Zhuo & Ji (No 4)
[2025] FedCFamC1F 22
•23 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zhuo & Ji (No 4) [2025] FedCFamC1F 22
File number(s): SYC 3409 of 2022 Judgment of: HARPER J Date of judgment: 23 January 2025 Catchwords: FAMILY LAW – PROPERTY – Adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) – Where final hearing proceeded as if undefended by the husband – Where there is extensive history of non-disclosure and breaches of Court orders by the husband – Where the husband’s conduct supports finding that there are non-disclosed assets – Where the wife is successful in seeking $5,886,842 in addbacks for property dissipated by the husband – Where money paid by the Second and Third Respondents is found not to be a loan – Contributions assessed as equal – Where the scale of the husband’s non-disclosure and breaches of Court orders justify substantial adjustment in the wife’s favour – Order for wife to receive entirety of all known assets – Order for husband to make a further cash payment to wife of $5,886,842 being the total value of property added back – Additional order for husband to pay spouse maintenance arrears of $188,998.41 plus interest.
FAMILY LAW – CORPORATE INSOLVENCY – Liquidator appointed as liquidator and receiver of trust assets held by trustee companies – Application for liquidator’s remuneration as liquidator and receiver – No material difference between principles applied to remuneration of liquidator and that of receiver and manager of assets of trust – Liquidator established prima facie case that remuneration is reasonable – Order for total sum of $563,580.74 in remuneration and disbursements paid to the liquidator.
FAMILY LAW – JURISDICTION – Liquidator’s claim for remuneration and disbursements made under the inherent equitable jurisdiction of the Court – Statutory jurisdiction of the Court under s 58AA and s 1377C of the Corporations Act 2001 (Cth) – Power of Court to make any order necessary to do justice includes power to approve remuneration and disbursements of liquidator and receiver.
Legislation: Corporations Act 2001 (Cth) Pt 5.6, Div 6, ss 58AA, 198G, 459A, 459P, 461, 474, 488, 501, 553, 1321 (repealed), 1337C, Sch 2, Div 90, ss 60-10, 90-15, 90-20
Family Law Act 1975 (Cth) Pts VIII, VIIIAA, ss 75, 79, 80, 81, 114
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 9, 44
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Ch 6, rr 6.02, 6.03, 6.04, 6.06
Cases cited: Agnarsson & Agnarsson (No 4) [2024] FedCFamC1F 407
Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1
Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347
Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102
Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Burke and Burke (1981) FLC 91-055; [1981] FamCA 44
Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102
Chang v Su (2002) FLC 93-117; [2002] FamCA 156
Conlan as liquidator of Rowena Nominees Pty Ltd (rec and mngr appt) (in liq) v Adams (2008) 65 ACSR 521; [2008] WASCA 61
Dentown Pty Ltd v PWI Group Pty Ltd (as trustee of the Australia No. 1 Group Trust) (2019) 141 ACSR 330; [2019] NSWSC 1032
Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592; [2005] HCA 20
Franklin's Selfserve Pty Ltd v Commissioner of Taxation(Cth) (1970) 125 CLR 52; [1970] HCA 33
G and G (2000) FLC 93-043; [2000] FamCA 1075
Harris & Dewell (2018) FLC 93-839; [2018] FamCAFC 94
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
JEL and DDF (2001) FLC 93-075; [2000] FamCA 1353
Jones v Matrix Partners Pty Ltd (2018) 260 FCR 310; [2018] FCAFC 40
Kowalski and Kowalski (1993) FLC 92-342; [1992] FamCA 54
Lin & Ruan (2021) FLC 94-024; [2021] FamCAFC 90
Mabb & Mabb and Anor (2020) FLC 93-947; [2020] FamCAFC 18
Magnus & Sandri (No 4) [2024] FedCFamC1F 499
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Martin & Newton (2011) FLC 93-490; [2011] FamCAFC 233
Metal Manufactures Pty Ltd v Morton (2023) 275 CLR 100; [2023] HCA 1
Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in liq) [2006] NSWSC 4
Morgan, Re Brighton Hall Securities Pty Ltd [2018] FCA 2029
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Norman & Norman [2010] FamCAFC 66
Public Trustee v Smith (2008) 1 ASTLR 488; [2008] NSWSC 397
Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789
Re JML Property Services Pty Ltd (in liq) [2018] NSWSC 1069
Re JPD Media & Design Pty Limited (subject to Deed of Company Arrangement) [2020] NSWSC 1311
Re M & J Super Fund Pty Ltd (in liq) [2021] NSWSC 279
Re Say Enterprises Pty Ltd [2018] NSWSC 396
Re Stockton Ltd (2004) 140 FCR 424; [2004] FCA 1682
Re Timeshare Resort Club Ltd (in liq) (2010) 187 FCR 13; [2010] FCA 673
Sarto & Sarto (2022) 65 Fam LR 605; [2022] FedCFamC1A 16
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332; [1990] HCA 8
Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144; [2011] VSC 380
The Commonwealth v Milledge (1953) 90 CLR 157; [1953] HCA 6
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Vass v Vass (2015) 53 Fam LR 373; [2015] FamCAFC 51
Watson v Ling (2013) FLC 93-527; [2013] FamCA 57
Waye & Waye [2023] FedCFamC1F 962
Wei v Xia (No 5) (2023) 67 Fam LR 421; [2023] FedCFamC1F 679
Wirth v Wirth (1956) 98 CLR 228; [1956] HCA 71
Zao & Lee [2019] FamCAFC 169
Zegna & Zegna (No 2) [2022] FedCFamC1F 558
Zhuo & Ji [2023] FedCFamC1F 357
Zhuo & Ji (No 2) [2023] FedCFamC1F 640
Zhuo & Ji (No 3) [2024] FedCFamC1F 159
Division: Division 1 First Instance Number of paragraphs: 195 Date of hearing: 18-19 September 2023; 2-4 September 2024; 16-18 December 2024 Place: Sydney Counsel for the Applicant: Mr Mellas Solicitor for the Applicant: Lander & Rodgers Counsel for the First Respondent: Litigant in person on 18-19 September 2023; Mr Eardley on 18 December 2024 Solicitor for the First Respondent: Mr Hall of Hall Partners on 2-4 September 2024; Mr Stewart of Stewart Law on 16-18 December 2024 Counsel for the Second and Third Respondents: Mr Hartwell on 18-19 September 2023 and 2-4 September 2024; Mr Strik on 16-18 December 2024 Solicitor for the Second and Third Respondents: Castle Lawyers on 18-19 September 2023 and 2-4 September 2024 Counsel for the Fourth Respondent: Mr Anderson on 2 September 2024; Mr Spencer on 4 September 2024 and 16-18 December 2024 Solicitor for the Fourth Respondent: Cornwalls (NSW) Pty Ltd ORDERS
SYC 3409 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ZHUO
Applicant
AND: MR JI
First Respondent
MS R
Second Respondent
MR AA JI (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
23 JANUARY 2025
THE COURT NOTES THAT:
A.On 18 December 2023, Mr Caruana of RR Accountants was appointed as the liquidator (“the liquidator”) for the following six (6) entities:
(a)G Pty Ltd;
(b)G Holdings Pty Ltd;
(c)V Pty Ltd;
(d)L Pty Ltd;
(e)KK Pty Ltd; and
(f)DD Pty Ltd.
