p 298) there is correspondence from the Husband to the Wife and to Mr R. This was at a period less than one month since the settlement funds had been provided and evidenced a dispute as to how to funds should be dealt with.
The Husband accepts that in that email he was telling Mr R that his were the only instructions that were relevant as to what should happen in respect of those settlement funds. This communication takes place in the context that the Husband had, immediately prior to the correspondence, withdrawn $200,000 from the parties’ joint line of credit against the Wife’s wishes and without notice to her. The Husband also says in that communication, that if the Wife disagreed with the conduct of the US activities, as they touched upon the parties’ Australian Corporation C Proprietary Limited, then that was a matter that she could take up under Australian law.
The parties utilised a number of United States based bank accounts. These were the US H Bank account and the US LLC U Bank account (‘LLC UB’).
The Husband’s position was that the settlement funds should be placed into the LLC UB when the money became available. At that point in time they were not available because the settlement process was not complete, although the Husband concedes that he thought that it was close to finalisation.
The Wife complains that depositing into the joint account would have removed the proceeds from her control. The Husband disputed this.
The Wife said that the LLC UB account was in the sole name of the LLC. The Husband was the sole director and shareholder of that company, although they had made decisions together regarding the operation of the company. The Wife said she had never accessed the account and initially said that she did not know if she was a signatory.
The Wife was directed to pp 169 and 170 of the Husband’s affidavit which contained the document for opening the account. There were shown both the Wife’s status as a signatory and the boxes ticked to enable Internet banking for both the Husband and the Wife. She then said that while the Husband had provided her with details for electronic access to both the H Bank US and the LLC UB accounts the electronic access did not work for the LLC UB account as that provided incorrect details.
In relation to the LLC UB account the Wife said that she had exercised no access to the account on the basis that she was in Australia, that she had never had occasion to access it because it related to properties managed by the Husband and she had trusted the Husband and therefore she created no access for herself.
While the Wife had said that the Husband controlled the LLC account, she accepted that it was only in a sense of what had been previously agreed and done between them. That is, he used the account, and she did not use the account.
The Wife also said that she had been told by their former business partner in the USA that the managing member of an account could at any time remove another person from the account. In this instance the Husband was the managing member of the account and the Wife thought that this meant that he would be able to remove her from the account.
Ultimately the Wife accepted, on being shown the documents related to the opening of the joint account, that she had been made a signatory, been authorised for internet access (although she had not accessed it), and that to the extent that the Husband was described by her as controlling the account, this was reflective of the agreed manner in which the parties had conducted their business with the Husband operating the account and the Wife not. The Wife maintained a suspicion that the Husband may remove her from the account, based on an assertion made by their former US business partner that this was possible, although the Husband had neither done so nor directly threatened to do so.
It could not be sustained that the proposed transfer of the funds into the LLC UB account immediately removed them from the Wife’s reach. However, given it was the Husband who operated the account, it may be accepted that it would only be a short step to the Husband removing the funds from that account and placing them out of reach of the Wife as he had the $200,000. This pointed to the funds being at risk of removal.
The authority to disburse and the impugned signature
In any event, Mr R declined to transfer funds without the authorisation of both parties. He subsequently received authorisations purportedly signed by both of the parties.
The Husband said that on 18 August 2015 he was provided with documents by Mr R including an authority to disperse the settlement sums. He says that Mr R said that he would have it executed by the Wife, along with other documents, including indemnities that would also be required to be executed by the Wife. These documents had previously been emailed by Mr R on 5 August 2015. On meeting with Mr R on 18 August 2015, the Husband paid Mr R’s outstanding account. The Husband says that he executed his documents.
On 24 August 2015 the Wife received notice that Mr R had been provided with both a settlement authority and an authority to disburse the settlement funds, purportedly signed by the Wife.[12] The authority to release was annotated with a handwritten note to pay the $1.1 million USD into the account of C LLC.
[12] [94] Wife’s affidavit of 12 September 2017
It is uncontroversial that Mr R possessed an authority purportedly executed by the Wife.
The Wife denies having signed the authority.
The Wife outlined a conversation between herself and Mr R where it was said by Mr R that he been provided with a document with the Wife’s signature on it by the Husband, and that the Husband had said that he had obtained the signature from the Wife. This is relevant for a non-hearsay purpose. The fact that it was said to the Wife cannot be thought of otherwise than as an important factor in the commencement of litigation by her. The fact that it was said to the Wife left her in the position that she was then aware that a document, bearing her signature, which she did not sign, had been provided by the Husband. This non-hearsay relevance renders the hearsay rule inapplicable,[13] and makes the conversation between Mr R and the Wife available for the proof of the assertions contained therein, although some caution should be exercised about this evidence given its hearsay nature.
[13] Section 60 Evidence Act 1995
The Husband, in his oral evidence denied providing Mr R with a document with the Wife’s signature on it. His affidavit was silent as to this matter. In explanation for why his evidence in relation to this matter was not contained in his affidavit he said that the time for the giving of that explanation was during the trial of this matter.
The Wife pointed to a number of circumstances that support a finding that the Husband was involved in the presentation of a forged document for the release of the $1.1 million. She submits that there are three people who could be responsible for the presentation of the signed authority. The first is herself. She denies having signed the document. Her signing of the document would have been incongruent with her concern as to the Husband having access to the funds. While the Husband pointed to the Wife's signing of a documents later the same day as undermining her assertion that there had been a forgery, the documents that she signed did not include a disbursement authority that would have allowed the Husband access to the settlement funds. She says that the settlement documents that she signed were on the basis of assurances that she was given by Mr R that they would not affect where the moneys would go, nor her claims in relation to Mr White.[14]
[14] [101] of the Wife’s trial affidavit
I accept the Wife’s evidence on this point, in the circumstances identified above, despite having some other hesitations about her credibility.
Credibility of the Wife
Those hesitations arise from three particular aspects of the case identified by the Husband as relevant to the Wife’s credit. One relates to her assertion to the Supreme Court of the ACT that the Husband and Ms L had engaged in the theft of $600,000, an allegation that I explain later in these reasons was without any adequate basis.
The second matter relates to allegations made by the Wife against the Husband as to the circumstances of the preparation of tax returns.
