Zalitis & Zalitis
[2025] FedCFamC2F 474
•11 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Zalitis & Zalitis [2025] FedCFamC2F 474
File number(s): SYC 5331 of 2022 Judgment of: JUDGE LIVERIS Date of judgment: 11 April 2025 Catchwords: FAMILY LAW – PROPERTY – both parties seeking an alteration of property interests after a 38 year marriage – whether the husband made full and frank disclosure – whether addbacks should be made – whether the husband engaged in wastage – allegations of coercive control and financial abuse – whether a Kennon adjustment should be made – whether a Jones v Dunkel inference should be made due to the husband’s failure to call his accountant to give evidence – whether the husband’s evidence is credible – just and equitable property adjustment orders made – whether an order for spousal maintenance should be made Legislation: Evidence Act 1995 (Cth) s 140(1)
Family Law Act 1975 (Cth) ss 4AB, 72(1), 75(2), 79(2), 79(4), 81, 106A
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Chapter 6
Cases cited: Adamson & Adamson [2014] FamCAFC 232; (2014) FLC 93-622
Benson & Drury [2020] FamCAFC 303; (2020) 62 Fam LR 1
Berfield & Berfield (No 2) [2024] FedCFamC1F 573
Blass & Blass [2022] FedCFamC1A 63
Carlson & Fluvium [2012] FamCA 32
Carswell & Tenson (No 4) [2024] FedCFamC1F 848
Clauson and Clauson [1995] FamCA 10; (1995) FLC 92-595
Dajani & Dajani [2025] FedCFamC1A 28
Dickons & Dickons [2012] FamCAFC 154; (2012) 50 Fam LR 244
Emmerton & Manwaring (No 2) [2024] FedCFamC2F 996
Jabour & Jabour (2019) 59 Fam LR 475; (2019) FLC 93-898
Jones v Dunkel (1959) 101 CLR 298
Kannis & Kannis [2002] FamCA 1150
Keating & Keating (2019) FLC 93-894
Kennon v Kennon (1997) FLC 92-757; (1997) 22 Fam LR 1
Koch & Kest [2021] FamCA 408
Kowaliw & Kowaliw (1981) FLC 91-092; [1081] FamCA 70
Mallet & Mallet [1984] HCA 21; (1984) 156 CLR 605
Martell v Martell (2023) 66 Fam LR 650
Mayhew & Fairweather [2022] FedCFamC1A 53
Omacini & Omacini [2005] FamCA 195
Oriolo & Oriolo (1985) FLC 91-653
Pickford & Pickford [2024] FedCFamC1A 249
Ramzi & Moussa [2022] FedCFamC2F 1473
RK & SK [2000] FamCA 1045
Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108
Trevi & Trevi [2018] FamCAFC 173 (2018) FLC 93-858
Weir and Weir (1993) FLC 92-338
Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447
Zubcic & Zubcic and Anor [2019] FamCAFC 168; (2019) FLC 93-918
Division: Division 2 Family Law Number of paragraphs: 289 Date of last submission/s: 12 September 2024 Date of hearing: 24 – 26 June, 25 October 2024 Place: Darwin Counsel for the Applicant: Mr Longworth Solicitor for the Applicant: Bartier Perry Counsel for the Respondent: Mr Havenstein Solicitor for the Respondent: Swifte Law ORDERS
SYC 5331 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS ZALITIS
Applicant
AND: MR ZALITIS
Respondent
ORDER MADE BY:
JUDGE LIVERIS
DATE OF ORDER:
11 APRIL 2025
UPON NOTING:
Definitions:
A.Suburb C property means the property situated at and known as 1 B and 2 B Street, Suburb C, NSW; folio identifier ….
B.Suburb C CBA loans means the following two loans from the Commonwealth Bank of Australia in the joint names of the parties and secured over the title of the Suburb C Property by the Suburb C Mortgages:
a.Loan account …70 …07; and
b.Loan account …70 …05.
C.P Bank loan means the business loan in the name of Mr Zalitis from the Commonwealth Bank of Australia bearing account number …00 …90 secured over the title of the Suburb C Property by the Suburb C Mortgages.
D.Suburb E Property means the property at D Street, Suburb E, Folio Identifier ….
E.Suburb C Mortgages means the registered mortgages to the Commonwealth Bank of Australia secured over the title of the Suburb C Property, dealing Numbers …96 and …63.
F.Suburb G property means the property known as F Street, Suburb G; Folio Identifier ….
G.Suburb G CBA loan means the Commonwealth Bank of Australia investment loan …73 in the sole name of the husband and secured by the Suburb G Mortgage.
H.Suburb G Mortgage means the registered mortgages to the Commonwealth Bank of Australia secured over the title of the Suburb G Property, dealing Number …51.
I.H Company means the entity H Pty Ltd.
J.Super Fund 1 means the Self-Managed Superannuation Fund known as Super Fund 1.
K.K Company means K Pty Ltd being the corporate trustee of Super Fund 1.
L.L Trust means the L Trust, the trustee of which is N Clinic.
M.N Clinic means the company N Pty Ltd.
N.The entities means H Company, K Company, L Trust and N Clinic.
O.Wife’s Motor Vehicle 1 registered in the name of H Company and bearing registration … currently in the wife’s possession and control.
P.Joint CBA Account means the Commonwealth Bank of Australia Smart Access account …21 …11 in the joint name of the parties.
Q.The Suburb C property listing date means the 43rd day after the wife’s non-compliance with order [2(a)] or such other date as the parties agree in writing.
THE COURT ORDERS THAT:
1.Within 28 days of the date of these orders the husband do all acts and things and sign all documents necessary to transfer to the wife the whole of his right, title and interest in the Suburb C property.
2.Simultaneous with the transfer of the Suburb C property, the following shall occur:
(a)The wife shall pay all sums necessary to repay the Suburb C CBA loans and discharge any of the Suburb C mortgages associated therewith.
(b)The husband shall pay all sums necessary to repay the P Bank Loan and discharge any of the Suburb C mortgages associated therewith.
3.Within 28 days of the date of these orders the following shall occur:
(a)The husband shall pay to the wife any arrears of monies payable by him pursuant to the interim spouse maintenance order made by SJR Neilson on 23 September 2022.
(b)The husband shall, in his capacity as director of H Company do all acts and things including the payment of monies to cause H Company to transfer to the wife, free of any impost, the wife’s motor vehicle and in complying with this order, the husband shall ensure that the consideration identified on the Notice of Disposal is equal to the value of the wife’s motor vehicle as recorded in the accounts of H Company as at the date of disposal.
(c)The husband and the wife shall do all acts and things and sign all documents necessary to cause the Joint CBA Account to be closed and the residual balance transferred to the parties:
(i)$10,579.30 to the husband; and
(ii)The balance to the wife.
4.Pending the husband’s compliance with order [3(b)], the husband shall cause H Company to pay, and in its default the husband shall be personally liable to pay, the following expenses with respect to the wife’s Motor Vehicle 1:
(a)Registration costs;
(b)Green slip insurance and comprehensive insurance costs;
(c)Servicing, maintenance and repair costs including but not limited to replacement tyre costs.
5.Within 7 days of the husband’s compliance with the last of orders [1], [2(b)], and [3] the wife shall resign as a director and office holder and transfer to the husband the whole of her right, title and interest in the Entities.
6.The husband shall indemnify and keep indemnified the wife with respect to any liabilities, whensoever and howsoever they arose arising from or related to:
(a)her being an officer holder or shareholder of any of the entities;
(b)the use by the wife of the wife’s Motor Vehicle 1.
7.For the purpose of order [3(c)], the wife shall have leave to provide a copy of these orders to any employee of the Commonwealth Bank of Australia.
8.Other than as provided for in these orders, the parties each retain all other assets and liabilities in their respective names, including their superannuation interests.
9.In the event that the wife cannot comply with order [2(a)] hereof before the Suburb C Property Listing Date, the Suburb C property shall be sold and to give effect to this order, the following shall apply:
(a)The wife is authorised by this order to act as trustee for the husband in respect to the sale of the Suburb C property and doing all things specified in the following orders [9(b)] to [9(h)] (inclusive).
(b)The Suburb C property shall be listed for sale with such real estate agent as is selected by the wife (“the Suburb C Agent”).
(c)The Suburb C property shall be listed for sale by private treaty or public auction as recommended by the Suburb C Agent.
(d)The wife shall retain a solicitor to act on the sale of the Suburb C property (“the Suburb C Solicitor”).
(e)The list or reserve price shall be such amount as is recommended by the Suburb C Agent in writing.
(f)That upon agreement being reached for the sale of the Suburb C property, the wife as Trustee for sale shall execute the contract of sale and all other documents necessary to complete the sale of the property including all transfer documentation forthwith upon its submission to her by the Suburb C Agent or the Suburb C Solicitor.
(g)That 21 days prior to the completion of the sale of the Suburb C property, the husband shall pay all sums necessary to discharge the P Bank loan.
(h)The proceeds of sale of the Suburb C property shall be paid in the following manner and priority:
(i)The Suburb C CBA loans.
(ii)Payment of the Suburb C agent’s commission and advertising or other expenses, if any, payable on sale.
(iii)Payment of the legal costs and outlays relating to sale.
(iv)The balance to the wife.
10.Except as specifically provided for by these orders to the contrary, each of the husband and the wife releases the other from all debts owing from one to the other.
11.Other than as otherwise set out in these orders the parties shall have the sole right, title and interest in any other property which is at the date of the orders in their possession title or name and they shall be solely liable for and indemnify the other against any personal liabilities.
12.The Parties shall do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
13.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders, then a Registrar of the Sydney Registry of the Federal Circuit and Family Court of Australia is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE LIVERIS
In 1981, Ms Zalitis was in her second year of a diploma, and was working at Q Hospital. There, she met Mr Zalitis, who was working at the Hospital.
They started living together in 1983, and were married in 1984. At the commencement of the relationship, neither party had any assets or liabilities of any significant value.
The parties separated on a final basis on 6 March 2021. They are not divorced.
Over the course of the marriage, the parties purchased, renovated and sold various pieces of residential real estate. In late 1994, they purchased 1 B Street, Suburb C. They initially leased the property, before ultimately demolishing the dwelling on it in 1998 and rebuilding a home in the following years.
