YORKE & YORKE

[2016] FCCA 3112

FEDERAL CIRCUIT COURT OF AUSTRALIA

YORKE & YORKE [2016] FCCA 3112

Catchwords:
FAMILY LAW – Property dispute – only significant asset being matrimonial home – house to be sold – whether husband’s tax debts should be wholly or partly, or at all, paid out of her proceeds – whether husband’s credit cards should also be paid out – evidence about credit cards manifestly inadequate – future needs of wife far greater than husband’s – some tax to be paid out ($50,000) – remainder divided 80% to wife and 20% to husband.

Legislation:

Family Law Act 1975, ss.81, 90MT(1)(a), 90MT(2), 90MZA
Family Law (Superannuation) Regulations 2001, regs 12, 13; r.14F

Superannuation Industry (Supervision) Regulations 1994, rr.7A.07(2), 7A.13

Kennon and Kennon [1997] FamCA 27
Stanford v Stanford [2012] HCA 52
Trustee of the property of G Lemnos (a bankrupt) v Lemnos (2009) 41 Fam LR 120
Kowaliw and Kowaliw [1981] FLC 91-092
Johnson v Johnson (1999) 26 Fam LR 475
Trask v Westlake [2015] FamCAFC 160

Applicant: MS YORKE

Respondent: MR YORKE

File Number: MLC 893 of 2015

Judgment of: Judge Burchardt

Hearing dates: 20 and 21 October 2016

Date of Last Submission: 21 October 2016

Delivered at: Dandenong

Delivered on: 15 December 2016

REPRESENTATION

Counsel for the Applicant: Ms Renwick

Solicitors for the Applicant: Williams Winter

Counsel for the Respondent: Mr Weil

Solicitors for the Respondent: Resolve Conflict Lawyers

THE COURT ORDERS:

1. The Applicant and Respondent do all acts and sign all documents necessary to place the real property situated at Property A (‘Property A”) on the market for sale on such terms as agreed, and failing agreement as follows:

   (a)The selling agent be nominated by the President of the Real Estate Institute of Victoria to sell the property jointly;

   (b)The mode of sale be by public auction;

   (c)The sale/reserve price of Property A be agreed and failing agreement the price nominated by the selling agent.

2. That the net proceeds of the sale of Property A be applied as follows:

   (a)To pay all costs and expenses of the sale including legal costs and disbursements, agent’s fees and commission, including marketing and advertising costs;

   (b)To discharge the mortgage secured against the property;

   (c)To pay $150,000 towards the debt to the Australian Taxation Office, held in the Respondent’s sole name;

   (d)To pay $26,500 towards the credit cards held in the name of the Respondent, including but not limited to the (credit cards omitted);

   (e)The balance be divided: 

   (i)80% to the Applicant; and

   (ii)20% to the Respondent.

3. That the Applicant and the Applicant’s solicitor’s forthwith do all acts and things and sign all documents necessary to remove the Caveats registered over the following properties:

   (a)Property A;

   (b)Property B; and

   (c)Property C.

4. That pending the settlement of the sale of the Property A in Order 2 herein, the Applicant have the sole right and occupation of the Property A and the Respondent pay or cause to be paid:

   (a)The mortgage and the utilities for the Property A, as and when they fall due; and

   (b)The sum of $500 per week to a bank account as nominated by the Applicant.

5. That the Applicant retain to the exclusion of the Respondent and the Respondent relinquish any and all interest in, and/or entitlement to, any and all assets registered in the Applicant’s personal name (solely or jointly) and/or in which she otherwise has a legal and/or beneficial interest, including but not limited to the following:

   (a)Her (omitted) motor vehicle;

   (b)Jewellery in her possession;

   (c)Funds standing to her credit in any bank account.

6. That the Applicant pay and/or assume responsibility for, and indemnify and keep indemnified the Respondent for all time, in respect of any and all past, existing and/or future liabilities and/or payments registered in her personal name (whether solely or jointly) and/or for which she is otherwise responsible (whether jointly or severally), including but not limited to credit card liabilities and legal fees.

7. That the Respondent retain to the exclusion of the Applicant and the Applicant relinquish any and all interest in, and/or entitlement to, any and all assets registered in the Respondent’s personal name (solely or jointly) and/or in which he otherwise has a legal and/or beneficial interest, including but not limited to the funds standing to his credit in any bank account.

8. That unless otherwise specified in these Orders and save for the purpose of enforcing the payment of any monies due under these Orders:

   (a)Each party shall be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these Orders;

   (b)Monies standing to the credit of a party in any bank account is to become the property of the party in whose name the account is registered;

   (c)Each party shall forego any claim to the other party’s superannuation, long service leave, redundancy, retirement, retrenchment and like benefits belonging, to or earned by, the other;

   (d)Insurance policies remain the sole property of the owner named thereon;

   (e)Each party shall be solely liable for, and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and

   (f)Any joint tenancy of the parties in any real or personal property is hereby expressly severed.

9. The Applicant do all acts and things and sign all such documents as may be required, at the Respondent’s expense to, in relation to the (omitted) Family Trust (“the Trust”):

   (a)Consent to her removal as a beneficiary of the said Trust; and

   (b)Relinquish any and all of her past, existing and/or future right, entitlement and interest in the Trust including but not limited to any amount standing to her credit in loan accounts or unpaid beneficiary entitlements; and

   (c)The Respondent, in his capacity as director and shareholder of the (company omitted) (“the Entity”) and Appointor, Guardian and trustee of the Trust:

   (i)Retain to the exclusion of the Applicant, all assets owned by the Entity and/or the Trust; and

   (ii)Indemnify and keep indemnified for all time, the Applicant in respect of any and all past, existing and/or future liabilities in respect of the Entity and or the Trust, including but not limited to the taxation liabilities.