(together the “companies”).
B.On 15 March 2024, orders were made appointing the liquidator as receiver and manager of the assets and undertaking of the following trusts:
(a)the HH Trust;
(b)the SS Trust;
(c)the V Trust;
(d)the L Trust; and
(e)the DD Trust.
(together the “trusts”).
C.On 2 September 2024, orders were made for the companies identified at Notation A(a) – (e) inclusive to be wound up in insolvency pursuant to s 459A and s 459P(1)(e) of the Corporations Act 2001 (Cth) and for the company identified at Notation A(f) to be wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth).
D.On 4 September 2024, orders were made appointing the Applicant Wife (“wife” and “trustee”) as trustee for the sale of the property located at B Street, Suburb C (“[B Street] property”) with folio identifier ….
E.Pursuant to s 81 of the Act the Respondent Husband (“husband”) and the wife intend these orders to finally determine all financial relations and issues between them and avoid further proceedings between them.
THE COURT ORDERS THAT:
Spouse Maintenance
1.Within 14 days of the date of these orders, the husband pay the wife the cash sum of $188,998.41 into a bank account as nominated by the wife, being periodic and non-periodic spouse maintenance which ought to have been paid by the husband pursuant to the orders of 18 October 2022, plus interest to be calculated in accordance with r 10.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) from 18 October 2022 to date.
Cash Payment to the Wife
2.Within 60 days of the date of these orders, the husband pay the wife a cash sum of $5,886,842 into a bank account as nominated by the wife.
Sale of B Street Property
3.On settlement of the sale of the B Street property, the trustee shall do all acts and sign all documents necessary to direct the net sale proceeds to be paid in the following manner and priority:
3.1 Payment of trustee’s expenses, agent's commission and advertising and legal expenses of the sale;
3.2Any outstanding auctioneer’s expenses or valuation fees relating to the sale of the property;
3.3 The usual council and water rate adjustment;
3.4 The sum required to discharge the mortgage secured over the property; and
3.5 The balance to be paid to the wife or as she directs.
General Orders
4.Subject to the above orders, the wife shall retain all interests in, and entitlement to:
4.1. All personal and real property now in her respective possession or control including but not limited to:
4.1.1. The property situated at and known as BS Street, Suburb C;
4.1.2. The property situated at and known as TT Street, Suburb UU;
4.1.3. Her interest in the business known as VV Pty Ltd;
4.2. All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name respectively; and
4.3. All interests in life insurance policies and superannuation funds standing in her sole name respectively.
5.Subject to the above orders, the husband shall retain all interests in, and entitlement to:
5.1. All personal and real property now in his respective possession or control;
5.2. All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name respectively;
5.3. His interests in companies and trusts in which he presently acts as officeholder and/or is a shareholder; and
5.4. All interests in life insurance policies and superannuation funds standing in his sole name respectively.
6.The wife is hereby declared solely liable for all liabilities in her sole name respectively and shall indemnify and keep indemnified the husband in respect of same.
7.The husband is hereby declared solely liable for all liabilities in his sole name respectively and shall indemnify and keep indemnified the wife in respect of same.
8.The husband hereby release the wife from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the wife for or by reason of or in respect of any act, cause, matter or thing, including but not limited to any liabilities to the following:
8.1. WW Pty Ltd;
8.2. XX Pty Ltd;
8.3. YY Pty Ltd;
8.4. AB Pty Ltd;
8.5. PP Trust Limited;
8.6. W Financial Services;
8.7. National Australia Bank Limited;
8.8. ZZ Bank;
8.9. Westpac;
8.10. Commonwealth Bank of Australia;
8.11. T Trust Limited; and
8.12. AC Financial Services.
9.The husband hereby indemnify the wife for any other liabilities secured against any other real properties in which the husband has an interest, that are not otherwise subject to the liquidation/insolvency process or as identified in these orders.
10.Each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
11.In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
12.The Response to Initiating Application filed by the Second and Third Respondents on 27 December 2023 be dismissed.
Liquidator
13.Pursuant to Order 5 of the orders made on 15 March 2024 and Order 4 of the orders made on 2 September 2024, the Fourth Respondent in his capacity as liquidator and receiver (“the liquidator” and “the receiver”) is authorised to pay the amount of $456,580.74 comprising:
(a) $183,058.00 on account of the receiver’s professional fees;
(b) $245,532.82 on account of the receiver’s legal costs and disbursements incurred with Cornwalls; and
(c)$27,989.92 on account of the receiver’s legal and conveyancing costs and disbursements incurred with AD Lawyers,
from the amounts now held by him as receiver on account of his remuneration, costs, and expenses incurred:
(a)In acting as the receiver of the assets and undertaking of the following trusts:
i.the HH Trust;
ii.the SS Trust;
iii.the V Trust;
iv.the L Trust;
v.the DD Trust; and
(b) In acting as the liquidator of the Fifth to Tenth Respondents.
