Winter & Winter & Ors

[2010] FamCA 933

FAMILY COURT OF AUSTRALIA

WINTER & WINTER AND ORS [2010] FamCA 933

FAMILY LAW – PROPERTY – Wife’s claim against husband to set aside or vary consent property order made in 2005 – Wife’s claim based upon miscarriage of justice by reason of alleged fraud, suppression of evidence, failure to disclose relevant information and the giving of false evidence – Husband fraudulently concealed or suppressed relevant evidence and deceived wife at time of consent property order –  Husband’s wealth considerably more than then disclosed – Miscarriage of justice established  – Wife entitled to variation of consent property order – Husband now insolvent – Continued non disclosure in some respects – Discretion exercised to vary consent property order so as in effect to award wife all of husband’s assets able to be identified in the proceedings – Such assets however seem limited to husband’s shares in fifth respondent a United States public company – Shares presently revoked under United States law 

FAMILY LAW – PROPERTY – Wife’s claim that third fourth and fifth respondents at all times alter ego companies of husband – Fourth respondent wholly owned by third respondent – Claim established in relation to third and fourth respondents until 11 March 2008 – Legitimate transaction on 11 March 2008 for transfer of all shares in third respondent to eighth respondent after call up of a guarantee – No challenge by wife to that share transfer – Eighth respondent not involved in husband’s prior alter ego use of third and fourth respondents – Legitimate intervening event – In the circumstances of both control and beneficial ownership passing to eighth respondent corporate veil not lifted in relation to third and fourth respondents – Third respondent now in liquidation – Claim not established in relation to fifth respondent a United States public company with registration of all classes of shares now revoked

FAMILY LAW – PROPERTY – Wife’s claim to set aside 1993 Deed of Family Arrangement between husband and second respondent and eighth respondent as trustee of husband’s and second respondent’s father’s Estate – Claim dismissed

FAMILY LAW – PROPERTY – Wife’s claim that pool includes four chattel items claimed by seventh respondent – Seventh respondent’s claim for ownership and possession of those four chattel items – Wife’s claim that seventh respondent’s claim for three of the chattels based upon illegality of agreements with purpose of assisting husband to conceal assets from wife – Whether principal ex turpi causa non oritur actio applies – No intention by seventh respondent to defraud wife – Principle held not to apply – Effect of oral agreements made between seventh respondent and husband – Later written agreements to different effect ignored as unconscionable transactions – Seventh respondent at special disadvantage both constitutional and situational – Seventh respondent’s claim for ownership and possession made out – Fourth chattel subject to valid security interest – Seventh respondent’s claim for possession made out

FAMILY LAW – PROPERTY – Wife impecunious – Husband’ s claim that wife’s application be dismissed as abuse of process by reason of champerty – Claim dismissed

FAMILY LAW – PROPERTY – Husband’s claim that wife’s application be dismissed as abuse of process by reason of her being complicit with others to lend her name to commence these proceedings and obtain injunctions in April 2008 solely for the purpose of destroying fifth respondent’s business to benefit rival competitors – Claim dismissed

FAMILY LAW – PROPERTY – Third respondent a New Zealand corporation in liquidation – Effect of Cross-Border Insolvency Act 2008 (Cth) – No application by liquidators of third respondent to be recognised as foreign representative – No impediment thus to ability of wife and/or seventh respondent to claim assets in Australia of fourth respondent as wholly owned subsidiary of third respondent

Family Law Act 1975 (Cth) ss79, 79A, 85A, 106B
Cross-Border Insolvency Act 2008 (Cth) Schedule, 1: Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law

ACCC v CG Berbartis Holdings Pty Ltd (2003) 214 CLR 51
Australian Central Credit Union v Commonwealth Bank of Australia (1991) ACSR 145
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
Barker & Barker [2007] FamCA 13
Bigg v Suzi (1998) FLC 92-799
Bridgewater v Leahy (1998) 194 CLR
Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386
Cattanach v Melchior (2003) 215 CLR 1
Chang v Su (2002) FLC 93-117
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Deloitte Touche Tohmatsu v JP Morgan Portfolio Services Ltd (2007) 158 FCR 417; [2007] FCAFC 52
Farmer v Bramley (2000) FLC 93-060
Fitzgerald v FJ Leonhardt Pty Ltd (1997) 143 ALR 569
Flory v Denny (1852) 7 Ex 581
Foran v Wight (1989) 168 CLR 385
Giles v Thompson [1993] 3 All ER 321
Gould & Gould; Swire Investments Ltd (1993) FLC 92-434
Hall v Herbert (1993) 101 DLR (4th) 129
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 260 ALR 34; [2009] HCA 43
Jones v Dunkel (1959) 101 CLR 298
Kennon & Spry [2008] HCA 56
Kent v The Vessel “Maria Luisa” [2003] FCAFC 93
Peate v FCT (1964) 111 CLR 443
Peate v FCT (1965) 116 CLR 28
Phillips and Phillips (2002) FLC 93-104
Tanwar Enterprises Pty Ltd V Cauchi (2003) 217 CLR 315
Suffolk & Suffolk (No 2) [2009] FamCA 917
Warby & Warby (2002) FLC 93-091; [2001] FamCA 1469
Weir & Weir (1993) FLC 92-338

Austin RP and Ramsay IM, Ford’s Principles of Corporations Law, 12^th Ed, Lexisnexis Butterworths, Sydney, 2005.
Wilmott L, Christensen S and Butler D, Contract Law, Oxford University Press, 2001.

APPLICANT: Ms Winter

FIRST RESPONDENT:	Mr Winter
SECOND RESPONDENT:	A Winter
THIRD RESPONDENT:	A Capital Ltd (In Liquidation)
FOURTH RESPONDENT:	A Capital (Australia) Pty Ltd
FIFTH RESPONDENT:	V Inc
SIXTH RESPONDENT:	V Pty Ltd (Deregistered)
SEVENTH RESPONDENT:	Mr MW
EIGHTH RESPONDENT:	J Winter

FILE NUMBER: BRC 3781 of 2008

DATE DELIVERED: 15 October 2010

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: O'Reilly J

HEARING DATE: 12, 13, 20, 21, 22, 23, 27, 28, 29 and 30 April, 5, 10, 11, 24, 25, 26 and 28 May and 24 June 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Baston
(Direct brief)

FIRST RESPONDENT:

In person

COUNSEL FOR THE SECOND 

RESPONDENT:

Mr Galloway (from 24 May 2010)

SOLICITOR FOR THE SECOND

RESPONDENT:

Emerson Family Law (from 24 May 2010)

THIRD RESPONDENT:

The first respondent in his capacity as authorised director

FOURTH RESPONDENT:

The first respondent in his capacity as authorised director

FIFTH RESPONDENT:

The first respondent in his capacity as authorised director

SIXTH RESPONDENT:

Deregistered

COUNSEL FOR THE SEVENTH 

RESPONDENT:

Mr Jones (on 12, 13, 20 and 21 April 2010)

SOLICITOR FOR THE SEVENTH

RESPPONDENT:

Lillas & Loel Lawyers (on 12, 13, 20 and 21 April 2010)

SEVENTH RESPONDENT:

In person (from 22 April 2010)

COUNSEL FOR THE EIGHTH 

RESPONDENT:

Mr Galloway (from 24 May 2010)

SOLICITOR FOR THE EIGHTH

RESPONDENT:

Emerson Family Law (from 24 May 2010)

Orders

Wife’s proceedings

IT IS ORDERED

1. Pursuant to s79A of the Family Law Act 1975 (Cth) the consent property order made on 7 March 2005 between the husband and the wife be varied so as to include the following provisions:

   (a)subject to any relevant United States law, the husband’s shares in the fifth respondent be transferred to the wife

   (b)all other assets of the husband (if any) able to be identified in the proceedings (but subject to the findings made) specifically claimed already by the wife in the proceedings and which may be listed by the Court pursuant to paragraph 2 be transferred to the wife.

