Zao & Lee
[2023] FedCFamC1F 675
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zao & Lee [2023] FedCFamC1F 675
File number(s): SYC 8556 of 2015 Judgment of: ALTOBELLI J Date of judgment: 16 August 2023 Catchwords: FAMILY LAW – PROPERTY – Where the wife managed the finances in the relationship – Where there has been non-disclosure, particularly by the husband – Where there are numerous bank accounts, loans and transfers – Where there are multiple informal loans from family members in Country D – Where the wife made a greater financial contribution at the commencement of the relationship and the husband made a greater contribution during the relationship – Where there is no adjustment for future needs. Legislation: Family Law Act 1975 (Cth) ss 75, 79 Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
In the Marriage of Quinn (1979) FLC 90-677; [1979] FamCA 86
Kowaliw & Kowaliw (1981) FLC 91-092; [1981] FamCA 70
NHC and RCH (2004) FLC 93-204; [2004] FamCA 633
Speller v Chong [2003] NZFLR 385
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Suffolk v Suffolk [2007] FamCA 797
Trevi & Trevi [2018] FamCAFC 173
Weir& Weir (1993) FLC 92-338
Division: Division 1 First Instance Number of paragraphs: 92 Date of hearing: 3–6 July 2023 Place: Sydney Counsel for the Applicant: Ms Coulton Solicitor for the Applicant: Westlink Legal Pty Ltd Solicitor for the Respondent: QV Law ORDERS
SYC 8556 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LEE
Applicant
AND: MS ZAO
Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
16 AUGUST 2023
THE COURT ORDERS THAT:
1.Within 60 days, the parties are to do all acts and things to sell the property located at H Street, Suburb E NSW being the whole of the land contained in Certificate of Title Folio Identifier … (“the H Street property”). Upon the sale of the H Street property, the proceeds of sale are to be disbursed in the following manner:
(a)To pay the ancillary costs of sale;
(b)To discharge the mortgage; and
(c)To pay the balance to the Applicant husband (“the husband”).
2.Within 28 days of settlement of the sale, the Respondent wife (“the wife”) is to pay the husband a lump sum (“the lump sum”) equivalent to any shortfall between the husband receiving all of the net sale proceeds plus all assets in his possession and control, and 50% of the net assets of the parties as found by the Court (having regard to the actual sale price of the said property), failing which interest will accrue on the said sum in accordance with the Family Law Act 1975 (Cth) (“the Act”), its Rules and Regulations, calculated from 28 days from the date of settlement aforesaid.
3.In the event that the wife is not able to meet the lump sum payment of any shortfall to the husband in accordance with Order 2, then the wife shall forthwith take all necessary steps and execute all documents to cause the property at F Street, Suburb E NSW to be sold for the best price achievable, and to use the net proceeds of sale to pay the husband the lump sum together with any interest to which he is entitled under these orders.
4.As between the parties and subject to the above orders herein, the husband and the wife will each respectively retain all interest in and entitlements to all of their property and entitlements in their possession, power or control, including their superannuation, as at the date of these orders.
5.Both parties shall promptly do all acts and things and execute all documents, authorities and writing as are necessary to give effect to all or any of the provisions of the paragraphs comprising these orders within the timeframes specified.
6.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders then the Registrar of the Court be appointed pursuant to s 106A of the Act 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.
7.Leave is granted to the parties to apply to relist the proceedings on 14 days’ notice to deal with any interpretation, implementation and/or enforcement of these orders.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 the pseudonym Zao & Lee has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
These reasons for judgment explain the orders that the Court has made in relation to the alteration of property interests of the parties in this matter.
BACKGROUND
Mr Lee (“the husband”) is the applicant in this matter and is 63 years old. Ms Zao (“the wife”) is the respondent and is also 63 years old. The parties commenced cohabitation in mid-2010 and married in late 2010. The parties separated in December 2014 and their divorce was finalised in 2016. There are no children from the marriage, however the husband has one son from a previous relationship and the wife has one daughter from a previous relationship. Both parties are from Country D, but they cohabitated in Australia and both remain living here.
This matter has been before the Court since December 2015. The final hearing which was listed to commence on 6 June 2022 was vacated due to non-compliance with Court orders and directions. The final hearing came before me for four days between 3 and 6 July 2023. The husband was represented by counsel and the mother was represented by a solicitor advocate. Both parties required the assistance of G Language interpreters.
COMPETING PROPOSALS
In his Minute of Order received on 27 June 2023, the husband proposes that the former matrimonial home, H Street, Suburb E (“the H Street property”) and F Street, Suburb E (“the F Street property”) be sold and that the net proceeds of sale be disbursed as to 70 per cent to himself and 30 per cent to the wife. This is to occur after the payment of ancillary costs of sale, the payment of the mortgage to the National Australia Bank (“NAB”) in the sum of $710,000, and the payment of $213,846 to the husband’s relatives. The parties will otherwise retain all of their interest and entitlement to all of their property and entitlements in their possession, power or control, including their superannuation.
In her Minute of Order contained in her case outline in the court book received on 29 June 2023, the wife proposes that she transfer to the husband all of her right, title and interest in the H Street property and that the mortgage for that property be transferred into the husband’s sole name. She also proposes that the husband pay to her the sum of $250,000.
EVIDENCE BEFORE THE COURT
In support of his case, the husband relied upon:
(a)Case outline received 2 July 2023;
(b)His affidavit filed 4 July 2022;
(c)Affidavit of Ms J filed 5 June 2023;
(d)Affidavit of Ms C filed 5 June 2023;
(e)Affidavit of Mr K filed 5 June 2023; and
(f)Various documents tendered and marked as Exhibits A1–A29.