The Wife complained of the Husband’s preparation of and lodgement of tax returns without reference to her. Initially she asserted that this involved the 2015 tax return although, after reflecting on the matter, she determined that it was in fact the 2014 tax return that she had the complaint about. This was a tax return that included a reference to landscaping works around their home and storm damage. Her complaint was that the Husband had prepared and lodged the return without reference to her. However, the Husband’s reply affidavit at p 42 contains an email sent by him to the Wife and then by the Wife to him on 6 March 2015 involving the 2014 financial year tax return and arrangements for the business. This is notably after a time when the Husband had communicated separation to the Wife but during a time in which it appears their ongoing relationship was uncertain. However, it is apparent from the text of the emails that the Wife was provided with the 2014 financial year tax returns prior to lodgement. Further, her response to the Husband in relation to these tax returns was in glowing terms.
The Wife’s criticism of the Husband in relation to the tax returns was certainly not current at the time of the preparation and lodging of the tax returns. It is a later developed criticism and, given the content of their emails from March 2015, does not reflect the reality of their situation. The Wife’s evidence about the Husband’s conduct in this respect indicates that some caution should be exercised in relation to her evidence about the Husband.
The third relates to the hostility shown by the Wife toward the Husband as reflected in emails at about the time of the Supreme Court litigation. These are referred to elsewhere in the judgment.
I note that rejection of a witness’s credibility on one point does not equate to the need to reject a witness on all points.
On this particular point, the execution of the authority to disburse, I accept the evidence of the Wife that she did not execute the document, being fortified in that conclusion by the circumstances pointing against her executing the document as set out above.
The significance of Mr R – the parties’ US lawyer
The second person who could be responsible for the document is Mr R. He was not called in the proceedings by either party. Late in the trial the Wife sought to call Mr R and an issue firstly arose as to whether Mr R would make himself available to give evidence. The Husband claimed and declined to waive privilege. Despite this Mr R indicated that he was available to give evidence on three issues. The first was why he insisted on both the Husband and Wife signing the documents for the release of the settlement funds, the second was as to whether he had placed the Wife’s signature on the document and the third was as to who had told him that the Wife had signed the document.
However, permission was refused to the Wife to call him at that late stage of the trial, being the final day of trial, and in circumstances where it would cause an adjournment of the trial, where the Husband should have been placed on notice of the case that he was to meet.
It was suggested that the Husband’s failure to waive privilege should weigh against the Husband’s account, on the basis of a Jones v Dunkel inference. Such an inference was explained in RPS v The Queen[15] by Gaudron A-CJ, Gummow, Kirby and Hayne JJ as reasoning that “relates to the drawing of inferences or conclusions from other facts” and that it “is necessary to keep at the forefront of consideration that the mode of reasoning which is described proceeds from the premise that the person who has not given evidence not only could shed light on the subject but also would ordinarily be expected to.” RPS noted that there may be a reasonable expectation in a civil trial that a party would call relevant evidence, and that “the failure of a party (or someone in the party’s camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party’s case and that (citing from Jones v Dunkel) ‘where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, in the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference’”.
[15]RPS v The Queen [2000] 199 CLR 620
It is not clear why there would be a greater expectation that the Husband would call Mr R rather than the Wife, on the questions of whether he had forged the document and what he had been told about the execution of the document. As noted, the Wife’s evidence indicated that Mr R had spoken to her about the provenance of the document. There is not a reason to consider him to have been in either of the party’s camps. There is no more reasonable expectation that one party might call him than the other. That tells against the drawing of such an inference.
The second issue that arises is whether such an inference is available by virtue of a failure to waive privilege. Given that the privilege did not prevent the giving of evidence by Mr R, the failure to waive appears to be of little significance. It may be thought, in any event, that significant caution should be exercised before entertaining such an inference based on the failure to waive privilege. Stephen Odgers notes,[16] in relation to s 128 of the Evidence Act 1995, the position of the ALRC at ALRC 26, Vol 1 para 862 in relation to inferences and privilege:
No adverse inference should be drawn from the fact that privilege is claimed. Under existing law, no adverse inferences should be drawn where a person claims a privilege. It is not thought necessary, therefore, expressly to forbid the drawing of adverse inferences.
[16] Uniform Evidence Law 13th Edition p 1127
Such a position recognises the undoubtedly corrosive effect that drawing inferences on the claim of privilege would have to the efficacy of the privilege.
For each and any of the above reasons no adverse inference will be drawn from the claim of privilege made by the Husband.
Even without the calling of Mr R there is little if any basis to consider that he could reasonably be responsible for the document.
Neither party suggested that Mr R had forged the impugned document. Specifically, in the course of dealing with the Wife’s application to call Mr R, the Husband said “I have never said that Mr R put any signatures on documents other than his own”.[17] This did not equate to a concession by the Husband that Mr R was not involved in the impugned document.
[17] T 503
However, there is no motive presented that would suggest there is any likelihood that Mr R forged the document. He had, contrary to any such position, made it clear that he required two signatures in order to release the funds. It sits ill with such a refusal to disburse the funds to think that he was responsible for the document.
There is not a reasonable basis to consider that Mr R was responsible for the impugned document.
Reasons to infer the Husband’s responsibility for the impugned document
The third person who could be responsible for the document is the Husband. It may firstly be observed that the forged document was directed to the outcome sought by the Husband, being the payment of the proceeds of the US litigation into the LLC account. The Husband had already failed in his attempts to achieve this end, as Mr R declined to act on his instructions alone, and declined to make the transfer absent an authority from the Wife.
It may also be observed that the exclusion of both the Wife and Mr R as viable sources for the authority reduces the available inferences as to who may bear responsibility for the document.
Thirdly, email correspondence from the Husband to Mr R of 28 August 2015 (four days after the Husband says that he was first alerted to the Wife asserting that the signature appearing on the document allowing the disbursement of funds was a forgery) bears upon the issue of whether the Husband was responsible for the forged signature.
The email of 28 August 2015, [4] is as follows:
The combination of… escalation of demands and your misinformation led me to a course of action that was unnecessary, improper and completely out of character, that is the creation of documents designed to do nothing else than have the settlement funds paid into the LLC as is required by the Rule 11 Agreement and settlement agreement so as to avoid the possibility that, as you had advised me, [V Bank] might call in the sale proceeds from your trust account.