10. That for the purposes of these Orders:

    (a)The ‘Superannuation Fund’ is (omitted);

    (b)The Applicant is the member spouse;

    (c)The Respondent is the non-member spouse; and

    (d)‘The Trustee’ means the trustee(s), person(s) or corporation(s) responsible from time to time for the management or investment of the Superannuation Fund.

11. That paragraphs 11 to 21 of this Order are binding on the Trustee.

12. That the base amount to be allocated to the Respondent out of the Applicant’s interest in the Superannuation Fund is $69,353 (‘the base amount’).

13. That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 whenever the Trustee makes a splittable payment from the interest held by the Applicant in the Superannuation Fund, the Trustee shall pay to the Respondent the amount which is calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001 the base amount of $69,353 (provided that such base amount shall not exceed the value of the interest determined under Section 90MT(2)), and there be a corresponding reduction in the entitlement that the Applicant would have had but for these Orders.

14. That paragraph 16 has effect from the operative time.

15. That the operative time for the purpose of these Orders is the beginning of the fourth business day after the day on which a sealed copy of these Orders is served upon the Trustee.

16. That the Trustee and the parties in accordance with the obligations set out under the Family Law Act 1975, the Family Law (Superannuation) Regulations 2001 and the Superannuation Industry (Supervision) Act and Regulations 1994, shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement and make the payment in accordance with these Orders.

17. That the Respondent shall do all things necessary, including but not limited to, exercising his request pursuant to r. 7A.07(2) of the Superannuation Industry (Supervision) Regulations 1994 for the payment of the transferable benefits out of the Applicant’s interest in the Superannuation Fund to the Respondent in accordance with r. 7A.13 of the Superannuation Industry (Supervision) Regulations 1994.

18. That until the happening of any of:

    (a)The establishment of a separate account in the name of the Respondent the Superannuation Fund; or

    (b)The transfer or ‘rolling over’ into another superannuation fund or superannuation account of the payment split created by paragraph 12 hereof; or

    (c)The Respondent satisfies a condition of release and is paid the payment split which was created by paragraph 12 hereof; or

    (d)The Respondent exercising a waiver of rights within the meaning of Section 90MZA of the Family Law Act1975 in relation to the payment split created by paragraph 12 hereof;

    the Applicant be and is hereby restrained by herself, her servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his/her interest in the Superannuation Fund a ‘not splittable payment’ within the meaning of Regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001. 

19. That the Court notes:

    (a)That the value of the transferable benefits from the Applicant’s interest to the Respondent’s interest are calculated in accordance with r. 7A.13 of the Superannuation Industry (Supervision) Regulations 1994;

    (b)Pursuant to r. 14F of the Family Law (Superannuation) Regulations 2001, any payments from the Applicant’s superannuation interest in the Superannuation Fund made after the Trustee has created a new interest in the Respondent’s name in the Superannuation Fund are not splittable payments; and

    (c)The Trustee will be relieved of its obligations to calculate and split payments under this Order in the event that a lump sum is paid to the Respondent in accordance with the requirements under the Superannuation Industry (Supervision) Regulations 1994.

20. That each party and the Trustee have liberty to apply in relation to the implementation of the orders affecting the Applicant’s superannuation interest.

21. That a copy of these Orders be served forthwith upon the Trustee.

22. Certified for Counsel.

AND THE COURT NOTES:

A.The parties agree that as far as it is practicable to do so that the Orders are made having regard to the provisions of Section 81 of the Act with a view to determining for all time the financial relationship between the parties and avoiding further proceedings between them.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 893 of 2015

MS YORKE

Applicant

And

MR YORKE

Respondent

REASONS FOR JUDGMENT

Introductory

1. This is a property dispute between parties who were married for over 25 years.  As things have transpired the only asset of any moment that the parties have is the former matrimonial home in (omitted) which both parties estimate to be worth $1.5 million with a mortgage of $790,000, together with the husband’s superannuation of just over $130,000.  Although there are a number of subsidiary issues the main issues between the parties are who is to pay the husband’s outstanding tax liabilities in excess of $400,000 and how the equity in the matrimonial home, which it is agreed will be sold, should be divided.

2. The husband proposes that all tax liabilities be paid out of the sale of the matrimonial home and that the amount remaining thereafter be divided 65/35 in favour of the wife.  The wife proposes that the husband pay all the tax liabilities and that she receive the entirety of the net proceeds of sale.  For the reasons that follow I think that $150,000 of the accrued tax debt should be paid out of the proceeds of the sale of the matrimonial home and the wife should receive 80 per cent of the remainder.  The husband is to retain liability for all other extant tax debts.

Agreed Matters

1. Although the case extended to two days there is much in this case that is not in any way in dispute.  The wife was born (the parties are now divorced but it is convenient still to use this terminology) (omitted) 1965 in (country omitted).  The husband was born (omitted) 1957 also in (country omitted).  The wife asserted during her evidence that the parties are cousins although it was not made clear whether they are first cousins or their relationship is more remote.  The husband migrated to Australia in 1971 but returned to (country omitted) in 1980 at which time the wife’s family circumstances were parlous.  He assisted the wife and her family for a number of years.  They married on (omitted) 1988 and in that year the wife, likewise, came to Australia.  Their son, X, was born on (omitted) 1989 and their daughter, Y, on (omitted) 1995.  The parties have lived, it would appear, in the (omitted) area ever since and for many years, at least since March 1996 when they purchased the matrimonial home at Property A, (omitted).  Both the children were privately (and expensively) educated, X at (school omitted) and Y at (school omitted).

2. Although the wife had commenced a sociology degree in (country omitted) at the time of her marriage, thereafter she has been a fulltime housewife and has never worked.  Her English, while being quite good enough to enable her to give evidence, is clearly not entirely fluent.  The husband is entirely fluent in English.