2. The wife has liberty to apply within 21 days on short notice to the other parties by arrangement with the Associate by email for the identification and listing of assets (if any) contemplated by paragraph 1(b).

3. The husband do all things and sign all documents necessary to give effect to this order and in default a Registrar is empowered to sign all such documents.

4. The wife’s claim to set aside the Deed of Family Arrangement dated 3 February 1993 between the husband, the second respondent and the eighth respondent and the transactions effected pursuant to it is dismissed.

5. All other claims by the wife are dismissed.

Seventh respondent’s proceedings

IT IS DECLARED

1. The seventh respondent, as the registered owner of the following items, or alternatively by way of a valid security in relation to them, is entitled to take and have possession and exercise all of the rights which attach to ownership and possession:

   (a)Mercedes Benz car registered no …

   (b)Mercedes Benz Prime Mover registered no …

   (c)Yacht formerly known as N Yacht and now known as Z Yacht.

2. The seventh respondent, by way of a valid security in relation to the following item is entitled to take and have possession and exercise all of the rights which attach to his security interest:

   (a)The horse float trailer (unregistered) the subject of these proceedings. 

AND IT IS ORDERED

1. The husband immediately:

   (a)make available for collection by the seventh respondent the Mercedes Benz car, the Mercedes Benz Prime Mover (the two vehicles) and the horse float trailer

   (b)notify the seventh respondent by email today to …@....com.au the location of the two vehicles and the horse float trailer

   (c)notify the proprietor/s of such location/s where the two vehicles and the horse float trailer may be of the making of this order and that pursuant to it the two vehicles and the horse float trailer are to be released immediately to the seventh respondent. 

2. The husband do all things and sign all documents necessary to give effect to these declarations and orders and in default a Registrar is empowered to sign all such documents.

Further orders

AND IT IS FURTHER ORDERED

1. All injunctions made in the proceedings are discharged. 

2. All applications for interlocutory relief not previously dealt with are dismissed. 

3. The parties have liberty to apply on short notice to each other by arrangement with the Associate by email:

   (a)under the slip rule

   (b)if any machinery orders may be necessary to carry out these orders or to give effect to the decision or

   (c)if clarification of any part of the decision or orders should be required.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 3781  of 2008

MS WINTER

Applicant

And

MR WINTER
First Respondent

And

A WINTER
Second Respondent

And

A CAPITAL LTD (IN LIQ)
Third Respondent

And 

A CAPITALY (AUS) PTY LTD
Fourth Respondent

And

V INC
Fifth Respondent

And

V PTY LTD (DEREGISTERED)
Sixth Respondent

And

MR MW
Seventh Respondent

And

J WINTER
Eighth Respondent

Section headings	Paragraphs
The parties and their applications	1 –12
The wife	1 – 7
The husband	1
The Deed of Family Arrangement	2
The companies and their assets	3 – 4
Mr MW	5
Other property	6 – 7
Mr MW	8 – 9
Chattel ownership/security entitlement	8 – 9
The husband	10 – 11
Abuse of process - champerty	10
Abuse of process - improper purpose of proceedings	11
The second and eighth respondents	12
Relevant background facts	13 – 14
Value received by the husband and the wife pursuant to the consent property order 7 March 2005	15 – 18
Was there more?	19 – 31
The principles relevant to the application of s 79A	32
Was there fraud, suppression of evidence, failure to disclose relevant information and/or the giving of false evidence by the husband in the earlier proceedings	33 – 113
Wife’s case as to husband’s evidence in the earlier proceedings	33 – 37
The A companies and V Companies – alter ego companies of husband?	38 – 95
The A companies	38 – 51
B property	52
G property	53
M Station	54 – 58
Yacht “N Yacht”	59 – 60
Horses and equipment	61 – 66
Horses	61
Mercedes Benz Prime Mover	62 – 63
Horse float trailer	64
Use of the yacht and horses and equipment	65 – 66
Mercedes Benz car	67
Range Rover	68
A Winter	69 – 75
Analysis	76 – 90
V Company	91 – 95
The A companies and V Companies - sham arrangements?	96 – 99
Conclusion as to whether there was fraud, suppression of evidence, failure to disclose relevant information and/or the giving of false evidence by the husband in the earlier proceedings	100 – 113
Has there been a miscarriage of justice by reason of one or some of those matters	114 – 119
Exercise of the discretion - should the s79 order made on 7 March 2005 be varied or set aside and if set aside should another order under s79 be made in substitution for the order set aside	120
Mr MW’s claims/ex turpi causa non oritur actio/sham/Deed of Family Arrangement/abuse of process by champerty/ abuse of process by improper motive	121 – 328
Mr MW’s claims	123 – 254
Background	127 – 131
Mercedes Benz car – ownership	132 – 134
Mercedes Benz Prime Mover – ownership	135 – 137
The yacht – ownership	138 – 141
Other evidence in relation to the car, the Prime Mover and the yacht – conclusions as to Mr MW’s ownership and entitlement to possession – two documents 18 February 2004 and 16 November 2004 – these to be ignored as unconscionable transactions and/or brought about by undue influence	142 – 183
Another factor concerning the wife’s claim vis a vis Mr MW’s claim	184 – 187
The horse float – security	188 – 200
Car, Prime Mover and yacht – security	201 – 203
Enforcement of security – Car, Prime Mover and yacht	204
Enforcement of security – horse float – Cross-Border Insolvency legislation	205 – 215
Ex turpi causa non oritur actio and/or sham	216 – 254
Ex turpi causa non oritur actio	216 – 250
Sham arrangements?	251 – 254
Deed of Family Arrangement	255 – 296
No consideration?	261 – 270
The value of the Estate now	271
Prejudice if the Deed is now set aside?	272 – 273
Section 106B	274 – 279
Section 85A	280 – 296
Abuse of process – champerty	297 – 318
Abuse of Process – improper motive	319 – 328
Nature and value of the asset pool now	329 – 365
Contribution	366 – 379
The s75(2) factors	380 – 386
The fourth step	387
Analysis and conclusion	388 – 395

REASONS FOR JUDGMENT

The parties and their applications  

The wife

The husband

1. The wife claims against the husband relief under s79A of the Family Law Act 1975 (Cth) (the Act) that a consent property order made on 7 March 2005 be set aside or varied on the basis of a miscarriage of justice by reason of alleged fraud, suppression of evidence, failure to disclose relevant information and the giving of false evidence. The specific relief she claims is that all assets of the husband and of companies controlled by him which assets are able to be identified as presently existing be transferred to her. She seeks also that a Deed of Family Arrangement made 3 February 1993 be set aside pursuant to s106B and/or s85A of the Act and that her claim otherwise be deferred under s79(5) of the Act until the death of J Winter the eighth respondent.