1 B Street is a dual occupancy property. The parties moved into the home built 2 B Street in early 2001. After separation, they lived separately under one roof at 2 B Street. In late 2021, Ms Zalitis moved into the adjoining duplex property, at 1 B Street, where she continues to live. Mr Zalitis moved out of 2 B Street in late 2021, and he has lived in rental properties since.
In early 2016, Mr Zalitis purchased D Street, Suburb E, as an investment property. The property was purchased for $1.9 million. It was rented as a holiday rental property, with the proceeds applied towards the loan.
During the marriage, both parties worked as medical professionals. In 1985, Ms Zalitis completed her allied health qualifications and was a senior allied health professional at S Centre in Suburb R until the parties’ first child, Mr T, was born in 1992. Their daughter, Ms U, was born in 1996.
Ms Zalitis did not work in paid employment between 1992 and 2001, providing primary care to the children. She returned to work in 2001, working 12 hours per week at V Centre, where she continues to work on a part-time basis, earning approximately $70,000 per annum.
Between 1984 and 1991, Mr Zalitis completed post-graduate studies in health care. In 1991, he qualified as a medical professional, and started work in private practice. He completed his Masters in health care in 1997. In 2010, the parties bought W Street, Suburb G. The parties established N Pty Ltd, and Mr Zalitis started practice at N Clinic, at W Street, where he continues to work as a consultant medical professional, operating his practice through the company H Pty Ltd.
On 2 August 2022, Ms Zalitis applied for an adjustment of property interests. The application was made in urgent circumstances, after Ms Zalitis was notified by Mr Zalitis’ legal representatives on 20 July 2022 that he had caused D Street to be listed for sale by auction in August 2022. Interim orders were made on 5 August 2022 in respect of the application of any proceeds of sale.
A central issue in the proceedings is Mr Zalitis’ conduct during the relationship, with allegations of coercive control and waste being raised. His post-separation conduct, including his conduct in these proceedings, is also brought into question. Ms Zalitis’ application is that taking into account what each party contributed to the relationship and making relevant adjustments, an alteration of property interests with the result that she would receive 70% of the property pool and Mr Zalitis would receive 30% is just and equitable.
Against that, Mr Zalitis’ case is that the parties’ contributions were equal across the relationship, there may be a need to make a future needs adjustment and that when all adjustments are made, orders for Ms Zalitis to receive 52.5% of the property pool and for him to receive 47.5% is just and equitable.
Central to the determination of the competing proposals are the questions:
(a)Has Mr Zalitis made full and frank disclosure? A related question is whether an inference under Jones v Dunkel[1] should be made arising from his failure to call his accountant, Mr X, of Y Accounting Firm to give evidence.
(b)Has Mr Zalitis perpetrated family violence against Ms Zalitis? If so, a related question is has that conduct had an adverse impact on Ms Zalitis’ contributions to the acquisition, conservation or improvement of property, such that an adjustment should be made in her favour to reflect that fact?
(c)Has there been wastage by Mr Zalitis, in that did he act recklessly, negligently or wantonly with matrimonial assets, with the overall effect of reducing or minimising their value?
(d)Is Mr Zalitis’ evidence credible?
(e)Should an order for the payment of spousal maintenance be made?
[1] (1959) 101 CLR 298.
In determining these questions, s 140(1) of the Evidence Act 1995 (Cth) provides that the court must find a case of a party proved if it is satisfied that it has been proved on the balance of probabilities. In deciding whether it is so satisfied, subsection (2) provides that without limitation, the court is to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceeding and the gravity of the matters alleged.
IS IT JUST AND EQUITABLE TO MAKE AN ORDER ALTERING THE PROPERTY INTERESTS OF THE PARTIES?
Section 79(2) of the Family Law Act 1975 (Cth) provides that the court shall not make an order for the alteration of property interests unless it is satisfied that, in all the circumstances, it is just and equitable to do so. If the court determines that it is just and equitable for the property interests of the parties to be altered, s 79(4) sets out the matters that must be taken into account in considering what order, if any, should be made.
The court must identify and assess the parties' contributions within the meaning of ss 79(4)(a) – (c), and then take into account the matters set out in ss 79(4)(d) – (g) and 75(2), to the extent that they relevantly apply. Lastly, the court must consider the justice and equity of the actual orders to be made. The “overriding requirement” [2] is that the court shall not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
[2] Mallet & Mallet [1984] HCA 21; (1984) 156 CLR 605 per Dawson J at [10].
In Stanford v Stanford,[3] the High Court stated that the requirements of ss 79(2) and 79(4) should not be conflated. In this case, the parties have not lived together since 29 October 2021, following their separation on 6 March 2021. Since that time, there has not, and will no longer be, any common use of property. There are competing applications for orders altering each party’s property interests. In all the circumstances, and consistently with the observations in Stanford,[4] I am satisfied that this is one of the many cases where it is just and equitable to make an order under s 79 altering the property interests of the parties.
[3] [2012] HCA 52; (2012) 247 CLR 108 at [35] – [40].
[4] At [42].
HAS MR ZALITIS MADE FULL AND FRANK DISCLOSURE?
A party to financial proceedings is required to make a full and frank disclosure.[5] The duty of disclosure is absolute. The duty is a continuing obligation, relating to documents and any other information that is relevant to material facts.
[5] Oriolo & Oriolo (1985) FLC 91-653; Weir and Weir (1993) FLC 92-338; Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
A party’s failure to disclose goes to the heart of the court’s obligation to make orders that are just and equitable. In Kannis & Kannis,[6] the Full Court said:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude that the asset pool is greater than demonstrated. In those circumstances it might be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
[6] [2002] FamCA 1150 at [51].
In St John v St John (1979) 6 Fam LN N14, Hutley J observed:
… faced with the party whose affairs were tangled and who did not give the assistance within his power to disentangle them the trial Judge in my opinion was well entitled to simply take the view that it lies upon that party to devise means to comply with the order. If the burden is impossible, he cannot complain as he is the author of his own misfortune.
The adequacy of Mr Zalitis’ disclosure is a central issue in the proceedings, and one which Ms Zalitis says substantially affects the overall assessment of the credibility of his evidence. She contends that in some respects, Mr Zalitis has obfuscated and evaded in meeting his obligation to make disclosure, in a way that it is open to find was deliberate in some instances, and in others where it is open to consider that the failure was wilfully irresponsible, or showing such a disregard as to be impertinent. Ms Zalitis points to a number of examples, and the evidence given by Mr Zalitis at the trial, in support of these submissions.
Consent orders as to disclosure
On 23 September 2022, Senior Judicial Registrar Nielsen made consent orders that within 21 days, the parties will do all things necessary to instruct Y Accounting Firm to prepare and, if applicable, file with the Australian Taxation Office the financial statements and tax returns in relation to the L Trust, N Pty Ltd, H Pty Ltd and K Pty Ltd as trustee for the Super Fund 1, for the years ending 2018, 2019, 2020, 2021 and 2022, because they had not been done.
Super Fund 1 is the parties’ self-managed superannuation fund. The SMSF was established in mid-2007.
Mr Zalitis gave limited trial evidence about the consent orders. He said that the tax returns have been completed up until the end of 2022, but for the SMSF, because his accountant had to source a new auditor. In cross-examination, Mr Zalitis initially said that as far as he was aware, the financial statements and tax returns for all of the entities apart from the SMSF were up to date, including 2023.
He accepted that there are no financial reports for the SMSF for the 2016, 2017, 2018, 2019, 2020 and 2021 years, notwithstanding being aware of the consent orders, and being in court on the day they were made. The only financial statements produced for the SMSF were for the years ending 2012, 2015 and 2022.
When Mr Zalitis was asked about the entities the L Trust, N Pty Ltd, H Pty Ltd, and taken to the detail of financial statements and tax returns, he was unaware of some details, including discrepancies in key respects. He said that his cross-examination was the first time he was made aware of discrepancies such as rent sums received by the SMSF in 2021, and was the first time he was seeing financial documents, notwithstanding in some instances those documents being produced by him in disclosure.
Mr Zalitis said that he did not bother to read documents in detail, and that, “I am remiss in not having the time to look at detail – adequate detail. There is no doubt about that.” In the context of a detailed sequence of cross-examination about financial statements, tax returns, and bank documents, Mr Zalitis went on to agree that it cannot be taken with any confidence that he has comprehensively read the document to which his signature is put, notwithstanding being the director with supervisory control of the entities.
Mr Zalitis agreed that a reader of a document containing his signature could not be confident that he understood what was in it, nor that he took the requisite care to ensure what was in it was accurate. He could not answer yes or no to the proposition that when he gave an undertaking to a court, the court cannot be confident that he understood the undertaking.
The disclosure and valuation of the SMSF
Despite being aware that Ms Zalitis had alleged he had failed to comply with his duty of disclosure in these proceedings, there were errors in his financial statement dated 27 April 2024, which Mr Zalitis agreed, misrepresents the value of the SMSF.
The SMSF owns a suite at W Street and Lot 1, being a car park. Mr Zalitis gave trial evidence to this effect, but in cross-examination, he agreed that the SMSF owns a second car space at W Street, being Lot 2. He agreed that Lot 2 was valued at $100,000, and that the total value of the SMSF was $970,000, not $870,000 that he had claimed. In cross-examination, Mr Zalitis agreed that he has supervisory control of the SMSF. He held the cheque book for the bank account. Cheques required the signatures of both parties, but Mr Zalitis wrote all of the cheques. Mr Zalitis did not include Lot 2 when he gave evidence in his trial affidavit or in his financial statement.
The disclosure and valuation of H Pty Ltd
A further issue with Mr Zalitis’ approach to disclosure and valuation is in relation to H Pty Ltd. Mr Zalitis beneficially owns 99 of the 100 shares. Ms Zalitis owns the other. Both parties are directors of the company. Mr Zalitis conducts his practice through the company, and all professional fees are paid into it. The value of the company is a significant issue in the proceedings.
The most current financial statement for H Pty Ltd is dated 2022. Despite the many years of outstanding returns, the 23 September 2022 consent order designed to bring the entities to compliance, and the importance of the value of the company in these proceedings, Mr Zalitis has not prepared reports for the 2023 financial year.
On 16 May 2024, Ms Zalitis’ lawyers wrote to Mr Zalitis’ lawyers and proposed the appointment of a single expert to value the company. Albeit close to trial, the letter was not responded to.