14.The liquidator in his capacity as receiver is authorised:
(a) To retain the amount of $107,000 comprising:
i. $55,000 on account of the receiver's professional fees;
ii. $30,000 on account of the receiver's costs of obtaining third party taxation and accounting advice; and
iii.$22,000 on account of the receiver's legal costs and disbursements, from the amounts now held by him as receiver from which to pay his remuneration, costs, and expenses to be incurred in the liquidation of the Fifth to Tenth Respondents;
(b)Such remuneration, costs and expenses to be fixed in that amount; and
(c) To pay that amount over at the completion of the said liquidations.
15.The receiver is to pay the balance held by him and any further amounts that may be received by him (after payment in accordance with Order 13 and having retained the amount in Order 14) into such account as the Court may direct.
16.With effect upon compliance with Order 15, the liquidator forthwith be discharged from his appointment as receiver of the assets and undertaking of the trusts.
17.Without limiting the liquidator's powers, the liquidator must notify the parties within seven days of receipt of any proofs of debt and supporting documents submitted by secured or unsecured creditors related to the companies and associated trusts set out at Notations A and B above and provide the parties with all documents evidencing the purported creditor's claim.
18.In the event there is a dispute between the wife and the liquidator in relation to any proofs of debt referred to in Order 17, the wife has liberty to relist the matter on seven days’ written notice.
19. The liquidator must notify the parties within seven days of his anticipated completion of his appointment.
20.The liquidator be released from any and all claims held by the wife, the husband and the Second and Third Respondents whatsoever and howsoever arising from his appointment as receiver pursuant to the orders made on 15 March 2024.
21.The liquidator may apply to relist the proceedings for further directions on seven days’ written notice.
Costs
22.Any application seeking an award of costs is to be filed and served with an affidavit in support within 28 days of the date of these orders, and in the event no application is filed within the time specified, there shall be no order as to costs up to and including the date 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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Zhuo & Ji have been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are proceedings for property adjustment under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the applicant wife, Ms Zhuo (“wife”) and the respondent husband, Mr Ji (“husband”).
The second respondent, Ms R (“the mother”), and the third respondent, Mr AA Ji (“the father”), are the parents of the husband (“the parents”).
The fourth respondent is Mr Caruana in his capacity as liquidator of, and receiver of the property of, the companies who are the fifth to tenth respondents (“liquidator”).
The final hearing of the proceedings has had a belaboured history, which has had some impact on the outcome. I will describe this history in more detail later.
BRIEF BACKGROUND
The parties commenced cohabitation in 2007 and were married in 2008. There are two children of the relationship who are presently three and seven years old.
The parties separated on a final basis on 29 April 2022.
In 2007 the wife purchased a property at AE Street, Suburb AF (“the [Suburb AF] property”) for $400,000 as sole registered proprietor. The parties contributed equally to the $100,000 deposit and the remainder of the purchase price was funded by way of a mortgage in the wife’s name as mortgagor.
The husband registered KK Pty Ltd (“[KK Pty Ltd]”) in 2009.
The parties resided in the Suburb AF property until 2010 when it was sold for $420,000. The net proceeds of sale were applied to the purchase of a property at TT Street, Suburb UU (“the [Suburb UU] property”) which was again purchased in the wife’s name. The purchase price was $605,000, which was funded, together with the other acquisition costs by the parties and a $440,000 mortgage. In her trial affidavit at paragraph 160 the wife states the husband sought reimbursement for his contribution from her parents, so in effect her parents provided $100,000. The Suburb UU property has not been sold and the wife’s mother has resided there since 2017.
In late 2012 KK Pty Ltd purchased a property at LL Street, Suburb NN (“the [LL Street] property”). In her affidavit at paragraph 175(a) the wife claimed she, with the financial assistance of her family, transferred $116,160 to KK Pty Ltd to help purchase the property. I accept this is likely to be correct.
In early 2013 the parties purchased a property at AG Street, Suburb AH (“the [Suburb AH] property”) in their joint names for $630,000. The purchase was funded by savings of the parties for the deposit, stamp duty and other purchase costs, together with a mortgage of $573,000. The parties received some rental income from the property which was applied to service the mortgage. In mid-2014 the parties renovated the property. The renovation was funded by a mortgage refinanced for $1,400,000 and a contribution of $206,000 by the wife’s parents.
In mid-2013 Q Pty Ltd (“[Q Pty Ltd]”), a company controlled by the husband, purchased six lots of land in Suburb AJ. The wife gave evidence that $142,410 from the parties’ joint offset account connected to the mortgage in respect of the Suburb UU property, was contributed to Q Pty Ltd to pay for the deposit for the land. The lots of land were subsequently sold for approximately $4,500,000.
The Suburb AH property was sold in late 2015 for $1,800,000. The net proceeds of sale of $400,000 were paid into an account held by the husband’s company G Pty Ltd (“[G Pty Ltd]”) and applied to the company’s purchase of a property at 2 JJ Street, Suburb O (“the [JJ Street] property”).
In 2017 the wife purchased a unit at BS Street, Suburb C (“the [BS Street] property”) for $890,000 in her sole name with a mortgage of $708,000. The remainder of the purchase price was provided by her parents. The parties moved into the property following settlement.
In 2017 the parties’ first child, X, was born.
In 2019 a property at B Street, Suburb C (“the [Suburb C] property”) was purchased for $2,800,000. The purchase was funded by a mortgage of $1,960,000 and by contributions from the wife of $559,000 and by the husband of $280,000. The mortgage and the property are registered in the husband’s sole name. From mid-2019 to late 2021 the property was leased and the parties received weekly rental income between $1,350 and $1,500. The rent was deposited into the parties’ joint ZZ Bank bank account and was applied to mortgage repayments, the parties both contributed if there was shortfall.
In 2019 the wife claimed the husband sold a property at AK Street, Suburb AL for $6,800,000 without her knowledge. She is not aware of where the proceeds went.
In or around 2020 the husband purchased a property at AM Street, City AN, United States of America (“the [City AN] property”). The wife estimates the value at $100,000.
In September 2021 the wife transferred her directorship and shareholding in G Holdings Pty Ltd to the husband at his request. The company owns a property at D Street, F Town which the wife purchased in 2014 with a mortgage and funds contributed by her parents. This property together with a property held by KK Pty Ltd at E Street, F Town (“the [F Town] property”), to which the wife contributed $62,000, were part of a development project of the husband.