The Deed of Family Arrangement

1. The Deed of Family Arrangement dated 3 February 1993 was made between the husband as assignor, his brother A Winter the second respondent as assignee and their mother J Winter the eighth respondent as trustee of the Estate of her late husband H Winter.  Pursuant to the Deed the husband’s interest as a contingent beneficiary in one third of the Estate was transferred to A Winter. 

The companies and their assets

1. The wife seeks findings that A Capital Ltd (In liq) (A New Zealand), A Capital (Aust) Pty Ltd (A Australia) and V Inc (V Inc) are alter ego companies of the husband and that all property owned by each be transferred to the wife including (as identified by the wife):

   ·39,859,706 shares held by A New Zealand in V Inc

   ·35 million shares held by A New Zealand in A Holdings Ltd

   ·all chattels in Australia owned by A New Zealand and A Australia (a wholly owned subsidiary of A New Zealand) including:

   (i)Yacht, formerly N Yacht and now named Z Yacht

   (ii)Mercedes vehicle registered no …

   (iii)Mercedes Benz Prime Mover registered no …

   (iv)Horse float trailer (unregistered)

   (v)Range Rover registered no …

   (vi)M Station vehicles and equipment presently at T but subject to any valid security held by John Deere Credit Limited

   (vii)39 horses located in south Queensland.

2. During argument Mr Baston of Counsel, for the wife, made clear that the wife is “not interested in the shares in either of the [A] companies”, that is, A New Zealand and A Australia, but “only the assets”.  He reasoned that whilst ordinarily a party could claim only the transfer of the shares in a proprietary company, upon lifting the corporate veil in relation to alter ego companies the assets can be treated as assets of the husband without regard to liabilities of the companies. 

Mr MW

1. The wife seeks findings that Mr MW the seventh respondent has no interest in the first four items listed above:

   (i)Yacht, formerly N Yacht, now named Z Yacht

   (ii)Mercedes vehicle registered no …

   (iii)Mercedes Benz Prime Mover registered …

   (iv)Horse float trailer (unregistered)

   or alternatively that his claim be denied on the basis of the ex turpi causa non oritur actio principle.

Other property

1. The wife claims also:

   (i)4 million shares in V Inc held by the husband issued or allotted in 2007

   (ii)all of the issued shares in a wholly owned United States subsidiary of V Inc (also called V Inc)

   (iii)intellectual property being a software product owned by V Inc

   (iv)500,000 shares in A  Holdings Ltd

   (v)management fees paid to the husband by V Inc to “other unaccounted funds transferred by [V Inc] to [A] New Zealand” between July 2005 and March 2008

   (vi)Aircraft

   (vii)furniture and artwork from M Station held by Mrs P Winter, the husband’s wife, beneficially for the husband

   (viii)cash at bank.

2. The claim for V Inc’s assets was put on the same basis as already outlined. 

Mr MW

Chattel ownership/security entitlement

1. Mr MW seeks findings and a declaration that he is entitled to ownership and possession of:

   (i)Yacht, formerly N Yacht, now named Z Yacht

   (ii)Mercedes vehicle registered no …

   (iii)Mercedes Benz Prime Mover registered no …

   (iv)Horse float trailer (unregistered).

2. In relation to the first three items Mr MW’s claim is based upon the terms of agreements he says he made with the husband, or alternatively a security interest granted by the husband. In relation to the fourth item his claim is based upon a security interest which he says was granted by the husband in his capacity as a director of A Australia. 

The husband

Abuse of process - champerty

1. The husband seeks a finding that the wife’s proceedings are an abuse of process by reason of champertous funding by Mr MW and should be dismissed on that basis.

Abuse of process - improper purpose of proceedings

1. The husband seeks a finding that the wife’s proceedings are an abuse of process by reason of the wife being complicit with others to lend her name to commence these proceedings and obtain injunctions in April 2008 solely for the purpose of destroying V Inc’s business to benefit rival competitors and should be dismissed on that basis.

The second and eighth respondents

1. The second respondent and the eighth respondent seek the dismissal of the wife’s claim that the 1993 Deed of Family Arrangement be set aside.

Relevant background facts

1. The wife and the husband married in 1990.  They separated on 7 December 2001 and were divorced in June 2003.  There is one child of the marriage, born in 1992, now 17 years.    

2. On 7 March 2005 a consent property order was made in the following terms:

   That orders 1 to 5 herein are made in accordance with Section 79 of the Family Law Act:-

   Property

   1.That subject to orders 6 and 7 herein, the balance of the funds presently held in the Barry & Nilsson Trust Account are to be paid to the Wife for her sole use and benefit absolutely.

   2.That the Wife make available to the Husband within twenty-one (21) days of the date of these Orders the following property:-

   a.The Tasmanian oak sideboard;

   b.The timber outdoor setting.

   3.That the Wife retain to the exclusion of the Husband:-

   a.All other furniture presently in her possession or in storage at […];

   b.All bank accounts currently in her name;

   c.Any superannuation entitlements in her name;

   d.Any other personal property;

   e.All other property and chattels of whatsoever nature and kind her name, possession or ownership as at the date of making these Orders.

   4.That the Husband retain to the exclusion of the Wife:-

   a.All other furniture presently in his possession;

   b.All bank accounts currently in his name;

   c.Any superannuation entitlements in his name;

   d.Any other personal property;

   e.All other property and chattels of whatsoever nature and kind in his name, possession or ownership as at the date of making these Orders.

   5.That the Husband and the Wife indemnify each other with respect to any liabilities, including taxation liabilities in their name or in the name of any company with which they have an interest.

   Child Support Departure

   6.That from the funds presently held in the Barry & Nilsson Trust Account held on behalf of the parties, the sum of $70,000 remain and be invested into an interest bearing account with such funds to be utilised for the payment of the following expenses in respect of the child of the relationship […], born […] 1992:-

   a.school fees

   b.educational expenses

   c.all other tuition fees associated with her schooling;

   d.for school camps and excursions.

   7.In the event funds remain in the interest bearing account at the conclusion of the child’s secondary schooling they are to be used for the child’s tertiary education. In the event that there are funds remaining at the conclusion of the child’s tertiary education, or the child does not attend tertiary education, then the remainder of such funds are to be paid to the child.

   8.That the husband, upon request to the wife or the wife’s solicitors, be given a copy of the statement of account in which the funds are being held.