The statement of financial position for the company as at 30 June 2022 for the company indicates the company has a total negative equity of $101,292.92. The negative equity for the company as at 30 June 2021 being indicates the same negative sum.
Mr Zalitis’ failure to prepare documents, and provide full and frank disclosure, has left Ms Zalitis and the court unaware of the value of the entity through which he conducts his practice, and generates his income. This failure is compounded by the significance of the value in the proceedings, and the fact that Mr Zalitis contends that the company has a value of $15,000. Ms Zalitis contends it has a value of $150,000.
Further, Ms Zalitis obtained under subpoena a profit and loss statement for the company for the 9 months as at 31 March 2023. Mr Zalitis submitted the profit and loss statement to the Commonwealth Bank of Australia in support of an application for finance to purchase F Street, Suburb G in 2023. When taken to it in cross-examination, Mr Zalitis’ was unable to speak to the document because he said “this is the first time I’ve seen this document”. He went on to say that he had not seen the material produced under subpoena by the Commonwealth bank at all. When it was put to Mr Zalitis that the document was produced to the Bank on his behalf, he said that he delegated that to his accountant, saying “ … all of this corporate stuff was subpoenaed, so I – I let him deal with providing all that information and disclosure.” Mr Zalitis agreed that he did not disclose the document in the proceedings.
Submissions as to disclosure by the parties
In her trial evidence, Ms Zalitis gave evidence in chief of requests for disclosure made between October 2021 and 15 November 2023. Her evidence is that in several instances, no response was made on behalf of Mr Zalitis, and in others, limited responses were made. Her evidence is that as a consequence of Mr Zalitis’ non-disclosure, she has issued subpoenas to financial entities and institutions.
Mr Zalitis did not give evidence in chief about these matters of disclosure, and timeliness. It was submitted on behalf of Mr Zalitis that he ought to have better explained issues in relation to his disclosure and financial arrangements. It was also acknowledged that he was “certainly slow” to respond to many of Ms Zalitis’ requests. However, it was contended on his behalf that his non-disclosure was not absolute, and many of the items on the Balance Sheet are agreed. Whilst not seeking to minimise his conduct in the proceedings in relation to disclosure generally, Mr Zalitis also draws a distinction between non-disclosure, and late disclosure. He says that in cross-examination he was honest against his own self-interest.
In my assessment, there are some difficulties with these submissions. Firstly, in my view they fail to recognise the extent of the disputes about items in the Balance Sheet, many of which are liabilities claimed by Mr Zalitis which are of significant value, and in respect of which there has been very limited if any evidence, and often very limited, if any, disclosure. It also fails to appreciate the significant limitations in ascribing a value to H Pty Ltd.
Mr Zalitis is an intelligent and educated man. He considers himself a truthful person. He understands the importance of truth, frankness and honesty, in affidavits and financial statements filed in legal proceedings, but also with respect to documents more broadly, including tax documents, banking documents, and his interactions with authorities such as the Police. In his oral evidence, he said that he read his affidavits carefully, and would not want them to misrepresent the truth, in the evidence that is given in them. He told his lawyers everything that he thought was important in the preparation of those documents.
In cross-examination, Mr Zalitis gave evidence that he had read the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), and was aware of his disclosure obligations. However, inconsistently with this evidence, Mr Zalitis also said in cross-examination that he had not read documents, including property valuations prepared by Z Valuations in the proceedings, affidavits, and legal correspondence, because he is an extremely busy professional. He made assumptions that documents were “more of the same”.
Having read the Rules with respect to his undertaking as to disclosure, and being aware of the need to give full and frank disclosure, Mr Zalitis said to the best of his ability he complied with those duties.
I do not accept the submission made on behalf of Mr Zalitis that rather than make overall findings of credit, the court might consider it more useful to have regard to the questions of disclosure as a factor under s 75(2)(o), and when determining the disputed items in the Balance Sheet.
I accept that in some instances the delegation of tasks to accountants and lawyers may be an appropriate explanation for conduct. This is particularly so given Mr Zalitis’ evidence that he has limited knowledge of accounting and taxation issues, and that he relied on the advice he received in relation to those matters. I accept that in this respect, there is nothing unusual, suspicious, or sinister in a company director relying on professional advice to guide the decision-making process.
However, Mr Zalitis’ evidence, and the deficiencies in his conduct, go much further than this. Mr Zalitis gave an undertaking as to disclosure on 14 September 2023. In cross-examination, he said that he understood all of the components of the notice in the undertaking, and that he wouldn’t have signed the document if he didn’t. He said that he has complied with his undertaking of disclosure, as far as he has been able to, to the best of his ability.
I am unable to accept this evidence. Mr Zalitis was aware that over two years, Ms Zalitis was repeatedly requesting disclosure from him in relation to his financial affairs. He was aware that over that time, Ms Zalitis was repeatedly complaining to him about the asserted failure to make adequate disclosure. In cross-examination. Mr Zalitis also accepted that together with his failure to make disclosure, Ms Zalitis was also complaining that he was making unilateral decisions and use of the property in the matrimonial asset pool.
Mr Zalitis said that he was made aware of, and seen letters from Ms Zalitis’ legal representatives, “on and off, yes”. The depth of Mr Zalitis’ non-disclosures is significant. It extends not only to financial documents, but documents going to matrimonial assets over which there was a known dispute. For example, Mr Zalitis agreed that he did not disclose the agency agreement for the sale of D Street Suburb E, notwithstanding that from mid-June 2022 to 20 July 2022, he did not have any discussions with Ms Zalitis about wanting to sell that property, and being aware there was a dispute about how that property should be dealt with.
I am not satisfied that the evidence enables me to find that the asset pool is complete. Mr Zalitis’ conduct has centrally contributed to that uncertainty. As a result of Mr Zalitis’ failure to comply with his disclosure obligations, I am unable to reliably assess and ascribe a value to H Pty Ltd. I am also unable to reliably assess other claims and disputes between the parties about items in the Balance Sheet.
As a result of Mr Zalitis’ failure to comply with the 23 September 2022 consent orders, I am unable to make a proper assessment of the activity within the SMSF, or the value of it.
In Tate & Tate,[7]the Court said:
The interlocutory orders made by the trial judge by way of case management, were no less orders of the court. They were entitled to full and punctilious obedience. This court has a duty to order its business with justice according to law. The Rules of Court are there to assist in the fair and timely preparation of matters for expeditious trial. Litigants in such matters also have the duty of full and frank — and we would add prompt — disclosure of relevant financial matters. Against that background the trial judge's specific orders achieved an even greater potency. They did not have to be expressed as “unless” or “guillotine” orders: they were interlocutory orders of a judge of a superior court of record and to be obeyed as such according to their terms, which included specific times for performance.
It is not for litigants, appearing in person or otherwise, to pick and choose which orders they will or will not obey, or when they may condescend to comply with them. Such an attitude, amply evidenced in this matter, if adopted, brings its own nemesis. That is not only because it is contemptuous of the court's orders. It is also because it works injustice to the parties who do comply, and unfairness to that myriad of litigants waiting to have their matters despatched as soon as the court can hear them. The luxury of procrastination — let alone deliberate disobedience — is a luxury of the past if it ever existed.
[7] [2000] FamCA 1040 at [74] – [75].
In my view these comments have application in this case. It is not only Mr Zalitis’ unexplained failure to comply with consent orders that is a concern. His failures go to the heart of the integrity of the trial process in financial proceedings. It not only impacts upon the assessment and reliability of Mr Zalitis’ trial evidence, but it has also impeded a complete and reliable assessment of the value of the asset pool to be made, including as it goes to central matters such as the value of Mr Zalitis’ company. That in turn has affected the ability of a reliable assessment to be made of certain s 79 factors. The fact that this has occurred in property adjustment proceedings, in default of consent orders, and ignoring legal correspondence on behalf of Ms Zalitis compounds these failures in my view.
I consider that as a consequence of Mr Zalitis’ non-disclosures, I cannot be satisfied that the asset pool is complete, or that it is not greater than what has been established on the evidence. I consider that Ms Zalitis is the party disadvantaged by this lack of disclosure, and that it is appropriate to err on the side of generosity as a consequence.
Should I make an inference under Jones v Dunkel?
Ms Zalitis has submitted that the court should draw a Jones v Dunkel[8] inference arising from Mr Zalitis’ failure to call his accountant, Mr X, to give evidence.
[8] (1959) 101 CLR 298.
On behalf of Mr Zalitis, it was accepted that such an inference was open on the evidence.
In Blass & Blass,[9] the Full Court said:
[9] [2022] FedCFamC1A 63 at [22] – [25].
Without being directly stated, it appeared that the primary judge’s reference to a failure to call witnesses by the appellant drew upon the reasoning expressed in cases such as Blatch v Archer (1774) 1 Cowp 63 (“Blatch v Archer”) at [65] and, more particularly, Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”), where a failure to call a witness may be relevant to forming factual conclusions. In Blatch v Archer, Lord Mansfield said:
65. … It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. …
Here, what attracted the primary judge’s attention was the failure of the appellant to call either her mother or her adult daughter, Ms E, in support of her contentions that child X engaged in problematic harmful sexual behaviour.
In ASIC v Hellicar [2012] 247 CLR 345 (“Hellicar”) at [165], the plurality of French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ firstly observed, on the issue of the failure to call a witness, that:
Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led… And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles which do not permit the course taken by the Court of Appeal of discounting the cogency of the evidence tendered by ASIC.
At [167], the plurality then referred to Jones v Dunkel, as an example of the application of such principles, quoting:
…“that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence”.
(Footnote omitted)
In his evidence and cross-examination, Mr Zalitis deferred to Mr X in a number of key respects, including as to disclosure. He did not call Mr X to give evidence, where it was clearly within his power to do so. No explanation for not doing so has been given. When he was asked in cross-examination whether there was a reason he had not asked Mr X to give evidence in these proceedings, Mr Zalitis said that he was not aware that that was an issue.
Accordingly, I draw an inference in the circumstances, that Mr X’s evidence would not have assisted Mr Zalitis, both in terms of his failure to call Mr X, and his failure to produce and disclose financial records in a timely fashion, or at all.