In support of her case, the wife relied upon:
(a)Case outline received 29 June 2023;
(b)Her affidavit filed 29 April 2022;
(c)Affidavit of Mr L filed 5 September 2018; and
(d)Various documents tendered and marked as Exhibits R1–R89.
The Court tendered a document after the proceedings, namely:
(a)Joint balance sheet, undated and marked as Exhibit C1.
The wife, the husband, his son Mr BB, his sister-in-law Ms J and his niece Ms C gave evidence and were cross-examined. Mr L’s affidavit filed 5 September 2018 was read but he was not required to be cross-examined.
APPLICABLE LAW
This is an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides:
79 Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s 75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”), the Full Court considered the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108, which provided guidance on how s 79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”), but on the basis that it is a shorthand distillation of the words of s 79, as opposed to being a statutory edict. The four steps articulated in Hickey at [39] are:
(1)Identify and value the property, liabilities and financial resources of the parties;
(2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
(3)Identify and assess the other facts relevant under s 79(4)(d)–(g) including s 75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
Another legal issue that arises is whether I should notionally add back assets to the property pool. In the Full Court’s decision of Trevi & Trevi [2018] FamCAFC 173, Murphy J explains at [27]:
The Full Court held in AJO and GRO that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
(Footnotes omitted)
Relevant to this case is the first category—that is, the question of adding back expenditure on legal fees. In this regard, the Full Court in NHC and RCH (2004) FLC 93-204 at [55] and [57] states:
55.This decision appears to confirm the principle that where the payment of legal costs can be regarded as a premature distribution of funds (in which both parties have an interest), it is appropriate to add back those costs as a notional asset. It also confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account. The decision also supports the proposition that where it is determined that a payment of legal fees should be taken into account as a notional asset, any outstanding liability in respect of those fees should also be taken into account.
…
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
A significant issue in this matter was the alleged non-disclosure of the husband. Attempting to deal with non-disclosure often puts the other spouse to considerable difficulty with regards to investigating their financial affairs. The Full Court in Weir& Weir (1993) FLC 92-338 at 79, 593-4 made the following statement regarding the duty to disclose and the Court’s powers where non-disclosure has been found:
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black & Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti & Giunti (1986) FLC 91-759, and Mezzacappa & Mezzacappa (1987) 11 Fam LR 957; (1987) FLC 91-853. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s 75(2) factors.
The husband also raised what is, in effect, a waste argument regarding the wife’s gambling. A succinct statement of the law in this regard is the statement by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 at 76, 644 (“Kowaliw”):
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or 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 conduct 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.
Another issue that needs to be considered in this matter is that the parties’ relationship was relatively short. Where cohabitation has lasted only for a short period, the Court is more likely to decide that “the contributions of the parties of their property should not be regarded as equal”, but there is no “formula or special rule to be applied in such cases” (Grant Riethmuller and Robin Smith, Family Law (Thomson Reuters, 7th edition, 2022) 798). However, it is often appropriate for the Court to examine the respective contributions of both parties to a marriage more closely in the case of a comparatively short period of cohabitation than in the case of a longer period (In the Marriage of Quinn (1979) FLC 90-677 at 78,613–78,615, 78,617) (“In the Marriage of Quinn”), and “the impact of initial contributions may be seen as more significant when weighed against other contributions” in a short marriage (Suffolk v Suffolk [2007] FamCA 797 at [104]).
Finally, I have also considered the cultural aspects of this case, in a situation where it may be more common for informal loans to be given between family members in Country D communities. Some Country D families may see familial transactions “as a natural part of family life in which legal formalities were unnecessary and which were flexible and based on mutual assistance and trust” (Speller v Chong [2003] NZFLR 385 [8]). Difficulty may arise when there are disputes about such transactions, as there is commonly “little contemporaneous documentary evidence available and testimonies are significantly divergent” (Mr M, [citation omitted]). However, while I acknowledge this may be the case, I note that neither party raised this as a relevant factor in relation to their loan agreements.
FINDINGS ABOUT CREDIT AND NONDISCLOSURE
It is regrettable that credit findings need to be made in this case, but it is necessary in order to adjudicate on the issues that the parties brought before the Court. In a financial matter it is often the case, and is certainly the case presently, that issues of the credibility of a party or a witness are very much linked to their willingness to comply with Court rules and orders about disclosure of their financial affairs.
In making these findings the Court is very conscious of a number of matters. Firstly, the husband has a poor command of the English language and gave all of his evidence through an interpreter. Secondly, the husband had limited education and completed secondary education in Country D but has not pursued further studies. Thirdly, he presented as a rather simple man who, for example, was prepared to, and in fact did, surrender all control of his Australian financial matters to the wife. It is an uncontested fact in this case that the wife controlled all the finances of both parties.
By contrast, the wife presented as the articulate, educated, intelligent and clearly savvy financial manager of this relationship. The Court accepts that English was not her first language but the Court had no difficulty understanding her, and she rarely (if at all) used the interpreter that was provided for her. She has been a full time health professional since 2005 and has worked for a number of years. She created a complex web of financial transactions which involved mortgages, loans and multiple bank accounts. She gave her evidence confidently, but had a marked propensity to argue her case rather than simply answer the questions asked of her, and she was just as feisty, evasive and often uncooperative as the Court will find the husband to have been.