3. The husband worked for a number of companies including (omitted) until 2009 when he decided to go out on his own.  He is clearly an extremely experienced and competent (occupation omitted) who makes approximately $250,000 per year.  These funds are channelled to him through a company of which he is the sole director via a trust of which he is the appointor.  It does not appear to be disputed, although the wife says she has no direct knowledge about these matters, that the company and trust have no retained assets and act simply as conduits for the husband’s income.  The husband is presently engaged in a project which takes him every week to Canberra, where his accommodation and transport are paid for, and although it cannot be said with certainty, from his evidence it seems clear that he will continue to earn at approximately the level he now earns (bearing in mind that he has been at or about this level of earnings for some years) into the future although at the age of 59 at some point it is likely he will retire.

4. The marriage was not entirely happy over the years although the parties have vividly different accounts as to why this was the case, to which I shall return.  On any view of the matter by 2013 the finances of the family were under severe strain.  This was because the husband had not lodged any tax returns from the time he commenced self-employment in 2009.  His tax returns for the years 2008 - 2009 and following were not lodged until the court ordered this to be done.  As a result of the lodgement of returns up to the year 2014 - 2015 a very substantial tax liability including substantial interest and penalties has evolved.  It seems reasonably clear that the husband sought in 2013 to refinance the mortgage on the matrimonial home to the tune of $100,000 to address allegedly then pressing tax demands but it is equally clear that the wife refused to execute the necessary documentation.

5. The wife says, and the husband denies, that she was at all times entirely ignorant of the family’s finances.  She says that the husband was extremely controlling in financial and other matters and that he belittled her at all times with insults to the effect that she was crazy or unintelligent and/or generally incompetent.  The wife further says that the relationship was marred by considerable physical violence on the husband’s part, a matter to which I shall return. 

6. On any view of the matter the parties agree that they separated under one roof in August 2013.  There was an incident in July 2014 which led to the police being called and final separation took place either then (the husband’s version) or in November 2014 (the wife’s version).

7. The son, X, is 27 years old and continues to reside in the matrimonial home with the wife who has remained in possession.  He is described as having a job at a (omitted) company and to be studying to be a (occupation omitted).  His mother has asked him to contribute to the family’s costs but he has not done so.  He does not even mow the lawn. The daughter, Y, has completed a degree in (omitted) but has not been able to yet obtain employment.  She also lives in the former matrimonial home and receives $200 a week from her father together with other occasional assistance. 

8. The father’s father died in May 2014 and there is a dispute about the nature of the father’s inheritance.

The Evidence Given At Court

1. I do not propose to traverse the parties’ affidavits in any detail whatsoever. The agreed matters set out above are taken from their affidavit material, which I have read in detail and to which I pay full regard.  Nonetheless the matters in issue are better illustrated in the circumstances by a paraphrase of their evidence which will follow.  This is not a transcript.  It is taken from my notes and records those aspects of the matter that I felt were of particular significance. 

The Evidence Of The Wife

1. The wife adopted her affidavit and financial statement as true and correct.  Under cross-examination she confirmed that Y is aged 20 and has finished her study in sound production and is trying to get a job.  She is in good health.  The husband pays her $200 each week and lets her use his car while he is in Canberra.  X started work about five months ago.  The mother had asked him for assistance in the household expenses but he had not done so.  The mother was taken to paragraph 30 of her affidavit sworn 13 October 2016 in which she detailed significant expenses arising from X’s dietary requirements.  She responded that she tried to support her children.  She said in this regard more generally, “I can’t say no to the children.”  When one looks at the cost of the Wagyu steak that the son receives it is apparent that that is a true assertion.  X is saving for a trip to the (country omitted) but Y does contribute a little bit to the household expenses.

2. There was extensive cross-examination about the extent of the wife’s consumption of alcohol.  This was pertinent as it went to the husband’s denial of the wife’s case.  The wife denied being an alcoholic. She said that she used alcohol to sleep.  She did not agree that four to five glasses of wine or beers per day was excessive.  She said she fasts for 60 days per year but used alcohol to self-medicate.  Pills now enable her to sleep.  She asserted that the husband drank more than she did.  She said, “We fight when we fight”, and said that, “alcohol was not the point”.  She said the parties fought about money and that the husband hid things but the fighting was not because of alcohol.  She was taken to Dr O’s report which recorded the four to five glasses of wine or beers per day as the wife’s consumption but said these were not standard drinks.  She said the husband would come home and not speak to her.  She was depressed and was not happy since the marriage.  There was never any money.  She drank as she was emotional.

1. The mother was taxed with her proposed expenditure of $700 a week on rental and said that she was looking at a property in (omitted).  She needed three bedrooms.  She had lived in (omitted) for 28 years.  She was comfortable in (omitted) and the children were born there.  When it was put to her that she could obtain such accommodation for $400 to $500 a week she said these were really old houses.  She said she could not afford to rent anything and she wanted spousal maintenance of $1500 per week.  The husband used to give her $950 a week but he cut this to $500 and removed her credit cards as well. 

2. The mother was cross-examined about the withdrawal of $100,000 from the husband’s superannuation in March 2015.  It was put to her that this was after tax debts had been ascertained.  The wife said she did not know.  She said the husband lied about his super.  She agreed separation took place in about 2014 and has occurred under one roof since August 2014.  The final separation was in November 2014.  She did not understand about tax.  In March 2013 the husband asked her to borrow $100,000 for tax but she refused to sign the documentation.  She had no idea about taxation.  She said she would ask but the husband would not respond.  He had always worked upstairs and took all his records when he left.  He took all the mail.  She said she looked at statements that came through the mail for the family trust because these were not those of the husband.  This answer was given with conviction and I accept it.

3. It was put to the wife that of the $100,000 withdrawn from the husband’s superannuation in 2015 $80,000 was paid to tax.  The wife said that the husband told her he spent $80,000 in satisfying a GST liability but she did not accept this or, indeed, anything that the husband said.  When shown (bank omitted) records (exhibit R2) consistent with such payments she stuck to her denial.  She said she did not understand.  She said the husband had told the superannuation fund he had retired (as we shall see that assertion was, in fact, correct).