DID MR ZALITIS PERPETRATE FAMILY VIOLENCE AGAINST MS ZALITIS, AND IF SO, HAS THAT CONDUCT HAD AN ADVERSE IMPACT ON HER CONTRIBUTIONS TO THE ACQUISITION, CONSERVATION OR IMPROVEMENT OF PROPERTY, SUCH THAT AN ADJUSTMENT SHOULD BE MADE IN HER FAVOUR TO REFLECT THAT FACT?
In her trial evidence, Ms Zalitis alleged that during the relationship and particularly the last few years of the parties’ marriage, Mr Zalitis was a bully and emotionally abusive toward her, and engaged in coercive and controlling behaviour.
Mr Zalitis gave trial evidence that he managed the finances during the relationship, which Ms Zalitis delegated to him during the marriage, and otherwise denied that he had acted in a coercive and controlling manner throughout the marriage and after separation. He said that he recalled being made aware of Ms Zalitis’ allegations, and that she did not feel safe continuing to live under the same roof as him, and that he was offended by it.
In considering the issue of family violence s 4AB of the Family Law Act 1975 (Cth) provides the following definition:
Definition of family violence etc.
(1)For the purposes of this Act, family violence means violent, threatening or other behaviour by a person that coerces or controls a member of the person’s family (the family member), or causes the family member to be fearful.
Section 4AB(2) sets out a non-exhaustive list of examples of behaviour that may constitute family violence.
In Ramzi & Moussa,[10] Judge Beckhouse said:
[10] [2022] FedCFamC2F 1473 at [145] – [146].
Generally, coercive control is understood as a course of conduct aimed at dominating and controlling another person, including a family member.
In Illgen & Yike [2018] FamCA 17 at [123]-[125], Gill J analysed the terms “coerces or controls” in the section 4AB(1) definition of family violence in the following manner:
123. Coerce is defined in the 7th Edition of the Macquarie Dictionary relevantly as:
1. To restrain or constrain by force, law or authority; force or compel, as to do something.
2. To compel by forcible action
124. Control is defined in the 7th Edition of the Macquarie Dictionary relevantly as:
1. To exercise restraint or direction over; dominate; command
125. The phrase ‘coerces or controls’ is expressed disjunctively. However it may be seen that the two concepts are closely related. Together they form an expanded concept of the exercise of power, to restrain another or to cause another to act, by force, domination or command.
In Pickford & Pickford[11], Aldridge and Carew JJ said:[12]
In fulfilling the onus of proving an allegation of family violence that involves behaviour that coerces or controls, it is not necessary to prove the alleged perpetrator intended the behaviour to be so. That does not mean that intention is irrelevant, but it is not dispositive. A person who engages in such behaviour may be completely oblivious to the impact of their behaviour or they may believe that they are acting in such a way to protect the other family member. Notwithstanding that subjective belief, the behaviour may nevertheless coerce or control the other family member and fall within the definition of family violence.
The focus of the fact finding process is on the behaviour and the impact of the behaviour. It is the behaviour that coerces or controls. It requires action and reaction.
[11] [2024] FedCFamC1A 249.
[12] At [46] – [47].
Their Honours went on to say that when determining an allegation that a person has engaged in behaviour that coerces or controls a family member, a trial judge will undertake a forensic examination of all relevant evidence to identify the behaviour about which complaint is made; identify the full context of the behaviour including any explanation that may be given by the alleged perpetrator; identify the impact of the behaviour on the alleged victim (mere assertion by the alleged victim that they feel coerced or controlled is insufficient); make all relevant factual findings; and explain why the behaviour in question is or is not family violence that coerces or controls the family member and if the alleged behaviour does not entail a course or pattern of conduct, and explain how the behaviour can nevertheless be characterised as behaviour that coerces or controls, if so found. Once such behaviour has been identified it is then a question of what weight is to be given to it and any impact on the orders under consideration.
In Dajani & Dajani,[13] with reference to Aldridge J in Martell v Martell,[14] the Full Court said:
Pausing there, it can be seen the focus is on the contributions made by a party and the nature of them. The circumstances in which family violence could make that contribution more arduous and deserving of greater weight can easily be envisaged. The point is, however, the recognition of the true nature and extent of the contributions and not punishment of the perpetrator.
[13] [2025] FedCFamC1A 28 at [37].
[14] (2023) 66 Fam LR 650.
The assessment of the impact of family violence on contributions ought not be undertaken in a compartmentalised manner, and must be holistic. The contributions which have been made significantly more arduous have to be weighed along with all the other contributions by each of the parties, and it is an error to compartmentalise them and weigh one against the remainder.[15]
[15] Benson & Drury [2020] FamCAFC 303; (2020) 62 Fam LR 1 at [35] – [36].
In Koch & Kest [2021] FamCA 408, Gill J said at 27 quoting Keating,[16] it is necessary to establish the incidence and effect of family violence and “an evidentiary nexus between the conduct complained of in the capacity (and or effort expended) to make the relevant contributions.”[17]
[16] Keating & Keating (2019) FLC 93-894.
[17] At [39].
Ms Zalitis’ trial evidence is that Mr Zalitis’ conduct constituting family violence includes the following:
(a)Verbal and emotional abuse during the relationship and particularly in the last few years of the marriage;
(b)Requiring her to countersign cheques for funds held in the SMSF, and threatening to stop paying expenses for the home, or the car, if she did not agree or questioned his spending;
(c)Entering her bedroom late at night, or in the early hours of the morning, waking her up and demanding that she consent to his withdrawal of funds and sign cheques, or log into a bank account so that he could transfer money from it. Ms Zalitis alleges that Mr Zalitis would turn on the bedroom lights, and stand in front of her when she woke up, present her with a cheque-book and a pen and tell her, “sign it”. If she questioned him, Mr Zalitis would become angry and agitated and not leave the room until it was signed;
(d)During the relationship, Mr Zalitis would take Ms Zalitis’ car keys from her as a punishment, at least once per month, and if she became distressed, he would tell her that she cannot leave the house, taking the car keys from her and hiding them;
(e)In early 2021, Mr Zalitis hid the family dog, after the parties had an argument, and Ms Zalitis was able to leave the house through the backdoor inside gate before he was able to hide her keys. Soon after, Mr Zalitis started contacting Ms Zalitis, telling her that the dog was missing, forcing her to return to the home and start looking for the dog. Mr Zalitis proceeded to get in Ms Zalitis’ car, drive it away, and returned later without the car, refusing to tell her where it was until much later in the morning. Ms Zalitis found the dog locked in the upstairs bathroom;
(f)Installing surveillance cameras at the home, without telling Ms Zalitis, and controlling access to the cameras, including cameras that filmed and recorded the internal activity at the home;
(g)Since approximately 2000, Ms Zalitis’ mobile telephone has been registered to an account in Mr Zalitis’ name. He controlled and obstructed her access to and use of her mobile phone, including the contacts that she had accumulated on the SIM over a lengthy period of time, requiring her to purchase a new phone, but losing all those contacts. Mr Zalitis’ conduct extended to failing to maintain payments for Ms Zalitis’ mobile phone, despite being ordered to do so on 23 September 2022.
Mr Zalitis has also failed to pay spousal maintenance at times at all, and at other times when due. Ms Zalitis also alleges that he has withheld correspondence from Services NSW in relation to unpaid fines, and failing to pay rates and levies for properties owned by the SMSF.
Mr Zalitis has admitted some of the conduct, such as installing surveillance cameras, but denies that he did so in order monitor Ms Zalitis’ movements. He denies deliberately positioning the cameras to survey Ms Zalitis. Further, whilst Mr Zalitis admits that at times he required Ms Zalitis to sign cheques at night, he denied that he was financially controlling during the relationship, or that he engaged in any behaviour that is capable of being categorised as coercive and controlling behaviour, or family violence.
In my assessment, the early stage of the parties’ relationship is marked by a degree of financial independence between the parties, but also a degree of joint decision-making. During the marriage, Mr Zalitis’ income was deposited into a bank account that Ms Zalitis had no access to and vice versa. Against that, the parties attended auctions together and made decisions in respect of real estate together.
In later years, Mr Zalitis controlled the parties’ finances, but this was done in circumstances where Ms Zalitis worked in his practice as a bookkeeper, and over significant years was involved in managing the practice and preparing and submitting tax returns. Whilst Ms Zalitis agreed in cross-examination that she managed Mr Zalitis’ practice, did the bookwork and did the tax returns, she did not agree that she managed the finances.
Mr Zalitis said that he was in charge of the finances during the relationship, as part of an agreement with Ms Zalitis for him to perform this role in the marriage. He said that when it came to major financial decisions such as the purchase of real estate, Ms Zalitis was very much involved and selected each of the properties that they purchased. In cross-examination, Ms Zalitis agreed that over the course of the relationship, there were some major financial decisions that were made jointly, including to purchase real estate.
Over the relationship, Ms Zalitis accepted that Mr Zalitis would buy jewellery for her, and that they bought artwork together, some of which she has retained, and some of which Mr Zalitis has retained. Whilst Ms Zalitis did not accept that she was heavily involved in the financial arrangements with Mr Zalitis, in my opinion these factors suggest she was involved to some degree.
However, in my assessment, whilst that may have been so in relation to the purchases made during the early parts of the marriage and in the years that followed, this is clearly not the case for decisions made in more recent years, including the decision to list D Street for sale, where Mr Zalitis acted unilaterally, and did not communicate his decisions and actions with Ms Zalitis.
The parties have a joint Commonwealth Bank account with a current balance of $49,926, of which they have joint access. Ms Zalitis agreed in cross-examination that those funds remain in the account, as an agreed item in the Balance Sheet, for use to pay for renovations at 1 B Street, and repairs for 2 B Street. The parties agree that neither party can access the account without the other party’s signature. Ms Zalitis contends that Mr Zalitis will not consent to the release of funds from the account, and consequently she has been required to spend her own money on gardening and cleaning for 2 B Street.
Further, over 30 years, from when Ms Zalitis stopped work until separation, Mr Zalitis paid all of the home loan repayments, school fees, household utilities, private health insurance premiums, household maintenance and repair costs, vehicle lease repayments, registration servicing and maintenance costs, mobile phone costs and vet bills. On 30 June 2022, Mr Zalitis ceased paying the electricity account for 1 B Street, and since then, Ms Zalitis has paid the electricity accounts for both properties. In cross-examination, Ms Zalitis said that she believed Mr Zalitis was paying this expense, and accepted that she expected he would keep paying the account. She also accepted that she gave evidence of this in an attempt to be critical of Mr Zalitis.
