Zang & Juong
[2014] FamCA 582
•23 July 2014
FAMILY COURT OF AUSTRALIA
| ZANG & JUONG AND ANOR | [2014] FamCA 582 |
| FAMILY LAW – PROPERTY – where the husband was declared a bankrupt but his trustee has chosen not to participate – where the wife sold the former matrimonial home contrary to a court order that she not do so – where the wife transferred proceeds of sale of that property to a company now in the control of her mother – where the wife claims the transfer was repayment of debt owed by the parties to the wife’s family – where the husband seeks an order under s 106B of the Family Law Act to set aside that disposition – where an order is made under s106 B setting aside the wife’s transfer of monies to the account controlled by the company – where the wife makes a claim against an interest the husband has in a property in Country D – where there are proceedings in a Country D Court in respect of that property – where the order made does not interfere with the rights of the parties in that litigation in Country D – where both parties have worked hard during the marriage – where neither party has made full and frank disclosure of assets– where the wife has had the use of significant capital since separation – where only one asset remains for distribution –– where orders are made that the remaining monies be used to discharge the husbands bankruptcy, pay a child’s school fees,, contribute to the wife’s debt to the Australian Taxation Office, pay child support arrears with the balance to be divided equally between the parties. |
| Child Support (Assessment) Act 1989 (Cth) Family Law Rules 2004 Black & Kellner (1992) FLC 92-287 Weir & Weir (1993) FLC 92-338 |
| APPLICANT: | Mr Zang |
| RESPONDENT: | Ms Juong |
| 2nd RESPONDENT: | B Pty Ltd |
| FILE NUMBER: | SYC | 4444 | of | 2012 |
| DATE DELIVERED: | 23 July 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 23 & 24 October 2013; 8 – 10 April 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Messner |
| SOLICITOR FOR THE APPLICANT: | Zhang Shijing Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Litigant in person |
| SOLICITOR FOR THE 2ND RESPONDENT: | No appearance |
Orders and notations
The payment by the wife to B Pty Ltd in the sum of $270,000 on or about 8 October 2013 be set aside pursuant to s 106B Family Law Act 1975 (Cth) (“the Act”).
The lawyers for the husband forthwith serve a copy of these orders upon St George Suburb M.
B Pty Ltd, and/or any director from time to time of B Pty Ltd, direct St George Bank, Suburb M branch, to do all things and sign all documents to cause all of the funds and any accrued interest in account number 0493358368 (“the funds”) to be electronically transferred to an account nominated by the husband’s solicitors, Zhang Shijing Lawyers of 13/301 Castlereagh Street, Sydney.
B Pty Ltd and any director of B Pty Ltd is restrained from operating the bank account referred to in the previous order in any other way than in compliance with that order.
Pursuant to s79 of the Act an order is made in the terms of paragraphs 6 to 8.
Upon receipt of the funds pursuant to order 3 by the husband’s solicitors, the husband’s solicitors shall pay those funds in the following manner and priority:
6.1.In payment of an amount to the husband’s trustee in bankruptcy in the sum of $115,053, together with interest accumulated on this sum since 13 February 2013;
6.2.In payment of an amount to F School for the balance of school fees for 2014 year for E;
6.3.Payment to the Australian Taxation Office of the amount sufficient to discharge the wife’s current obligations to the Australian Taxation Office but no more than $81,000;
6.4.In payment of the husband’s current child support debt;
6.5.Payment of any balance remaining as to
6.5.1.50 percent to the husband’s trustee in bankruptcy (in the event that the husband’s bankruptcy is not otherwise discharged by the payment referred to in paragrgaph 5.1, on the basis the trustee pays back to the husband’s solicitors upon trust for the husband any surplus funds not required to discharge the husband’s bankruptcy) or to the husband’s solicitors upon trust for the husband if his bankruptcy has been discharged by the payment referred to in paragraph 5.1; and
6.5.2.50 percent to the wife.
I note the husband has a one quarter interest in a property in City C, Country D (“the Country D property”). The wife has conducted proceedings in Country D in respect of that property which she has not concluded. The husband seeks that this court not deal with that property as part of the overall property adjustment but to leave his interest in the Country D property to be the subject of any determination by the court in Country D. The wife seeks an order for 80 percent of the Country D property. No order will be made in relation to the husband’s interest in the Country D property but the wife is entitled to pursue whatever remedies she may in Country D in respect of that property.
Subject to these orders and the matters noted in paragraph 7, each party be solely entitled to the exclusion of the other to all other property, chattels and superannuation in their respective names or possession as at the date of these orders and that each party indemnify the other in relation to any debt associated with any asset that is kept by each of them respectively.
If either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.
All other outstanding applications are dismissed.
Leave is granted to the wife to photocopy documents produced under subpoena by KK Pty Ltd Pty Ltd.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zang & Juong and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 4444 of 2012
| Mr Zang |
Applicant
And
| Ms Juong |
Respondent
And
| B Pty Ltd |
2nd Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This property settlement, whilst productive of a large amount of written material and oral evidence, is a dispute about assets which have very little value in comparison with the value of assets the parties have had (or may still have unbeknown to the court).
Currently there is an amount of $232,431 plus accumulated interest in an account in the name of B Pty Ltd (“B”) at St George Bank. This company was incorporated with the involvement of the wife contemporaneously with the wife selling the former matrimonial home in circumstances where firstly, this court had made an order that she not do so and secondly, the husband’s trustee in bankruptcy had lodged a caveat against the title of that property. The wife took steps to obtain the lapsing of the caveat and ignored the injunction against her. She thereafter transferred $270,000 from the proceeds of the sale of the property into this company’s account. The husband seeks an order under s 106B Family Law Act 1975 (Cth) (“the Act”) to set aside that disposition. The wife and B oppose any such order being made.
The company, represented by the wife’s mother as the current director of that company, claims that the company is entitled to these funds which on the wife’s case, was a repayment of debt owed by her to her mother, her father and her brother.
In addition, the wife makes a claim against an interest the husband has as one quarter owner of a property in City C, Country D (“the Country D property”). In 2014 the wife took action in a City C court to attempt to obtain an order from that court that she was entitled to one half of the interest in that property. She was unsuccessful in that application and has apparently appealed the decision. In any event, the wife’s evidence is there will be further litigation in Country D whereby she seeks that the Country D court declare what interest she has in the husband’s one quarter share of that property.
Both parties worked very hard during the marriage and developed what for a period of time was a thriving business, and held interests in real estate from time to time. There is little left of the fruits of those activities apart from those assets already described.
The husband was declared bankrupt on 29 August 2012. His trustee in bankruptcy (understandably) did not want to participate in this hearing. In those circumstances, the husband has been allowed to participate. Part of the husband’s application is to seek sufficient funds to discharge himself from his bankruptcy.
APPLICATIONS
During final submissions, the wife made two adjournment applications. The first based on the fact that she wanted an updated valuation done in respect of the husband’s interest in the Country D property. That application was refused. Her second application was to adjourn these proceedings until the proceedings she had commenced in Country D in relation to the Country D property had concluded. Again I refused that adjournment application. Ultimately, the wife sought an in personam order that the husband transfer to her 80 percent of his interest in the Country D property. As indicated, she opposes the husband’s application pursuant to s 106B of the Act.
Initially the husband wanted an order made as between the parties declaring that the wife had no interest in the Country D property. The husband amended that position so that his final application was that the parties’ interest in the Country D property should not be dealt with as part of this application but left to the Country D court to decide.