4. The wife said the husband forged her signature on a document in 2009, being annexure A to her affidavit sworn 26 February 2016.  She said she knew nothing about the $60,000 referred to in that application.  She said the mortgage was very high and that they needed a car but she refused to sign.  The husband did this behind her back.  $20,000 of this sum went into her bank account in a term deposit and $38,000 was used to buy a (omitted) car.  This proved to have faults and was replaced.  It was held through the husband’s business.

5. The wife denied that the husband had been good to her and her family.  She said he was okay before the marriage.  He was her cousin.  He sponsored her family to come to Australia and her mother had lived with them for 17 years.  Her father was a (occupation omitted) but the husband had not helped her to study (omitted).  She said there was a really bad situation between her and the father’s family and him as well.

6. It was put to the wife that the husband said that she was the subject of violent rages and abuse of him.  She denied this.  She said she was not angry, “You go a long time.  Then you get angry.  Everyone does when upset.”

7. When cross-examined about the incident on 15 July 2014 the wife became argumentative and volatile.  She said he was ironing.  She went upstairs and went down and up again.  She was angry at the time.  He raised the loudness of the music and ignored her which made her angry.  She wanted to ask where they were going.  She said she grabbed everything and threw it downstairs.  She said she did not know what had happened but she had not even touched him.  I accept that latter assertion which was given with conviction.  The police were called and the husband told them that the wife had slapped him.  A neighbour also came.

8. The wife said that the husband was always telling her to shut up (a matter elaborated in greater detail in her affidavit material) and she had started seeing Dr O in July 2016.  She needed to see someone as she was really sick. 

9. She said the husband never allowed her to buy anything.  There was no money for clothes or makeup.  She used credit cards. The husband cancelled the (omitted) and (omitted) cards in about 2014.  Those cards had been at their limit since 2010 because he had failed to pay.  She said she used the (omitted) card for petrol last month.  She also said that $500 goes towards dog food and other expenses each week.  She then gave details of the childrens’ private schools which I have already canvassed and the non-payment of the husband’s tax.  The wife then complained about a present that the husband had bought for a woman in (country omitted).  He had been to a French restaurant and spent in excess of $400.  She had still looked after the husband until July 2014.

10. The wife did not know if the husband had life insurance but accepted that he pays health insurance and car insurance, although no longer for X.  Although the wife was aware that the fees for private school are very substantial she said she did not know that the parties were living beyond their means.  She confirmed that the husband told her he wanted to borrow $100,000 in March 2013 but she did not understand why.  He always prepared spreadsheets but she had not seen the one counsel put to her.  She refused to sign the documentation in 2013 and told the husband to talk to the Taxation Department and try and sort it out.  The wife said it was not her business and not her debt.  When it was put to her that the non-payment of the ATO debt might lead to the husband’s bankruptcy the wife responded, “What can I do?”

11. The wife was further cross-examined in some detail about her alleged suspicions of the husband’s infidelities.  She accused him of having many affairs.  It is sufficient to say that this evidence was entirely unconvincing and it is not necessary to deal with this generalised assertion further.  When it was put to her that the husband denied having a girlfriend in (country omitted) and that this person was a work colleague he had not seen since 1986 the wife said she did not know.  The wife said that the husband’s trips to (country omitted) were not for work and accused him of being a liar. 

12. The wife was cross-examined about the estate of the husband’s father who died in 2015.  She confirmed that her husband has two other brothers.  When it was put to her that a property in (omitted) had been sold and that the $42,000 share that the husband received had been applied to tax, the wife said she did not know if this was the case.  The wife was cross-examined about her assertions that the husband had property in (country omitted).  Although she responded that she was aware that this was the case because she was the husband’s cousin I found this evidence entirely unconvincing. 

13. There was no re-examination.

The Evidence Of The Husband In-Chief

1. The husband adopted his affidavits and financial statements as true and correct.  When asked why he had not paid tax he said he worked seven days a week at (company omitted) and he started his own company in 2009.  He had to work long hours.  X had been ill and the resultant stresses had not given him time to do his tax.  He knew tax was an issue by 2011 but X required further surgery.  Everything came to a head at the beginning of 2013.  The parties always had money issues and were always short.  Loans were taken against the house accordingly which he said were discussed with the wife throughout.  He said that as he earned more they spent more.  He tried to obtain a loan of $100,000 and the $12,000 overdraft in 2013 but the wife refused security.  He gave her papers to sign but she had not agreed.  He went on using credit cards instead.

2. The husband submitted exhibit R2 showing payments of over $80,000 to the Tax Department taken from the $100,000 withdrawn from his superannuation.  He said he received $42,000 from the sale of the (omitted) property that had previously belonged to his father (at least in part).  He said the ATO had told him to pay as he went and had to use the $40,000 for that.  He said his father had died in 2015 and he obtained one-third of the estate.  He had no knowledge of his brother’s dealings.  He had since learnt that he owns one-third of one-third of a property in (omitted) and one-third of one-eighth of a property in (omitted).  He values these at an estimate of $52,000 although they are not immediately realisable.  He is living at a friend’s place but is not there long term as his friend will return in December.  He has not re-partnered.

The Father Under Cross-Examination

1. The husband accepted that he was not an innocent victim and accepted that he, of course, was in part to blame for the current situation.  He said he asked his accountant to start preparing tax returns in 2013 and submitted his expenses in the tax years 2010 to 2013 in July of that year.  The avalanche occurred in 2014.  When it was put to him that he lodged a BAS on 31 December 2013 the husband said the ATO had demanded outstanding GST.  His personal returns were not, however, lodged.  This was at his direction.  Company money goes through the trust and money comes to him as a result.  Returns were filed for the company, (company omitted), but other returns could not be lodged because he could not pay.  He was ordered to lodge tax returns by the court in February 2016 and those to 2013 were already completed at that time.  He told the accountant to prepare his personal tax returns for 2014 and 2015 tax years in 2015.  The husband accepted that the accusations of adultery were serious.  He did not quite agree with Dr O’s report because the wife knew the amounts of tax that were due.