In late 2021 the parties commenced construction on a complete knock down and rebuild of the Suburb C property. The parties have paid approximately $700,000. The renovations remain incomplete.
The evidence disclosed the husband once had, or continued to have at the time of hearing, a position as director or secretary or an interest in the following companies:
(a)KK Pty Ltd registered in 2009, the husband being the sole director, secretary and sole shareholder;
(b)L Pty Ltd as trustee for L Trust, the husband being the sole director, secretary and sole shareholder;
(c)DD Pty Ltd as trustee for DD Trust, the husband being the sole director and secretary. KK Pty Ltd is the sole shareholder.
(d)G Pty Ltd as trustee for HH Trust, the husband being the sole director, alternate director, secretary and sole shareholder;
(e)G Holdings Pty Ltd as trustee for SS Trust, the husband being the sole director, secretary and sole shareholder. The husband was appointed as director in late 2021;
(f)V Pty Ltd as trustee for V Trust, the husband being the sole director and secretary. The husband holds 25 of 200 shares in his own name and KK Pty Ltd holds the remaining 175 shares;
(g)Q Pty Ltd, the husband being the sole director and secretary, and KK Pty Ltd is the sole shareholder;
(h)H Pty Ltd as trustee for J Street Trust, the husband was a director until mid-2017. G Pty Ltd holds 50 of 100 shares;
(i)H2 Pty Ltd, the husband being the sole director and secretary, and Q Pty Ltd is the sole shareholder;
(j)H3 Pty Ltd, the husband is the sole director appointed in mid-2017 and was appointed secretary from mid-2019. Q Pty Ltd is the sole shareholder;
(k)AO Pty Ltd, the husband being sole director and secretary. Q Pty Ltd is the sole shareholder;
(l)AP Pty Ltd, the husband being director until mid-2019, secretary until late 2022 and shareholder until late 2022;
(m)AQ Pty Ltd, the husband being a former director, secretary and shareholder. The husband previously owned 50 of 100 shares until late 2022 and KK Pty Ltd was a previous shareholder;
(n)AR Pty Ltd, the husband being director until mid-2020 and KK Pty Ltd being sole shareholder;
(o)AS Pty Ltd, the husband being one of two directors. The husband acquired 45 of 100 issued shares;
(p)AT Pty Ltd, the husband being the sole director, secretary and a shareholder from his appointment in mid-2023. The husband held 33 of 99 shares which he divested in mid-2024;
(q)AU Pty Ltd, the husband being appointed the sole director and secretary in late 2022. The husband is the sole shareholder; and
(r)AV Pty Ltd, the husband being the sole director, and AP Pty Ltd holding 34 of 100 issued shares and AU Pty Ltd owning the remaining 66 shares.
In 2021 the parties’ second child, Y, was born.
In late 2021 the husband and L Pty Ltd purchased a property at N Street, Suburb P for $2,300,000.
In early 2022 the husband sold a property at AK Street, Suburb AL for $3,350,000 without the wife’s knowledge. The net proceeds of $1,483,832 were deposited into the account of V Pty Ltd.
In mid-2022 the husband sold the LL Street property for $1,030,000. The net proceeds of sale of $514,542.12 were deposited into the account of KK Pty Ltd.
On 30 June 2022 pursuant to Court orders made on 1 June 2022 the husband moved out of the BS Street property. The wife and children continue to live there.
In mid-2023 AT Pty Ltd purchased a property at AW Street, Suburb AX for $1,700,000. The husband has a one third interest in this company. The wife does not know the source of the purchase funds.
By late 2023 the mortgage secured against the JJ Street property went into default and the first registered mortgagee sold the property in early 2024.
There was also dispute about ownership of properties at AY Street, Suburb AZ and BA Street, Suburb AZ, however no evidence was provided that the husband completed purchase or holds ownership of these properties.
PROCEDURAL HISTORY
The procedural history in the matter has some relevance to the orders which will be made.
The proceedings were commenced by the wife on 20 May 2022 in the Federal Circuit and Family Court of Australia (Division 2). The matter was transferred to this Court on 1 June 2022. The husband filed a Response on 29 September 2022.
Numerous orders were made prior to May 2023 requiring the husband to provide disclosure and restraining him from dealing with various properties. He failed to comply and was put on notice on 10 May 2023 that any further non-compliance with any undischarged orders of the Court would result in his Response being dismissed and the matter potentially proceeding as if undefended (Zhuo & Ji [2023] FedCFamC1F 357).
On 13 July 2023 the proceedings were relisted and the Court was satisfied that there had been material and ongoing non-compliance with its orders since 10 May 2023, and consequently made orders dismissing the husband’s Response (Zhuo & Ji (No 2) [2023] FedCFamC1F 640). There was no appeal from this judgment. The proceedings were listed for final hearing, as if undefended, on 14 and 15 August 2023, although the husband sought and was granted leave to make submissions and cross-examine witnesses.
On 9 August 2023 the wife filed an Amended Application for Final Orders and consolidated trial affidavit. The hearing dates were vacated on the husband’s application on 14 August 2023 due to the lateness and voluminous nature of the wife’s material and the matter was again set down for final hearing on 18 and 19 September 2023.
On 12 September 2023 the husband’s mother filed an urgent Application in a Proceeding seeking leave to intervene in the proceedings together with the husband’s father. The mother alleged the parents had loaned the husband $4,944,825 between 2013 and 2022 and that their joinder was necessary to seek repayment. The application for joinder was listed on the first day of final hearing when the parents were joined as the second and third respondents, and the final hearing commenced.
On 19 September 2023 the wife was cross-examined by the husband and counsel for the parents. The wife closed her case and the husband declined to tender any documents. The proceedings were stood over part heard to 19 February 2024 with an estimate of two days. Orders were made for the parents to file any affidavit material upon which they sought to rely at final hearing.
In late 2023 Mr Caruana was appointed as liquidator for the following entities, which were placed into voluntary liquidation by the husband:
(a)G Pty Ltd;
(b)G Holdings Pty Ltd;
(c)V Pty Ltd;
(d)L Pty Ltd;
(e)KK Pty Ltd; and
(f)DD Pty Ltd.