   Spouse Maintenance

   9.That the Order made by Registrar Dittman dated 1 May 2002 be discharged upon the making of these Orders.

   10.The parties agree that this is an Order to which the provisions of section 77A of the Family Law Act apply. The parties, by agreement, nominated the sum of Fifty Thousand Dollars ($50,000) as the spousal maintenance component in the share that the Wife is to receive under these orders and the parties agree that such sum is to be referable to maintenance payable to the Wife only in circumstances when the Wife is unable to support herself adequately.

   Costs

   11.That any and all Costs Orders made in this matter including any reserved Costs Orders and including the Order made by her Honour Justice May dated 13 July 2004 be discharged.

   12.That in respect of all other costs in relation to these proceedings each party agree to pay their own costs of and incidental to the proceedings.

Value received by the husband and the wife pursuant to the consent property order 7 March 2005

1. The moneys in the Barry & Nilsson trust account represented the net sale proceeds of the parties’ former matrimonial home at D Street.   According to the wife the house was sold for $3.525 million in 2002.  After payment of a mortgage of about $2.7 million the net proceeds were $805,253.  About $700,000 was invested, pending final property settlement, to pay for spousal maintenance, child support, school fees and other costs.  Pursuant to par 1 of the order the wife received $330,202.40 being the balance in the Barry & Nilsson trust account.  Prior to that she had received $238,532 spousal maintenance, $32,356 child support and $50,000 for a motor vehicle, “all up” according to the wife $651,091. 

2. The husband contends that the value of the furniture and chattels received by the wife pursuant to par 3 of the order was about $400,000 as at 7 March 2005.  He relies on ex 5.  However, ex 5 is not sworn by a valuer.  The wife contends that the value as at 7 March 2005 was considerably less.   However, she adduced no evidence as to the value as at 7 March 2005.  She contends also that several of the items were taken by the husband and not received by her.  He contends, conversely, that he received very few items being those marked with an asterisk on ex 5.  The wife contends that the value now of the items received by her is about $40,000 (her estimate). 

3. There is no evidence as to whether the indemnities the wife received pursuant to par 5 had value or were nominal. 

4. The husband contends (again by reference to ex 5) that the value of the pool as at 7 March 2005 was at least $700,000 (seemingly, $400,000 furniture and chattels and roughly $300,000 Barry & Nilsson trust account – actually $330,202.40) and that he received only $14,500 value as denoted by the asterisks marked on ex 5.  He contends that even if the chattels in ex 5 be ignored, if the $70,000 allocated for child support for the child (pursuant to par 6) is accounted for as part of his settlement, then the wife received about 88% of the pooled assets and if not the wife received about 98%. 

Was there more?

1. The husband contends that in the property proceedings which resulted in the consent property order he had no undisclosed assets. 

2. The wife’s case however is that the husband’s analysis is false and that the value she received, even if almost 100% of the then identified assets, was negligible in comparison with the husband’s true worth as at 7 March 2005 which was not disclosed by him, mostly held by A New Zealand, A Australia and V Inc as his alter ego companies.  She relies on exs 29 and 30 as proving that his true worth was about $89 million (ex 29) and that even A New Zealand’s worth was about $84 million (ex 30).  Exhibit 29 is a document headed Current Assets which the husband concedes is in his handwriting.  It is undated.  It contains an item however “Deposit on [M Station] $400,000”.  It is known that A Australia purchased M Station by contract dated 5 May 2004, which settled on 25 February 2005.  Thus, it is relatively clear that the husband created the document ex 29 sometime between May 2004 and February 2005. 

3. Exhibit 29 [has been removed for publication]:

4. Exhibit 30 is the balance sheet of A New Zealand as at June 2004, printed 16 November 2004.  It is not verified by audit, but appears to comprise part of the contemporaneous books and records of A New Zealand.  Exhibit 30 [has been removed for publication]:

5. The husband contends that ex 29, although drawn up by him, was not drawn up as a list of his current assets but was a document requested by someone for a purpose he could not accurately recall, but possibly the bookkeeper in the employ of the A companies to do with the A Company accounts.  The barcode and number in the top right hand corner of ex 29 were placed on it by the Australian Securities and Investments Commission (ASIC).  In March or April 2008, Mr MC, accountant, took several documents from premises at T property in Brisbane which was the registered office of V Pty Ltd, the former sixth respondent (now deregistered), the Australian business office of A New Zealand and the registered office of A Australia and had delivered them to ASIC.  Exhibit 29 was one of those documents. 

6. Exhibit 30, under the heading A Capital Ltd, that is, A New Zealand, has the address PO Box … H Qld.  This was the post office box address used for the various entities whose operations were conducted from the T premises. 

7. The husband, under cross examination, said in relation to ex 29:

   ·The B property had been owned by A Australia and has been sold

   ·The G property was owned by A Australia and has been sold

   ·The “Benz truck” is the Mercedes Benz Prime Mover and is an asset of A New Zealand

   ·The trailer (the horse float trailer) is owned by A Australia  

   He acknowledged that the Mercedes Benz Prime Mover is registered in Mr MW’s name and said that whilst the trailer had been registered in A Australia’s name presently it is unregistered.

   ·The “F Truck” is a Ford truck which in early 2009 was “removed by force” from M Station by a Mr GR (to whom reference later will be made)

   ·The “horses at cost” comprised horses purchased with $100,000 borrowed funds from a bank which funds had been provided “for mortgage purposes for a property” 

   He said that as at the date ex 29 was drawn up the “horses at cost” comprised 11 or 12 horses.  He said that there are now about 37 or 39 horses, comprising about 30 specialty horses, some riding horses and a couple of horses belonging to his wife Mrs P Winter all of which are presently agisted.  The specialty horses, he said, are owned by A Australia, but ultimately by A New Zealand which wholly owns A Australia. (The husband added on 24 June 2010 that three of the horses had since died). 

   ·The Aircraft was “always owned” by Mr PT of PT Aircraft Sales Pty Ltd, although it was hangared at M Station and the husband, with Mr PT, were its registered operators 

   ·The “Benz car” is owned by A New Zealand 

   He acknowledged it is registered in Mr MW’s name. 

   ·The Range Rover is owned by A Australia and it is the registered owner, it is financed by Westpac, there is about $65,000 owing on it and in his view it is worth about $35,000

   ·The deposit on M Station was for its purchase by A Australia 

   The husband said that presently the mortgagee is in possession. 

   ·The V Inc shares at USD 2.26 are owned by A New Zealand and as at the date of ex 29 V Inc shares were trading on the US “secondary board” at that price

   He said that V Inc’s main asset is the intellectual property in a software product, such that the shares at the time were valued “by the public” at USD 2.26 per share.  The husband said that the software product was “ready to go to market” in 2008, that the first invoices for sale of the product had been received at Easter 2008, but that because of what he described as an orchestrated “[MC] coup”, this “stopped us in our tracks”.  (More will be said later about the software product, how the husband in Brisbane chanced upon the basal software which became the product and the husband’s proactivity, in 2001 and beyond, to “arrange” for it to be owned by V Inc, a United States public company, and for A New Zealand initially to hold 100% (or perhaps 97% after set up costs) of V Inc).