2. The husband denied forging the wife’s signature to borrow $60,000 in 2009.  It had been signed in front of X and he had had to leave it with the wife for a week before she signed it.  I should interpolate and deal with this aspect of the evidence at this point.  Not only do the signatures in annexure A to the wife’s affidavit seem to me, as a matter of ordinary impression, to be remarkably similar, but the husband’s evidence on this point, as indeed on most others, was given with conviction and I believe him.  He did not forge his wife’s signature.

3. The father was cross-examined about his statement of financial position, part of annexure A to the wife’s affidavit.  This showed cash assets of $96,000.  The husband asserted that this was in part superannuation and the surplus had been used for school fees and all other expenses.  I accept that answer. 

4. The husband was taken to exhibit A1 being the records whereby he withdrew the money from his superannuation.  He said he had used $100,000 for GST in two quarters of approximately $11,000 and $70,000 each.  When it was pointed out to him that he had completed the eligibility section by clicking on the dot point that suggested that he had ceased employment and had retired (as is indeed the case) he said he made a mistake.  He clicked on 55 and retired which was wrong.  This is not an answer I am prepared to accept.  The husband well knew that he did not meet any of the eligibility criteria set out in the document and chose the one most convenient to him.  He undoubtedly wittingly misled the superannuation fund to obtain funds that he desperately needed.  The husband impressed me as a highly intelligent, articulate man and the suggestion that he simply made a mistake because he was upset after the July 2014 incident, as he asserted, is simply unbelievable and I do not accept it. 

5. The husband confirmed that he still has income protection and, more particularly, has life insurance.  The beneficiaries of the life insurance (presently over $900,000) are his children.

6. The husband was asked about a $600 expenditure at (omitted) on 3 July 2016 and said that this was a purchase of a watch for Y’s boyfriend for his 21^st.  He said, “I am stupid with money where the kids are concerned.”  As with the wife’s similar concession I accept that this is the case.  Indeed, it is apparent from the cross-examination that he has made numerous payments on his daughter’s behalf of recent times. 

7. The husband said he was weak in controlling the money and just gave in.  He said that the parties were under financial strain because of the wife and that both of them were responsible.  He said if he had been strong enough it would not have come to this. 

8. The husband was cross-examined about the incident in July 2014.  He denied turning the volume up when the wife wanted to talk.  He further denied that his family had been unpleasant to her. 

9. When cross-examined about the allegations of family violence allegedly perpetrated by him on the wife the husband said he never even slapped her.  He said when the wife was in a rage she would slap herself extensively.  He had never slapped her.  15 July 2014 was the first time she had actually hit him.  This was accompanied by foul abuse.  She hit her face multiple times.  He had never hit the wife’s mother. 

10. Once again I would interpolate.  Men frequently deny family violence in cases before this court.  Indeed, in my 10 years on the bench I cannot immediately recall an unequivocal admission.  In this particular instance, and very much contrary to normal experience, I entirely believe the husband.  Matters of demeanour have to be approached with caution but the allegations of physical violence in this case involve two persons, both of whom gave extensive evidence before me.  As I find the husband was being palpably truthful when he denied family violence.  He was also palpably truthful in his account of the wife hitting herself when agitated.  The wife herself concedes that she was annoyed on this occasion.  She also conceded that she was angry from time to time. 

11. The husband said he had been to the GP for help because the parties could not communicate and he had referred them to a Dr P.  They saw Dr P but the wife did not wish to continue whereas the husband did.  He said the wife wanted to argue but he would walk away.  He denied keeping all documents in a locked bag as the wife asserted and denied hitting her with a cord nor did he laugh at her.  In short he denied all the wife’s extensive allegations of abusive or insulting behaviour.

12. He said there were occasions when they did not speak.  He said “under pressure I like solitude and she likes engagement.”  He would speak in English and she would speak in (omitted).  He said that he would say, “You must be crazy about this”, but this was not meant to be insulting.  I do not accept that answer.  He undoubtedly called the wife crazy from time to time.

13. The husband said that the wife had credit cards which were all maxed out.  He said he had paid $48,000 in PAYG this year.  Every quarter he has to pay $16,000 and he also has to pay GST.  He will do his tax over Christmas.  He travels to Canberra each week and does not have time at the weekend. 

14. The husband confirmed that the spreadsheet, exhibit A2, had been prepared by him to explain finances.  He had produced others when the wife required it.  He had taken her through it.  He did not produce other spreadsheets until 2014.  Exhibit A2 was produced in 2010 and revised in 2013.  He had not been able to prepare his tax returns because of emotional and work related stress.  He was taken through his tax returns.  He owed $9654 for the 2008 - 2009 year.  In the 2009 - 2010 year he owed $17,603.  In 2010 - 2011 he owed $66,710.  In 2012 he was initially assessed for $51,280 but this was subsequently, in February of 2016, revised to $231.  In 2012 - 2013 he was assessed as owing $332.  In 2013 - 2014 he was assessed as owing $60,832.  In 2014 to 2015 he was assessed as owing 60,245.  His tax assessments were tendered as exhibit A3.

15. The husband was examined about the nature of his work but in my view nothing turns on this.  I have already explained that the husband is likely to continue to earn earnings at his current level for the foreseeable future.

16. Further cross-examination about the husband’s financial statements and what is likely to occur after the matrimonial home is sold did not, in my view, take the matter further.

17. The husband said he had not gone to (country omitted) for personal reasons.  He has a friend, Ms T, whose birthday is on (omitted).  On 1 December 2014 he bought a pendant for $870 for Ms T.  He had left Australia on 5 December 2014 and this was hardly coincidental.  He had two trips to (country omitted) in 2014 to 2015.  He had been to restaurants there for business meetings.  His client was not paying and he was trying to obtain a partnership.  The bill on 10 December 2014 was a business meeting.