The Husband says that this paragraph refers to his out of character executing of an indemnity and waiver for the US lawyer. He says that it was out of character for him to simply let the US lawyer off the hook for issues arising out of his conduct of the parties’ matters. This construction suggested by the Husband sits so poorly with the text of the email as to be indicative of an explanation derived after-the-fact.
The email appears better to describe the creation of documents authorising the payment of funds to the LLC, in accordance with what the Husband said was to occur with the funds pursuant to the settlement agreement. The allegedly forged document would achieve (if accepted) this purpose, and more readily meets the description as “unnecessary, improper and completely out of character” than the Husband’s late in time explanation that this referred to providing Mr R with an indemnity and waiver.
On balance, the email ought to be taken as an admission referring to the forged document. It more readily bears this character than the strained meaning attributed by the Husband.
The Husband sought to undermine the idea that he was responsible for the document by pointing to the subsequent execution by the Wife of a settlement agreement and release. However, her subsequent execution of the settlement agreement does not speak to whether she signed the original settlement authority and authority to release as the subsequent execution of the settlement agreement and the release did not allow the funds to be released to the Husband. Her execution of later documents did not undermine her case that there was a forgery of the authority to release.
Standard of proof
The provision of a forged document in the circumstances alleged in this case is a grave matter. While the proof of the overall case of a party is governed by the operation of s 140 of the Evidence Act 1995, it has been held that the approach set out in Briginshaw v Briginshaw[18] and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd[19] remains applicable:[20]
The ordinary standard of proof required for party who bears the onus in civil litigation in this country is proof of the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary “where so serious a matter as fraud is to be found”. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.
[18]Briginshaw v Briginshaw (1938) 60 CLR 336
[19]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170
[20] Uniform Evidence Law 13th Edition p1317
That is to say that in the context of civil proceedings, the more serious an allegation, the stronger the evidence that is required to meet the standard of proof.
Here what is alleged against the Husband is a matter of seriousness, being the use of a forged document directed to the control of the $1.1 million proceeds of the parties’ litigation in the United States. It calls[21] for careful evaluation and, as said in Briginshaw, the avoidance of indefinite testimony or indirect inferences and inexact proofs.
[21] Uniform Evidence Law 13th Edition p1318
Conclusions to the Husband’s responsibility
The email from the Husband to Mr R renders sufficient proof of the Husband’s involvement in the use of the impugned document. Even if I am wrong that the email is sufficient to bear that weight upon its own, in combination with either or both of the following circumstances it is sufficiently buttressed to mean that it is established that the Husband was responsible for the impugned document.
Those circumstances are that firstly that the document would achieve what was being sought by the Husband and resisted by both Mr R and the Wife, and secondly the exclusion of both the Wife and Mr R as being reasonably able to be thought of as involved.
Those circumstances are secondly further supported, although with caution derived from its hearsay character, by the representation made by Mr R to the Wife that the document had been provided to him by the Husband complete with the Wife’s signature.
Responsibility for the costs and expenses of the Supreme Court proceedings
It was in this context that the Wife commenced litigation in the ACT Supreme Court for the protection of the $1.1 million. Following the settlement of the substantive aspects of those proceedings in that Court, the balance, which related to a costs dispute was transferred under the cross-vesting legislation to the Canberra Registry of the Family Court of Australia.
The Husband criticised the Wife for the commencement of the proceedings in the ACT Supreme Court rather than the Family Court of Australia. It is not clear what difference this made.
Those proceedings undoubtedly resulted in significant expense for the parties and a drain upon their combined property pool. The Wife paid her lawyers in those proceedings $99,900, with $65,000 coming from funds removed from the LOC (Item 8 in the Balance Sheet). The liquidator was paid from the US settlement monies in the sum of approximately $111,000.
It was unclear what component of the Husband’s legal fees at item 23 on the Balance Sheet related to this aspect of the parties’ litigation.
The Wife’s claim to the Supreme Court of the ACT also asserted that the Husband and Ms L were responsible for the theft of $600,000. This did not form part of her case in the Family Court of Australia proceedings. However, the Husband cross-examined her about this matter in any event on the basis that it would reveal an animosity on the part of the Wife towards him to explain her engaging in the litigation in the Supreme Court of the ACT for other than a legitimate purpose. The Wife conceded she still holds the view, although she cannot prove it by means of evidence, that the Husband and Ms L are responsible for theft of money from the US LLC venture. She explained her estimate which was firstly $350,000-$500,000, and then later $600,000 as being her personal estimate. It was based upon the Husband’s drawing down of the $200,000 from the line of credit, based upon her allegation that he had forged her signature in order to obtain the proceeds from the US settlement, both of these matters denuding her of any trust for him, and further derived from her observations that while she was in US participating in the business venture the rents deposited in respect of that venture did not appear to correlate with number of tenants. On top of that she alleged that their business partner, Mr M, had made a complaint about the sum of $48,000 not being deposited. For these reasons, she formed the view that the Husband and Ms L had stolen money from the US LLC venture. This was the scope of the basis by which she asserted this. There appears to have been no basis on which she could quantify the particular amount that she did.
This is supportive of the idea that the Wife held bad will toward the Husband at the time of the commencement of the litigation in the ACT Supreme Court. This was further supported by correspondence from the Wife to the Husband at around the time of the litigation. The Husband cross-examined the Wife in respect of the annexure appearing at his response affidavit at p 137 being an email from the Wife (under a pseudonym) to him dated 12 November 2015. Although when taken to the email, the Wife denied the characterisation that she had threatened the Husband, the email clearly contains threats of litigation and of the prosecution of the Husband. Additionally, the email describes the Husband’s new partner, Ms L, in highly unflattering and vilifying terms. The Wife accepts that at this time she was pretty upset at what she described as the “treachery” of the Husband toward her.
While it is open to consider that the Wife’s feelings towards the Husband may have coloured and affected her litigation in the ACT Supreme Court, it does not detract from the proposition that the Husband’s use of the impugned document gave her ample legitimate reason and grounds to seek to protect the $1.1 million.
The Husband’s position was that an order should be made in his favour in relation to the costs and expenses of the Supreme Court litigation due to the misconceived and unwarranted nature of the Wife’s application, due to the lack of an undertaking as to damages being given by the Wife, and due to his prospective success should the matter have continued. Orders were sought both as an adjustment of property interests and as a costs award in the transferred matter.