Ms Zalitis has remained in 1 B Street since separation. There are 3 mortgages over the 2 properties. She has not been contributing to the payment of any of the mortgages. Ms Zalitis is critical of Mr Zalitis for moving out of 2 B Street. In cross-examination it was put to Ms Zalitis that she is suggesting that Mr Zalitis engaged in family violence against her, but wanted to share a common wall with him, and she said that was because she did not want him spending so much money on rent. She said that she moved into 1 B Street because she could not afford anywhere else to rent.
However, during the relationship, in my opinion the interactions of the parties amounts to conduct engaged in by Mr Zalitis that is coercive and controlling behaviour, within the meaning of s 4AB. This includes behaviour such as entering Ms Zalitis’ bedroom late at night or in the early hours of the morning, waking her up, and demanding she sign cheques, or log into a bank account, or consent to his withdrawal of funds. Apart from the impact this had on Ms Zalitis, Mr Zalitis’ evidence and explanations about this conduct shows a significant lack of insight into his behaviour. His failure to consider reasonable alternatives even in the event of emergency is also a matter of concern.
Coercive and controlling behaviour is also reflected in Mr Zalitis’ conduct in requiring Ms Zalitis to ask him for money, and to account for her spending. When she was required to ask Mr Zalitis for money, Ms Zalitis did so with a sense of fear and nervousness. Ms Zalitis accepted in cross-examination that on most occasions, when she asked, Mr Zalitis gave her money. However, this is not to the point. The issue is that Mr Zalitis’ pattern of interacting with Ms Zalitis was one of control, often in a demeaning manner, and not in isolation. I accept that the instances complained of by Ms Zalitis are not aberrations.
Further, when the matter of Mr Zalitis’ behaviour in relation to the signing of cheques was put to him in cross-examination, he said, “No. That’s incorrect. Once a fortnight is an exaggeration.” When he was asked what the frequency was, he said it was hard to estimate, but that it was infrequent. When he was asked if he accepted that the event occurred, he said that when it happened, it was a necessary signature for some sort of payment the next day, for example Mr T’s university fees, or something like that. He accepted that sometimes, unfortunately, he had to wake Ms Zalitis up.
In cross-examination, Mr Zalitis accepted that he would go in to the bedroom, turn on the light and insist that she signed the documents, but said he did so with an apology. He disagreed that he approached her in terms that involved him standing in front of her with a cheque book and a pen and telling her to “sign it”.
When it was put to Mr Zalitis that he needed to be in control, he said sometimes things were overlooked, they wouldn’t be done, and he had to ensure that things were done. He said that cheques were cumbersome and they inconvenience people. I do not accept Mr Zalitis’ evidence that if the parties wanted university fees to be paid, he had to transfer the money the next day. Mr Zalitis was unable to adequately answer why he couldn’t have left the cheques with a note for Ms Zalitis to sign the next day, saying “it’s not the way we operated, usually”.
In a related context, I am also concerned by Mr Zalitis’ evidence in chief that, albeit in the context of the SMSF, that he “agreed to [Ms Zalitis’] demand” and “acceded to [Ms Zalitis’] request to divide the payment between us”.
When he was asked about this in cross-examination, and when it was put to him that to the extent he was suggesting the Ms Zalitis made a demand, and that he agreed to it, was wrong, Mr Zalitis agreed, but that was not before he suggested that the suggestion to divide the payment was Mr X’s, and that the use of terminology in his evidence in chief was one way to express the situation. It was ultimately accepted by Mr Zalitis that there was no evidence of any demands made by Ms Zalitis, and that he wouldn’t say she was a very demanding person at all.
I also accept Ms Zalitis’ evidence in relation to Mr Zalitis’ conduct in unilaterally installing security cameras at 2 B Street. Mr Zalitis did this without speaking to Ms Zalitis. Ms Zalitis agreed that there was some security aspects to the decision. In cross-examination, Mr Zalitis agreed that when Ms Zalitis asked him about them, he said that the house next door and car had been broken into. Ms Zalitis said it was Mr Zalitis’ car. When Mr Zalitis was asked why cameras were installed inside the house when his concern was outside the house, Mr Zalitis said they were aimed inside and outside.
Mr Zalitis maintained remote access to the cameras, and he could watch the live feed. When it was put to him that the camera under the TV in the family room was for surveillance, Mr Zalitis said it was in storage, and was just sitting there. Ms Zalitis’ complaint in particular is about the camera installed on the balcony outside, which enabled Mr Zalitis to monitor her movements, including on the day she moved out of 2 B Street.
In late 2021, the day she moved out of 2 B Street without telling Mr Zalitis, he contacted her by text message and asked her if she was moving out. He agreed that he wrote her, “[Ms Zalitis], are you doing a […]?”, in reference to his brother who had left his family some years before. He then drove back to 2 B Street to confront Ms Zalitis about leaving.
After Ms Zalitis left 2 B Street, Mr Zalitis installed an additional security camera in late 2021, pointing at 1 B Street, where Ms Zalitis had moved to. He disagreed that he did so to survey Ms Zalitis and her movements. I do not accept Mr Zalitis’ evidence in this regard. The camera remained positioned toward the front door and driveway of 1 B Street until early 2022, when it was repositioned inside the house at the window, and Ms Zalitis has not seen it since.
I do not accept Mr Zalitis’ evidence that he installed the camera in late 2021 because he wanted to protect his remaining possessions. I do not accept Mr Zalitis’ evidence that he did not install the surveillance cameras to monitor Ms Zalitis’s movements. I find that Mr Zalitis’ conduct in installing the security cameras inside and outside the house in the manner he did, surveying Ms Zalitis and contacting her on the day she left 2 B Street, and surveying her at 1 B Street, amounts to coercive and controlling behaviour.
In my opinion it is control that is consistent with Mr Zalitis’ actions in unilaterally changing locks, at both D Street and 2 B Street, and not telling Ms Zalitis, including after the surveillance cameras had been installed. When Mr Zalitis was asked about this in cross-examination, he had no immediate recollection of it, and asked to be reminded a bit more about the request that Ms Zalitis be able to spend time at D Street, in December 2021.
Ms Zalitis wanted to spend 3 weeks at D Street, and ultimately an agreement was reached for her to spend 2 weeks there after Mr Zalitis spent 2 weeks there. When Ms Zalitis arrived at the property, the locks had been changed. When he was asked about this in cross-examination, Mr Zalitis’ evidence was the real estate agent should have given her the new key. Mr Zalitis maintained this evidence, even when asked about what Ms Zalitis might do if she arrived late at night. When he was asked whether he thought to tell her the locks had been changed, Mr Zalitis said, “No. I would have delegated that to somebody else, actually”.
In my view this conduct is consistent with the type of coercive control I have referred to. I do not accept Mr Zalitis’ evidence about the changed locks at 2 B Street. When he was initially asked about it in cross-examination, he denied that he changed the locks when Ms Zalitis moved out. He said that Ms Zalitis changed the locks on 1 B and 2 B Street. He agreed he gave no evidence in chief about this. He was taken to text messages sent to him by Ms Zalitis, including on 13 February 2022, where it was said, “You say I have access to [2 B Street] when you know that’s not true. You had put a new lock on the front door and not given me a key” and no responsive message was sent. Mr Zalitis agreed that he told Ms Zalitis she had free access whenever he was present, claiming that he was concerned about patient files being there.
I do not accept Mr Zalitis’ evidence in this regard. I find that Mr Zalitis’ conduct in relation to locks and access to property to be further examples of his coercive and controlling behaviour during the relationship, and post-separation. It is also consistent with Mr Zalitis’ behaviour in relation to the dog. This incident occurred shortly after separation. In cross-examination, Mr Zalitis was taken to text messages between the parties about the dog’s disappearance. He said he was angry and distressed. When he was asked about a message that he wrote stating, “I haven’t told anyone about your secrets”, he said it was an unintentional threat, but not before he said everyone has secrets.
Mr Zalitis knew that Ms Zalitis would be upset if the dog was lost or harmed. He disagreed with the propositions put to him that he locked the dog in the bathroom and told Ms Zalitis that he had run away, but he agreed that she would interpret him telling her that the dog was lost by returning home.
I find that Mr Zalitis’ conduct in this regard is evidence of a further instance of coercive and controlling conduct, consistent with Mr Zalitis’ conduct that he would tell Ms Zalitis that she cannot leave the house, after becoming upset or distressed from the circumstances of the relationship. Mr Zalitis’ evidence that he would “protect her from herself like I would a child”, in my opinion further reflects the dynamic of his need to be in control, and to restrain Ms Zalitis’ freedom of actions by force, domination or command.
In my view Mr Zalitis failed to recognise, minimised, or was evasive in respect of coercive and controlling behaviour toward Ms Zalitis over the relationship, and of the impact that it had on her. At the times when he would wake her up in the night and demand that she sign cheques, or give effect to financial transactions, she would feel anxious. She would wake up exhausted and drained. She would struggle to get the children ready for school, there being times when she was too tired to make their lunch, instead giving them money to buy their lunch from the canteen.
Mr Zalitis’ behaviour affected Ms Zalitis at work. She was required to focus on a computer screen, and found it difficult to perform her job on the days when she had been woken up by Mr Zalitis during the early hours of the morning. These extended to the times when Mr Zalitis would demand that she have sexual intercourse with him.
Ms Zalitis was made to feel anxious and nervous about asking Mr Zalitis for money. He took action against her that restricted her freedom, such as hiding her car keys, under the guise of protecting her. He surveyed her movements and her actions. He interfered with her use of property in the relationship, including her access to 1 B and 2 B Street, and to D Street.
Mr Zalitis’ conduct extended to other aspects of the relationship, and permeated through controlling Ms Zalitis’ ability to communicate and maintain connections with family and friends, by restricting the access she had to her SIM card and mobile telephone number that she had used for 20 years.
The instances where Ms Zalitis was involved in decisions affecting the parties’ lives are not an answer or counter-balance to this conduct. I am satisfied that Mr Zalitis, in these ways, engaged in coercive and controlling behaviour, amounting to family violence, during the relationship and post-separation.
DID MR ZALITIS ENGAGE IN LEGAL WASTAGE?