In relation to the fund that remains in Australia and in the event that the s 106B order is made, the parties seek different things by way of property settlement.
The husband seeks that after an order pursuant to s 106B of the Act is made, an amount of $232,431 plus interest be distributed in the following way:
10.1.Payment of an amount to the husband’s trustee in bankruptcy sufficient to cause the husband to be discharged from his bankruptcy;
10.2.The payment of the balance of E’s school fees for his final year of high school at F School;
10.3.Payment of any outstanding liability that the husband has in respect of child support;
10.4.Balance remaining to the husband.
In the event that the husband’s application under s 106B is successful, the wife seeks that I make an order in her favour of 80 percent of that sum.
DOCUMENTS RELIED UPON
The applicant husband relies on the following:
12.1.Initiating Application filed 3 December 2012
12.2.His affidavit sworn 4 February 2013
12.3.His affidavit sworn 7 May 2013
12.4.Amended Financial Statement filed 18 October 2013
12.5.His Case Outline filed in court 23 October 2013
12.6.His affidavit filed 20 December 2013
12.7.His affidavit filed 20 January 2014
12.8.Affidavit of Mr G filed 23 October 2013 (chartered accountant for Trustee in bankruptcy).
The respondent wife relies on the following:
13.1.Response to an Initiating Application filed 6 February 2013
13.2.Her affidavit sworn 6 February 2013
13.3.Her affidavit sworn 28 May 2013
13.4.Financial Statement filed 6 February 2013
13.5.Her affidavit filed in court 23 October 2013
13.6.Her affidavit filed 21 November 2013
13.7.Her affidavit filed 16 January 2013
13.8.Her affidavit filed 24 February 2014
13.9.Affidavit of Mr H filed 31 March 2014.
B relies on the following:
14.1.Affidavit of Ms I filed 23 January 2014
14.2.Affidavit of Mr J filed 23 January 2014
14.3.Affidavit of Ms I filed 3 April 2014
The Court also had the following valuations and appraisal:
15.1.Valuation Report by Mr K filed 1 August 2013
15.2.Asset Appraisal Report by City C Assets Appraisal Co filed 1 August 2013.
SHORT HISTORY
The husband was born in Country D in 1964. He is currently aged 50 years.
The wife was born in Country D in 1969. She is currently aged 45 years.
The parties commenced cohabitation in around February or March 1994.
The parties married in 1995.
The parties’ first child E was born in 1996. He is currently aged 17 years.
The parties’ second child L was born in 2002. He is currently aged 12 years.
There is controversy in relation to when the parties separated. The wife says it was on 20 July 2011. The husband, having received a certificate under s 128 Evidence Act 1995 (Cth), indicated that he had given false evidence in his sworn application for divorce and that in fact the date of separation was the date of his return to Australia after he went to Country D for his father’s funeral, which was in February 2012. During cross examination, the husband said he thought the correct date of separation was March 2012. In the divorce application the husband affirmed that the date of separation was 20 July 2011. Although it is not of great relevance I find the parties separated on 20 July 2011.
CREDIT
I am unable to accept either the wife or the husband as a credible witness.
On the first day of the hearing, the wife initially denied knowledge as to where the cheque for $270,000 drawn to B had been deposited. The wife eventually conceded that she knew that it had been deposited to an account at St George Bank in Suburb M. There were also inconsistencies in the wife’s evidence as to whether or not the change of office bearers in B had been affected online or as a result of attendance at ASIC in person.
The wife, when presented with clear objective documentary evidence, refused to acknowledge its existence. An example of this was during final submissions where she failed to accept that money had gone from her bank account ($20,000 on 29 January 2013) to the account in her name at the Casino.
The wife’s sole purpose in this litigation was to maximise the amount of money that she had available for herself, her children and her family members and to ensure the husband received nothing from the funds available in Australia. She was prepared to disregard a direct order that she not sell the matrimonial home and did so in a way that leads me to believe that she was prepared to say or do anything in order to achieve her ultimate purpose.
The husband on the other hand, was less than frank in relation to his current trading activities. Documents were produced that would indicate that the husband is enthusiastically re-engaged in business activities, notwithstanding his bankruptcy. That is not reflected in the level of income stated in the husband’s evidence. In his affidavit the husband states he is working in a company called N Pty Ltd (“N”), controlled by a friend (who I find on balance is the husband’s current de facto partner), Ms O (Ms O is her English name) who pays him in cash. Ms O provided a letter to the Child Support Agency (“CSA”) to say she was paying the husband $23.30 per hour after tax. The husband says he works 30 hours per week. The wife claims Ms O is covering for the husband by acting as director for N (which the husband conceded was named after Ms O (Ms O) and himself, so that the husband can continue to run a business. The husband confirmed that he is the only person in the company who holds an appropriate business licence.
The husband did not disclose to his trustee in bankruptcy the existence of the interest he had in the Country D property. The husband answered “no” to a question “do you own…any land or building in Australia or overseas” on the Insolvency and Trustee Service Australia Application.
The evidence given by the wife’s mother was constantly interrupted by the wife, suggesting answers to her. On a number of occasions the wife’s mother ended her answer to a question in cross examination with the word “right?”, whilst looking at the wife at the bar table. I did however think that the wife’s mother had a reasonable idea about what was going on. The wife’s mother has combined with the wife in a campaign to maintain as much of the funds for the future of the children and the wife’s family as possible.
Accordingly I am not prepared to accept the evidence of either party or the wife’s mother on behalf of B unless it is corroborated by independent objective evidence.
The result is that there is a lot in this case that is unknown, particularly in relation to the disposition of funds.
DETAILED CHRONOLOGY
The husband was born in Country D in 1964. He is currently aged 50 years.
The wife was born in Country D in 1969. She is currently aged 45 years.
Around 1 December 1989, the husband immigrated to Australia.
On 18 May 1990, the wife immigrated to Australia.
The parties commenced cohabitation around February or March 1994.
Around December 1995, the parties purchased a property at Suburb P for $188,000. The wife says she solely paid for the purchase. The contract for sale has both parties listed as the purchasers.
The parties married in 1995.
The parties’ first child E was born in 1996. He is currently aged 17 years.
Around 5 November 1997, the husband incorporated Q Pty Ltd. The husband was a director.
On 6 July 2000, the parties purchased a property at Suburb R for $408,500. The husband says he borrowed $20,000 from his mother for the deposit, and the parties borrowed $380,000 from the St George Bank.
Around 2001, the parties sold the Suburb P property for $290,000. The net proceeds of $70,000 were applied to reducing the mortgage on the Suburb R property, renovating the Suburb R property and repaying the loan to the husband’s mother.
In May 2001, the wife says she borrowed $30,000 from a friend of her parents, Mr S, to purchase a corner shop “T Pty Ltd”. She says the husband did not put any money towards the purchase of the business.
On 5 March 2002, the wife was appointed as a director for Q Pty Ltd.
The parties’ second child L was born in 2002. He is currently aged 12 years.
On 26 September 2003 (the husband says October 2003), the wife sold T Pty Ltd for $70,200 plus stock of $12,607.
On 19 December 2003, the parties purchased a property at Suburb U for $730,000. The purchase was funded by way of the proceeds of the sale of the corner shop, and a mortgage of $584,000 with the National Australia Bank.