   ·The 6 million V Inc options exercisable at USD 0.50 never issued

   ·The A Fund shares “issued as founder shares” never issued.

8. The most significant asset in ex 29, plainly, is the “23 million [V Inc] shares at USD 2.26”, denoted in ex 29 as worth $67,574,000 as at the date of the preparation of ex 29, placed, as discussed, as between May 2004 and February 2005. There is independent evidence that as at May 2004 V Inc shares were trading at about USD 2.26, so that the value attributed by the husband to those shares in ex 29 may be taken to be accurate. See ex 46, an internet graph extract showing the V Inc share price movement between 5 May 2004 and 17 November 2008, tendered by the husband. 

9. The husband said that the aircraft as at the date of ex 29 was owned by Mr PT of PT Aircraft Sales Pty Ltd.  If this be true, it is curious that the husband included it in ex 29, which seems to have been compiled as a list of assets otherwise associated with the A companies.

10. Possibly, the genesis of ex 29, having regard to its inclusion “Deposit on [M Station] $400,000” was in relation to an application by A Australia for finance for the completion of that contract.

11. However, beyond that observation, the evidence as to its genesis by the only person capable of giving cogent evidence in that regard, namely the husband, was unclear, save that someone at some stage at some time for some purpose had required it of him, but these matters he could not “accurately recall”, beyond as already stated.

12. It is sufficient at this stage to observe that the husband denied any beneficial interest in A New Zealand or A Australia, and any beneficial interest in the assets listed in ex 29, but that if his denials be false and that in truth the A companies were his alter ego companies, and via A New Zealand its V Inc interests were his alter ego interests, then the wife was seriously deceived when the consent property order was made on 7 March 2005 such that its making amounted to a miscarriage of justice.

13. However, before coming to such conclusion it is necessary to look at the relevant principles relating to a “miscarriage of justice” within the meaning of s79A, and then to look more deeply into the evidence.

The principles relevant to the application of s 79A

1. In Barker & Barker [2007] FamCA13 the Full Court referred to Bigg v Suzi (1998) FLC 92-799 and the line of authority following it:

   120.A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process [original emphasis]” (Bigg v Suzi (supra) at 84,982). See also Suiker (supra); Public Trustee (as executor of the estate of Gilbert) v Gilbert (supra)).  Whilst cases such as Suiker (supra), Holland v Holland (1982) FLC ¶91-243 and Gebert v Gebert (1990) FLC ¶92-137 indicate that the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation.  As the Full Court said in Holland (supra):

   To succeed in an application under section 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under sec. 79 does not, of itself, show that there has been a miscarriage of justice. There may be cases where the order consented to is so far outside the ambit of what is just and equitable that the Court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice.

   …

   122.There will thus be many cases in which an order will be made, by consent or otherwise, based upon an agreed valuation which has been prepared many months earlier.  There may be factors in the intervening period which have affected the value so agreed.  Unless there is some particular act which impugns the process by which the orders were obtained, the mere effluxion of time and the consequent changes in the market during that period, whether they be upward or downward, will not of themselves create an injustice, nor require either of the parties to make further investigations of value if they choose not to do so.

   123.As previously discussed, in order for a claim under s 79A(1) to succeed, the Court must be satisfied that a miscarriage of justice has resulted. It is not sufficient to merely establish the existence of one or more of the stated grounds, such as suppression of evidence.  In Livesey v Jenkins (supra), Brandon LJ had this to say about the nexus between non-disclosure and setting an order aside (at 445-6): 

   I would end with an emphatic word of warning. It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them, or, if they are legally aided, against the legal aid fund.

   We agree with this statement. (emphasis added)

Was there fraud, suppression of evidence, failure to disclose relevant information and/or the giving of false evidence by the husband in the earlier proceedings

Wife’s case as to husband’s evidence in the earlier proceedings

1. The wife's case is that at the time the consent property order was made on 7 March 2005 she relied on the following evidence by the husband as to his property, assets and financial circumstances as contained in the husband's affidavit filed on 23 February 2004:

   15.The Respondent has claimed throughout the property proceedings that I possess and/or control a large amount of wealth in certain Companies.  This is despite my providing evidence to the contrary.  I have been employed as a company director of [A New Zealand] since August 2001.  I receive an income of $500.00 gross per week if funds are available in the Company.  My employer pays for my rent of $675.00 and motor vehicle loan expenses of $250.00 per week as part of the employment contract as I use my home as my fulltime office and I need the vehicle for work related travel.  These are my only sources of income and beneficial payments.

   16.Further, I have had to obtain loans in excess of $150,000.00 to assist in payment of debts, including legal fees and living expenses.  I continue to borrow money when necessary to pay for my expenses.  I currently owe in excess of $30,000.00 in legal fees.  Annexed and marked with the letter "H" is a copy of the Affidavit of the Director of [A Ltd] and my tax returns for the years 1997 to 2002 together with a letter of my solicitors dated 12 December 2003 explaining in detail that the alleged wealth does not exist and the respondent's perceptions that I have access to large quantities of money either directly or by way of financial resources is without foundation.

   17.I do not have an interest in any other company by way of shares, beneficial interest or otherwise.

2. The husband exhibited to that affidavit a letter from his solicitors to the wife's solicitors dated 12 December 2003, annexure H, in which it was asserted that the husband had not "secreted away wealth", “particularly in the United States”, and that "the only assets available are those being the proceeds of the sale of [D Street property] and the household furniture and effects …".

3. It is self evident by these materials that the wife, prior to the making of the consent property order, had alleged that the husband had assets which he had failed to disclose to her.

4. The wife, in her affidavit filed on 28 April 2008, in support of the current proceedings, said:

   6.In settling all claims that I had against [the husband] in the original proceedings, I relied on his evidence in his affidavit sworn on 20 February 2004 and his Financial Statement filed in the original proceedings.  Specifically I relied upon [the husband’s] sworn evidence that he had no assets and earned a weekly wage of $500 per week.

1. The wife's case is that throughout the earlier property proceedings disclosure by the husband was “always difficult” and that she had “held suspicion” that information was being withheld.  In her affidavit filed on 16 May 2008 (incorporated by reference in her trial affidavit filed on 16 April 2010, but not referred to other than in this respect) she provides detail of the effort made by her solicitors to obtain full disclosure by the husband of his assets: see pars 3-34 and 40 of that affidavit, and par 41, in which she deposes as to her reliance on the information provided by the husband in entering into the consent property order.

The A companies and V Inc – alter ego companies of husband?