Before dealing with the question of adjustment that may be occasioned by virtue of the circumstances surrounding the Supreme Court litigation it is necessary to deal with whether a costs award should be made within those proceedings.
I note the context that, on disagreement between the parties regarding the $1.1 million, the Husband had suggested that to the extent that such touched upon C Pty Ltd the Wife could take action under Australian law.
As noted above, the Wife commenced proceedings by way of originating application in the ACT Supreme Court in 2015, seeking the winding up and appointment of receiver in relation to the parties’ company, C Pty Ltd. That matter was resolved in the ACT Supreme Court on 18 December 2015 by consent on the basis that the US funds be transferred into an Australian joint account, pending the resolution of Family Court proceedings. That is, the litigation achieved the object of securing the US litigation proceeds. Orders were made that the receiver be paid either by the parties, or from the joint account containing the US funds. The receiver’s entitlement was ultimately fixed by court order at $111,638.98. The question of costs was transferred to the Family Court of Australia pursuant to the cross vesting legislation.
This aspect of costs comes before this Court by virtue of the transfer from the Supreme Court of the ACT pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987. That Act provides at s 11 for the application of the law in force in the State or Territory on which the Court is sitting, in this case, the law of the Australian Capital Territory. Accordingly, costs in relation to the Supreme Court action are not determined by reference to s 117 of the Family Law Act 1975, but rather by reference to the law of the Territory.
In a case where the action has been resolved by compromise, as here, it has been noted that it is rarely appropriate, where there has been no trial of the merits, for a Court to embark upon a trial of the merits to determine costs (that is to conduct a shadow trial), as it would involve the Court in embarking on potentially complex factual matters to determine the issue. That is not universally the position as there may be occasions on which the Court is apprised of sufficient of the facts to determine the merits notwithstanding the compromise of the matter. Here the Court has examined a number of the underlying factual matters which were identified in the ex parte proceedings.[22]
[22] Law of Costs 3rd Edition (2013) p 467
However, that examination falls short of allowing an assessment of the merits of the claim in the action. The examination undertaken in these proceedings was not directed to the same remedies as sought in the ACT Supreme Court, and I was not addressed on how they did or did not meet the remedies sought in those proceedings.
The Husband describes the proceedings in the Supreme Court as being misconceived, unwarranted, that they should never have happened and that if he had been present rather than them being conducted on an ex parte basis the orders would never have been made.
On the basis that he says that he would have been successful had the proceedings been argued, the Husband says that the costs in relation to that matter should now be awarded to him.
The Husband says that he would have been bound to succeed in relation to those proceedings had they been contested and points to what he identifies as being problems in respect of the Orders made by Mossop AJ on the basis that the ex parte proceedings were conducted without any relevant undertaking as to damages. I am unable to accept this to be the case. A lack of undertaking may, of course, mean that a Court will not grant ex parte relief. It is not an absolute bar.
I am unable to determine as sought by him, that the Wife’s application was doomed to fail. I do not accept that it was inappropriate for the Wife to have commenced litigation in the Supreme Court rather than the Family Court. The Supreme Court held the relevant jurisdiction to deal with the claim before it and exercised it. It is unclear what, if any difference commencing in the Supreme Court made in any event. Further, the Husband’s argument that the lack of an undertaking as to damages in the ex parte proceedings supported his claim for costs is not made out. It is again left as unclear how the lack of the undertaking justifies a costs award in the compromised proceedings.
Shortly before the hearing of the ex parte proceedings before the Supreme Court the Husband communicated to the Wife that he agreed that the proceeds of the US litigation would be retained in Mr R's trust account. The Wife asserted that there was an issue with this in that the money was at risk of being taken by the V Bank.
Further, against the notion that the Wife was justified in pursuing the Supreme Court proceedings the Husband notes, and the Wife accepts that he made an offer to place the relevant monies into an H Bank account on 19 November 2015. The Wife says that this was made so late that there was no ability to make a response to such an offer.
I am unable to determine that the offers were of such a nature, and made in a timely enough fashion as to impugn the Wife’s continued pursuit of the proceedings in the face of the offers.
The general scheme of the Orders sought by the Wife achieve a cleaner break by ensuring that the parties will not become neighbours. Her scheme of Orders is preferable.
Finalised pool including add-backs
Incorporating the determinations made through this judgment, and the concessions made by the parties, the finalised pool, with each item rounded to the nearest thousand dollars (noting that the exercise of the discretion is not an accounting exercise and that rounding will not in any significant sense impact upon whether the overall outcome is just and equitable) is as follows:
1 D St Suburb B (H)
$1,300,000
2 D St Suburb B (J)
$1,250,000
E St, Suburb F (J)
$1,260,000
H Bank account/proceeds US litigation (J)
$1,036,000
Wife’s bank accounts (excluding the amount attributable to the interim distribution)
$17,000
Wife’s chattels
$29,000
Wife’s jewellery
$60,000
H Bank account (J)
$2,000
Shares (J)
$18,000
Husband’s bank accounts (excluding the amount attributable to the interim distribution)
$8,000
Husband’s chattels
$1,000
C Pty Ltd (J)
$41,000
C Family Trust
$0
Add-back Interim distribution to the Wife
$126,000
Add-back Interim distribution to the Husband
$126,000
Add-back Husband’s removed funds
$328,000
Add-back legal and receiver’s expenses Supreme Court litigation
$212,000
Add-back interest related to the removal of the $200,000
$14,000
Total
$5,828,000
Liability NAB line of credit (J)
$1,180,000
Liability mortgage E St
$399,000
Total
$1,579,000
Wife’s superannuation
$617,000
Husband’s superannuation
$132,000
Carried forward tax loss company
$1,371,000
Carried forward tax loss trust
$321,000
The net current pool, excluding superannuation is therefore $4,249,000.
For the Wife to receive 56 percent of the net current pool she will need to receive net assets and money to the total of $2,379,000.
It is noted that while the parties sought percentage adjustments of the assets of the parties, they sought equalisation of the superannuation interests. Their submissions did not seek an increased adjustment of the current property to effect a percentage adjustment of the total pool in the context of equalisation of the superannuation pensions.