On 13 February 2004, the parties sold the Suburb R property for $715,000.
In January 2005, the Council approved the parties’ Development Application to rebuild the Suburb U property.
On 14 February 2005, the Office of Fair Trading issued a permit to the wife as an owner-builder.
On 25 July 2007, the husband incorporated V Pty Ltd to run a business. Both parties were appointed as directors.
On 14 February 2008, Q Pty Ltd was deregistered.
On 25 September 2008, the wife was removed as a director of V Pty Ltd.
On 4 December 2008, the wife received a letter from the Registrar-General of the NSW Department of Lands informing her that a caveat was lodged on the Suburb U property by W Pty Ltd.
On 19 April 2010, the parties incorporated X Pty Ltd (“X”). The husband was director.
On 23 June 2010, the parties purchased a property at Suburb Y for $1,170,000. The deposit for the purchase came from a bank cheque in the sum of $150,000 which I discuss below.
On 28 June 2010, the parties sold the property at Suburb U for $1,380,000. The parties discharged the mortgage to the St George Bank and received net proceeds of $359,362.98.
Around August 2011, the wife used the net proceeds from the Suburb U property to purchase a property at Suburb Z for $540,000. The wife says she paid a deposit of 20 percent and obtained a mortgage for $432,000. The husband says the parties applied $120,000 of the parties’ monies to the purchase, and repaid the mortgage by withdrawing money from X.
On 20 December 2010, V Pty Ltd was deregistered.
The parties separated on 20 July 2011 (the husband now asserts the actual date of separation was March 2012).
On 8 March 2012, the wife borrowed $424,700 from HSBC.
On 30 April 2012, the husband was notified by the Australian Taxation Office (“ATO”) that he had an income tax liability in the sum of $110,444.25 (including administrative penalties).
In May 2012, the husband says the wife sold the Suburb Z property for $590,000. The mortgage was discharged. He asserts she gave him no notice of the sale, and retained the entirety of the net proceeds of about $158,000.
In May 2012, the husband lodged a caveat over the Suburb Y property.
On 29 August 2012, the husband became bankrupt.
On 1 October 2012 the parties’ divorce was finalised.
On 14 November 2012, the husband discovered the caveat on the Suburb Y property was lapsed by a lapsing notice lodged by the wife.
On 13 February 2013, I made orders (inter alia) joining the husband’s Trustee in Bankruptcy to the proceedings. The trustee filed an affidavit indicating that an amount of around $115,053 is required to discharge the husband’s bankruptcy.
On 18 June 2013, I noted that the Trustee would not take an active approach in the proceedings and I granted leave to the husband to participate in the hearing.
On 29 August 2013, the wife received approximately $333,000 (see second paragraph 8 on page 4 of the wife’s affidavit of 23 October 2013) from the sale of Suburb Y. On or about 8 October 2013 an amount of $270,000 was transferred into the new company account for B. The sum of $63,000 remained available to the wife.
On 11 September 2013 the wife commenced as a director of B but ceased to be a director on 17 October 2013.
Before the B account was frozen by me, there was a payment made out of the account of approximately $23,000 (apparently for school fees). As at the date the order was made to freeze the account, there was approximately $246,000 in the account. Since that time, orders have been made authorising two further payments. On 26 November 2013 I made an order that the sum of $4,700 be withdrawn from the frozen account for the purposes of paying an orthodontist account in relation to one of the children. On 28 January 2014 I made an order that a sum of $9,701.50 be paid in relation to E’s first term 2014 school fees at F School. The current balance in the account is approximately $232,431 plus interest.
APPROACH
The s 106B application needs to be dealt with as a first step.
Thereafter, my task is to:
74.1.Identify according to ordinary common law and equitable principles and then value the property, assets, financial resources and liabilities of the parties;
74.2.Determine whether it is just and equitable to make an order altering those interests and if so;
74.2.1.Identify relevant contributions and assess them;
74.2.2.Consider relevant matters referred to in Section 79(4)(d) – (g) of the Act;
74.3.Determine what order adjusting the property, assets and liabilities of the parties is just and equitable.
SECTION 106B APPLICATION
The husband made an application under s 106B of the Act to set aside the payment by the wife to B in the sum of $270,000 on or about 8 October 2013 from the proceeds of the sale of the Suburb Y property.
The provisions of ss 106B(1), (3) (4AA)(a) and (c) and (4A) of the Act are in the following terms:
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
....
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4AA)An application may be made to the court for an order under this section by:
(a) a party to the proceedings; or
…
(c) any other person whose interests would be affected by the making of the instrument or disposition.
(4A)In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) .....
The provision of s 80(1) of the Act allows a court in exercising its powers under sec 106B (4A), to do any or all of the following, inter alia:
(a) order payment of a lump sum, whether in one amount or by instalments;
(d) order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(f) order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;
(i) impose terms and conditions;
(k) make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice;
As indicated, the wife breached a court order restraining her from exchanging contracts on the sale of the property in Suburb Y and from otherwise selling or dealing with that property. The wife feigned ignorance as to the precise nature of the order that had been made against her, saying that she thought the order was that she could sell the property with the husband’s written consent and such consent could be established by simply writing to the husband and/or the husband’s trustee in bankruptcy, and indicating her intention to exchange contracts or otherwise sell the property.
The husband found out about the sale of the Suburb Y property on the first morning of the hearing. The wife on that day resisted providing information to the court about the sale. Very reluctantly she eventually conceded that a bank cheque had been drawn to B on the settlement of the sale. After initially refusing to disclose where that cheque had been deposited, the wife gave sufficient information that enabled the court to make orders freezing the fund. An ASIC search of the company obtained by the husband on the first morning of the hearing, disclosed that the director and secretary of the company was Mr AA, a person who the wife described as a “cousin”. On 12 September 2013, Mr AA ceased to be a director and secretary of the company and the wife became a director and secretary on 11 September 2013. On 17 October 2013 the wife ceased to be a director and secretary and her mother Ms I became a director and secretary on that day. Ms I remains the current Director and Secretary of the company. Mr AA remains the only current shareholder/member.
As set out above, the wife received approximately $333,000 from the sale of Suburb Y. $270,000 was transferred into the company account for B. The sum of $63,000 remained available to the wife. Of this amount the wife says in her affidavit filed 23 October 2013 that she paid a total of $27,300.35 to F School, $27,417.87 to BB School, $1448 to CC Pty Ltd, $388 to DD Books, $1000 to the moving company, $2720 towards a tour to Country EE that L participated in, and $3840 to pay a rental deposit. Further she contends to have spent $100 per week for other living expenses from this amount. Of the $270,000 in the B account, $23,000 was apparently paid towards further school fees.
As already indicated, as at the morning of 23 October 2013 the balance that remained in the account was $246,832.13 and an order was made to restrain any withdrawal from the account in the name of “B Pty Ltd” account number …368 held at St George Bank in Suburb M. Since that time, orders were made authorising two further payments for school fees and for the purposes of paying an orthodontist account for one of the children.
At the hearing, B was represented by the wife’s mother who is the current director of the company. The wife’s mother has had a relatively recent diagnosis of gallbladder cancer and has had her gallbladder removed. The wife indicated that she had been advised that her mother may have six months to live without medical treatment and perhaps one and a half to two years to live with treatment. I, however, have no independent medical evidence to support that that is in fact the case. The wife’s mother appeared on the second day of the first part of the hearing and was cross examined (the matter had been adjourned part heard in October 2013 to April 2014). The wife’s mother appeared in April 2014 for the first session but did not reappear after the first adjournment. She reappeared at the end of the second day of the second part of the hearing for a short period of time, but indicated she could not attend on the next day. An order was made allowing B to provide written submissions within seven days.