The A companies

1. By way of background, the following matters are relevant.

2. The husband was born and raised in New Zealand. His mother J Winter and brother A Winter still live there. The husband came to Australia in about 1985 and established himself in the finance industry. He engaged in this professionally until about 1996 when, according to his evidence, voluntarily he did not renew his licence as he was “burnt out”. In about September 1998 he became chairman and the majority shareholder in VL Inc (VL Inc) a United States incorporated software development company (ex 14 Vol 4 Z p36). He referred to VL Inc as “my” company (ex 14 Vol 4 Z p122).  Its shares had traded apparently at about USD 34.00 before declining during 2000. In August 2001 winding up proceedings were commenced in the United States. An attempt at voluntary administration failed. In November 2001 VL Inc was liquidated by the United States Bankruptcy Court.

3. In late 2000, well into VL’s decline, apparently at the child’s eighth birthday party at D Street (the child was born in November 1992), the husband met a Mr ON, who was the father of one of the child’s school friends.  Through Mr ON, the husband subsequently met Mr WA and Mr LE.  These three men had developed a software product, which either was or became the P Software product, held in a company called SP Company Pty Ltd (SP) which operated out of a small office and had about 15 shareholders.

4. A New Zealand was incorporated in August 2001. Its directors were, and are, the husband and his brother A Winter. It has 1 million issued shares initially held by A Winter from its date of incorporation until 11 March 2008 on which date all of the shares were transferred to the husband’s mother J Winter. These matters are fully explained in the affidavits of J Winter and of Ms JF, chartered accountant. See, in particular, annexure D to the affidavit of Ms JF, p3.  (Initially, the wife sought to set aside the share transfer however, expressly this was abandoned at the trial, there being full and adequate explanation by J Winter and Ms JF in their respective affidavits, showing that the transfer occurred in the aftermath of the Australia and New Zealand Banking Corporation calling up a guarantee which had been given by the Estate of the husband’s late father H Winter in relation to A Australia’s purchase of M Station).  I find, on the basis of the evidence of J Winter and Ms JF, that the share transfer by A Winter to J Winter was a legitimate transaction, so that both control and beneficial ownership on 11 March 2008 passed to J Winter as trustee of the Estate of the late H Winter.  The husband said in his trial affidavit, pars 60-62, that his understanding was that the share transfer had the effect that “there has been no beneficial interest change as [A Winter] is still the beneficiary”. His “understanding” plainly is erroneous having regard to the evidence of J Winter and Ms JF to which I have referred, and which I accept. 

5. A New Zealand, it appears, did not at any stage operate any business in New Zealand. Its office in Australia, through which all business was conducted, was the T premises. All of its business conducted from that office was by the husband and employees arranged by him, apart from a very early stage in which A Winter apparently had some minor involvement. As early as 10 August 2001, A New Zealand had opened a Westpac bank account at T.  See ex 14 Vol 2 O p1, and A New Zealand’s general ledger ex 14 Vol 2 O pp20-23 and pp24-27.  Notably, the entries on the bank account documents “[H property] rent” was rent paid for premises at H which was the husband’s then residence. 

6. In late 2001, A New Zealand purchased a non operating shelf company in the USA and changed the shelf company name to V Inc.  This was referred to by the husband as “[V] 1999”.  The husband explained that “[V] 1999” in early 2004 was merged with a listed company which changed its name also to V Inc.  This was referred to by the husband as “[V] 1970”.  By the merger, effected by a Reorganisation Agreement detailed in a report 4 March 2004 to the United States Securities and Exchange Commission (ex 14 Vol 2 Q pp1-34) there became a listed V Inc (the current fifth respondent) which ultimately owned the other V so that it became a non operating wholly owned subsidiary.  Mr Baston observed in his written submissions that since March 2004 the two V companies have operated as if one entity.  The original shareholding in the shelf company was 100% A New Zealand (or, as I understand the matter, after set up costs 97%).  The report 4 March 2004 however, at ex 14 Vol 2 Q pp20-21, shows that as at that date A New Zealand held 60.8%, A Winter 2.9%, M Winter 0.0%, a Mr ME 4.5%, a Mr EN 0.13% and a Mr BR 0.4% (totalling 68.75%).  The notes to that document include:

   (1)All of the shares owned by [A Ltd], a New Zealand corporation, (i.e. 23,000,000 shares) are attributable to [A Winter] because he is the sole shareholder and a director of said corporation.  As a result of these holdings and the holdings described in Note 2 below, [A Winter] and [A Ltd] may be deemed to be principal shareholders and parents of the Company. 

   (2)… Therefore the number of shares either owned by [A Winter] or beneficially directly or indirectly held by him is 24,100,000.        

   (3)[The husband] disclaims any beneficial interest in any of the shares either owned or attributable to his brother [A Winter]. 

7. The document is signed “[The husband], President” (p34).  It describes that its principal product is the P software (p6ff), described as acquired by a prior “acquisition” from SP Company made “during the first half of 2002” (p6).  Mr Winter had described in his evidence that “we” acquired the P software by purchasing the shares in SP Company.  It is unclear whether “we” is a reference to A New Zealand, which onsold the shares in SP Company to V Inc, or whether V Inc itself acquired the shares.  However, nothing turns on this.  It is sufficient to observe that the document (p6) records that SP Company “became acquired” by V Inc.  Thus, through the husband’s efforts, the product he chanced upon in late 2000 became owned by V Inc, of which he was President, but in which he “disclaimed” any beneficial interest (Note 3 above).  The document shows also that V Inc’s Australian office was the T premises (p17) which also was the registered office of V Pty Ltd the sixth respondent (now deregistered). 

8. V Inc’s trading history is shown in ex 46, the graph to which I have referred, showing that at its high point in late 2004/early 2005 it traded at about the USD 2.26 value referred to by the husband in ex 29. Its shareholding at the time of the trial was said by the husband to be represented in exs 43 and 44. It appears that the initial majority shareholding of A New Zealand over the years was diluted either by the issue and allotment of shares to the public or by the sale or transfer of some of A New Zealand’s shares.

9. A Australia was incorporated in January 2003. Its directors were and are the husband and the husband’s brother A Winter. It is wholly owned by A New Zealand. All of its business also was conducted from the T premises by the husband and employees arranged by him. A Australia engaged in the transactions described in ex 29 to which reference already has been made.

10. The husband candidly said that he was, and is, the managing director of both A New Zealand and A Australia. 

11. The husband telephoned the wife in late October 2001, apparently from the United States, announcing that he wished to divorce her and on his return from the United States put this in train. The wife said however that the marriage had been “quite rocky” particularly from about mid 2001.

12. The role of A New Zealand, it appears, largely was restricted to its role of ownership of the V Inc shares.

13. There is reference in the material to other “A” companies notably A Holdings Ltd, which was intended to conduct aquaculture at M Station, but seemingly did not become very active in that pursuit.  The search in relation to it shows that it is owned by A Australia.  There is also reference to A Horticulture Ltd, which Ms JF said is a small company owned by A Winter and his wife, and that “all it does is pay wages and charge various entities for contract orchard work including the Estate of [H Winter]”: annexure D to Ms JF’s affidavit.  These companies, thus, may be left to one side, the focus of the wife’s case being on A New Zealand and A Australia. 