It is also clear that cultural matters provide a context within which to understand how the parties conducted their financial affairs in what is, when viewed through a Western individualistic lens, such an opaque and informal manner. Thus, for example, the Court finds that both the husband and the wife made, or purported to make, quite substantial financial loans and/or gifts to members of family without documentation or consideration of issues such as interest-rates and dates for repayment. The Court is satisfied from the evidence however, that, in context, accountability was created by personal obligation rather than legal documentation.
The Court finds that the husband failed to comply with many requests for disclosure by the wife, and orders for disclosure made by the Court. The clearest evidence of this was contained in the affidavits of the wife’s former solicitor, Mr L filed 5 September 2018. His affidavit was read, but he was not required for cross-examination. By way of summary, Mr L describes the wife’s compliance with orders for disclosure and obtaining valuations, as well as her persistent request to the husband for the same, and the husband’s consistent non-compliant and evasive responses. He annexes extensive correspondence in support. The Court acknowledges that this lack of disclosure by the husband would have made the wife’s task of effectively putting forward her case more arduous.
In cross-examination about his financial affairs the Court found the husband to be feisty, evasive, and often uncooperative. He was at least honest about one thing, namely that he refused to answer certain questions about his bank accounts in Country D, specifically an account or accounts with O Bank.
The Court does not accept the husband’s evidence about his current assets and resources in Country D. As it turns out, however, the relevance of this finding is limited because neither party sought an adjustment under s 75(2) of the Act, nor did the wife’s case include a contention that she contributed to any such assets.
In this regard, however, the Court records that it does not accept the submission made by Mr Nguyen, the mother’s solicitor advocate, to the effect that the rejection of the husband’s evidence about his current assets and resources in Country D is pertinent to the issue of the alleged loans to him from Country D, which funds he contributed to the marriage. The submission was, in effect, that the Court does not know whether the alleged loans were merely the husband using his own money under the guise of the loan. As it turns out, findings can be made about the veracity of these loans quite independently of this issue.
The Court has fewer doubts about the husband’s evidence in relation to his financial affairs in Australia. The obvious difference between disclosure of financial affairs in Australia, and in Country D, is the transparency that is brought about through the ability to access relevant financial records by subpoena in Australia, but not in Country D.
As for the wife, there are also multiple issues about her credibility. Apart from the observations made about the manner in which she gave her evidence discussed above, two examples from her cross-examination should suffice.
Firstly, in relation to a question about a transfer of $150,000 from her S Bank account to Country D in early 2017 she told the Court words to the effect: “I refuse to answer this question”. In context, the fact of the transfer was indisputable, and the question sought an admission, or concession from her, that the source of the funds in question must have been joint monies, meaning the co-mingled monies of the husband and herself. There would have been many other potential plausible answers including, for example, “I don’t know” or “This is a difficult question and hard to answer”, both answers she had otherwise given in her cross‑examination. The Court accepts the cross-examination about financial affairs after the date of separation may have been both intrusive and offensive for both parties, but the fact is that both cases place these issues in dispute, and the question asked of the wife was relevant. Her choice to answer in the manner that she did reflects poorly on her credibility.
The second example is even starker. In cross-examination the wife recanted on substantial parts of her sworn evidence including, for example, about the husband’s homemaker contribution, purported loans to her from her relatives in Country D, and the veracity of some of the loans to the husband from his relatives in Country D.
For example at paragraph 60a of her trial affidavit dated 29 April 2022, referring to an inward transfer of $50,985 on 16 May 2014 from her niece Ms Q, the wife deposed that this was money that her niece had sent to her, and thus it was money that belonged to her. In context, the wife was denying the husband’s assertion that the funds in question were in fact his funds, and that he was merely using Ms Q as the conduit for getting his money out of Country D. The wife’s recanting of her sworn evidence seems to have coincided with the lawyers representing the husband directing the wife and her solicitor advocate’s attention to the bank transfers between the husband and Ms Q.
Another example is paragraph 21 of the wife’s trial affidavit in which she deposes to having received gifts of cash from relatives in Country D totalling $400,000 which, she contends, was applied towards the mortgage repayments of two of the properties, as well as the payment of rates, taxes and living expenses. No evidence was led by the wife supporting this contention. It did not feature in the submissions made on her behalf. As will be seen, substantial cash was received from Country D, but it was the husband’s money, not hers.
The final example in the wife’s cross-examination occurred when she was asked to concede that the husband had brought into the relationship $40,000 in cash originating from Country D. She denied this, and insisted that the money in question was in fact money generated by the husband during the relationship as a result of selling products purchased in Australia to Country D customers. The cash represented the sale proceeds being returned to Australia. This evidence is nowhere referred to in her affidavit and it was not an assertion put to the husband in cross-examination. It was a creative, recent invention by the wife.
The Court is left in the difficult position where it has significant concerns about the credibility of both the husband and the wife in this case. Indeed, the Court cannot be satisfied that the findings that it makes below about the assets, resources and liabilities of the parties, and their income and expenditure, is in fact correct. The Court will simply do the best it can in the circumstances. Nonetheless, the irony of the situation is worth recording. Both the husband and the wife come to this Court asking for it to make orders in their favour pursuant to the Act and its rules and yet both have either totally ignored, or selectively applied, the extensive provisions of the legislation which mandate disclosure.
THE BALANCE SHEET
At the commencement of the hearing the Court was provided with the document entitled “Joint Balance Sheet”, which is reproduced below:
Ownership Description Lee value Zao value ASSETS 1. W F Street Suburb E (pre-marital property) $670,000 $670,000 2. H&W H Street $1,400,000 $1,400,000 3. H P Street property, City B, Country D 1% share of $600,000 $6,000 ???
Non-disclosure4. H R Street, City B, Country D 50% of $300,000 $150,000 ???