(collectively referred to as “the companies”)
The final hearing did not proceed on 19 February 2024. Consent orders were made joining the liquidator to the proceedings as fourth respondent and for him to effect the sale of the following properties:
(a)2 Z Street, Suburb BB (volume …, folio …);
(b)3 Z Street, Suburb BB (volume …, folio …);
(c)Lots 3 and 4 M Street, Suburb O (folio … and …);
(d)N Street, Suburb P (folio …);
(e)2 EE Street, Suburb FF (folio …);
(f)1 EE Street, Suburb FF (folio …);
(g)GG Street Suburb FF (folio …); and
(h)D Street and E Street, F Town (folio …).
On 20 February 2024 consent orders were made joining the companies as parties to the proceedings. The final hearing was adjourned to 2 September 2024 with an estimate of three days.
On 15 March 2024 I delivered judgment in Zhuo & Ji (No 3) [2024] FedCFamC1F 159 (“Zhuo & Ji (No 3)”) and made orders appointing Mr Caruana as receiver and manager of the assets and undertakings of the following trusts:
(a)the HH Trust;
(b)the SS Trust;
(c)the V Trust;
(d)the L Trust; and
(e)the DD Trust.
On 2 September 2024 orders were made by consent to wind up the companies in insolvency pursuant to s 459A and s 459P(1)(e) of the Corporations Act2001 (Cth) (“Corporations Act”). DD Pty Ltd was ordered to be wound up pursuant to s 461(1)(k). An order was also made as follows:
The costs, expenses, and remuneration of the Liquidator be paid from company property, such remuneration to be calculated in accordance with the schedule of charge out rates, set out in Exhibit [MC]-3 to the affidavit of [Mr Caruana] dated 22 August 2024.
On 4 September 2024 the proceedings were stood over part heard to 16 December 2024 with an estimate of three days. Orders were made appointing the wife as trustee for the sale of the Suburb C property. This order remained operative at the date of hearing.
On 9 December 2024 the liquidator filed an Application in a Proceeding for remuneration and disbursements in his capacity as liquidator and receiver. The husband filed a Response to this application on 12 December 2024. The wife did not file any responsive material. The liquidator’s application was heard at the final hearing, and is determined as part of this judgment.
The final hearing resumed on 16 December 2024 and ran for three days with judgment reserved on 18 December 2024.
Save for 18 and 19 September 2023 when the husband was self-represented, all parties had legal representation.
MATERIAL RELIED UPON
As set out in her case outline filed 14 August 2023, the wife relied upon:
(a)The wife’s Amended Initiating Application filed 9 August 2023;
(b)The wife’s affidavit filed 9 August 2023; and
(c)The wife’s Financial Statement filed 9 August 2023.
The wife filed written Further Submissions on 13 December 2024. During trial, the wife tendered a proposed Minute of Orders which was marked Exhibit T.
As mentioned, the final hearing proceeded as if undefended by the husband. No application was made by the husband after 13 July 2023 to rely upon affidavit evidence, nor did he seek to tender any documents.
The parents relied upon the following documents, though no list of documents relied upon was provided:
(a)Response to Initiating Application filed 27 December 2023;
(b)Affidavit of Mr AA Ji filed 31 October 2024;
(c)Affidavit of Mr AA Ji filed 27 December 2023;
(d)Affidavit of Ms R filed 27 December 2023;
(e)Affidavit of Ms R filed 31 October 2024;
(f)Affidavit of Ms R filed 12 September 2023;
(g)Affidavit of Mr Ji filed 19 January 2024;
(h)Affidavit of Ms BC filed 4 January 2024;
(i)Affidavit of Mr BD filed 4 January 2024; and
(j)Affidavit of Ms BE filed 9 February 2024.
The parents tendered a Case Outline which was marked Exhibit V and a proposed Minute of Order marked Exhibit U.
As set out in his Outline of Submissions filed 17 December 2024, the liquidator relied on the following documents for his Application in a Proceeding filed 9 December 2024:
(a)Affidavit of Mr Caruana filed 9 December 2024;
(b)Affidavit of Mr Caruana filed 26 February 2024;
(c)Affidavit of Mr BF filed 9 December 2024;
(d)Affidavit of Ms BG filed 9 December 2024; and
(e)to the extent necessary:
(i)Affidavit of Mr Caruana filed 6 December 2024 regarding DD Trust;
(ii)Affidavit of Mr Caruana filed 29 August 2024;
(iii)Affidavit of Mr Caruana filed 6 August 2024 regarding V Trust; and
(iv)Affidavit of Mr Caruana filed 6 August 2024 regarding HH Trust.
The wife was cross-examined by the husband when he was self represented and by counsel for the parents. An interpreter was made available at the request of her lawyers, however most, if not all questions were asked and answered in English.
The parents called the husband as a witness in their case, a course to which ultimately no objection was taken by the wife, and the husband was cross-examined.
The mother was cross-examined with an interpreter.
The father was cross-examined with an interpreter.
The documents tendered and received into evidence are set out in Schedule 1 to these reasons.
There was no expert evidence.
COMPETING PROPOSALS
The wife advanced a case seeking 100 per cent of the known asset pool, including the net proceeds of sale of the Suburb C property, the transfer to her of Motor Vehicle 1 motor vehicle, and a cash payment of $6,484,557.32 as the amount equivalent to the value of notional property she claims should be added back to the asset pool after dissipation by the husband. She also seeks a payment of $188,998.41 being the total amount, together with interest, that the husband has been liable, but failed, to pay for periodic and non-periodic spouse maintenance. She contended that such an outcome would be just and equitable in circumstances where she made significant financial, non-financial and homemaker contributions and where the husband was materially non-compliant with his disclosure obligations and dissipated assets in breach of injunctive orders of the Court.
The husband articulated no specific claim to the property pool after his Response was dismissed on 13 July 2023.
No claim was made for a split of the spouse parties’ superannuation interests.
The parents’ case as originally formulated in their Response filed on 27 December 2023 was that they had loaned the husband $5,200,428 during the marriage. They sought orders to be repaid this amount plus interest of $2,375,400 for a total sum of $7,575,829 as part of the final property settlement. By reason of s 79(10) of the Act they were joined to proceedings on the first day of trial as the wife’s claim to 100 per cent of the asset pool could pose difficulties to recovery of their loan should she be successful.