18. It’s sufficient to say that while the husband’s relationship with Ms T may be somewhat more intimate than he is prepared to concede, a matter about which I am not able to arrive at a final conclusion, the amounts that he has spent on her have been trivial.  The restaurant expenses were clearly business expenses.  The business trips were clearly business trips.

19. Re-examination did not take the matter further.

The Evidence Of Dr O

1. Dr O adopted her affidavit as true and correct.  She noted the treatment of the wife was ongoing.  The wife suffers from mild to moderate depression but is responding to therapy.  She expected to see the wife for approximately six months once a fortnight. 

2. It should be noted that Dr O’s report purported to make a finding that the wife had been the subject of significant domestic violence and that she would be of relatively good prognosis if she were financially supported to restart a new life and perhaps some education or employment training.

3. Under cross-examination Dr O confirmed that she first saw the wife in July 2016 and had seen her twice before providing the report annexed to her affidavit.  The presenting history was based on what the wife told her.  She took note of the GPs notes but had not rung the GP.  The wife had told her she had seen two other psychiatrists during the marriage but could not say if one of those was Dr P.  Her opinion about the wife being a victim of domestic violence was based on her last eight years of work and her 30 years of experience.  She had not known that X had been ill but knew there were issues with the husband’s family.  She knew that the husband had been employed at all times in (occupation omitted), as an (occupation omitted), with a good income.  The wife had not been aware of financial pressure.

4. Dr O was cross-examined about the wife’s alcohol intake.  She had recorded that the wife drinks alcohol four to five glasses of standard drinks of wine or beer per day.  She was of the view that a woman who drank that amount of alcohol would definitely show deterioration in liver function testing which the wife had not experienced.  When she was challenged as to her expertise to make that observation Dr O pointed out that she had trained as a GP and had sufficient medical expertise to make such an observation.

5. Dr O said that financial support would be good to help the applicant on her way.  It often takes a woman such as the wife a long time to take control of her life.  She had, after all, been a homemaker all her life. 

6. In re-examination Dr O confirmed that her consultation fee is $215 for a 45 minute session.  She discounted the wife substantially and the Medicare rebate is 65 per cent.

Findings About Credit Of The Witnesses

1. I have already made some scattered comments about certain particular aspects of the evidence.  In broad terms the wife was not, unfortunately, an impressive witness.  She was clearly tense and nervous and I give full credit to the anxiety that an appearance in court in a language in which she is not wholly fluent must have presented to her.  She volunteered information about the increase in payment to Y of recent times and this was to her credit.  Nonetheless as her evidence continued it became apparent that she has a profound antipathy towards the husband and tends to exaggerate.  As I indicated she became argumentative and volatile when discussing the 15 July 2014 incident, and at various other occasions in her evidence her answers were unresponsive and unsatisfactory.  Given that I roundly reject her florid accusations of physical violence, which stood at the forefront of her case, it is apparent that I am by no means entirely convinced that she was accurately recounting events.

1. Although there are some aspects of the husband’s evidence that I have not accepted (most particularly the obviously untruthful assertion about how he obtained his $100,000 in superannuation) he was in the main a credible, calm and responsive witness.  He remained effectively unshaken in cross-examination.

2. Dr O was a careful and considered witness giving evidence, in my opinion, within her area of expertise, subject to one important qualification.  While no doubt Dr O has worked with women who have suffered family violence over a protracted period of time, it is for the court to make findings of fact.  As the husband’s written submissions correctly assert, it is unsurprising that she has accepted the history given to her by the wife.  I am not bound by her opinion and, indeed, as I have made plain I do not accept the wife’s evidence, and therefore Dr O’s evidence, in this regard.

Findings On The Facts

1. These findings, of course, are only necessary to deal with those matters that are not agreed or otherwise uncontroversial.  I have made it plain that I do not think that the wife was the subject of physical abuse by the husband.  That, of course, in large part disposes of the Kennon and Kennon [1997] FamCA 27 (“Kennon”) case that the wife opened.  It is clear that the wife left all financial matters to the husband.  I strongly suspect he was, indeed, controlling in the sense that he wanted to know where money was going.  Nonetheless the wife on her own case had the use of credit cards for a substantial period of time and was given $20,000 to use as she wished.  As is so often the case, the truth of the matter lies somewhere between the parties competing versions.  It is understandable that the husband was concerned about money because, unlike the wife, he knew from at least about 2011 onwards that he was not paying tax that he would inevitably be required to pay and that he was spending all his money.  In these circumstances a certain stringency with money is scarcely surprising.

2. The husband did from time to time belittle the wife with remarks about her being crazy and the like but these were nowhere near as much as the wife asserts.  It is, of course, impossible to say exactly to what extent this attained but I should make it plain that it goes nowhere near the range that might otherwise satisfy the “Kennon” point.

3. Contrary to the wife’s position there is no property in (country omitted) that the husband owns or even indirectly controls.  I accept his evidence that the business referred to is run by an uncle and aunt and is not his.  There is no land in (country omitted) available to the husband either.  His share in his father’s estate, not already dispersed, is worth $52,000, and although it is not immediately realisable the husband’s concession that it be included in the pool is one that I endorse.

4. There is no doubt that the wife is not well.  Her English is imperfect.  She has no formal qualifications.  The suggestion that she might in some fashion be able to work as a (omitted) is far-fetched.  On any view of the matter her employment prospects are uncertain.

5. Any other areas of disagreement will be dealt with when I come to the issues of contribution and the pool. 

6. Having thus addressed the facts we may turn, at last, to the standard methodology.

Stanford v Stanford – Should There Be A Property Adjustment

1. This is one of the many cases which reference was made in Stanford v Stanford [2012] HCA 52 where the parties both desire that there be a property adjustment, their affairs are now being dealt with on a completely different way to that in which they were dealt with during the relationship and it is immediately apparent that the court should make a property adjustment as the parties desire.