On 15 April 2014 the wife’s mother lodged with the court a document dated 10 April 2014 entitled “Minute of Order sought by B Pty Ltd”. For identification purposes I have marked that document Exhibit 33. That document did not contain any further submissions. The minute of order sought by B claimed ownership of monies in the account of B; asked for a payment out to BB School in relation to L’s tuition in the sum of $26,316 for the 2014 school year and a payment of $17,928.50 to F School in relation to the balance of E’s schooling for the 2014 school year.
B sought to retain the remaining amount for the purposes of expenditure in respect of Ms I’s medical treatment. The minute of order sought that the current restraining order be lifted and that leave be granted to serve a copy of the orders on St George Bank at Suburb M. The document also had appended to it some banking records which I have not taken into account as evidence before me in this hearing, as no application has been made to re-open the evidence.
Funds the wife says were advanced by members of her family
It is both the wife and her mother’s case that the $270,000 was transferred into the account held by B to repay monies advanced by the wife’s parents ($80,000) and the wife’s brother ($150,000), together with accumulated interest over a three year period.
The wife’s mother was a little uncertain as to what had been advanced but she offered the evidence that $150,000 came from her son; $35,000 came from her and she knew her husband had provided some funds but she was not sure what they were.
The receipt of $150,000 by the wife on or about the 9 March 2010
The wife received a bank cheque payable to her for $150,000 dated 9 March 2010. The bank cheque application form (exhibit 31 and also Annexure Q to the wife’s affidavit filed 16 January 2014) indicates that the applicant for that cheque was Mr FF who is the wife’s brother. Mr FF seems to have significant involvement in Country D and at the time of the first part of the trial was not in Australia, but was in Country D.
There is no doubt that this money was used to assist in the acquisition of the Suburb Y property. It was paid into the joint account of the parties in March 2010, and in May 2010 an amount of $117,000 was drawn from that account to pay the deposit on the Suburb Y property. The husband first said that he had no knowledge of the $150,000, and only became aware of it after the commencement of the court case. However, the husband also conceded that he didn’t really know how the purchase of Suburb Y was financed. At the time the $150,000 was paid into the joint account the account did not have very much money in it at all, so it is clear that deposit monies for the purchase of Suburb Y came from this bank cheque.
Curiously, the wife gave evidence that she did not actually know that the $150,000 had come from her brother until very recently when she says that she was told the truth by her mother two to three months before the court hearing. Although Annexure K to the wife’s affidavit filed 30 May 2013 provides a statutory declaration from her father stating that he had lent the parties the $150,000, the wife said that her mother had later told her it was actually her brother’s money that her father had borrowed and needed to repay. The wife’s mother gave evidence that the wife’s brother had “signed the cheque” (even though it was a bank cheque) in front of both of them. The uncertainty about that evidence is only compounded by the fact that (although unexplored in oral evidence) the signature on the bank cheque application (exhibit 31) seems to be that of the wife’s father when that signature is compared with the signature on the wife’s father’s Statutory Declaration. Mr FF has not given any evidence in this case nor did the wife’s father, Mr GG, give any oral evidence.
Whilst it is reasonably clear on the objective documents that $150,000 for Suburb Y came from a source which was in the wife’s brother’s name (seemingly in Ms HH), I am unable to make any clear finding about the source of the funds in the account from which the bank cheque was drawn or arrangements in the wife’s family in respect of those funds.
It is important to remember that up to this time the wife had been the financial controller of the business of the parties which had significant turnover (further discussed below) and it was only about one year prior to the separation.
Counsel for the husband makes the point that at the time of the acquisition of the Suburb Y property, the wife had sufficient facility with her funding provider to be able to complete the conveyancing transaction notwithstanding the fact that Suburb U settled five days after the settlement of the purchase of Suburb Y. In July 2010 the wife had $511,000 in a bank account. The wife gave evidence that she borrowed the money from her family rather than drawing on the monies that had been put into the offset account to fund the purchase of Suburb Y because she saved interest if the monies in the offset account were left untouched. The wife asserted during submissions that the only way that the purchase of Suburb Y and the purchase of Suburb Z could be afforded in the middle of 2010 was with the assistance of funds from her family. However, as counsel for the husband pointed out, given the facility in the offset account, the debt could have been repaid at any time.
Money the wife says she owes her parents
Annexure J to the wife’s affidavit, filed 6 February 2013, is a statement of a St George Portfolio Loan Account. The wife has highlighted certain cash deposits which she says have come from her parents between 1 January 2009 and 31 May 2010. Annexure K is a St George Freedom Business bank statement and the highlighted figures are also said to have been borrowed from the wife’s parents between 8 July 2009 and 30 June 2010. Annexure L is a copy of the wife’s diary where she sets out all the monies her parents have loaned to her. The wife points to these highlighted cash deposits as evidence that monies had been provided by her family.
The wife’s mother’s evidence is inconsistent with both the wife’s statement that there were a number of payments, and the diary notes that the wife has kept. The wife’s mother said there were only two payments; one of $20,000 and one of $15,000.
She asserts the $20,000 came from a personal injury settlement where she was represented by II Lawyers. However, a letter from II Lawyers (exhibit 12) indicates the matter settled in the amount of $19,500 and the document is unclear as to whether II Lawyers had still to take fees from those monies.
The other amount of $15,000 is said to have come from the wife’s mother’s superannuation. There are no documents to support that contention.
I accept the submission by counsel for the husband that in their normal trading activities, the parties were receiving (at least in part) substantial cash payments, as evidenced by cash deposits from time to time into the trading account. The depositing of cash into the above mentioned accounts is not of itself evidence of any monies coming from the wife’s family.
During the hearing the wife indicated that she did not know what a “cash job” was. I did not believe that evidence. Ms JJ from KK Pty Ltd (“KK Pty Ltd”) gave evidence which indicated that the wife had a substantial role in the business, primarily as its financial controller and I find the wife was the financial controller of a significant business that often dealt in cash (and deposited significant amounts of cash into business accounts from time to time).
The mother asserted that she never received cash from job sites because she never went to job sites and that if the husband received cash money it was unlikely that the husband would put those funds into the joint account. Although the wife insisted that all the cash that had been put into the trading account came from her family, I do not accept her evidence about that.
Counsel for the husband points to an application made by the wife’s parents to secure what sounded like pretty reasonable accommodation at Suburb NN for a peppercorn rent until 2021. That application represented to the Department of Housing that the wife’s parents were impecunious.
The wife’s parents have lived in public housing since 2006 and have not been in paid employment since that time.
It is inherently unlikely that the wife’s mother would be lending the wife money at a time when the wife and the husband were involved in a business that was turning over about $1.22 million in the 2008 year and $900,000 for the 2009 year (see report from tax office).
Conclusion about the alleged loans by the wife’s family
There is no clear evidence before the court as to what the nature of the receipt of $150,000 was. There is evidence that the wife made purchases for her brother on credit cards. The wife asserted she did not know that the $150,000 had come from an account in her brother’s name. There is no objective evidence as to whether or not it was a loan; a repayment of a loan, a gift or in fact funds held beneficially for the wife.