However, by the end of the trial the parents sought more modest relief. They modified their claim to seek a declaration that the parents had lent the husband no less than an amount in United States Dollars, Australian Dollars and Country BL currency equivalent to a total of AUD$810,000, together with orders that the Suburb UU and Suburb C properties be sold and the net proceeds be paid to the parents.
The liquidator claims remuneration both as liquidator and receiver. The claim for remuneration was not challenged by the wife, other than to argue the liability should not fall upon the matrimonial pool of assets, but should be satisfied entirely by the husband. The husband challenged the quantum of the liquidator’s remuneration. This dispute is dealt with later in this judgment.
PART VIII
Part VIII of the Act sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s 79 of the Act, which gives the Court power to make such orders for alteration of property interests as it considers appropriate.
Section 79(2) of the Act provides that:
The court must 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.
Section 79(4) of the Act sets out the factors to be taken into account in considering what order, if any, should be made. These will be discussed in detail below.
In property proceedings under the Act, parties generally rely upon the “four step process” as follows:
(1)Identify and value, the parties’ property, liabilities and financial resources at the date of the hearing;
(2)Identify and assess the contributions of the parties as referred to in s 79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
(3)Identify and assess the other factors relevant including, the matters referred to in s 75 of the Act 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 of the case.
Consistently with the four step approach, in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) the High Court made clear at [37] it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property (see Bevan & Bevan (2013) FLC 93-545 (“Bevan”) at [72]–[73]).
Under Australian law there is no “community of property” in property owned by spouses individually and the question of whether it is just and equitable to make an order “is not to be answered by assuming that the parties’ rights or interests in marital property are or should be different from those that then exist” at the time when the discretion may be exercised (Stanford at [37]–[39], [50]; Wirth v Wirth (1956) 98 CLR 228 at 231–232 and 247–248). Unless and until property rights or interests are adjusted pursuant to s 79, one spouse has no inchoate or other proprietary interest in the exclusive property owned by the other spouse (Bevan at [80]; Lin & Ruan (2021) FLC 94-024 at [41], [48]–[49]; Sarto & Sarto (2022) 65 Fam LR 605 at [19]; Agnarsson & Agnarsson (No 4) [2024] FedCFamC1F 407 at [46]).
Stanford at [40] also made clear that the requirement pursuant to s 79(2) that it would be just and equitable to make orders altering property should not be conflated with the requirements of s 79(4). The requirement to make an order that is just and equitable permeates the entire decision-making process and is not a threshold issue (Martin & Newton (2011) FLC 93-490 at [306]; Bevan at [62], [86]).
Stanford at [41]–[42] held that the very fact of separation may lead to the ready satisfaction of the just and equitable requirement. In most cases, the Court will not need to discuss the s 79(2) issue, because the parties accept it would be just and equitable to make some form of adjustment. That is the position in these proceedings.
Having regard to the language of both s 79(1) and s 79(2) of the Act, the Court is required to make orders which are not only “just and equitable” but also “appropriate” (Zao & Lee [2019] FamCAFC 169 at [48]; Aitken & Aitken (2023) FLC 94-142 at [59]). Section 80 grants specific powers to make a range of different orders to adjust property interests.
Section 81 is also relevant, requiring orders which finally determine the financial relationship between the parties to avoid further proceedings.
Disclosure
Allegations about non-disclosure are routinely encountered in this Court. The case made by the wife asserted egregious defaults in disclosure by the husband, including breaches of orders for disclosure.
Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”) makes detailed provision for disclosure. Rule 6.06 stipulates parties to financial proceedings have a duty to make full and frank disclosure of “all information relevant to the proceedings in a timely manner”. Rule 6.02 provides for undertakings by parties that “to the best of their knowledge and ability”, they have “complied with, and will continue to comply with the duty of disclosure”. Both parties have provided such undertakings at several points during the proceedings. Other rules provide specifics about the provision of documents and their use in financial proceedings (rr 6.03, 6.04 and 6.06).
The duty of disclosure enforces a high normative standard, always understood as fundamental to the integrity of this Court’s processes in financial cases under Pt VIII of the Act. It has been settled law for decades in this Court that deliberate non-disclosure warrants the Court being not unduly cautious about making findings in favour of the innocent party. But despite being described as absolute, the duty of disclosure does not embody a counsel of perfection and is limited by relevance, and in relation to documents is limited to those documents in the possession, custody and control of a party, meaning “the legal right to possession” (Wei v Xia (No 5) (2023) 67 Fam LR 421 (“Wei v Xia (No 5)”) at [168]–[173]).
In Wei v Xia (No 5) I summarised the possible consequences of failure in disclosure and the obligations imposed as follows:
174. A failure to disclose in financial proceedings in this Court may lead to unfavourable inferences against the defaulting party very similar to the adverse inferences which may be drawn in accordance with the Blatch v Archer principle discussed above, in the sense of having the effect of discounting the evidence of the non-disclosing party. They are separate bases which can lead to the same or similar result.
175. The line of authority concerning non-disclosure in financial proceedings under Part VIII of the Act has also tended to concentrate upon the consequences of non-disclosure for ascertaining the property of the parties to the marriage. In other words, it is a specific type of inferential reasoning which comes into play for the purposes of identifying property of parties to a marriage, and then in justifying a robust approach to making just and equitable orders dividing that property. If there is persuasive evidence supporting a reasonably plausible conclusion of the existence of other undisclosed assets, it may be open to the Court to make a finding that such assets exist, or take account of the likely existence of other assets under s 79(4)(e) of the Act (s 75(2)(o) of the Act; HDM & MM [2006] FamCA 47 at [27]; Gould & Gould (2007) FLC 93-333; [2007] FamCA 609 at [27]). Thus, the Court may be persuaded that it would be appropriate to make an order beyond the ascertained property; provided that any order made on this basis can be seen to achieve substantial justice relative to the subject non-disclosure (Hicks and Thomas (as trustee of the bankrupt estate of Hicks) (2021) FLC 94-006; [2021] FamCAFC 19 at [87]), or all known assets should be awarded to the innocent party, on the basis that the party who refuses to disclose the assets is in fact hiding them (In the Marriage of Chang and Su (2002) 29 Fam LR 406 (2002) FLC 93-117; [2002] FamCA 156 at [60]). But also the authorities show any inference that a defaulting party is hiding property must be founded upon established facts. Concluding that other assets exist is, like any other fact, a finding, or requires findings, of fact about which the Court must feel “an actual persuasion”.