It is submitted on behalf of Ms Zalitis that the court should find Mr Zalitis’ conduct in relation to his dealings with property to be reckless, negligent or wanton, in line with the principles of waste stated by Baker J in Kowaliw & Kowaliw,[18] where his Honour said:
As a statement of general principle, I am firmly of the view that financial losses incurred by the parties or either of them in the course of the marriage whether such losses result from a joint and several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of action designed to reduce or minimise the effective value or worth of matrimonial assets; or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
[18] (1981) FLC 91-092; [1081] FamCA 70.
Ms Zalitis made this submission in respect of Mr Zalitis’ dealings with Motor Vehicle 2 and the trade-in of Motor Vehicle 3, his sale of D Street and the purchase of F Street, his conduct in relation to tax debt and her interest in the SMSF.
It was accepted on behalf of Mr Zalitis that he is unable to resist the submissions made in respect of Motor Vehicle 3 and Motor Vehicle 2. This is a proper concession to make. Mr Zalitis unilaterally traded in Motor Vehicle 3 and entered into the contract for $535,500 for Motor Vehicle 2 in early 2023. He informed Ms Zalitis on 18 April 2023 for the first time by way of correspondence through legal representatives.
Mr Zalitis’ evidence is that Motor Vehicle 3 required repairs in the sum of $35,000. By using Motor Vehicle 3 as a trade in for a $535,500 contract that he was unable to complete, Mr Zalitis rightly conceded in cross-examination that his expectation was for the deposit to be lost.
Mr Zalitis entered into the contract to purchase Motor Vehicle 2 12 days after the letter was sent on behalf of Ms Zalitis that criticised Mr Zalitis for failing to respond to correspondence sent on 10 February 2023 about the valuation of the Suburb G properties, and his failure to bring his financial affairs up to date.
In my view, Mr Zalitis’ evidence in cross-examination that under the circumstances, a month delay in informing Ms Zalitis seemed to be a short period of time, is reflective of a pattern of conduct of Mr Zalitis’ disengagement with his obligations in the proceedings. I do not accept his evidence that there was no intention not to tell Ms Zalitis about the transactions, or that the transactions were the only way he could save the money.
Mr Zalitis was aware of Ms Zalitis’ long-standing complaint that throughout the marriage, he had unilaterally dealt with assets without her knowledge or consent. The fact is in early 2023, Mr Zalitis entered into the vehicle contract unilaterally, did not inform Ms Zalitis until one month later amidst significant complaint about his lack of responsiveness and disclosure in the proceedings, and had the effect of losing the $130,000 deposit.
D Street, Suburb E
The issue of D Street, Suburb E has been controversial between the parties. On 29 October 2021, Ms Zalitis’ legal representatives wrote to Mr Zalitis. That letter alleged a long-standing history of coercive and controlling behaviour by Mr Zalitis, and requested an undertaking from him agreeing to not unilaterally deal with matrimonial assets without her knowledge and consent.
The letter also set out Ms Zalitis’ position that D Street, Suburb E be sold, and the net proceeds of sale be released to her by way of an interim property settlement. It asked whether Mr Zalitis agreed to the sale of the property, and put him on notice that failing agreement an order would be sought in those terms.
On 18 November 2021, Mr Zalitis’ lawyers responded to the letter of 29 October 2021. Mr Zalitis denied the allegation that there has been a long-standing history of coercive and controlling behaviour within the marriage. At that stage, Mr Zalitis proposed retaining D Street as part of a final alteration of property interests.
On 20 July 2022, Mr Zalitis’ lawyers wrote a letter to Ms Zalitis’ lawyers, about him vacating 2 B Street, providing his first tranche of disclosure documents, and informing that he had listed D Street for sale by public auction in August 2022, so that he may realise the asset to create liquidity to assist in his payment of debts and expenses.
Mr Zalitis accepted in cross-examination that he listed D Street for sale without telling Ms Zalitis, without seeking her views, or asking for her agreement. This occurred in the context of Mr Zalitis’ being put on notice of Ms Zalitis concerns that he unilaterally dealt with marital assets, and seeking an undertaking from him.
Whilst it is submitted on behalf of Mr Zalitis that Ms Zalitis originally raised the question of selling D Street, in my view that is not to the point. The parties were clearly at odds about the distribution of the proceeds of sale of Suburb E. Ms Zalitis wanted the property sold and the net proceeds paid to her as part of an interim property settlement. Mr Zalitis’ basis for listing the property for sale was to assist him in payment of debts and expenses.
Additionally, apart from the brief statement in the letter of 20 July 2022, Mr Zalitis did not provide Ms Zalitis with details of how the proceeds of sale would be applied, nor documents concerning the sale of the property, including the agency agreement. In cross-examination, Mr Zalitis accepted that he would have commenced the process in about mid-June 2022. Throughout the entire intervening period, he did not alert Ms Zalitis, nor did he discuss with her the idea of selling property to assist in the payment of debts and expenses.
On 22 July 2022, Ms Zalitis’ lawyers replied to the letter of 20 July 2022. The letter took issue with Mr Zalitis’ conduct, but stated that Ms Zalitis would not oppose the sale of D Street. However, the letter also made it clear that Ms Zalitis opposes Mr Zalitis’ unilateral dealing with the net proceeds of sale. It did not accept Mr Zalitis’ general statements about the creation of liquidity to assist in the payment of debts and expenses, and pointed out that Mr Zalitis had failed to disclose these matters. It sought a written undertaking from Mr Zalitis that he would not deal with the net proceeds of sale in the absence of Ms Zalitis’ written consent, failing which proceedings would be instituted.
On 28 July 2022, Mr Zalitis’ lawyers replied to the letter of 22 July 2022, attaching a draft Balance Sheet for consideration. It said that it is less than previously expected, primarily because it was anticipated that D Street would sell for $3.5 million, not $4 million as previously envisaged, and that there will be a capital gains tax liability of about $440,000. On this basis, including the need to apply $1.67 million to discharge the mortgage, it was anticipated that the net proceeds of sale would be in the vicinity of $1.3 million. The letter also gave notice that Mr Zalitis proposed to apply the proceeds of sale to purchase a residence for himself in Suburb G, and that he will make arrangements to borrow approximately $1.7 million.
On 2 August 2022, Ms Zalitis’ lawyers replied to the letter of 28 July 2022. The letter again took issue with Mr Zalitis’ approach to disclosure. It also notified that Ms Zalitis did not consent to Mr Zalitis utilising the net proceeds of sale from D Street to purchase a property in Suburb G for Mr Zalitis to live in, the particulars of which had not been disclosed. It stated that it was wholly inappropriate for Mr Zalitis to seek to have the entire benefit of the sale proceeds for himself.
Ms Zalitis sought the proceeds to first be applied to pay an outstanding tax liability in the sum of $249,000, and thereafter be shared between the parties and categorised. She expressed some scepticism about Mr Zalitis’ motivations and actions in relation to unilaterally dealing with marital assets, and a lack of confidence that he is using his best endeavours to achieve the best sale price for the property. She did not consent to it being sold for less than $3.5 million. She sought an undertaking in these terms.
In cross-examination, Mr Zalitis agreed that he instructed the agents to set the price guide for D Street at $2.75 million-$3 million, but that the agent “twisted [his] arm”. He said the agent strongly advised him to set the price guide in these terms, and agreed that after receiving this advice he did not contact Ms Zalitis in any way to inform her of that advice. Ms Zalitis accepted in cross-examination that the transaction was arms’-length, and that Mr Zalitis was guided by the advice he received, and based upon the real estate agent’s feedback. However, she was concerned about the sale at that time, and felt it should wait until summer.
Mr Zalitis did not directly answer the question put to him that he was entirely conscious of Ms Zalitis’ concerns about the sale, and that the reserve price not be set for less than $3.5 million, saying that his concern at the time was that if he didn’t go ahead with sale, he would lose $6,000 that he had given to the real estate agent and he would then be placed in more dire financial circumstances.
Mr Zalitis’ trial affidavit said that he decided to list D Street for sale, motivated by his desire to retire debt and reduce his expenses. This evidence is expressed in general terms. He went on to say that the auction proceeded in August 2022, and the property was passed in at $2.8 million. He then negotiated with the buyer and was able to secure an exchange of contract for $2.85 million.
Mr Zalitis set in cross-examination that Ms Zalitis’ views were not irrelevant, but were weighing heavily on him, in terms of how he felt internally. Regardless of this, he accepted that the legal correspondence between the parties is a reflection of his instructions to his lawyers.
This includes a letter on 10 August 2022, informing Ms Zalitis that there was only one serious buyer for the property, notwithstanding the extensive marketing campaign and that contracts were able to be exchanged with that buyer after negotiations for the sum of $2.85 million. It confirmed that Mr Zalitis intends to proceed with the purchase of a property in Suburb G and will be seeking the release of the proceeds of sale to enable that purchase to be completed.
In cross-examination, Mr Zalitis was asked about evidence he gave in the affidavit he filed as part of his response in the proceedings on 6 September 2022, that as at that date he had identified the property he intended to purchase as F Street, Suburb G. He said the purchase price is $3.7 million and that he has proceeded to pay $10,000 as a holding deposit to AA Company.
Mr Zalitis said that the term “holding deposit” was questionable, but he didn’t know how else to describe it. He agreed that his evidence did not say when that the deposit was paid. He said that he was not issued a receipt for the deposit, which he described as extraordinary, and strange. He said that he communicated with the agent only by text message.
When asked about not providing a copy of any form of holding contract or holding deposit documentation, or even attaching a copy of his bank statement showing where the deposit was paid, Mr Zalitis said that he did not know that he had to.
Mr Zalitis was asked in cross-examination about a table of transactions for his Smart Access Account #...20. He agreed that it was one of a number of pages that were produced by the Commonwealth Bank of Australia in response to a subpoena. He agreed that the record of a payment of $10,000 to the AA Company Trust Account was made on 2 June 2022.
He agreed that, “more or less, I would say yes”, that as at 28 July 2022, he had identified a property in Suburb G to purchase. He agreed that the evidence in his affidavit filed on 6 September 2022 that as at 28 July 2022 he had not identified any particular property was incorrect. He said that emotionally, he may have made that decision, but that financially it would have been predicated by whether he would be able to obtain finance not. He also accepted that the payment to AA Company was made around about the time that he engaged the agent to sell Suburb E.