Structure of the Orders
The parties are currently each in receipt of a pension from their respective JS schemes. That is, their superannuation is in the payment phase. They ask that their pensions be equalised. In closing submissions the Wife advised the Court that the superannuation fund had not been placed on notice of the proposed Orders.
Mr X provided an expert report regarding the parties’ superannuation in response to joint instructions received from the parties. That report became Exhibit C5. That report identified that the appropriate value to be applied to determine a transfer value to the interests is the Scheme Value, which differed from the Family Law Value as adopted by each of the parties in their joint balance sheet. Mr X’s valuation of the Husband’s interest in accordance with the Scheme Value was $138,320.90, and of the Wife’s was $649,328.21. Given the common position of the parties that the interests should be split equally, nothing of significance turns on this difference from the agreed values in the balance sheet.
Mr X then identified what portion of the Wife’s interest would need to be transferred to the Husband to result in equalised pensions. That amount was 36.05 per cent with a transfer value to the Husband of $234,082.82.
In order to equalise the pensions, an order will be made pursuant to s 90MT(1)(a) specifying the base amount of the splittable payment as $234,082.82 in accordance with the X calculation.
Given the lack of notice to the Trustee, the splitting order will not enter into force until the Trustee has been placed on notice of the proposed Order and a suitable time has passed to allow the Trustee to object. Should the Trustee object then an opportunity will be given to the Trustee to be heard. Should the Trustee not object then the Order will enter into force.
Amongst the Orders sought by the Wife were her taking of responsibility in relation to a number of loan accounts. The references to account numbers in those orders, in large part, do not appear to correspond with the agreed liabilities and loan accounts referenced in the joint balance sheet. Given the outcome sought by the Wife in the case, the loans referred to must incorporate her taking responsibility for the NAB line of credit referred to in the joint balance sheet, being the primary liability of the parties.
While extant interim Orders should be discharged, the parties should not be at liberty to encumber property, or to increase loans other than to give effect to the Orders, at least until the Orders are brought in to effect.
It should be recognised that the effect of the add-backs will be that the Wife will receive, in her hand property and monies of the order of $2.3 million. The Husband will receive in his hand property and monies of the order of $1.17 million. That disparity has been made necessary in order to achieve and just and equitable outcome by virtue of the premature distribution that the Husband took to himself, and the waste occasioned at the Husband’s hands by virtue of the Supreme Court litigation.
I certify that the preceding two hundred and seventy (270) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 18 January 2019.
Associate:
Date: 18 January 2019
Schedule 1:
The Husband’s application
Property Division
1.The parties do all such acts and things to cause the property of the parties to be divided between them in the proportions 60 per cent to the Husband and 40 per cent to the Wife or other such percentage as the Court deems equitable but not less than 50 per cent to the Husband.
2.That the percentage division in Order 1 be applied to the parties’ USD account #01 with the H Bank as at Item 4 of the Balance Sheet filed 18 August 2016, and as amended filed 22 December 2017.
Real Property
3.The parties’ real property be divided as follows:
a)From the date of these Orders 1 D Street, Suburb B shall remain in the Husband’s sole title and the Wife foregoes any right or interest in the property and shall, within 30 days of these Orders, provide vacant possession of the property and shall take with her such of those goods and chattels assigned to her by these Orders. The Wife shall indemnify, and keep indemnified, the Husband for any damage to the property and all outgoings on the property up to and including the date the Wife vacates the property;
i) The Wife shall provide access to 1 D Street, Suburb B for the Husband and an assistant to carry out an inspection of the property immediately prior to handing the property over so that the Husband can determine any damage and or repairs for which he should be indemnified;
ii) For the purposes of Order 3a)i), “damage and or repairs” shall be what would be assessed as such under an ACT Residential Lease.
b)That the Husband shall, within 30 days of these Orders, do all things and sign all documents necessary to transfer his rights, title and interests in 2 D Street, Suburb B to the Wife provided that she indemnify him and keep him indemnified in relation to all outgoings on the property;
c)In the alternative to 3a) and 3b), the following Order is substituted:
(1)That the Husband shall do all things and sign all documents necessary to transfer his rights and title in 1 D Street, Suburb B to the Wife and the Wife shall indemnify the Husband for any liabilities and outgoings in respect of the property;
(2)That the Wife shall, within 30 days of these Orders, do all things and sign all documents necessary to transfer her rights title and interests in 2 D Street, Suburb B to the Husband and she shall indemnify him and keep him indemnified in relation to all outgoings on the property and give to the Husband all files and other documents relating to the property;
(i)That no less than 3 days prior to the date of effect of Order 3c), the Husband shall be provided all tenancy documents and duplicate keys for 2 D Street, Suburb B so that the Husband and an assistant may carry out an inspection of the subject property to:
(a)Reconcile the contents with the lease inventories, and
(b)To establish what, if any, damage to property or loss of inventory has occurred since 1 July 2015 at 2 D Street;
(ii)The Wife shall ensure that tenants in 2 D Street are given the notice required pursuant to the ACT Residential Tenancies Act for the Husband to carry out the ordered inspections;
(iii)The Wife indemnifies the Husband for any tenant claim, repairs, maintenance or other cost and or loss relating to the period up to the date of effect of these Orders;
(iv)The Wife shall execute and give to the Husband all forms necessary for notification to the Residential Tenancies Board for the change of management of the property, and
(v)The Wife shall notify existing tenants to pay rents due (full or pro-rated as the case may be) to the NAB account ‘#09’ as of the date of these Orders.
d)As the Husband does not oppose the Wife retaining ownership of E Street, Suburb F, QLD, in her sole name, the Husband shall, within 30 days of these Orders, do all things and sign all documents necessary to transfer his rights, title and interests in E Street, Suburb F, QLD to the Wife and the Wife shall indemnify the Husband and keep him indemnified in relation to all liabilities, costs and outgoings on the property.
e)Concurrent with the implementation of Orders 3a)-d), the Wife shall provide updated Profit and Loss Statements for each of the rental properties detailing net rents and outgoings as at 30 days from the date of these Orders. The Husband and Wife shall divide equally the net income from the properties.
f)The Wife shall pay to the Husband the difference in value of the real property received pursuant to these Orders by applying the following Balance Sheet Items 1-3 total agreed values:
200-202: $1,300,000; 204-206: $1,250,000; E Street: $1,260,000
Total value of properties = $3,810,000. If divided 60/40 in favour of Husband, value to H = $2,286,000 and to W = $1,905,000.