14. A Australia engaged in many transactions. It is convenient to refer to them by reference to ex 29.

B property

1. On 18 February 2004 the husband caused A Australia to purchase a property at B in New South Wales from a Mr GR for $400,000. Since, it has been sold.

G property

1. There was little evidence as to this property. The husband said it was purchased by A Australia and since has been sold.

M Station

1. The husband caused A Australia to purchase this property by contract dated 5 May 2004 which settled on 25 February 2005. It was financed as to $3.6 million by C Equities Limited on first mortgage by way of a facility of $1.9 million and a letter of credit issued by Australia and New Zealand Banking Group for $2.1 million guaranteed by the H Winter Estate (amounting to $4 million). The guarantee was called up with a debt ultimately of NZ $2.5 million.  The Estate was required to finance the call up by increasing its operating debt to the Australia and New Zealand Banking Group.  A Winter said that whilst A Australia is the debtor to the Estate, the husband is “responsible” for payment of the debt.  J Winter, who is the trustee of the Estate, and the husband’s mother, said that the debt is repayable by the husband (not his brother) and in her view is an actual not contingent debt. 

2. The call up of the guarantee led then to the transfer of the shares in A New Zealand from A Winter to J Winter, as deposed by J Winter and Ms JF.

3. The husband then arranged refinance by the National Australia Bank in relation to the C Equities Limited debt.  The NAB appointed a receiver in 2007. There was a further refinance by U Finance Pty Ltd who is now mortgagee in possession.

4. The husband and his wife Mrs P Winter lived at M Station for the entire period from its purchase until its repossession. The husband and his wife were married there and regarded it as their home.

5. There was evidence to the effect that part of the purpose of the purchase of M Station was also that it was to be the location of the aquaculture business to be set up by A Holdings Ltd but that this did not eventuate.

Yacht

1. The husband arranged for A Australia to purchase a yacht during 2004. The hull cost $260,000. Fit out and rig were additional, and were funded by Mr MW by his purchase of the yacht for $160,000 at which stage title was transferred to him. Documents disclosed by the Cruising Yacht Club of Australia … annexed to the affidavit of Ms KN shows “Owner/Charterer” with the box “Owner” bearing a tick in the name of the husband. The documents in ex 14 Vol 1 I show the husband as the skipper of the yacht (p38); contain his name and details as “Members/Boat Owner’s Details” (p41); the name “[A] Ltd / the husband” against “Owner/Charterer’s” name (p44); and an internet extract for the race showing the husband as owner and skipper (p49).

2. Mr MW is now the registered owner of and in possession of the yacht, which has been renamed Z Yacht.

Horses and equipment

Horses  

1. The husband arranged for A Australia, apparently in about 2004, to purchase several horses at the cost of about $100,000 which were paid for by funds borrowed from a bank.

Mercedes Benz Prime Mover

1. A Mercedes Benz Prime Mover was acquired for the cost of about $160,000. It was purchased in the name of Mr MW, who became and remains the registered owner. Finance with CBFC was in Mr MW’s name. The husband was clear in his evidence however that he regards A New Zealand (as the owner of A Australia) as the true owner. In this regard the husband relies on a document dated 18 February 2004 to which I will make further reference when dealing with Mr MW’s claims. Mr MW said he did not ever use the Prime Mover and that from the time of its purchase it has been in the husband’s possession.

2. The Prime Mover, it appears, was used coupled with the horse float trailer to which I will now refer.   

Horse float trailer

1. The husband caused A Australia to purchase a trailer and have it custom fitted out as a horse float for transport of the horses. It was used in conjunction with the Prime Mover.  The trailer was registered in A Australia’s name and is now deregistered.

Use of the yacht and horses and equipment

1. A Winter said that the purchase of the horses and equipment was “to promote the business interests of [A] and [V] by being involved in the community most likely to invest in projects such as [V]”. He said that likewise the yacht, which was used to sail in the 2004 Rolex Sydney to Hobart Yacht Race, had livery which “included the name [of the company] on the side and […] logo on the sails”. He said “I believe that both the interest in the [horses] and the yacht were distinctive marketing techniques to use in the market where it was intended to attract investors of substantial wealth”. See A Winter’s affidavit filed 9 July 2008. 

2. The husband said to similar effect in relation to the yacht, and referred to the purchase of the horses as an opportunity to participate in equestrian activities, …, to attract investment from wealthy persons and to “put the brands” and “logos” of A and V into a wealthy market.

Mercedes Benz car

1. The husband arranged with Mr MW for this vehicle to be purchased in Mr MW’s name. Finance, which amounted to about $50,000, with CBFC, was in Mr MW’s name. The husband was clear in his evidence that he regards A New Zealand (as the owner of A Australia) as the true owner. It was purchased in the name of Mr MW, who became and remains the registered owner. Mr MW said he did not ever use the car and that for the whole time since its purchase it has been in the husband’s possession.

Range Rover

1. The husband said that A Australia is the registered owner of the Range Rover, it is “in Queensland”, and is the vehicle which he uses. The financier is Westpac, which is owed about $65,000.

A Winter

1. A Winter was raised in New Zealand and has always resided there, apart from a brief period of residence in Australia in the 1980s. He is married to Mrs A Winter. He conducts business as in agriculture on behalf of the H Winter Estate.

2. He said that “after a lot of discussions” with his brother the husband in 2001 he agreed to the establishment of A New Zealand and that he, A Winter, would be the sole shareholder with himself and his brother the husband as its directors.

3. A Winter described himself as a “backer” of the husband in that he, A Winter, had the “financial ability to back things” and “I had the financial capacity to back a lot of things [the husband] did”. A Winter agreed that he had put no money into either A New Zealand or A Australia. He agreed that apart from A New Zealand’s “holding” shares in V Inc, and “holding” A Australia, to his knowledge A New Zealand had no business activities, that he has not used A New Zealand for any business activities of his own in New Zealand and that it was not involved in any way in his or the Estate’s agricultural business in New Zealand.

4. In relation to the NZ $2.5 million debt to the H Winter Estate as the result of A Australia’s purchase of M Station, he said that whilst A Australia is the party indebted to the Estate he holds the husband “responsible” for making repayment to the Estate. He said that he “expected” the husband to repay this debt because “It hasn’t worked out” and “I am living the consequences of that”.

5. He said that at all relevant times he was aware that A New Zealand was “conducting business in Australia” but that he was “not involved on the day to day basis”. He said that he does not know “the details of the [A New Zealand]/[V Inc] connection”. He said that he does not know, or could not recall, how A New Zealand acquired V inc shares and “could not recall” details as to the acquisition by A Australia of the Mercedes Benz Prime Mover or the horses but “I knew that was happening”. When asked whether he had approved the purchase of the yacht he said “[the husband] operated the company on the day to day basis”.

6. It appears that, in the early phase after establishment of the A companies A Winter had a minor involvement by being present at the T premises. However, in relation to the details of the operations of the A companies, somewhat poignantly he said, as to what his brother did, “Look, I don’t babysit him”.