It was largely undisputed, and I find, that the husband failed to discharge his duty of disclosure adequately, and failed to comply with Court orders. While it is true he made some disclosure, he failed to make disclosure in material respects. The wife included an extensive summary of the husband’s non-disclosure in her written submissions, set out below are a few examples of the outstanding disclosure:
(a)the husband’s personal tax returns for financial years 2019 to 2022;
(b)statements of the husband’s personal bank accounts for Commonwealth Bank …67 and …13 from late 2022 to date, for his credit card account with Commonwealth Bank …58 from January 2023 to date, and for ANZ Account …08 for periods between 2021 to date;
(c)tax returns, financial statements and company bank account statements variously for V Pty Ltd, AP Pty Ltd, AO Pty Ltd, AQ Pty Ltd, H2 Pty Ltd, H3 Pty Ltd, Q Pty Ltd, AR Pty Ltd, L Pty Ltd, KK Pty Ltd, DD Pty Ltd, G Pty Ltd and G Holdings Pty Ltd;
(d)documents from H Pty Ltd as trustee for J Street Trust relating to the J Street property including rental income statements, mortgage statements, contract for sale, bank statements and particulars of how sale proceeds have been applied; and
(e)documents from L Pty Ltd as trustee for L Trust regarding the M Street properties including valuation and market appraisals, ownership statements, bank statements of rental income, documents of sale including settlement statement, bank statements of receipt of sale proceeds and documents supporting how sale proceeds have been applied.
Beyond orders for disclosure, the wife also argued that the husband engaged in conduct which demonstrated serial and ongoing breaches of injunctions ordered by the Court as part of a need to protect its processes by maintaining the pool of assets available for division between the spouse parties. Some examples set out in the wife’s submissions include:
(a)the husband sold lots 5, 6 and 7 of M Street, Suburb O without notice to the wife in breach of Order 4 made on 1 June 2022;
(b)the husband sold J Street, Suburb K without notice to the wife in breach of Order 3 made on 1 June 2022;
(c)the husband listed for sale, refinanced, exchanged contracts for sale, and sold Lot 1 M Street, Suburb O without notice to the wife in breach of Order 3 made on 1 June 2022 and Order 5 made on 10 May 2023;
(d)the husband sold 1 and 2 BH Street, Suburb BJ without notice to the wife in breach of Order 3 and/or Order 7.6 made on 1 June 2022, and Order 3 and/or Order 7.6 made on 11 October 2022;
(e)the husband refinanced the F Town property in breach of Order 2 made on 11 October 2022, and refinanced the Suburb C property in breach of Order 2 made on 1 June 2022 and Order 1 made on 11 October 2022;
(f)the husband dismissed himself as director of H3 Pty Ltd, and appointed a new director to whom he transferred all his shares in the company, in breach of Orders 7.1, 7.2, 7.4 and 7.5 made on 11 October 2022; and
(g)the husband made continued attempts to sell the Suburb C property, after the wife was appointed trustee for sale, in breach of orders made on 4 September 2024.
I also record here that the liquidator gave evidence that he received only limited assistance from the husband in the course of the administration, the only books and records coming into his possession were those adduced by the wife in the proceedings, and these did not include any books or records later than 2022. The husband did not respond to any requests to complete Reports on Company Activity and Property, nor did he provide any assistance regarding access to accounting software.
Non-disclosure by the husband about his involvement in and the financial dealings and position of the companies formed an important part of the wife’s case. I accept she possessed very limited knowledge of the husband’s business ventures and the operations of his companies and businesses.
Prior to the appointment of the liquidator and receiver and the orders for winding up, it is clear that the husband had management positions and shareholdings in most if not all of the relevant companies identified above at [21] which gave him control over their assets. It is also clear that many of the companies are trustees of trusts, and the husband thus controlled the trustees. The evidence did not disclose any of the trust instruments governing the relevant trusts. However, the evidence further satisfies me that, irrespective of the terms of the trust deeds, the husband dealt with corporate and trust assets as he saw fit and for his own purposes. I infer he did so for his own benefit.
I accept the submissions of the wife. I am satisfied that there have been substantial and material non-disclosures and breaches of Court orders, for disclosure and to restrain dealings, by the husband. His failure to co-operate with the liquidator is additional evidence of an obstructive and dismissive attitude to the provision of information and regulatory requirements, including his fundamental obligations as a corporate officer. His conduct supports a finding that it is more likely than not that he holds or controls assets or financial resources which he has not disclosed, and which likely have a significant value. In the circumstances of this case, the Court is well justified in making an order beyond the known assets in favour of the wife.
ASSETS, LIABILITIES AND FINANCIAL RESOURCES AT THE DATE OF THE HEARING
I turn then, to the identification of parties’ property, liabilities, and financial resources at the date of the hearing, according to ordinary principles of law and equity.
A balance sheet was tendered by the wife, which became Exhibit N. The composition of this balance sheet was contentious. In relation to these disputed items, I express my conclusions as follows, noting the reference to item numbers is a reference to the item number on Exhibit N.
Valuations of the properties are limited to market appraisals.
Items 1 to 6
These items in substance are all assets of the companies as trustees for the nominated trusts (above at [37], [40]). The liquidator gave evidence that none of the companies held any assets other than assets held on trust. By the date of the final tranche of the trial, all trust property had been sold. After realisation of the trust assets the liquidator holds $56,390 in V Pty Ltd as trustee for the V Trust and $957,266 in DD Pty Ltd as trustee for the DD Trust. All the other trustee companies are insolvent with a deficit of assets over liabilities.