Mr Zalitis was pressed in cross-examination about the omission of the detail of the payment of a deposit in the letter from his lawyers dated 28 July 2022. That letter included a statement that “details of the new residence will of course be disclosed to you and will form part of the Family Balance Sheet in due course”. Mr Zalitis agreed that the letter does not mention the address, or the payment of the deposit. He said that emotionally, he wanted it, but there were options.
However, Mr Zalitis agreed that the fact that he had identified a property, had paid a deposit, and that was motivation for engaging an agent to sell Suburb E, was omitted from his affidavit filed on 6 September 2022. When it was put to him that it was a lack of disclosure to Ms Zalitis, Mr Zalitis accepted that, “Ultimately, I think that is correct. That’s correct”.
When it was put to him that he did not want Ms Zalitis standing in the way of the sale and purchase, he said that it wasn’t really her decision where he lived or whether she should have any influence over where he finally decided to live. When it was put to him that he left the details out of the 28 July 2022 letter deliberately because he didn’t think that Ms Zalitis deserved to know anything about his financial affairs unless he thought it was appropriate, he said he was not sure what the correct answer is.
Apart from these issues, Mr Zalitis gave trial evidence that the mortgage loan repayments at F Street are approximately $12,600 per month. In cross-examination, he agreed that this expense was an increase from $8,233 per month in rent that he was previously paying, but also that his evidence in chief was incorrect, a direct error, and that the mortgage loan repayments are more in the vicinity of $15,000 - $16,000 per month, and sometimes can be higher.
It is submitted on behalf of Mr Zalitis that his lack of communication with respect to the sale of D Street, and his reasons for doing so at the time, could have been better managed, but that this does not in and of itself amount to reckless financial behaviour. Mr Zalitis makes a similar submission in respect of the purchase of F Street, which is an asset on the Balance Sheet.
In my view, the submissions overlook and diminish the fact that Ms Zalitis clearly signified her concerns about the risks that Mr Zalitis would unilaterally sell D Street, and with an awareness of those concerns, he acted unilaterally for his own reasons anyway.
D Street was not a court ordered sale. The fact that both parties ultimately wanted it sold is also not quite to the point. They each had very different opinions as to how the proceeds of sale should be realised. The fact is Mr Zalitis did not include Ms Zalitis in any of the planning or decision-making. In my view, Mr Zalitis did not do this because it is consistent with his manner of dealing with financial assets of the parties during the relationship, but also because he did not want Ms Zalitis to obstruct his plans to affect a largely simultaneous sale of D Street to finance the purchase of F Street.
I do not accept Mr Zalitis’ evidence about the holding deposit, and the omission of those details from the letter of 28 July 2022, or his affidavit filed in these proceedings on 6 September 2022. That affidavit was made in response to proceedings that were initiated on an urgent basis as a result of the impending option of D Street . The omission of these details from his affidavit is a failure by Mr Zalitis’ to meet its disclosure obligations. He was not full and frank.
The reality is that when Mr Zalitis engaged agents to sell D Street, he had paid the deposit to AA Company for F Street. In the context of the allegations between the parties about the unilateral use of matrimonial assets, the omission of this detail from the letter on 28 July 2022, and the positive assertion that the purpose of selling D Street was to pay debts and expenses was misleading. This conclusion is further supported by the fact that Mr Zalitis failed to make disclosure in respect of the sale of D Street, nor of what debts and expenses he wanted to pay.
In my opinion, the manner in which Mr Zalitis proceeded to list and sell D Street, and purchasing F Street, is conduct that is reckless, negligent or wanton dealing with matrimonial assets. Whilst there is no evidence that D Street would have been sold for a higher value at some point in the future, that is not the central issue.
I do not accept Mr Zalitis’ evidence that he intends to retire when he turns 70 years of age. As I have pointed out, in my view, the evidence establishes that Mr Zalitis is prepared to sign declarations and make statements to people in authority that is consistent with what he thinks they want to hear in furtherance of his own interests.
The ability to analyse Mr Zalitis’ true financial position, income and earning capacity has been hampered by his failure to update his financial statements and comply with his disclosure obligations.
I accept Ms Zalitis’ evidence that she intends to retire at age 65. Since D Street was sold, Ms Zalitis has been unable to afford to pay for a holiday. She cannot afford to eat at high-end restaurants, or shop at high-end retail outlets. Her evidence in chief is that her financial circumstances do not permit her to afford to enjoy the same standard of living that Mr Zalitis enjoyed during the marriage, or that he continues to enjoy.
Mr Zalitis’ evidence in chief is that he qualifies for the pension phase of the SMSF, and that he has not drawn down any pension since separation. Mr Zalitis accepted in cross-examination that throughout the proceedings, Ms Zalitis had expressed concerns about the manner in which he had accessed and utilised funds from the SMSF.
He went on to accept that between 2018 and 2022, he wrote cheques to himself for his benefit, from the SMSF totalling $368,147.50, against one cheque in the sum of $11,937.50 made payable to Ms Zalitis.
In addition, I have found that H Pty Ltd pays a service fee to the L Trust. Mr Zalitis accepted that, to an extent, from year to year he is able to unilaterally determine what the service fee is, and also what his expenses are. He was asked about this in cross-examination, being drawn to the revenue precisely matching the expenses for H Pty Ltd in 2022.
I accept that the service fee is a controllable internal transaction between entities that Mr Zalitis operates. As I have set out, the real point to be extracted is that Mr Zalitis’ evidence about his taxable income was in part vague and unclear. He gave trial evidence that his taxable income in 2023 was $350,000. He also accepted in cross-examination that the sum recorded in his Financial Statement dated 27 April 2024 was calculated with reference to an annual sum of $350,000. However, that sum is at odds with Mr Zalitis’ assertions that he has a liability to the ATO in the sum of $316,733.21.
Mr Zalitis gave evidence in cross-examination that the revenue for H Pty Ltd as at 30 June 2022 is $800,388.18, solely attributable to professional fees. This is an increase from $708,326.93 in the previous year. In the Credit Assessment Summary submitted to the Bank on 1 June 2023, Mr Zalitis declared that his self-employed income was $632,972.04 yearly. He also declared income from property investments of $2,000 weekly, and income from rental expenses as $600 weekly.
Mr Zalitis’ Financial Statement is incomplete as to the latter expenses, and his disclosure to the Bank about professional income is substantially in excess to his evidence in chief and Financial Statement. In these circumstances, I am not satisfied about Mr Zalitis’ income. In my view, the evidence suggests Mr Zalitis’ income is more in line with his disclosures to the Bank, and indeed his evidence about the profit and loss statement over the full 12 months in 2023 to equate to an income of $850,000, to which Mr Zalitis said, “That’s the highest it has ever been, yes”. The service fee is then, “whatever the accountant says, yes”.
When it was put to Mr Zalitis that his Financial Statement significantly misrepresents his income and earning capacity by focussing on taxable income, Mr Zalitis said, “I see what you mean. The – at this stage, I was trying to increase her confidence. I wasn’t misrepresenting anything. If I worked at the same level, just Medicare increases would have increased my income passively. But what I’ve been doing is trying to decrease the number of hours I work because I’ve had it. I’m sixty – 68.”
I also take note of Mr Zalitis’ financial habits generally, indicating access to funds, in the context of unclear or incomplete financial explanation. He has bought and sold luxury motor vehicles. He has expended funds on personal lifestyle websites, bought a designer bag in the sum of $1,990 for a person he wanted to become friendly with, and spent $13,700 on a sauna. This financial conduct is at odds with the general assertions made by Mr Zalitis that he wanted to sell D Street to retire debt and reduce expenses, and that he and Mr X were trying to organise the money “to buy this silly car”, with reference to Motor Vehicle 3.
Section 75(2)(o) is “expressed in the widest terms and forms part of a suite of provisions that recognises more than merely financial matters”[37] in determining what is just and equitable. I have taken into account, as matters under section 75(2)(o) Mr Zalitis’ excessive non-disclosures which have impeded the ability to understand and properly quantify the asset pool, including the activity within the SMSF, the unquantifiable value of H Pty Ltd, Mr Zalitis’ reckless financial behaviour in relation to the sale of D Street and the purchase of F Street, his unilateral and unexplained conduct in relation to the SMSF funds, and his conduct in making notional distributions to Ms Zalitis from the L Trust, being money that she did not receive, and exposing her to tax debt.
[37] Zubcic & Zubcic and Anor [2019] FamCAFC 168; (2019) FLC 93-918 at [94].
Based on all of these considerations, and taking into account the matters under ss 79(4)(d) – (g) and 75(2) that are relevantly applicable, I find that a further adjustment of 12.5% in Ms Zalitis’ favour is appropriate.
WHAT ARE THE PROPOSED ORDERS, AND ARE THEY JUST AND EQUITABLE?
I have found the total net value of the asset pool to be $5,477,242.52.
The parties seek orders that Ms Zalitis retain her interest in her superannuation fund, and Mr Zalitis retains the interest in the SMSF.
Mr Zalitis seeks an order that 1 B and 2 B Street be sold, and the proceeds applied in a prescribed fashion, including to pay CGT on D Street , and payment of any ATO liabilities for the period up to and including 30 June 2022 for the L Trust, N Pty Ltd, H Pty Ltd, and the SMSF.
In light of my findings and conclusions, I am unable to make the orders sought by Mr Zalitis. I do not consider an outcome in these terms to be just and equitable. Although Mr Zalitis takes issue with Ms Zalitis’ capacity to refinance 1 B and 2 B Street on her evidence, thereby, he says, delaying the inevitable need for those properties to be sold, the orders I propose to make involve Ms Zalitis retaining 1 B and 2 B Street, and Mr Zalitis retaining F Street. Mr Zalitis will also retain the SMSF, artworks, household contents, and his motor vehicles. Ms Zalitis will retain her motor vehicles, the household contents, and her superannuation. In my view, the order sought by Ms Zalitis for the sale of 1 B and 2 B Street is appropriately made, in the event she is unable to comply with the orders for her to refinance the property.
Ms Zalitis has sought an order that Mr Zalitis be solely responsible for capital gains tax on D Street. I do not consider this is appropriate. Mr Zalitis contends that orders whereby Ms Zalitis retains in the first instance 1 B and 2 B Street, and an indemnity in relation to capital gains tax for D Street, is a disproportionate outcome.