The evidence would tend to indicate that there may be a flow of money from time to time in both directions between various members of the wife’s family. I note in passing that B has had a number of changes in office bearers. The only shareholder of the company has been Mr AA, who is apparently the wife’s cousin. There is no discernible correlation between the deposit by the wife of $270,000 into the account of B and any particular debt owed to any particular family member of the wife. Also the wife used the account as her own when she drew upon it to pay school fees for the children, prior to my order freezing the funds.
During final submissions, the wife attempted to tender further evidence to corroborate her oral evidence that her mother had paid $20,000 to her on 12 July 2010. The evidence in the case had concluded at that point. There was no actual application for the wife to reopen her case. In any event, as I have said, I am prepared to accept there is a flow of funds in many directions between the wife’s family members and I find a payment of that nature is of no particular relevance.
Conclusion in respect of s 106B Application
I find that the payment made by the wife of the sum of $270,000 on or about 8 October 2013 was a disposition made by the wife which defeated an anticipated order in the husband’s favour pursuant to s 79 of the Act. Although it is not necessary to make the finding, there is no doubt that the wife intended that that be the effect. She knew that there was an order of this court preventing her from doing what she did. As already said, the office bearer of the company at the time of the disposition and still its only shareholder was Mr AA, a “cousin”. B did not call him as a witness. There is no evidence that either he or B provided any funds to either of the parties. Neither the company, B nor its shareholder has a bona fide interest in the funds that the wife transferred to the company and the provisions of s 106B(3) of the Act have no relevant application. An order shall be made that the payment by the wife to B in the sum of $270,000 on or about 8 October 2013 be set aside pursuant to s 106B of the Act.
FULL AND FRANK DISCLOSURE
Lord Brandon, for the House of Lords in Livesey v Jenkins (1985) 1 All E.R. 106 at page 114, said:
…Each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and to the Court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice….
Justice Smithers in Briese (1986) FLC 91-713 referred to this discussion and said:
The husband's counsel submitted that it was a matter for the wife to pursue her rights under the Family Law Regulations and that there was no positive obligation on the husband to do more than comply strictly with the Regulations and with orders of the Court. He likened his client's position in this respect to that of a defendant in a civil action.
In my opinion this submission is not correct. I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
…..
Although the case relates to quite different circumstances, I believe that the conclusion in the House of Lords in the case of Livesey v. Jenkins (1985) 1 All E.R. 106 is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties. …. There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
In Oriolo & Oriolo (1985) FLC 91-653, the Full Court cited with approval the above passages from Livesey v Jenkins and Briese.
In Black & Kellner (1992) FLC 92-287, the Full Court referred to the three aforementioned authorities with approval.
In Weir & Weir (1993) FLC 92-338 the Full Court again pointed to the line of cases leading up to the decision in Black & Kellner and commented that in cases of that type, “the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be fraught to provide a charter for fraud in proceedings of this nature”.
The Family Law Rules (“FLR”) now emphasises the duty of full and frank disclosure.
Rule 13.01 FLR provides a general duty of disclosure and rule 13.04 FLR provides a particular duty of full and frank disclosure in financial cases. See also Rules 4.18 and 4.26 FLR.
Neither party can be described as “innocent”. I am relieved of any obligation to be unduly cautious about making findings.
WHETHER AN ORDER ALTERING INTERESTS SHOULD BE MADE
The parties have separated and their partnership has ended. After the separation, there was no longer a continuing commitment to the mutual use of assets and a shared responsibility for liabilities. Both parties in this case have sought that I make an order pursuant to s 79 adjusting the property interests of the parties.
I find that in all the circumstances, it is just and equitable to make an order altering property (including adjusting liabilities).
BALANCE SHEET
As earlier indicated, there are only now two known significant assets left;
117.1.The husband’s one quarter interest in the Country D property which has a value in Australian dollars of approximately $156,213;
117.2.The monies in the B account at St George, Suburb M in the sum of $232,431 plus interest.
It is very likely that each party has funds which have not been disclosed.
The Country D property
The husband is on the title to a property in City C, Country D, as to a one quarter interest. That property was acquired in approximately 2003. The wife wanted to suggest that monies from the sale of T Pty Ltd were used in respect of the purchase of that property. There is an account indicating a deposit into the party’s joint bank account of about $84,000 in 2003. That account is then depleted by the withdrawal of $10,000 in cash then two bank transfers of $20,000 and $40,000 (counsel for the husband asserted those two transfers had gone into an account in the wife’s name but there was no evidence of those accounts tendered by the husband). It is the wife’s case that this money made its way back to Country D and was in fact the source of funds for the acquisition of the property which was purchased in joint names of the husband’s parents, the husband and his sister.
The husband says that in around June 2003, his father spoke to him about purchasing a property in City C with a 25 percent share to the husband, 25 percent share to the husband’s sister, and the remaining 50 percent owned by the husband’s parents. The husband agreed to the purchase and on 16 June 2003, the husband appointed his father power of attorney. The property was purchased for RMB 1,228,000. The husband says he did not contribute any money towards the purchase price of the Country D property.
At the time of the acquisition of this property, the husband’s parents had an older property; they moved into the property which was acquired and rented out the older property. The husband says he did not pay any of the bills associated with the property.
On 26 January 2012 the husband’s father passed away.
Around 28 February 2012, the husband (and his sister) waived all rights to inherit any estate of their late father. The husband’s mother inherited the husband’s father’s share and now owns a 50 percent interest in the property.
The wife and husband were involved in litigation in a Country D court on 14 January 2014. Exhibit 13 is a copy of the English translation of the judgement of that court. The wife had initiated these proceedings to determine the ownership of the Country D property in which she asserted she provided RMB 1,288,000 to purchase the property in the husband’s name. She said from the time of purchase until the parties’ divorce, she believed that the husband was the only registered owner of the property, and only after the parties divorce she find out that all three respondents in the matter (the husband, his mother and his sister) had been registered as owners. The wife submitted that the Country D court should find that the property was an asset that she and the husband held jointly. The respondents submitted that the husband’s mother and father provided the funds to purchase the property and the wife had no interest or entitlement in it.
The Country D court found that in 2003, the husband’s father had signed a contract that confirmed that he and the three respondents had purchased the property. In 2004, the three respondents and the husband’s father were registered as owners. The Court further found that the wife did not provide any evidence of her asserted contribution to the purchase price. Instead, the Country D court found the husband’s father provided this money. The wife’s claim in the Country D court was not successful and although the wife says she has or will appeal, I am unaware as to what, if any, appeal process is available to the wife in respect of the order of the Country D court. Notwithstanding the finding of the Country D court on the evidence presented to it, I do not discount the possibility that monies came from the parties’ trading activities to assist in the purchase of the Country D property.
As indicated, the husband seeks that the Country D property not be the subject of any property settlement order. Given that the wife has made an application to the Country D court, I find that it is just and equitable not to make an in personam order in relation to the Country D property and to leave the Country D court to determine the ownership of the Country D property. As currently determined it seems likely that the husband will receive a one quarter interest in that property and the wife will receive none of it.
The debt of the wife to the Australian Taxation Office and other debts
Initially it was asserted that the wife owed a debt to the ATO. That debt was originally said to be $74,000. On that basis, I invited the Deputy Commissioner of Taxation (“the Commissioner”) to intervene in the proceedings. Having reviewed material, the Commissioner indicated that he did not intend to become a party to these proceedings.