(i)If H is ordered 1 D Street ($1,300,000), that is, W retains 204-206 D and E Street (value = $2.51 million), then:
(a)if 60/40 division of $3.81m = $2.286m - $1.3m = $986,000 W to pay H
(b)if 50/50 division of $3.81m = $2.286m - $1.905 = $605,000 W to pay H
(ii)If H is ordered 2 D Street ($1,250,000), that is, W retains 200-202 D and E Street (value = $2.56m), then:
(a)if 60/40 division of $3.81m = $2.286m - $1.25m = $1,036,000 W to pay H, or
(b)if 50/50 division of $3.81m = $2.56m - $1.905 = $655,000 W to pay H.
g)The amount the Wife shall pay the Husband shall be adjusted for the parties’ respective Liabilities and Addbacks in the following orders.
Jointly Owned Goods and Chattels
The orders sought under this heading were superseded by agreement being reached on this matter by the parties during the trial.
That the Husband has sole ownership of all items of joint marital property in his possession as at the date of these Orders.
That the Wife shall retain Balance Sheet Items 15 and 22 in her possession as at the date of these Orders, and the Wife shall:
a) Within 7 days of these Orders, give access to 1 D Street, Suburb B at an agreed time between the hours of 9:00am and 7:00pm so that the Husband can collect the items identified as “Annexure A” items as referenced in his Trial Affidavit, and
b) The Husband shall provide an executed transfer form as required in the ACT to transfer to the Wife his title in the Motor vehicle 2 referred to in the Husband’s trial affidavit, and
c) The Wife shall give to the Husband the additional joint chattels as identified and agreed between the parties before the making of these Orders at a date as determined by the Court.
In respect of Order 5c) and noting that the Husband has reserved his rights in respect of the valuation of the jewellery, the additional joint chattels provided to the Husband shall not effect the values as otherwise agreed in the Balance Sheet, and
a) Should the Wife not agree to the additional items as selected by the Husband, the Husband shall provide that list to the Court by the specified date and the Court shall make the order it deems just and equitable in the circumstances.
Shares
7.That the Wife, within 30 days of these Orders does all things necessary and signs all documents necessary to transfer to the Husband all of the Balance Sheet Item 16 shares currently held in her name.
Australian Company and Trust
8.The respondent Wife to do all things necessary to:
a) Within 30 days, transfer to the Husband her 50 per cent shareholdings in C Pty Ltd (CAN …) (“the Australian Company”)
b) Resign any office held by her in the Australian Company including as a director, and
c) Transfer to the Husband any interest in any loan accounts in the Australian Company.
9.The Wife shall provide a declaration as of the date of these Orders that, as against the Wife, the Husband is solely entitled to all the property of the Australian Company including as identified in the Australian Company’s depreciation schedule filed with the ATO for financial year (“FY”) 15, and
a) The Wife shall indemnify and keep indemnified the Husband with respect to the condition, operability and overall functional utility of the Australian Company’s assets.
10.The Wife shall provide a declaration as of the date of these Orders that, as against the Wife, the Husband is solely entitled to all the property of the C Family Trust (ABN …) (the “Trust”) and that the Wife has no right title or interest in the Trust and shall be removed as at the date of these Orders as a beneficiary of the Trust.
11.That from the date of transfers in Order 8 above, the Husband is to indemnify, and keep indemnified, the Wife with respect to:
a) Any liability of the Australian Company other than those originating before the date of transfer including any liability she may have guaranteed;
b) Any liability which may arise after the date of transfer by reason of the Wife having held office in the Australian Company provided that the liability did not originate prior to the date of transfer, and
c) Any liability of C Pty LLC (the “American Company”).
12.That the Wife shall indemnify and keep indemnified the Husband with respect to any liability or loss incurred by the Wife while acting as an officer of the Australian Company up to an including the date of transfer in Order 8 above.
Outstanding Australian Company and Trust BAS returns and annual tax returns
13.That the Wife shall, within 30 days of these Orders, prepare and lodge any outstanding BAS returns for the Australian Company and Trust.
14.That the Wife shall, within 30 days of these Orders, prepare Financial Statements (“statements”) in the form used by the Husband for the FY15 tax returns or in the form and manner used by the Financial Expert in his affidavit filed 12 September 2017 and shall provide the completed statements and all supporting documentation for the statements, including but not limited to original receipts and expenses invoices, to the Husband.
15.The Husband shall, within 10 days of the receipt of the statements and documents produced pursuant to Order 14, either sign off in agreement on the statements or provide amended statements with written explanation for each amendment to the Wife or her nominated accountant.
16.Within 7 days of the Husband having dealt with the statements pursuant to Order 15, the Wife or her nominee shall:
a) File the accepted statements with the parties’ accountant, Mr Y (“Mr Y”) and instruct him to prepare FY16 and FY17 tax returns for the Australian Company and Trust, or
b) Provide written explanation to the Husband as to why the Husband’s amendments are not acceptable to the Wife.
17.In the circumstances of Order 16b):
a) The Wife shall, within 7 days of providing the reasons for no-acceptance to the Husband, provide the draft statements and her written objections to the Husband’s suggested amendments to Mr Y, and
b) The Husband shall, within the same time period, provide any further comment on the Wife’s objections in writing to Mr Y.
c) In these circumstances, it is declared that the parties shall accept as final the determination Mr Y makes as to the components of the statements for FY16 and FY17 for each of the Australian Company and Trust.
18.The Court declares that as the Husband is the Australian Company’s Company Secretary, the Husband shall approve, after any necessary clerical amendment, and have Mr Y electronically file the FY16 and FY17 tax returns within 7 days of receiving the drafts from Mr Y.
a) Further, the Court orders that the same processes as in Orders 13 to 18 shall apply to the tax period 1 July 2017 up to the date of effect of these Orders and that the Financial Statements so provided shall be used by the Husband when he files FY18 returns for the Company and Trust.
Legal Costs
19.That the Wife shall be solely responsible for all legal costs of and incidental to the ex parte application she filed in the ACT Supreme Court incurred by herself and the Husband as noted at Items 23-26 of the Balance Sheet.