The circumstances in which the property was sold by Mr Zalitis are controversial, and in many respects inadequate. They have led to a significant increase in accommodation expenses. I have already taken those matters into account. However, D Street is a joint asset. Ms Zalitis received a portion of the proceeds of sale by way of an interim property distribution. A further portion of the proceeds of sale was applied to pay tax liabilities held by Ms Zalitis, but generated by Mr Zalitis in respect of distributions that Ms Zalitis never received. I have also separately taken that matter into account. In my opinion, there is no basis for Mr Zalitis’ actions to make him solely responsible for the capital gains tax.
The schedule of effect, based on my findings is set out below:
ASSETS Mr Zalitis Ms Zalitis 1 B and 2 B Street, Suburb C $4,250,000.00 Suburb C home loan #...07 -$757,645.00 Suburb C home loan #...05 -$80,710.00 CBA Smart Access #...73 $4,847.00 CBA Netbank ESaver account $310,200.00 Motor Vehicle 1 $25,000.00 Household contents (Suburb C) $16,750.00 Super Fund 2 $26,813.00 Smart Access Account #...11 $24,963.00 $24,963.00 Motor Vehicle 5 (driven by Ms U) $7,500.00 $7,500.00 Suburb E CGT -$120,000.00 -$120,000.00 F Street Suburb G $3,700,000.00 Suburb G CBA home loan #...73 -$2,958,999.00 CBA Business Loan #...90 -$35,631.00 Medical Finance Company -$96,500.00 CBA Account #...20 $1,520.00 Partial Refund of Motor Vehicle 3 Trade-in due to Husband $130,000.00 Motor Vehicle 4 (driven by Mr Zalitis) $55,000.00 Household contents (Suburb G) $25,000.00 Artworks retained by Husband $23,400.00 H Pty Limited (excluding cars) $0 Husband’s Legal fees drawn down from CBA and held in Trust $43,271.52 Super Fund 1 $970,000 Sub-Total $1,769,524.52 $3,707,718 % 32.31% 67.69%
In my view, a division of property in terms of 67.5% to Ms Zalitis, and 32.5% to Mr Zalitis, reflecting my analysis and findings, is just and equitable. I do not consider that any additional adjustment needs to be made. On a division in these terms, there is a shortfall of $10,579.30 in Ms Zalitis’ favour.
Ms Zalitis also seeks an order that the parties’ joint smart access account be closed, and the proceeds be distributed to her. I will make an order for the account to be closed. I will make an order that the proceeds of that account be distributed $10,579.30 to Mr Zalitis, and the remainder to Ms Zalitis.
I will make the orders sought by Ms Zalitis for Mr Zalitis to pay arrears of spousal maintenance that was on 23 September 2022 ordered. As at 28 May 2024, that sum was said to be $2,800.00, Mr Zalitis being ordered by consent to make monthly payments of $700.00.
I will also make orders for Mr Zalitis to cause N Pty Ltd to transfer to Ms Zalitis Motor Vehicle 1, which the parties agree is driven by Ms Zalitis. The consent order of 23 September 2022 obliged Mr Zalitis to cause N Pty Ltd to make the lease payments, registration, insurance premiums, servicing and maintenance costs of this vehicle. Mr Zalitis agrees to the order transferring this vehicle to Ms Zalitis, but he seeks an order that Ms Zalitis indemnify him in relation to any outstanding expenses, including insurance costs, e-tags and other liabilities. I do not consider that in these circumstances that is appropriate or just and equitable. I will make orders as sought by Ms Zalitis.
Ms Zalitis also seeks an order that pending Mr Zalitis’ compliance with orders in relation to Motor Vehicle 1, and otherwise in default, Mr Zalitis be personally liable for those costs. I will make this order. Mr Zalitis has not complied with the consent order of 23 September 2022, and nor has he complied completely with the consent order for spousal maintenance. In cross-examination, after initially stating that he was not aware that Ms Zalitis was relying on his support, or that she was dependent on his financial support through maintenance, Mr Zalitis accepted that she relied on his financial support to meet her expenses. It is appropriate that in default of compliance, Mr Zalitis be personally liable for the Motor Vehicle 1 expenses.
I will also make orders, as sought by both parties, that Ms Zalitis resign as a director of the entities H Pty Ltd, the SMSF, the L Trust and the N Clinic. In light of my findings, I will make that order time dependent on Mr Zalitis’ compliance with the preceding orders, rather than within 14 days as sought by Mr Zalitis.
Whilst I do not consider it appropriate for Mr Zalitis to indemnify Ms Zalitis in relation to CGT payable on D Street, in light of my findings about Mr Zalitis’ conduct and control, in my view it is just and equitable that he otherwise indemnify her in relation to the companies and the expenses associated with Motor Vehicle 1.
Ms Zalitis sought an order under s 106A of the Act. I will make a s 106A order. I consider it appropriate to do so because of the facts and circumstances of this matter, and particularly the history of defaults by Mr Zalitis in executing documents and doing all things necessary to prepare financial statements, even where those matters were to be done with his agreement.
Ms Zalitis has sought orders giving effect to the default sale of F Street, in the event that Mr Zalitis fails to comply with any order that obliges him to pay her a sum of money, should that default be greater than 28 days. Mr Zalitis has not sought any orders in default of compliance of any obligations imposed on him.
In light of my findings and conclusions, and in particular that no order requiring Mr Zalitis to pay a capital sum has been made, I do not consider it appropriate for there to be orders in default in respect of F Street. I appreciate that the final orders to be made create a liability for Mr Zalitis to make payments, and there is some risk of default.
I also take into account s 81 of the Act that requires the court’s orders to, as far as practicable, finally determine the financial relationships between the parties and avoid further proceedings between them. Should Mr Zalitis not comply with orders obliging him to pay money, there is the further potential for litigation in enforcement, but given that I am not making an order for a cash payment in the terms sought by Ms Zalitis, I am not satisfied that an order in default in the terms sought is appropriate in all the circumstances.
OTHER MATTERS - APPLICATION FOR SPOUSAL MAINTENANCE
In her amended initiating application filed 22 December 2023, Ms Zalitis sought an order that Mr Zalitis pay her $1,000 per week for a period of three years from the date of these orders, by way of spousal maintenance.
Mr Zalitis submits that Ms Zalitis’ proposed final orders were first brought to his attention through Ms Zalitis’ written closing submissions. It is correct that this order was pressed in written closing submissions, and that Ms Zalitis did not separately provide a Minute of Orders sought until after the close of evidence.
Mr Zalitis’ trial affidavit gives evidence that he has been paying Ms Zalitis spousal maintenance in the sum of $700 since 23 September 2022, and that he seeks an order that the application for spousal maintenance sought in the amended initiating application be dismissed.
Mr Zalitis’ written closing submissions are that on either party’s case, there is evidence that Ms Zalitis will have sufficient assets and finances which will meet a reasonable standard of living, such that it is not open to find that she is unable to support herself adequately.
Where a party has applied for both an alteration of property interests and spousal maintenance, the approach that is required is to consider the property application first, and then the maintenance application in light of the proposed property order, as the property order will have an impact on both parties.[38]
[38] Carswell & Tenson (No 4) [2024] FedCFamC1F 848 at [352].
Section 72(1) of the Act provides that:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
In Carswell & Tenson (No 4),[39] Curran J set out the principles that apply to an application for spousal maintenance as follows:
[39] [2024] FedCFamC1F 848 at [344].
The High Court in Hall v Hall [2016] HCA 23; (2016) 257 CLR 490 at [52], with reference to Astbury v Astbury [1978] FamCA 28; (1978) 4 Fam LR 395 at 398, states “[t]he wording of s 72(1), it has been noted, seems to imply that each party should attempt to support himself or herself where that is reasonable having regard to the matters referred to in s 75(2).”
The Full Court in Rice & Rice [2020] FamCAFC 174 set out at [9]:
... The issues raised in a claim for spousal maintenance are relatively straightforward and require a consideration of whether the applicant can support himself or herself adequately (s 72(1) of the Family Law Act 1975 (Cth) (“the Act”)), which requires the Court to look at the applicant’s needs and the income and property available to him or her to meet them. Finally, the capacity of the respondent must be taken into account.
The threshold issue in considering a claim for spousal maintenance is whether the applicant, in the present case the wife, is unable to support themself adequately. The Full Court in Brown & Brown [2007] FamCA 151; (2007) FLC 93-316 at [61] said as follows:
•The word “adequately” is not to be determined according to any fixed or absolute standard.
•The idea that “adequate” means a subsistence level has been firmly rejected.
•Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
•In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
•It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
•However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
If the wife is able to demonstrate an inability to adequately support herself, the capacity of the husband to meet a spousal maintenance order must then be considered.
As identified in Clauson and Clauson [1995] FamCA 10; (1995) FLC 92-595 at 81,907:
Where spousal maintenance is sought in addition to a property order it becomes, in effect, the fourth step in the process. It is only to be exercised after the three step process under s.79 has been completed and it is not to be confused with the s.75(2) component in that latter exercise. The reason why it must be exercised after the s.79 exercise is because that latter exercise establishes the background against which s.74 must operate, that is, the financial circumstances of the parties.
Section 74(1) of the Act provides that the Court may make such order as it considers proper for the provision of maintenance. In exercising jurisdiction under s 74 the Court shall have regard to any relevant factor referred to in s 75(2).
…
The onus of establishing a need for spousal maintenance is on the applicant, in this case being the wife (see Patterson and Patterson [1979] FamCA 37; (1979) FLC 90-705 at 78,760).
Ms Zalitis’ average weekly salary is $1,428. Her weekly expenditure is $1,571. Because of the way in which the application for spousal maintenance was made, the hearing was not conducted with any focus on the reasonableness or otherwise of Ms Zalitis’ expenditure.
There was very little cross-examination on Ms Zalitis’ financial statement, or her expenditure. The issue of the capacity to meet a spousal maintenance order was not directly taken up in the cross-examination of Mr Zalitis.
In any event, taking into account the adjustment of property interests to be made in Ms Zalitis’ favour, and recognising that whilst it is not necessary for an applicant for maintenance to use up all of their capital in order to satisfy the requirement that they are unable to support themselves adequately, I am not satisfied that Ms Zalitis has met this onus.
In the circumstances, I will dismiss the application for spousal maintenance.
I certify that the preceding two hundred and eighty-nine (289) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Liveris. Associate:
Dated: 11 April 2025
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