Non-disclosure5. H Bank account of Mr Lee in Country D $0 ???
Non-disclosure6. H Shares owned by Mr Lee in Country D $0 ???
Non-disclosure7. H O Bank accounts owned by Mr Lee in Country D $0 ???
Non-disclosure8. H Z Finance card account owned by Mr Lee in Country D $0 ???
Non-disclosure9. H U Finance account of Mr Lee in Country D $0 ???
Non-disclosure10. W Motor Vehicle 1 (sold but new car bought $ $20,000 11. H Motor Vehicle 2 $1,000 $ 12. W CBA …46 $0 13. W Bank account ending …28 $ $11,607.97 14. W Bank account ending …88 $0 15. H Bank account ending …65 $5,000 $ 16. W Bank account ending …19 $ $0 17. W Bank account ending …44 $ $0 18. W Bank account ending …96 $ $0 19. W&H Bank account ending …45 $0 $0 Total $ 2,232,000
+ UNKNOWN$ 2,101,607.97
+ ???ADDBACKS 20. H Withdrawals from joint bank account …40 $ 41,877 $ 41,877 21. W Withdrawals from …28 on 4 Oct 2011 $ 104,598 $0 22. W Withdrawals from …28 on 5 May 2015 $6,000 $0 23. W Withdrawal from …45 on 14-25 Aug 2015 $203,000 $0 24. W Withdrawals from …28 on 24 Sept 2015 $21,970 $0 25. W Withdrawals from …28 on 3-4 Feb 2016 $7,000 $0 26. W Withdrawals from …28 on 31 Mar 2016 $4,000 $0 27. W Withdrawals from …28 on 29 Jul 2016 $3,000 $0 28. W Withdrawals from …28 on 15 Aug 2016 $43,500 $0 29. W Withdrawals from …28 on 5 Jan 2017 $6,000 $0 30. W Withdrawals from …28 on 03 Feb 2017 Intl $150,000 $0 31. W Withdrawals from …28 on 15 Mar 2018 $5,000 $0 32. W Withdrawals from …28 on 23 July 2018 $6,000 $0 33. W Withdrawals from …28 on 24 July 2018 Intl $100,000 $0 34. W Withdrawals from …28 on 27 Aug 2018 $86,000 $0 35. W Withdrawals from …28 on 19 Dec 2019 $6,000 $0 36. W Withdrawals from …28 on 27 Mar 2020 $21,730 $0 37. W Withdrawals from …28 on 29 Jul 2020 Intl $150,000 $0 38. W Gambling $29,782 $0 39. W Visa card …18 $146,147 $0 40. H Withdrawal from offset …45 $ 82,377.89 Total $ 1,141,604 $ 124,254.89 LIAIBILITES 41. H&W Mortgage for H Street (April 2017) NAB account ending …07 $ 710,000 $ 710,000 42. W Credit Card Visa with S Bank $ $ 1,742 43. H&W Mr BB $213,000 $0 44. H&W Mr Lee’s relatives $ 206,361 $0 Total $ 1,129,361 $ 711,742 SUPERANNUATION Member Name of fund Type of interest Lee value Zao value 45. W Superannuation Fund 1 $ 180,000 $ 180,000 46. H Superannuation Fund 2 in Country D $ ???
Non-disclosureTotal $ 186,000 $ 180,000
+ ???Total $ 4,688,965 + UNKNOWN $ 1,445,611.08 + ??? non-disclosure
The values of the real estate at items 1 and 2 are agreed.
There was no expert evidence about the value of the husband’s properties in Country D, being items 3 and 4 on the balance sheet. The values that he attributes in his column will be treated as admissions against interest. The Court notes that whilst these items quite properly appear on the balance sheet, it was not part of the wife’s case that she made any contribution to the same.
Items 5 to 9 are in the nature of shares, bank accounts or credit/debit type facilities which the wife contends are either owned or controlled by the husband. The Court finds that the husband does in fact have these shares and accounts but the value is unknown. The cross-examination of the husband about these issues was far from satisfactory.
Item 10 is Motor Vehicle 1 purchased by the wife as new after separation in August 2016, and later sold. The wife, quite properly, agrees that the sale proceeds should be added back, hence the value of $20,000 on the balance sheet. In the absence of evidence of value to the contrary, the Court accepts the same.
The values at items 11, 13 and 15 will be accepted on the basis of being admissions against interest. Many of the other accounts referred to at items 13 to 19 were referred to in cross-examination but no evidence was led to the effect that there were credit balances that needed to appear on the balance sheet.
A number of add backs were contended for, and where the Court has allowed these it is on the basis of evidence indicating that the expenditure in question was a premature distribution of matrimonial assets. Moreover, the Court is satisfied that even if these were payments post-dating separation, the source of the monies was the co-mingled funds of the husband and the wife.
Item 20 is an agreed add back.
Item 23 is an agreed add back, as conceded by the solicitor advocate on behalf of the wife during her cross-examination, and as demonstrated at paragraph 76 of her affidavit.
Item 30 is added back though not in the amount sought by the husband. The evidence indicates that the wife did in fact either loan or gift to her niece the sum of $150,000, but the bank statements suggest that $134,970 was repaid, thus meaning that an add back of $15,030 is allowed.
Items 31 and 32 represent alleged withdrawals from the named account. The bank statements purportedly showing these withdrawals were in evidence but there was neither cross‑examination nor submissions made in this regard. The add backs will not be allowed as there is no evidentiary context for the same.
Item 33, $100,000, is a payment by the wife to her daughter which, on the evidence, has not been repaid. Item 34, $86,000, falls into the same category. These will be added back.