Exhibit 32 comprises of two letters from the ATO setting out the wife’s current outstanding taxation liabilities. As at 26 March 2014 the wife’s current tax debt is in the sum of $81,017.03 and the wife is currently disputing this amount in the Administrative Appeals Tribunal (“AAT”). On 14 March 2014 the Commissioner sent the wife a letter of offer in the AAT matter reducing the tax debt to $20,349.53. This offer expired on 30 April 2014 and I do not know if the wife might receive an extension of time.
The wife asserts she owes Mr LL $3,000 for school fees that he allegedly paid on her behalf (this is a man who says he gave the wife $60,000 to gamble for him).
The wife also says that she owes back rent of about $8,900, and about $15,000 for L’s current school fees. She asserts that she has a debt on her current ANZ visa card of $29,500 and that she currently has no access to any funds.
CONTRIBUTIONS
The wife concedes that both parties worked very hard up until 2009. Throughout the marriage the parties bought and sold properties, a supermarket business, and ran three different companies, all essentially involved in providing services.
Initial contributions
The wife asserts that she had approximately $100,000 in assets at the commencement of the relationship. The wife says before the parties married she had $55,000 in a term deposit at the Ms HH Bank of Australia, some cash, around $20,000 of furniture and a motor vehicle valued at $26,000. In relation to the $55,000 in a term deposit, part of Annexure A to the wife’s affidavit sworn 5 February 2013 are two documents from the Ms HH Bank of Australia. On 10 March 1995, the wife placed $30,000 in a two year term deposit. On 14 July 1995, the wife placed $25,000 in a one month term deposit. I accept that the wife had $55,000 in a term deposit at the commencement of her relationship.
The wife says at the date of cohabitation she was working afternoon shifts at and teaching Country D language. The husband says the wife commenced that role in 1996 after the parties were married. Nothing turns on that difference in the evidence.
The wife says the Suburb P property was solely her property, having purchased it around September 1995. This was a year and a half after the parties commenced living together and shortly before they married. The wife says she purchased the house for $188,000. She says she paid 20 percent of the purchase from her savings, and financed the remaining 80 percent by way of mortgage. The husband said the property was purchased under their joint names with a deposit of $18,800 from their joint account, the remainder financed by mortgage. The husband seems to be correct about who purchased the property. Annexure I to the wife’s affidavit filed 6 February 2013 would indicate the property was purchased in joint names. Once the wife’s initial cash contribution ($55,000) has been otherwise acknowledged, little turns on this difference in the evidence about the source of the deposit.
Financial contributions
From about 1998 the husband began earning $150,000 - $200,000 a year from the business. By 2003 or 2004, the husband was earning over $300,000 a year.
The husband says the wife hasn’t worked except for the part-time job before 1996 and for the two years she ran the corner shop. I do not accept that is so.
I am satisfied that the wife was substantially the financial controller of the business activities of the parties during their marriage.
The acquisition and disposal of real estate
In July 2000 the parties purchased a property in Suburb R as joint tenants. The husband borrowed a sum of $20,000 from his mother for the deposit and the sum of $380,000 by way of mortgage with St George Bank. In or about 2001 the Suburb P Property was sold and the parties received net proceeds of sale in the sum of about $70,000. They then applied a sum of $20,000 for the renovation of the Suburb R Property and another sum of $20,000 was repaid to the husband’s mother to clear the loan.
On or about 19 December 2003 the parties purchased a property at Suburb U for $730,000. The parties applied money from their joint account towards the initial deposit of $73,000 and jointly borrowed $584,000 by way of mortgage. The parties used their money from time to time to repay the mortgage and the husband would hand over his entire earnings from the business to the wife, who managed the finances. In April 2005 the parties began the re-building of the property at a total cost of $250,000 from their joint account. Prior to re-building the property, the parties received rent of $550 per week which was deposited into their joint bank account.
On 13 February 2004 the Suburb R property was sold for $725,000 and the parties received net proceeds of sale in the sum of $340,000. The entire proceeds of sale were applied to the Suburb U property.
In or about June 2010 the Suburb U property was sold for $1,380,000. The wife received net proceeds of about $826,460.59 and used this towards the purchase of the property at Suburb Y which was purchased by the wife for $1,170,000. At that time the wife received the bank cheque for $150,000, probably handed to her by her father. As I have already discussed I have no confidence in making any finding about whether those monies were actually the monies of the parties held in the brother’s name, the repayment of a loan, a loan, or a gift. If not the funds of the parties, I do not know if those funds were those of the wife’s father or the wife’s brother.
In August 2010 a property at Suburb Z was purchased in the wife’s name for $540,000. The wife asserted that that was the actual value of the property, although the arrangement the wife entered into also released the vendor from a liability for work in the sum of $150,000. The wife asserts that the vendor cheated the parties by selling the property to the wife for effectively a value of $690,000 when the Suburb Z property was not worth that amount at that time.
Non-financial contributions
In May 2001, the parties purchased a corner shop. The husband says he was responsible for setting up the shop in the morning and closing the shop in the evening. The wife says she worked 12 hour days in the shop, seven days a week, by herself. She says she opened the shop every morning at 7am and closed at 7pm. I am content to find that at this time the personal exertion of both parties was contributed in accordance with their personal capacities. The husband was physically working in the business.
The husband says he was solely responsible for rebuilding and renovating the parties’ homes and doing all the gardening and mowing. The wife does not put this in issue but says the parties have always employed a gardener to assist.
The husband says the parties shared the cooking, but mostly ate out at restaurants. He says he did most of the grocery and food shopping and he was responsible for looking after the family pets. The wife asserts the husband did no cooking for the family and the children looked after the pets.
The husband said the parties looked after E (as a baby) together and that E was later cared for by the husband’s mother for two years in Country D. The wife says she looked after and took L (as a baby) to her shop every day to care for him while she was working.
I find that during the time the parties were together, the wife played a greater role than the husband in making contributions to the welfare of the family.
Post separation contributions and expenditure
The husband conceded that he has not made any contributions to the welfare of the children post separation, apart from making some child support payments as has been documented.
The amount of capital that the wife had available to her at the date of separation is not entirely clear. The following history however seems to be broadly agreed.
In 2010 the parties sold their property at Suburb U for $1,380,000. At that time the mortgage on the Suburb U property was $881,853. The net proceeds of sale were consequently $498,147. Agent’s commission would have had to have been paid. The husband’s case outline asserts and I accept that the parties received net proceeds of sale of $459,362.
The parties at the same time purchased the Suburb Y property for $1,170,000 in the wife’s name. The wife borrowed $396,000 by way of mortgage from HSBC. As part of the purchase transaction, the parties paid a 20 percent deposit, being an amount of $234,000. There would have been other costs associated with the purchase. Ignoring those costs and applying simple mathematics, as at 2010 there was a surplus of about $225,000 from the sale of the Suburb U property after the purchase of the Suburb Y property.
The husband asserts that as at the date which I have found to be the separation date, namely July 2011, there was $252,000 in the wife’s name in the HSBC account (the bulk of which were the net proceeds of sale of the Suburb U property).
In August 2011 the wife purchased a unit at Suburb Z for $540,000 and applied $120,000 of the money in the HSBC account towards that purchase. The balance of the purchase costs were borrowed from HSBC in the sum of $432,000.