7. A Winter denied adamantly, despite this evidence, that at “set up”, although he was the sole shareholder of A New Zealand and had put no money into it, the purpose of the establishment of A New Zealand with him as the 100% shareholder was to “hold” assets for the husband or to “hold” the husband’s investments “for protection”.

Analysis

1. A Winter said that the establishment of A New Zealand occurred “after a lot of discussions” with his brother the husband in 2001.

2. The wife says that she received a telephone call from the husband in late October 2001 informing her that he wished to divorce her.

3. Separation occurred in December 2001.

4. The husband had left New Zealand in 1985 to pursue his interests in Australia. By a Deed of Family Arrangement in 1993, to which more detailed reference will be made below, he no longer, after 1993, had any financial interest in any business in New Zealand and in particular the business of his late father’s Estate in New Zealand.

5. A Winter had a brief period of residence in Australia in the 1980s, but since his return to New Zealand he has had no explicable reason to have any business interests in Australia, apart from those that resulted in the “discussions” with his brother the husband in 2001. 

6. In these circumstances, it seems somewhat inexplicable that A Winter would seek to establish a New Zealand holding company for the purpose of the acquisition and holding of shares in V Inc, whose purpose was to own and develop the P software product which the husband had indentified in Australia in late 2000 via Messrs ON, WA and LE, and have a wholly owned Australia subsidiary, in relation to which both A companies the husband, it appears, made all relevant decisions.

7. It is not to the point whether the two A companies may have had legitimate business operations. The relevant question is whether, by the husband’s use of and relationship with those companies, he used them and their assets as if they were his own beneficially, so that in truth he ought to have disclosed this to the wife in the earlier property proceedings to enable the Court to “lift the corporate veil” and treat the assets of both of the A companies as the husband’s own assets.

8. Whether a company is the alter ego of a person is a question of fact. 

9. On all of the evidence A Winter was an inactive director and the husband the only active director, that A Winter agreed to the establishment of A New Zealand, and to hold the shares in it on behalf of the husband, and in turn subsequently for A New Zealand to hold all of the shares in A Australia as a wholly owned subsidiary, solely to conceal the husband’s true ownership of the net assets of these companies. Certainly A Winter on his own evidence put no money into A New Zealand or A Australia.  Further, he described his role in relationship to the A companies as his “backing” of “a lot of things [the husband] did”. He said he had the “financial capacity” to do this, but put in no money.

1. Potentially, the same percentage basis award should apply now to that part of the four step process concerning contribution based assessment. 

2. However, as the husband is insolvent and the pool negligible (if not negative), as I have explained, the matter of this now is academic. 

The s75(2) factors

1. The wife lives with her mother in an apartment in inner Brisbane.  She works as a receptionist also in inner Brisbane. 

2. She is not in a relationship.  She has a friendship with Mr Fox, who has assisted her in these proceedings.  Mr Fox said in evidence that the friendship in the future may become romantic, but apparently at the time of the trial was not. 

3. The child is in Grade 12 and also attends a TAFE.  She lives independently.  The husband says the child has been in his care since 6 June 2009 and remains in his care.  She is boarding with a family in Brisbane.  The husband says the monthly cost of her living expenses for which he is responsible is $1,300.

4. The husband, until recently, was assessed to pay child support and was and is apparently in arrears to the extent of about $18,754.  On 17 May 2010 the husband received a favourable decision from the Social Securities and Appeals Tribunal setting aside a child support assessment and substituting a new decision that “the rate of child support payable from 9 June 2009 until 26 November 2010 be calculated on the basis that [the husband] has greater than primary care of [the child].” However, it would appear that does not alter the arrears of child support as at the date of the trial, $18,754.

5. The husband has remarried.  His family now comprises his wife Mrs P Winter and two young children, a son, 2 years and a baby daughter. 

6. The husband and his new family, since possession of M Station by its mortgagee, live in or near M, apparently in rented premises.  The husband says a bankruptcy notice has been issued by RS Property Investments for $850,000.

7. Both the wife and the husband, it would appear, are impecunious, if not both insolvent.  I have referred to the husband’s financial statement showing $69 million debt.  The wife has a debt to her mother of $40,000.  I have referred already to her litigation funding, however, it would appear on the true construction of the funding agreement that she may not be liable to the funder.  This however is not a matter for me to determine in these proceedings. 

The fourth step

1. In Phillips and Phillips (2002) FLC 93-104 at 88,985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that usually adjustment for the s 75(2) factors will be assessed in the range of 10% and 20%; but that a number of cases will justify an assessment outside those parameters; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally, that in the consideration of whether the result is just and equitable, it is the justice and equity of the actual order, not of the percentage distribution, which must be considered.

Analysis and conclusion

1. I have determined already that there was a miscarriage of justice in relation to the making of the consent property order 7 March 2005. 

2. The husband’s suppression of evidence and of relevant information, combined with his blatant deception concerning his true interest in the A New Zealand and A Australia companies, and my observations already made as to contribution both as at 7 March 2005, and now, have effect that I am favourably disposed to order, in the exercise of my discretion, that the consent property order be varied. 

3. At the trial, the husband presented as a dishonest person who would grasp at a straw of truth but bend it to mistruth.  Despite the 18 days of the trial, I am by no means satisfied, even yet, that he has made full disclosure of all matters affecting his financial circumstances, entitling me to be robust in considering the wife’s claim so as to award her by way of variation of the consent property order all assets of the husband able to be identified: Weir & Weir (above) at 79,593; Chang & Su (above) at [71]-[72].  Having regard to the principles in those authorities, and the facts as I have found them, I have no hesitation in awarding to the wife all existing assets of the husband which legally may be the subject of transfer to her. 

4. Unfortunately for the wife, the husband’s assets presently able to be identified, in as much as are claimed by the wife, are limited to his personal shareholding in V Inc, but with the shares presently revoked.  As I have understood the wife’s case, she does not claim the husband’s furniture E$3,500 and watches clothing and footwear E$4,500.  In case there are other assets of the husband identified in the proceedings (but subject to the findings made) and specifically claimed already by the wife in the proceedings, I will make provision for liberty to apply.    

5. The husband’s life story, since his USA dealings commencing in the 1990s, described in his affidavit in ex 14 Vol 5 pp610-617, shows a pattern of convincing persons to invest in projects identified or developed by him, living a glamorous lifestyle funded totally by investor and borrowed moneys, then financial failure. 

6. Be that as it may, Mr Baston urged, which may be true, that in the future the shares in V Inc may be restored. The wife should have the benefit of that possibility. I will therefore order under s79A that by way of variation of the consent property order made on 7 March 2005, subject to any relevant United States law, the husband’s shares in V Inc be transferred to the wife, and the liberty to apply provision mentioned.

7. There is no point in setting aside the consent property order made on 7 March 2005 for the reason that it has been fully performed.  Indeed, the specific relief sought by the wife seems to recognise this. 

8. Further, I will make declarations reflecting my findings in relation to Mr MW’s claim and consequential orders. 

I certify that the preceding three hundred and ninety-five paragraphs (395) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly

Associate:     

Date:              15 October 2010