20.That the Wife shall be solely responsible for the Item 27 ‘Payment to Receiver’ and that the Item 4 USD balance be adjusted in the Husband’s favour to replace the USD withdrawal made to pay the Receiver’s account.
21.That the Wife shall pay the Husband his costs of and incidental to the Wife’s DVO application in the ACT Magistrates Court and reimburse the Husband his legal costs of and incidental to defending the criminal charge the Wife caused to be filed against the Husband for alleged breach of the interim DVO.
22.That the Wife pay the Husband’s legal costs of and incidental to these proceedings or in the alternative, that each party pay their own costs of and incidental to these proceedings, other than the Wife’s costs as assessed as ordered 21 September 2016. The Husband is not liable for any costs of having the costs assessed.
a) That the Court costs of the Property Settlement and Divorce application shall be shared equally as between the parties.
Bank Accounts
23.Any credit balance in the parties’ accounts as listed at Items 9 and 12 is to be divided in the percentage at Order 1.
24.The Wife shall provide to the Husband a full accounting, with all necessary supporting documentation, for all rental income received from 1 July 2015 to the date of these Orders. The Husband shall have 7 days to review the accounts and supporting documentation in order to calculate any adjustments to net rental income. The adjusted net amount shall be divided equally between the parties after deductions for any amount already received by the Wife.
25.All rental income due and or received after the date of these Orders shall be the property of the party to whom the property is assigned by these Orders and the Wife shall be accountable for any rentals she receives for property assigned to the Husband.
26.As of the date of these Orders, that the parties are restrained from doing or causing to be done, anything that increases the liabilities at Items 28, 29 and 30 of the Balance Sheet as filed 18 August 2016 and each party indemnifies and keeps indemnified the other should either party breach this restraint.
27.That the parties’ joint liability for Item 28 of the Balance Sheet filed 18 August 2016 be adjusted, if necessary, to reflect the percentages ordered at Order 1.
28.That the calculation of the parties’ joint liability for Item 28 be further adjusted for the $65,000 the Wife withdrew from the account.
29.That the calculation of the parties’ joint liability for Item 28 be further adjusted for the $200,000 the Husband withdrew from the account.
30.That the Wife’s share of the Order 27 liability be further adjusted:
a) To include the outstanding balance of Item 29 of the Balance Sheet as at the date of effect of Order 31,
b) To include any “addbacks” as identified at Items 23 to 27 of the Balance Sheet filed 18 August 2016, and
c) Any additional “addback” amount pursuant to the Husband’s Trial Affidavit field 24 July 2017, Response Affidavit filed 23 October 2017 or other amount as determined by the Court.
31.That the Wife, within 30 days, shall do all things and execute all documents necessary to remove her name from and signing rights in respect of, all accounts held with the Husband either personally or in the names of the Australian Company and Trust.
32.That the adjusted, pursuant to Order 2, USD amounts at Item 4 of the Balance Sheet be further adjusted to “addback” to the Husband the Wife’s share of USD business expenses as detailed at page 86 of the Husband’s Trial Affidavit filed 24 July 2017.
33.That to each adjusted liability amount for each of the parties, a further adjustment shall be made to reflect any difference in real property valuations as provided by the experts.
34.That should the Wife’s adjusted liability amount exceed that of the Husband, the Wife shall make up the balance of the adjusted liability amount by having her share of the USD at Item 4 adjusted using the exchange rate as at the date of these Orders.
a) Should the Husband’s adjusted liability amount exceed that of the Wife’s, the Husband shall pay that amount to the Wife in AUD;
35.The parties shall, within 14 days of the date of these Orders, execute all documents necessary to jointly transfer into each of their sole names their respective adjusted USD amounts from the balance currently held in the joint H Bank USD account at Order 2.
Parties’ Superannuation – Splitting Order
36.The parties’ shall jointly instruct the agreed single expert to carry out, as at the date of these Orders, an updated valuation of the Balance Sheet Item 35 & 36 JS Superannuation pensions valuation.
37.That the previously instructed agreed expert shall calculate the updated pensions such that the parties’ JS pensions shall be equalised and that the parties’ shall, within 30 days of these Orders do all things and execute all documents necessary to instruct the JS pension Trustee to alter the parties’ respective interests such that they shall have equalised JS pensions.
Australian Company and Trust Carried Forward Tax Losses.
38.The Husband shall have the sole ownership and operation of the Australian Company and Trust and be solely responsible for maintaining the required financial records and for the taxation of each of those entities from the date of these Orders.
39.The tax losses at Balance Sheet Item 37 shall stay with the entity that has those losses as at the date of these Orders.
40.There shall be no order as to Balance Sheet Item 27 being a financial resource for the Husband.
Unprofessional Conduct/Professional Misconduct
The order sought under this heading was struck out at the commencement of the trial.
That the Registrar for the Canberra Registry of the Family Court of Australia be requested to take all necessary steps to refer the transcript of the proceedings in this matter (insert dates for trial transcript) and reasons for judgement to the ACT Law Society and the ACT Bar Association.
The orders sought by the Wife:
1.That the assets of the parties be divided as to 60 per cent to the Wife and 40 per cent to the Husband.
2.That all interim Orders made by this Honourable Court be discharged.
Company and Trust and shares
3.Within 28 days of these Orders, the Wife do all things required to :
22.4 Resign as a director of the C Pty Ltd and transfer any shareholdings in that company to the Husband; and
22.5 Irrevocably disclaim her interest as a beneficiary of the C Family Trust.
4.From the date of the Wife’s compliance with Order 3, the Husband indemnify, and keep indemnified the Wife with respect to:
4.1 Any past or current liability of C Pty Ltd or the Trust, howsoever arising including any liability which she may have guaranteed and any liability for tax, trade creditors, lease liabilities, GST, top up tax and retained profits, account fees or any other liability of C Pty Ltd or the Trust;
4.2 Any liability for audit activity should it occur in relation to income tax returns (if any) lodged, or to be lodged by the Husband an any tax agent or chartered accountant on his behalf with respect to either C and/or the Trust; and
4.3 Any liability which may arise by reason of her having held office in C.
5.That within 28 days of the date of these Orders, the Wife do all things to transfer any interest in any shares trading on the ASX to the Husband.