There was no satisfactory evidence in relation to the other add backs contended at items 13 to 37 of the balance sheet, and they are thus not allowed. The Court repeats its observations found at [45] above.
Item 38 represents the wife’s own estimates of gambling expenditure in documents that she relied on. All the wife could contend in response to this is that she won more on gambling than she spent. There is ample evidence before the Court, even just in the form of bank statements, which lead to a very strong inference which enables the Court to find that the wife had a gambling habit before, during and after the end of this relationship. The wife’s non‑documentary evidence about this is inherently unreliable, including for reasons given about credibility earlier. It is more likely than not that she has minimised the extent of her gambling losses, and exaggerated her winnings. The contended add back is probably modest, but it is amply supported by the wife’s own documents, and will thus be allowed in the sum sought. The rationale for this finding is that the gambling was wasteful in that the wife “acted recklessly, negligently or wantonly with matrimonial assets” (Kowaliw at 76, 644). There is no evidence that the husband condoned or consented to the gambling losses. Indeed it is quite possible that the wife’s gambling activities were very substantial indeed.
Item 39 purports to be an estimate by the husband of expenditure by the wife on her Visa card for personal use after separation. It is unsupported by the evidence and will not be allowed.
Item 40 is an add back conceded by the husband.
In late 2015, after separation, the wife purchased an apartment at Suburb T (“the Suburb T property”) for nearly $590,000. She paid stamp duty of $21,970 out of her savings account. She contends that she paid the deposit of $57,330 which, she acknowledged at paragraph 76 of her affidavit, was partly the husband’s money, and thus should be added back. In the same paragraph she concedes that a withdrawal of $145,570 from a NAB offset account should also be added back. This is an entirely appropriate concession to make. The wife herself recognises that part of co-mingled monies was used to purchase the Suburb T property. That property was subsequently sold in mid-2021. The wife contends that she made a net gain of $24,461 on sale. From the Court’s perspective, the concessions made by the wife in relation to add backs adequately reflects the contribution made by the husband, and thus the Court places no significance on whatever money the wife may have received from the rental of the Suburb T property, or profit on sale.
Item 42 purportedly represents the balance on the wife’s Visa card at the date of separation. The contention is unsupported by any evidence, and is thus not accepted.
Item 43 was not pressed by the husband. This was appropriate in circumstances where, notwithstanding his contention that his son, Mr BB, had loaned him the money, when Mr BB gave evidence both in his affidavit and in cross-examination he made no reference to it at all.
Item 44 was hotly disputed. The husband contended that he borrowed moneys from relatives in Country D, which funds were applied for the benefit of the wife and himself during the relationship. The dispute was not about the receipt of the funds, but about their characterisation as loans that need to be repaid. The amount of time spent in the evidence and at the hearing of this case on this issue was quite disproportionate to the amount involved. Given the concession that the monies were received and applied for the benefit of both the husband and the wife, the monies are either characterised as loans that need to be repaid by the husband, or contributions made by the husband. If they were loans, the Court is satisfied they were loans made to the husband. They were thus repayable by him at some indeterminate time, as it is clear that there was no evidence of a written or oral agreement in relation to when the funds would be repaid. The fact that the monies were advanced pursuant to an oral agreement does not detract from any finding that there was a loan. There was an element of hypocrisy in the wife’s case in challenging the nature of these advances in circumstances where her own evidence indicated similar informal, unspecified, undocumented advances of money to her own daughter.
The Court finds that the husband borrowed $46,916.75 from Ms C on or about 14 June 2011. The money has not been repaid. The Court does not accept the wife’s case, whether expressly or by inference, that these were the husband’s own funds, and that other transactions were used to disguise the beneficial ownership of the money. Ms C gave evidence which the Court accepts.
The Court finds that the husband borrowed $46,875.09 from Ms J, his sister-in-law from Country D. There is no evidence that it has been repaid. The Court adopts its reasoning found in the last paragraph. A loan is established in the amount claimed.
The Court finds that these are loans owed by the husband. The money benefitted the wife and comprised part of their co-mingled funds. These loans will be treated as joint liabilities on the balance sheet, for which the husband will remain liable to repay.
The Court rejects the balance of the husband’s claim in relation to loans purportedly owed by him. It was very difficult to establish how the contended figure of $206,361 was calculated. It is not necessary to determine this, but the strong impression is formed that it somehow represents an amalgamation of monies received, some of which have already been dealt with on the balance sheet. The amount at item 44 will thus be $93,791.84.
At item 46 the husband concedes superannuation, or a superannuation-type resource in the sum of $6,000. The Court accepts that there is scant evidence about the precise nature and quantum of any such resource. Nonetheless it is quite properly included in the balance sheet.