The Pool

Assets

·Property A, $1,500,000.

·(omitted) (wife’s car) $10,000.

·(omitted) car (husband’s) $24,000.

·Husband’s interest in the estate of (father’s name omitted), $52,000.

Liabilities

·Mortgage, $790,000.

1. The above matters are not subject to disagreement (save that I have already dealt with the husband’s interests in his father’s estate).  Outstanding issues raised between the parties include, on the wife’s case, the withdrawal of the $100,000 from superannuation in March 2015.  In my view this sum should not be taken into account in the pool.  It has been fully dissipated in paying tax or other perfectly reasonable expenses. 

2. The husband seeks to include credit card debts of approximately $70,000 from various credit cards.  There is little evidence about these credit cards. The most recent evidence (father’s affidavit and financial statement both filed 6 October 2016) put the figures at about $42,000. The father’s financial statement filed 5 November 2015 estimates at total credit card debt of $26,500. No independent evidence to support the father’s various assertions as to the quantum of credit card debt have been filed. Virtually no cross-examination took place about these matters. Doing the best I can in this sparse evidentiary landscape and accepting that the credit cards appear at least in part still to be used by the mother (see paragraph 23 above), I will accept the father’s 2015 Financial Statement as a concession against interest. It seems clear that the vast bulk of post-separation credit card use has been by the father. Accordingly $26,500 will be paid to the father towards credit card debt. 

3. There is further a dispute as to not only what should happen about the husband’s tax debts but also as to how much they are.  As will be seen from paragraph 42 above the taxation liabilities that had accrued by the time of separation (i.e. up to 30 June 2014) are approximately $155,000 (rounded off).  Given that separation really occurred, as I find, on 14 July 2014 (the wife’s evidence was that she had continued to cook and the like for the husband from October 2013 up to that point but not thereafter as I understand it) that figure, in my view, represents a sufficiently close and fair approximation of the tax debt that had arisen during the relationship.

4. The question of how tax debts of this order should be addressed has been considered in terms by the Full Court of the Family Court in Trustee of the property of G Lemnos (a bankrupt) v Lemnos (2009) 41 Fam LR 120 (“Lemnos”). A lengthy extract from the judgment of Thackray and Ryan JJ in that case at [240] - [246] is set out verbatim in the written submissions of the respondent. It should be noted that Coleman J, the other judge constituting the Full Court, arrived at the same conclusion as the plurality but for different reasons which did not touch directly upon the issue upon which this case is concerned.

5. In Lemnos the judge at first instance had allocated the entirety of tax debt, including interest and penalties, to the husband pursuant to the so-called waste principles enunciated in the case of Kowaliw and Kowaliw [1981] FLC 91-092. It is not necessary to set out the passage from the judgment of Thackray and Ryan JJ because it speaks for itself. I note that at [241] the plurality accepted the trial judge’s finding that the husband had been reckless and negligent in the way he had completed his income tax returns and that the wife had not been complicit. Nonetheless the plurality was of the view that this was not enough in itself to make the husband solely liable for those portions of the tax that accrued during the relationship that would have been payable if he had completed his taxation returns properly. The plurality noted that the husband in that case’s actions were not designed to diminish the value of the matrimonial assets, a finding that I would make here. The plurality quoted from Johnson v Johnson (1999) 26 Fam LR 475 (“Johnson”) at [20.5] – [20.6] where the Full Court, Ellis, Kay and Dessau JJ said:

   In our view the fact that the wife was or was not involved in the tax avoidant process which may lead to the imposition of penalties was only one consideration that his Honour needed to weigh up when determining liability for the penalties as between the parties. The benefits indirectly gained by the wife in having the pool of assets otherwise increased was a result of the availability of funds which would otherwise have been paid out in tax also have to be considered.

   In the context of an examination of 20 years of financial dealings by the parties, which dealings were almost entirely within the province of the husband, in our view, unless there were compelling circumstances to the contrary, a just outcome demanded that the wife take the good with the bad.  Whilst there is a sense of culpability about the penalties, they represent no more in this case than an outgoing incurred in creating the asset pool.

6. In Lemnos the plurality continued at [245]:

   The views expressed in Johnson relate to allocation of responsibility for income taxation penalties.  Although in the instant case it is accepted the husband was “on a frolic of his own” we do not accept that the wife’s lack of knowledge or complicity in the husband’s wrongful deductions is determinative of whether she should ultimately share responsibility for the payment of primary taxation on his income earned during the marriage.  In our view, to adopt their Honours’ description, the proposition that spouses should generally “take the good with the bad” has even more force when applied to allocation of responsibility for primary taxation.

7. It should be noted that the plurality observed that the principle identified in Johnson was not of universal application. 

8. In this case the observations of the Full Court are, to all effects, directly on point even though the facts in Lemnos were somewhat different.  The reality is that if the husband had paid his tax when he was supposed to there would be $150,000 not available for distribution between the parties.  The husband has plainly spent his income as it came in and the wife has, to an extent, assisted him in that process.  While she probably had no knowledge of the taxation situation before 2013, she was, or should reasonably have been, aware by then that things were wrong.  In my view she has had the benefits of the husband not paying tax in that the funds have been spent on the family generally, including her, and she cannot now escape responsibility for the primary tax that should have been paid.  $150,000 is a rounded figure.  It seems a fair way to deal with the matter and this sum will be paid directly out of the proceeds of sale of the property.

9. This leaves for consideration the question of the penalties and interest.  As the judgment of the plurality in Lemnos makes clear, the mere fact that the wife was unaware of these matters does not mean she automatically escapes liability from them. Each case must be considered in the light of its own particular facts and circumstances.  In my opinion a relevant consideration is the size of the pool when the property is sold and the parties’ likely ongoing circumstances.  I will return to this matter.  It is sufficient for present purposes to say that for the reasons which will follow the husband should pay all of the tax liabilities other than the $150,000.  In saying this, I am conscious that the present outstanding total may well be the subject of further negotiation and possible reduction in any event.