6.That the Husband receive the benefit from any tax losses accrued during the relationship associated with C Pty Ltd or the C Family Trust.
Real estate and associated loans
7.That, within 42 days of the date of these Orders, the Husband do all things and sign all documents necessary to transfer his right title and interest in the property known as Block …, Section …, on deposit plan, … Suburb B, more commonly described as 1 D Street, Suburb B in the Australian Capital Territory to the Wife, PROVIDED that she indemnity him and keep him indemnified in relation to all outgoings on the property.
8.That contemporaneous with Order 7, the Husband and Wife will do all things and sign all documents necessary to refinance the loan secured by registered mortgage to the National Australia Bank, number #66, into the Wife’s name.
9.That, within 42 days of the date of these Orders, the Husband do all things and sign all documents necessary to transfer his right title and interest in the property known as Block …, Section …, on deposit plan, … Suburb B, more commonly described as 2 D Street, Suburb B in the Australian Capital Territory to the Wife, PROVIDED that she indemnity him and keep him indemnified in relation to all outgoings on the property.
10.That contemporaneous with Order 9, the Husband and Wife will do all things and sign all documents necessary to refinance the loan secured by registered mortgage to the National Australia Bank, number #55, into the Wife’s sole name.
11.That, within 42 days of the date of these Orders, the Wife do all things and sign all documents necessary to transfer her right title and interest in the property known as Lot … Registered Plan … and Lot … Registered Plan …, more commonly described as E Street, Suburb F, in the state of Queensland to the Husband, PROVIDED that he indemnity her and keep her indemnified in relation to all outgoings on the property.
12.That contemporaneously with Orders 7, 8 9, 10 and 11, the Husband and Wife will do all things and sign all documents necessary to refinance the Line of Credit Account with National Australia Bank #03 (“Mr G’s loan”) into the Wife’s sole name.
13.That contemporaneously with Orders 7, 8 9, 10 and 11, the Husband and Wife will do all things and sign all documents necessary to refinance the Line of Credit Account with the H Bank #64 into the Wife’s sole name.
14.That contemporaneously with Orders 7, 8 9, 10 and 11, the Husband and Wife will do all things and sign all documents necessary to refinance the loan secured by registered mortgage to the H Bank, number #46 into the Wife’s sole name.
Money in bank accounts
15.That within 14 days the parties will do all things necessary to divide the money held in the joint H Bank account #01 (“the Premier Foreign Currency Account”) (currently frozen, USD $820,142.45 or AUD $1,078,567 as at 29.11.2017) as follows:
15.1 AUD $1,038,567 to the Wife;
15.2 AUD $40,000 to the Husband.
16.That within 14 days of the date of these Orders, the Husband and the Wife do all things to cause all joint bank accounts held in Australian dollars to be closed, with the proceeds to be divided equally between the parties.
Declaration
17.That the costs paid to O Lawyers, totalling $99,900 be declared the responsibility of the Husband and be notionally added back as an asset he is to receive.
18.That the costs paid to the Receiver, Mr Z of AA Accountants, totalling $111,638 be declared the responsibility of the Husband and be notionally added back as an asset he is to receive.
Superannuation
19.That in relation to the Wife’s entitlement in the J Super the follow Orders are made:
19.1 the base amount of $167,724 is allocated, as required by Section 90MT(4) of the Family Law Act 1975 (“the Act”) to MR WHITE (“the Husband”) out of the interest of [MS WHITE], date of birthday ...1953, reference number … (“the Wife”) in the J Super (“the JS fund”).
20.That in accordance with Section 90MT(1)(a) of the Act:
20.1 the Husband is entitled to be paid, using the base amount allocated in the Order 19.1 herein, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
20.2 The Wife’s entitlements and the entitlements of such other person to whom a splittable payment may be made to out of the Wife’s interest in the JS fund is correspondingly reduced.
21.That the trustee of the JS fund (the “Trustee”) do all such acts and things and sign all such documents as are necessary to:
21.1 pay the entitlements whenever the Trustee makes a splittable payment out of the Wife’s interest in the JS fund; and
21.2 calculate, in accordance with the Act and the Family Law (Superannuation) Regulations 2001 the entitlements created by Order 19.1 herein.
22.That the operative time for Order 18 herein is four (4) business days after the service of the final sealed Orders on the Trustee.
23.That the Trustee, having been afforded procedural fairness in these proceedings, is bound by these Orders.
Catch all
24.That except as provided in these Orders:
24.1 each party be responsible for payment of any debts attached to items of property that they receive pursuant to these Orders; and
25.That the Husband be declared, as against the Wife the sole legal and beneficial owner of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in his possession or control, including but not limited to:
25.1 amount estimated at totalling $143,092.71 removed by the Husband to the USA from the parties’ joint accounts, and unaccounted for;
25.2 the amount totalling $200,000 removed by the Husband to the USA from the parties’ joint account on 5 August 2015 from the NAB Line of Credit Account 12-060-1054, and unaccounted for;
25.3 the amount totalling $33,851.58 removed by the Husband, post separation from the parties’ joint accounts as follows:
25.3.1On 23 September 2015:
25.3.1.1$1,000 – from account 45-600-7307;
25.3.1.2$7,000 – from account 85-968-4804;
25.3.1.3$1,000 – from account 85-968-4783;
25.3.1.4$8,000 – from account 53-614-0466;
25.3.1.5$14,076.58 – from account 16-938-1304;
25.3.2On 23 November 2015 and 24 November 2015:
25.3.2.1$2,775 – from account 66-162-9009;
25.3.3On 7 December 2015:
25.3.3.1$3,631.83 – from account 79-431-7068;
and unaccounted for.
26.That the Wife be declared as against the Husband the sole legal and beneficial owner of all property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in her possession or control, including but not limited to:
26.1 the amount totalling $65,000 removed by the Wife from the parties’ joint account, the NAB Line of Credit Account #54 on 9 October 2015.
Section 106A order
27.That if either party refuses, fails or neglects to execute any document necessary to put these Orders into effect 14 days after being requested to do so, and any such refusal, failure or neglect is proved by Affidavits filed and served by or on behalf of the party alleging this, the Registrar of the Family Court at Canberra be and is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute such document in the name of such party.
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Fiduciary Duty
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Constructive Trust
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Procedural Fairness
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