Doing the best the Court can, therefore, and noting the limitations that have been identified above, the balance sheet will be as follows:
Ownership Description Value ASSETS 1. W F Street Suburb E (pre-marital property) $670,000 2. H&W H Street $1,400,000 3. H P Street property, City B, Country D 1% share of $600,000 $6,000 4. H R Street, City B, Country D 50% of $300,000 $150,000 5. H Bank account of Mr Lee in Country D Unknown 6. H Shares owned by Mr Lee in Country D Unknown 7. H O Bank accounts owned by Mr Lee in Country D Unknown 8. H Z Finance card account owned by Mr Lee in Country D Unknown 9. H U Finance account of Mr Lee in Country D Unknown 10. W Motor Vehicle 1 (sold but new car bought $20,000 11. H Motor Vehicle 2 $1,000 12. W CBA …46 $0 13. W Bank account ending …28 $11,607.97 14. W Bank account ending …88 $0 15. H Bank account ending …65 $5,000 16. W Bank account ending …19 $0 17. W Bank account ending …44 $0 18. W Bank account ending …96 $0 19. W&H Bank account ending …45 $0 Total $2,263,607.97 ADDBACKS 20. H Withdrawals from joint bank account …40 $41,877 21. W Withdrawals from -…28 on 4 Oct 2011 $0 22. W Withdrawals from-…28 on 5 May 2015 $0 23. W Withdrawal from -…45 on 14-25 Aug 2015 $203,000 24. W Withdrawals from -…28 on 24 Sept 2015 $0 25. W Withdrawals from -…28 on 3-4 Feb 2016 $0 26. W Withdrawals from -…28 on 31 Mar 2016 $0 27. W Withdrawals from -…28 on 29 Jul 2016 $0 28. W Withdrawals from -…28 on 15 Aug 2016 $0 29. W Withdrawals from -…28 on 5 Jan 2017 $0 30. W Withdrawals from -…28 on 03 Feb 2017 Intl $15,030 31. W Withdrawals from -…28 on 15 Mar 2018 $0 32. W Withdrawals from -…28 on 23 July 2018 $0 33. W Withdrawals from -…28 on 24 July 2018 Intl $100,000 34. W Withdrawals from -…28 on 27 Aug 2018 $86,000 35. W Withdrawals from -…28 on 19 Dec 2019 $0 36. W Withdrawals from -…28 on 27 Mar 2020 $0 37. W Withdrawals from -…28 on 29 Jul 2020 Intl $0 38. W Gambling $29,782 39. W Visa card …18 $0 40. H Withdrawal from offset …45 $82,377.89 40A W Deposit for Suburb T property $57,330 40B W Withdrawal from NAB offset account $145,570 Total $760,966.89 LIABILITIES 41. H&W Mortgage for H Street (April 2017) NAB account ending …07 $ 710,000 42. W Credit Card Visa with S Bank $0 43. H&W Mr K $0 44. H&W Lee’s relatives $93,791.84 Total $803,791.84 SUPERANNUATION Member Name of fund Type of interest Lee value 45. W Superannuation Fund 1 $180,000 46. H Superannuation Fund 2 in Country D $6,000 Total $ 186,000 Net Total (excluding superannuation) $2,220,783.02 Net Total (including superannuation) $2,406,783.02
Having regard to the Court’s findings about the balance sheet it is instructive to consider the impact of each party’s proposal in both percentage and dollar terms. On the husband’s proposal he would receive 51 per cent of a pool the net value of which is $2,406,783.02, and this would represent $1,227,459.34 to him. On the wife’s proposal she would receive 71 per cent of the pool which represents $1,708,815.94 dollars to her.
One wonders whether the parties, with the assistance of their lawyers, had undertaken this exercise. If they did, it was nowhere apparent in the material they placed before the Court, including their case outline documents.
ASSESSMENT OF CONTRIBUTION
No one contended that assessment of contribution should be on the basis of multiple pools. The wife contended that the Court should assess contribution on an asset-by-asset approach. The Court declines to do so due to the co-mingling of the parties’ finances with the consequential contribution by the husband to the wife’s assets at cohabitation.
The husband worked and earned income only for brief episodes during the marriage. As will be seen, his contribution in a financial sense was primarily by way of capital. He also owned two properties in Country D before cohabitation which the parties placed on the balance sheet. The Court is also satisfied that he contributed as homemaker, and that his contribution in this regard was close to being equal to that of the wife.
The Court finds that the husband’s cash financial contribution to the marriage amounted to $680,000. All of this money came from his own assets and resources in Country D, including the loans established above. The sum of $640,000 was conceded in the wife’s case. The remaining $40,000 represents the cash which the Court finds the husband did, in fact, bring into the relationship. The husband also contributed the two properties he owned in Country D, with agreed values totalling $156,000. There was no contention in the wife’s case that she contributed to these properties.
The $680,000 was not all received the same time. Indeed the evidence indicates that the monies came in certain tranches between 14 June 2011 and 1 July 2014 on the following dates:
(1)$123,683.09 in 2011, consisting of the following transactions:
(a)A payment from Ms J of $46,875.09 on 14 June 2011;
(b)A payment from Ms C of $46,916 on 14 June 2011;
(c)A payment from the husbands sister, Ms V of $19,992 on 21 June 2011; and
(d)Cash brought in by the husband from Country D in the amount of $9,900 on 8 September 2011.
(2)$82,678 in 2012, consisting of the following transactions:
(a)A payment from Ms J of $30,592 on 7 May 2012;
(b)A payment from Ms J of $15,892 on 6 June 2012;
(c)A payment from Mr BB of $16,204 on 6 June 2012; and
(d)Cash brought in by the husband and his friend (on the husband’s behalf) in the amount of $19,990 in October or November 2012.
(3)$247,980.19 in 2013, consisting of the following transactions:
(a)A payment of $46,419.12 from Ms Q on 24 May 2013;
(b)A transfer from the husband of $48,009.07 on 24 June 2013;
(c)A payment from Ms J of $49,992 on 25 June 2013;
(d)A payment from the husband’s nephew, Mr K of $51,580 on 4 November 2013; and
(e)A payment from Ms V of $51,980 on 5 December 2013.
(4)$226,201 in 2014, consisting of the following transactions:
(a)A payment from Mr K of $55,978 on 17 January 2014;
(b)A payment from Ms J of $55,978 on 17 January 2014;
(c)A payment from Ms Q of $50,985 on 16 May 2014;
(d)A transfer from the husband of $53,360 on 30 May 2014; and
(e)Cash brought in by the husband from Country D in the amount of $9,900 on 1 July 2014.