10. This then disposes of the question of what the pool is. 

Contributions

1. It is clear beyond doubt that since the marriage the husband has been the breadwinner and the wife has been the homemaker and carer of the children.  The husband has not sought to put the fact of the wife’s failure to work against her and in the circumstances where he has clearly consented to this outcome that is a proper concession.  The marriage lasted for 25 years and involved the bringing up of the two children.  It is in these circumstances I have no hesitation in evaluating their respective contributions as of equal weight.

The Future Needs Issues

1. The husband submits that the wife will be able to work in the future.  He points to the advice from Dr O.  That relevantly said that the wife would require ongoing treatment, for six to twelve months, and had a relatively good prognosis if she was financially supported to restart a new life. The husband has proposed orders that would provide for financial support for the wife to enable her to retrain although the orders do not suggest in what fashion or field that would actually occur.

2. In my view the wife’s future employment prospects are bleak.  First, she will have to recover from her depression and that will take, at best, six to twelve months.  Second, even assuming her mental health, as one would hope, improves significantly, what is her situation then?  She has no formal qualifications.  She is not a graduate.  She has not worked in her adult life at all.  She is not by any means completely fluent in English.  From what she said about living in (omitted) it is plain that she aspires to a superior or, at least, a comfortable lifestyle.  While that is an understandable position it is one she may well have to revisit.  She will have to cut her coat according to her cloth.  She will in all probability have to reconsider the, in my view, unduly generous way in which she treats her children.  I suspect she will simply not have the money to do so although equally she is plainly so devoted to her children that such parsimony might be thought unlikely.

3. On any view of the matter, and in any event, she will not have a fortune to live on.  She will be eligible for social security benefits because she will cease to be, as I think is agreed, a beneficiary of the trust.  Nonetheless, the pool as it will emerge being some $560,000 at most (she will have legal fees to pay out of this also) is not munificent. 

4. The same, of course, is true in lump sum terms for the husband.  Nonetheless he will continue to earn approximately $250,000 a year for some years yet to come.  Although retirement age is at 67 his business in (business omitted) does not involve, so far as I understand it, manual labour and there is nothing to suggest that the husband’s age is of itself any inhibitor to him obtaining work. 

5. The husband is in unexceptional health and there is nothing to suggest that there is anything to stop him continuing to work, in effect, for so long as he wishes.

6. These kind of balancing considerations are in no way easy to evaluate.  Necessarily they involve a value judgment.  In all the circumstances, in my view, there should be a loading of some 30 per cent in the wife’s favour in this regard.

The Wife’s Kennon Argument

1. I think I have dealt with this sufficiently above.  The factors I find go nowhere near the kind of aggravation of the difficulty of the wife’s role in making her contribution to justify an adjustment in her favour.  That is what Kennon is about and it is not the case here.

The Father’s Inheritance

1. While the $42,000 inherited from his Father’s estate has been spent on tax, and indeed the husband still has tax obligations he has to meet on an ongoing basis, the $52,000 which I have accepted a concession against interest, is something it is reasonable to suppose the husband will be able to access at some point. This is a further consideration in support of the adjustment as I have made it.  This being an asset derived effectively post-separation and owing nothing whatever to the wife’s contribution should be retained wholly by him. 

Just And Equitable

1. In my opinion the division of the parties’ tax and the overall outcome of an 80/20 split of the net proceeds of the sale of the matrimonial home, (the cars being effectively irrelevant) in the wife’s favour is, indeed, just and equitable in the circumstances.  This is a peculiar case involving a very fact specific set of circumstances.  The wife will be left with a modest amount of cash with which to seek to purchase a property and otherwise re-establish herself.  The husband will have an additional $100,000 or thereabouts to set against his other taxation liabilities.  If the interest and penalties remain in toto he will have to borrow approximately $200,000 to discharge his taxation debt.  This, in my view, is a relevant consideration to the overall outcome in this case. In light of the Full Court decision in Trask v Westlake [2015] FamCAFC 160, I should make it clear that any alteration in either the tax liabilities of the sale price of the home should lie where it falls.

Spousal Maintenance

1. This leaves the question of the applicant’s spousal maintenance claim.  She seeks spousal maintenance in the sum of $1500 per week.  The husband has proposed a payment of $800 per week for a period of one year but this proposal was in the context of the payment out of all of the taxation liability from the sale of the matrimonial home together with 35 per cent of the pool to him.  In the circumstances of the adjustment as I have made it, in my view, it is inappropriate that the wife receive additional spousal maintenance.  I have done my best to make the cut as clean as I can for both parties so that they can get on with their lives.  While the wife may need support for a period of time, she simply cannot expect in her new circumstances to live the sort of lifestyle she has lived in the past.  In my view the division of the property pool as I have found it, and ordered it to be, is, in my view, a fair compensation for all of the wife’s claims including that of spousal maintenance.  How she elects to apply the sums that these orders will give to her is a matter for her.  She will have more than enough to retrain should she wish, but if she wishes to do so out of the funds she thus receives she will simply have to adjust her expectations in relation to accommodation.  I repeat, in my view, taken overall the orders I propose are a just and equitable resolution of all matters between the parties.  They have the additional and obvious advantage that they do not leave the wife at risk in the event for some bona fide reason, the husband is unable to continue any spousal maintenance on an ongoing basis that might be ordered. 

2. I note that the parties are agreed as to a number of matters including the removal of the wife as a beneficiary of the trust and they also agree that there should be a superannuation splitting order to equalise the parties superannuation.  Those orders will be made. 

3. Finally, simply for completeness, I should say that the wife’s complaints about the husband’s disclosure are not in my opinion valid.

I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date:  15 December 2016