In April 2012 the wife sold the Suburb Z unit for $590,000. Assuming that there had been no appreciable reduction in the mortgage on the Suburb Z unit over a period of eight months, and ignoring sale costs, the wife would have had an equity in that property of $158,000 ($590,000 - $432,000).
In the husband’s case outline, he asserts that the wife had capital funds available to her, post separation, as follows:
HSBC (July 2011)
$252,000
Net proceeds of sale of the Suburb Z property (May 2012)
E $158,000
Sale of motor vehicle 1 (March 2012)
E $57,000
Sale of 4WD
E $15,000
In relation to the sale of the motor vehicle, at the date of separation, the wife had three motor vehicles in her control. She sold two of them. The two motor vehicles that the wife sold were a motor vehicle 1 and a 4WD motor vehicle. The motor vehicle was sold for $50,000 and the 4WD for $11,000, and the wife has had the sole use of those funds since the separation. The wife has recently transferred her motor vehicle 2 to her son, E, who currently is in year 12 and has only just obtained his driver’s licence.
The assertion contained in the husband’s outline involves a double counting, given that as set out above, the sum of $120,000 was used from the funds in the HSBC bank to purchase the Suburb Z unit and represents the bulk of the $158,000.
The wife, post separation also had control of, lived in and then sold the Suburb Y property, which is discussed above. The proceeds of the sale of that property have been substantially accounted for. The wife also received the balance of the proceeds of the sale of Suburb Y after she had paid the $270,000 to B. This was a sum of about $63,000. As set out above that amount (together with a further $37,500 from the $270,000) has apparently been expended mainly upon educational expenses (primarily private school fees) for the children.
The wife may or may not owe some money to members of her family, but I am unable to make a finding about that.
After separation, the wife also had control of the rental income from the Suburb Z and Suburb Y properties, but she asserts that the outgoings on those properties exceeded the income. The wife also paid the children’s private school fees (apart from school fees paid from the sale of the Suburb Y property).
Further, the wife received US $32,000 from an account numbered 389.
I accept that the wife had control of the capital of the parties in the identifiable amount of approximately $383,000 ($252,000 + $158,000 - $120,000 +$50,000 + $11,000 + US $32,000).
The wife asserts that she has expended all funds in the period since separation on her children, living expenses and renovations and repairs on the Suburb Y property prior to its sale. In the wife’s affidavit filed 5 February 2013 she says she spent money on “re-new the Suburb Y property, new swim pool, new gardens, new kitchens”. The wife asserts (but leads no expert evidence to establish) that these expenditures led to an increase in value of the Suburb Y property. She also says the tenants stopped rental payment on 1 March 2012 and they damaged the house (“Swim pool, all the lights, garage doors, kitchen, timber floors, all the curtains, water taps, bathrooms, toilet too”) and that she spent “lots of money to repair”. As discussed below, it is likely that amounts that the wife has not expended on supporting herself and the children and conserving and repairing the Suburb Y property, were either used by the wife on gambling activities or held in undisclosed deposits.
The Suburb Y property was purchased in June 2010 for $1.17 million and was sold for $1.3 million on 12 August 2013. Absent any evidence, I am not prepared to accept that the wife made substantial improvements to the property that led to an increase in its value but I accept the wife spent money to conserve and maintain the property.
The wife gave evidence that some expenditure on apparent luxuries (a Chanel bag for example) which were purchases made by her on her credit card, were in fact expenditure by her on behalf of others who had provided her with the funds to make that purchase. Absent any other corroboration, I do not accept the wife’s evidence that she had purchased such items for others in the manner described by her.
The wife’s gambling
Part of the answer as to missing funds can be found in evidence which discloses that the wife was involved in significant gambling activities.
Counsel for the husband submitted that the records that have been produced to the court indicate that the wife started attending the Casino from about 2007 onwards.
Counsel for the husband asserted that records from the Casino indicated that between 31 July 2011 and 17 February 2013 the wife lost about $109,000. The summary prepared by the husband indicates an actual loss of $157,000 between 3 November 2007 and 17 February 2013.
In oral evidence the wife acknowledged that she would spend time on each day of each weekend in the last twelve months at the Casino. On that estimate, the wife would have been at the casino on 100 days in the year. It is clear however that she spent significantly larger amounts of time than that during the year at that casino. For example, the husband established that between mid October and mid November the wife was at the Casino on twenty days.
The wife denied that she had transferred any of her funds to the Casino for gambling and asked for an example. The wife was referred to a withdrawal of $20,000 from her HSBC account on 29 January 2013. There was a deposit on the same day into her account at The Casino. The wife alleged that “LL” (Mr LL) had given her that money. The wife conceded however that Mr LL was not a signatory on her HSBC account. The example of the transfer of funds on 29 January 2013 was not an isolated one.
The objective documentation is replete with examples of the wife drawing funds from accounts within her own control, without any detailed explanation as to how she disposed of those funds. There are significant numbers of entries that point to the wife having lost money through gambling activities.
During the trial there was not a detailed analysis of the records from the Casino. It may have been, if that analysis had been done, the wife’s gambling activities are of a far greater magnitude than what the husband asserted during submissions. Between 25 June 2012 and 14 February 2013, the wife withdrew approximately $244,000 from her HSBC account. Most of these withdrawals were in round amounts of either $10,000 or $20,000 (with two exceptions; a withdrawal on 23 October for $15,000 and a withdrawal on 29 January for $29,000).
The wife asserts that the large amount of activity attributed to her in the subpoenaed records from the Casino is explained by the fact that friends of hers used her credit facilities to gamble at the Casino. Further, her evidence is that friends give her money to gamble with. Mr LL provided an affidavit to the effect that he gave the wife $60,000 to gamble at the Casino in February 2014.
The wife explained her rather extraordinary number of attendances in a year at the Casino as a means by which she obtained member points by placing bets for other people and that having earned these points, she then got benefits (including food) to take home to her children.
The wife referred to a letter from Mr MM dated 27 March 2014 which is exhibit 19. Mr MM refers to himself as the Casino’s “expert witness when it comes to explaining gaming records to Law Enforcement agencies and in response to subpoenas and in court should it be necessary”. He explains that the casino is unable to verify who it was that used the member card on the gaming machine, but whilst the card was issued to the wife personally, it is not uncommon for players to give their cards to another person to use and some players inadvertently leave their card in a gaming machine when they cease playing and a second person may then play on that machine with that second persons records being attributed to the first players records. He also says that no reliance should be placed on the accuracy of the Table Game records and that it is very probable the wife’s actual win/loss will be different to what the records indicate. The “cash in” figure can also be misleading. Lastly, the grand total of deposits on the Funds on Deposit Detail report is a total of all deposits made and accordingly is not a true record of money brought to the casino.
Having taken all that into account, I still find that in the context of the known assets in this case, a significant amount was lost in gambling by the wife.
RELEVANT s 79(4)(d) – (g) MATTERS
The wife at the time of the first part of the hearing, was renting at Suburb M.
At the time of the second part of the hearing, the wife gave evidence that she had been evicted from her rented accommodation and was temporarily being accommodated by the parents of one of her children’s school friends.
The wife made assertions during the trial that she suffered from a depressive illness. The wife did not provide any medical evidence to substantiate that assertion. Absent any medical evidence, I am unable to conclude that the wife has any difficulty arising from her mental status, save that there is an indication in the objective evidence that the wife may have a gambling addiction.