The Court notes that the figures above amount to $680,542.28.
In assessing contribution it is important to recognise that the funds of both the husband and the wife were co-mingled at all relevant times. Most, if not all of the husband’s money which came from Country D, was deposited into the wife’s S Bank account. It was then moved around into other accounts either in the name of the wife or the husband, or term deposits, or mortgage offset-type accounts. There is no doubt from the evidence that the wife was financially savvy, and for all practical purposes during the relationship controlled the parties’ finances. The fact that funds may have been held in the husband’s name does not detract from this finding.
The Court categorically rejects the express or implied contention in the wife’s case that because some, if not all, of the husband’s money sent from Country D went into her account that this somehow meant that she contributed to its deposit into her account. There is no significance in the name of the person into whose account the husband’s money was paid. The use of the wife’s bank account neither enhances nor detracts from the reality that the funds in question originated from the husband. The fact that it was paid into her account merely reflects the choice that the parties had made that she would be the financial controller in the relationship.
Assessing the contribution made by the wife is far more difficult, partly because of the very complex arrangements she entered into with various accounts into which monies were moved in and out; partly because of the many borrowings, mortgages and refinances that seemingly occurred both during and after the end of the relationship; and partly because of what seems to have been her tendency to borrow more money from the bank than was necessary for the relevant transaction.
It is interesting to observe that her own solicitor advocate referred to the “myriad bank accounts and transfers which needed to be unravelled”. He submitted that the wife’s affidavit presented an accurate picture of the movement and accumulation of funds. It is a very difficult document to understand and it seems to jump around from topic to topic with little logical rationale. It is likely to have been prepared by the wife herself with little supervision or oversight by a lawyer. If so, this was a false economy because the length of the hearing was undoubtedly extended because of the difficulty in trying to make sense of her evidence.
It warrants acknowledging that the onus of proof was at all times on the wife to establish her case about contribution, and to do so in a manner that was reasonably intelligible and transparent not just to the husband, but to the Court. It was not the task of the Court to trawl through the hundreds of pages of documents arrogantly tendered in support of the wife’s case to identify, and then draw appropriate inferences or make findings about the significance of those documents. That was the task of the wife and her lawyer. It was a task they did not diligently or satisfactorily discharge.
The wife worked as a health professional from 2005 and then throughout the relationship. Her income, whilst not high, was nonetheless substantial and the Court accepts that without this income it would have been more difficult to borrow money for the purposes of property acquisition and investment. She probably had superannuation at cohabitation. She also provided property as security for loans, including property which existed at the time of cohabitation. Hers was a substantial financial contribution, but it was quite disingenuous of her to seek to minimise the cash financial contribution of the husband.
When the parties commenced cohabitation in 2010 the wife already owned the F Street property, and a property at Suburb W (but, curiously, no detailed evidence is given about this property until paragraph 62 of the wife’s affidavit filed 29 April 2022). They lived in the F Street property for about one year and this is a contribution made by the wife.
It is useful to attempt to quantify the value of these assets at cohabitation. The absence of a retrospective valuation of the F Street property is singularly unhelpful.
The F Street property, of course, remains on the balance sheet. Its current agreed value is noted on the balance sheet, but there is no evidence of its value at the time of cohabitation. However, in cross-examination the wife confirmed that she purchased the F Street property for $381,000 in 2007. The wife contends that at about the time of cohabitation she owed $364,811 on the mortgage secured over this property (Exhibit R26). If so, whatever her equity in this property was, it could not have been significant unless the property had substantially increased in value between 2007 and 2010. The next year, on 4 October 2011, the mortgage was mostly paid out with a payment of $312,756.97, and the loan account was closed soon after. On the wife’s own evidence, therefore, the mortgage had been reduced by $52,000 during that first year.
The wife’s evidence is that in the financial year 2010–2011 she earned a total of $64,169.23.
The wife contends that she made a repayment of $52,900 off the mortgage using the sale proceeds of her property at Suburb W received in 2010. She deposes that this property was sold for $300,000 and was virtually mortgage free at the time of sale. This, according to her, was the payment referred to above off the mortgage of the F Street property, and about $247,000 paid into her savings account.
On the evidence before the Court it is difficult to quantify with any degree of precision the value of the real estate that the wife brought into the marriage. This was a missed opportunity for the wife. The onus was on her to establish this value. The value of real estate she brought in certainly includes the equity in the F Street property at the time, and the $247,000 representing the net sale proceeds of her Suburb W property.
The wife then deposes that in 2011 she purchased in her name a property at X Street, Suburb Y for $830,000 (“the Suburb Y property”). The security offered for the loan was over both the existing F Street property and the new Suburb Y property. The wife and the husband lived in this property for two years, and rented out the F Street property, applying the rent towards the mortgage and living expenses. The purchase was funded with a loan of $1 million from S Bank which, the wife contends, was used to complete the purchase of the Suburb Y property, and to pay out the loan on the F Street property. It is clear, therefore, that there was no equity deposit towards the purchase of the Suburb Y property.
It would have been useful to have had before the Court the application for the $1 million loan. In her evidence before the Court the wife sought to magnify her contribution, but minimise the husband’s contribution towards these transactions. However, her own evidence is that in the 2011–2012 financial year her taxable income was $79,490 which, even combined with rental income from the F Street property, raises some doubts about the plausibility of her obtaining a $1 million loan completely on her own. It must be remembered that by October 2011, the husband had already contributed around $123,683.09 by way of monies received from Country D.
The Suburb Y property was sold in 2013 for $876,000 and the wife deposes to have received net $132,440.
The wife deposes that in 2013 both she and the husband purchased the H Street property for $918,000. An $850,000 loan was obtained from the S Bank on the security of both the F Street and H Street properties. At one point in her evidence the wife contends they contributed no equity to this purchase, but later she contends that a deposit of $68,654 was paid at the time of purchase. She concedes that the stamp duty of $36,720 was paid out of joint funds and, in all likelihood the Court finds, any further funds needed to complete the purchase was provided from the same source. The husband and the wife lived at the H Street property until separation the following year. The husband continues to reside there. The property in question has an agreed value of $1,400,000. The S Bank loan was subsequently refinanced with the NAB in early 2015, after separation.
CONCLUSION ABOUT CONTRIBUTION
One could be forgiven for thinking that both parties, but especially the wife, had gone to great efforts to make the Court’s task of assessing contribution as hard as possible. Competent legal representation could have ameliorated this. It did not happen. The Court must do the best it can in the circumstances.
Contribution is assessed as being equal. The mere fact that this was a relatively short relationship does not necessarily exclude the application of a holistic approach to the assessment of contribution. This is particularly the case here where there are so many litigant-created uncertainties in the evidence which precludes a less impressionistic assessment of contribution. This being so, examining “the respective contributions of both parties to a marriage more closely in the case of a comparatively short period of cohabitation” (In the Marriage of Quinn) is difficult in this case. The Court finds that the more easily quantifiable financial contribution of the husband ($680,000) and his two properties in Country D is equivalent to the less easily quantifiable evidence of the value of the wife’s property, assets and other financial contributions made in the relationship. The timing at which the financial contributions were made (the wife had both the F Street and Suburb W properties at cohabitation, whereas the husband’s came in over a period of years), the fact of her earnings from employment throughout the relationship, and the fact that the F Street property remains in existence, are all factors pointing towards an overall assessment of equal contribution at the date of the final hearing, even if the husband’s financial contribution appears superficially to be greater than hers. The myriad contributions made by each of them during their relationship merely confirms the ultimate conclusion. They acquired the totality of what they have today because of the diverse contributions each made at different times.
ASSESSMENT OF FUTURE NEEDS
Even though the parties conceded that neither sought a future needs adjustment under s 75(2) of the Act, the Court confirms that it would have made no further alteration of property interests in the circumstances of this case. In the husband’s case this is primarily because of the lack of knowledge of his financial circumstances outside of Australia, other than his properties in Country D. In the wife’s case this is partly because of reservations in relation to her own financial circumstances, and partly because her own financial statement filed 2 May 2023 shows a substantial surplus of income over expenditure, as well a surplus of assets over liabilities, and superannuation to assist her in her retirement.
A JUST AND EQUITABLE ORDER?
Implementing an alteration of property interests with each party receiving 50 per cent of the net asset pool would result in each party receiving $1,203,391.51.
For present purposes a number of assumptions will be made. The liabilities at items 41 and 44 will be attributed to the husband. The H Street property will be attributed to the husband as, for reasons which will shortly become apparent, he will receive all of the net sale proceeds.
The husband proposes a sale of the H Street property. This is understandable as the parties’ joint mortgage liability is secured against this property. The wife proposes that she transfer her interest in this property to the husband, in return for a discharge of the mortgage and a cash payment to her. Neither party thus wishes to retain this property, and so it will be sold. If the sale proceeds are insufficient to meet the husband’s entitlement she will need to meet this in another manner.
The parties will do all acts and things to sell the H Street property. If the property is sold for its agreed value of $1.4 million and the proceeds of sale are distributed to the husband after the mortgage of $710,000 is repaid, he will receive approximately $690,000. If he then also kept the other assets and liabilities attributed to him, he would have $888,463.16, which is a shortfall of $314,928.35. If the wife retained all the assets and liabilities attributed to her on the balance sheet, she would have $1,518,320. The wife will need to make a lump sum payment of the shortfall to the husband, which may differ depending on the sale price of the property. The orders will reflect this.
The Court is satisfied to the extent that the evidence permits that the proposed orders are just and equitable to both parties. The Court acknowledges that a portion of the assets attributed to the wife constitutes notional i.e added-back property. The same applies to the husband. The impact of this on the wife is starker as she is left with less tangible property. Any anomaly in this regard may be understood by reference to a number of factors. The Court earlier mentioned that it was quite possible that the wife’s gambling activities were very substantial indeed, thus potentially explaining not just add-backs but the lack of tangible assets in her name. The wife has a substantial superannuation asset. She will become entitled to access this in the next few years. An important relevant finding is that the Court has significant concerns about the credibility of both the husband and the wife in this case. Indeed, the Court cannot be satisfied that the findings that it has made about the assets, resources and liabilities of the parties, and their income and expenditure, are in fact correct.
It is nonetheless interesting to compare the parties’ respective “before and after” relationship scenarios, as artificial as that may seem. The husband came into this relationship with the two properties at items 3 and 4, and introduced $680,000 in cash which, in all likelihood, existed before cohabitation or was generated without reference to or contribution by the wife. If this is quantified at $680,000 plus $156,000, his input totalled $836,000. His gain, so to speak, was $367,391.51. If the wife is treated, as she is, as having made an equivalent contribution, notionally assessed at $836,000, she too has made a gain, so to speak, of $367,391.51. This is, of course, a simplistic demonstration which in reality is coloured by the parties’ liabilities and added-back property as well as their non-disclosure.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 16 August 2023
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