The wife is bilingual and notwithstanding the fact that an interpreter was used to take her evidence, she has a more than adequate command of English. The wife is intelligent. When asked about her earning capacity, she indicated that she was unable to have employment because she needed to drop the children to school and that also she needed to be available to assist her mother during her illness. She indicated her father is also not well. Although I do not have any admissible medical evidence, the wife asserted that her mother’s life expectancy with chemotherapy is between one and a half and two years.
The husband has a one quarter interest in the Country D property which is worth $156,213. As already discussed, I have accepted that the Country D property should be excluded from any property settlement order. I take into account that the wife has not so far been successful in convincing a Country D court that she has a claim in respect of that property.
The husband gave evidence about his living arrangements with Ms O. They have a close personal relationship. I formed the view the husband was being quite coy in telling me what those arrangements were. On balance, I find the husband is living in a de facto relationship with Ms O. Ms O did not give evidence in the husband’s case.
N Pty Ltd is a company which was set up by the husband after his bankruptcy. The husband asserted to the CSA that he was getting $23 per hour after tax from this company. He also says in his affidavit that he didn’t really start doing work for this company until July 2013, notwithstanding it was incorporated a year before that. He did say in his evidence that Ms O had no experience at all in the business. The husband does hold a qualification as a contractor and has a contractor’s licence. He agreed that the company does not have any licence in its own right and the company operates under his licence. I found that the husband was disingenuous when he told me he did not understand when I asked him if he controlled the company. He agreed with the wife in cross examination that he was involved in getting employees to jobs and generally supervising their work. I do not at all accept the husband’s evidence that he is not back doing business in a reasonably substantial way. It may not be at the full extent of his operations prior to his bankruptcy, but I am reasonably satisfied that he is generating a far higher level of income out of that operation than he is disclosing to me or to the CSA.
Exhibit 28 were two folders produced by Ms JJ from KK Pty Ltd. The wife asserted that they indicated that after separation the husband traded under a company by the name of N Pty Ltd. The two folders contain invoices and credit notes of N and X for the purchase of products from KK Pty Ltd. The invoices seem to suggest there was trading activity by N with KK Pty Ltd from 21 August 2012 to 11 May 2013 and Ms JJ confirmed in her oral evidence that in this time N had purchased between $20,000 and $30,000 of products. The documents demonstrate that during the majority of that time the husband was the authorised person to pick up the orders.
Further, the invoices show that X was trading with KK Pty Ltd between 2 July 2011 and 24 July 2012 and Ms JJ provided evidence that in that time, X purchased in excess of $50,000 of products.
The husband agreed, when he was asked questions about it, that a payment of approximately $9,000 was made to one of the two children’s schools in cash. He said the source of that cash came from Ms O’s personal bank account. The husband asserted that there had been a payment into Ms O’s personal bank account by his sister in Country D of approximately $9,000. I would not be prepared to accept that evidence without corroboration.
In respect to the payment of legal fees, the husband also gave some evidence that some monies came from his sister in Country D, again through Ms O’s account; two lots of $20,000. Again, I do not accept that evidence about the sources of funds without corroboration.
I find that the husband and Ms O are involved in a joint enterprise and there has not been a full disclosure of how they have arranged their financial circumstances.
The children are currently estranged from their father. The wife will continue to have the primary financial responsibility of caring for the children.
The wife intends to approach the CSA to provide them with information that she has obtained as a result of issue of subpoena in this matter, relating to the position and trading activities of the husband. As at the date of these orders, it is uncertain as to whether or not the wife will be able to obtain a higher assessment from the CSA and even more problematic is whether or not having obtained such an assessment, she will be able to extract payment from the husband.
JUST AND EQUITABLE
In making her application for 80 percent of the husband’s interest in the Country D property and 80 percent of what is in Australia (although her application now seems to be 100 percent after repayment of monies she asserts are owed by her to her brother and her parents), the wife refers to a promise that the wife asserts her husband made at around the date of separation; that she could have 80 percent of all the assets.
The husband asks that part of the remaining funds be used to discharge his bankruptcy. I accept that the debt that led to the bankruptcy of the husband was accrued during the marriage and arose out of joint commercial activities.
On the condition monies are made available to assist the husband to discharge his bankruptcy, the husband seeks the payment of E’s school fees for the balance of the 2014 year because of what he perceives to be a “critical junction in E’s educational life”. The wife also seeks a similar payment.
The wife however complained that the husband’s application only focused on E’s education and not on L’s education. Whilst that is undoubtedly so, absent the consent of the parties, I find that making provision for L’s schooling is a matter for further consideration under the Child Support (Assessment) Act 1989 (Cth), rather than it being an order for settlement of property for the benefit of a child pursuant to section 79.
The wife’s debt to the ATO is about $81,000 but the ATO has offered to settle with her for an amount of $20,349 as long as a payment was made by 30 April 2014. I do not know if the ATO will extend the offer.
What remains is for me to make a property settlement order between the parties that deals with the one remaining asset in Australia that is known to exist, in circumstances where I have substantial doubts about whether or not either party has made a full and frank disclosure as to their current financial circumstances.
The most weighty considerations are:
· The wife’s initial contribution of $55,000 in cash;
· The doubts about contributions possibly made on behalf of the wife by family members;
· The respective contributions of each of the parties towards the acquisition, conservation and improvement of the properties and to the welfare of the family;
· The source of the debt which led to the husband’s bankruptcy;
· The wife’s receipt of capital after separation of about $383,000, some of which has been used by the wife to support herself and the children since separation and to conserve and repair the Suburb Y property but on the balance of which (an amount I cannot quantify) has been lost by the wife through gambling activities or is otherwise held by the wife but not disclosed;
· The wife continuing primary responsibility for the care of the children;
· The husband’s superior ability to regenerate assets though his business.
Balancing all those matters, I find that a just and equitable outcome would be to release from the funds available amounts that would substantially discharge the husband’s bankruptcy (limited to an amount of $115,053 plus interest on that debt from 13 February 2013); to pay to F School for the balance of school fees for 2014 year for E; to satisfy the ATO in respect of the wife’s debt (an amount somewhere between about $20,350 and $81,000) owed by her; to pay the husband’s current child support debt; and to divide the remaining balance (if any) evenly between the parties.
WIFE’S APPLICATION TO PHOTOCOPY SUBPOENAED DOCUMENTS FROM KK PTY LTD
During the last phase of the hearing the wife had issued a subpoena to KK Pty Ltd. Ms JJ from that company attended to produce records which became Exhibit 28.
The wife sought permission to photocopy Exhibit 28 for the purposes of being able to provide those documents to the CSA in support of her proposed departure application.
After the evidence had concluded and during final submissions, the wife submitted from the bar table that the documents produced by KK Pty Ltd indicated that the husband had been working at various sites and that he had many workers working for him, with him as the boss.
These documents may be of some relevance in the event that the wife makes an application for departure from a child support assessment. Permission is granted to the wife as sought to photocopy subpoenaed records from KK Pty Ltd for the purposes of making them available to the CSA.
I certify that the preceding two hundred and two (202) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 23 July 2014.
Associate:
Date: 23 July 2014
Key Legal Topics
Areas of Law
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Immigration
Legal Concepts
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Judicial Review
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Procedural Fairness
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Jurisdiction
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Natural Justice
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