The wife initially argued that the trusts were the “alter ego” of the husband on the basis of his control and shareholding in the trustee companies, and therefore she sought to include their assets and liabilities on the balance sheet as his assets. As noted above at [68], it is necessary to begin the present task by identifying, according to ordinary common law and equitable principles, the existing legal and equitable proprietary interests of the parties. There is well developed jurisprudence in this Court that in the context of s 79 the expression “property of the parties to the marriage or either of them” can extend not only to property owned by a party to the marriage but also property of corporations or trusts that are technically strangers to the relevant marriage but are controlled by a party to the marriage “where the control is such as to put the party in the same position as if he or she were the owner of the property”, usually meaning that party, in addition to control, has the power to appoint trust assets to themselves (Public Trustee v Smith (2008) 1 ASTLR 488 at [110]–[125]; Harris & Dewell (2018) FLC 93-839 at [53] and my discussion in Dovgan & Dovgan [2021] FamCA 306 (“Dovgan”) at [271]–[276]).
But the involvement of third party interests can also complicate the application of these principles and the appointment of the liquidator clearly does so. As Gibbs J said in Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 355 “The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it”.
A company in liquidation loses the capacity to deal with assets (Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592 (“Linter Textiles”) at [21]–[58], [125]–[130]). By reason of s 198G of the Corporations Act, the officers of a company are unable, except in limited circumstances, to exercise any powers while the company is being wound up in insolvency or by the Court. Shareholders generally lose rights of management and any voting rights (Linter Textiles at [85], [174], [214]).
Liquidators assume a responsibility, as an officer of the court, to administer the statutory scheme created by the Corporations Act for the winding up of a company, get in the assets, pay creditors and divide any surplus among contributories. The statutory scheme is “both an exhaustive and sufficient measure for the distribution of the company’s property”. Although the liquidator does not hold the assets of the company on trust, the appointment of the liquidator circumscribes or suspends the exercise of the incidents of ownership of the company’s assets and creditors have a special interest in having the assets collected and distributed (Franklin’s Selfserve Pty Ltd v Commissioner of Taxation (Cth) (1970) 125 CLR 52 at 69–70 per Menzies J; Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 at 352; Linter Textiles at [4], [38], [54]; Metal Manufactures Pty Ltd v Morton (2023) 275 CLR 100 at 106–107, [6] – [10]). These observations apply with equal force to trustee companies in liquidation.
Unlike personal bankruptcy, the assets of a company in liquidation only vest in a liquidator if a vesting order is made pursuant to s 474(2) of the Corporations Act. As I pointed out in Zhuo & Ji (No 3) at [15] and [16], trustee companies enjoy a right of exoneration of their liabilities and indemnity for expenses which generates a security in the form of an equitable lien over the trust assets which is a proprietary interest in those assets and upon liquidation the right of indemnity passes to the liquidator which includes the cost of the liquidation and the liquidator’s remuneration. The trustee company’s right of indemnity has two aspects which should be kept distinct, namely, a right by way of reimbursement or recoupment, and the right by way of exoneration, which is held in priority to any interest of beneficiaries of the trust in trust assets and is property of the trustee (Jones v Matrix Partners Pty Ltd (2018) 260 FCR 310 (“Matrix Partners”) at [34]–[45], [68], [69]). So the liquidator himself has an interest in the surplus assets of V Pty Ltd or DD Pty Ltd and duties to their third party creditors, who may be subrogated to the rights of the trustee (Matrix Partners at [68]).
It seems to me that for these reasons there is no longer any proper basis in this case for application of the principles referred to above at [88] to the assets of the trustee companies or the trusts. Upon liquidation it could no longer be concluded the husband had the necessary degree of control of, or power to be exercised permissibly over (see the authorities mentioned in Dovgan at [273]) the assets of trusts through their trustee companies.
By the end of the trial the wife accepted the intercession of the liquidator and receiver made unsustainable, a conclusion that the assets of V Pty Ltd or DD Pty Ltd, being the only trustee companies with any surplus funds, were property of the husband. I agree that no basis exists in the evidence, or exists in principle, to justify such a conclusion by the close of the final hearing. I note in passing that no reliance was placed upon the Court’s powers in Pt VIIIAA of the Act to make orders binding third parties.
However, this does not in my view preclude a finding that, prior to liquidation and winding up, the assets of companies over which the husband had complete control and which, on the evidence, he utilised as he saw fit and for his own purposes, were property of the husband. This remains an important aspect of this case, because as will be explained later, it has consequences for considering the wife’s claims to add back substantial notional property.
I note here that no proof of debt process pursuant to s 553, and Div 6 generally of Pt 5.6 of the Corporations Act has yet been undertaken which would precisely quantify the claims of unsecured creditors of V Pty Ltd or DD Pty Ltd or the relevant trusts, being the only companies with any surplus funds. The liquidator gave evidence that in the course of his administration he identified four likely unsecured creditors of V Pty Ltd, including the Australian Taxation Office (“ATO”), with debts totalling $274,263.66. In respect of V Pty Ltd the liquidator identified three likely unsecured creditors, again including the ATO, with debts estimated at $479,909.88.
It is conceivable that after the liquidator’s claims to remuneration and disbursements, and any claims of the trustee companies to exoneration and the claims of unsecured creditors, have been satisfied, there might remain a surplus balance. Prima facie this surplus would be trust property, which for the reasons given already could ultimately devolve upon the husband once the winding up is at an end. However, this cannot be presently known, and as explained later, I will approve $563,580.74 for remuneration and disbursements for the liquidator. Therefore, on the basis of the evidence available to me, and the estimated quantum of unsecured debts, it is unlikely there will in fact be any surplus available in either trust.
For these reasons items 1 to 6 will be excluded from the balance sheet.
Items 7 and 8
These are the wife’s properties and the dispute in relation to them was value. Towards the end of the trial the parents attempted to challenge the values attributed by the wife on the basis of some market appraisals which were not even on affidavit. These were rejected. I will accept the wife’s values.
Item 10
By the time the trial resumed on 16 December 2024 it was clear, and conceded by the husband in cross-examination, that he had acquired 45 of 100 issued shares in a company called AS Pty Ltd, which according to evidence uncovered by the wife, purchased 15 units located at BK Street, Suburb K on or about mid-2024 for approximately $18,310,000. The husband made no disclosure about this shareholding or any information at all about AS Pty Ltd. The wife sought to include the husband’s shareholding on the balance sheet with a value of $8,239,050 being 45 per cent of $18,309,000.
In cross-examination the husband appeared to claim he was holding the shares for “someone else” and had no interest in the company. In light of his history of non-disclosure and proclivity to breach injunctive orders of this Court, I treat his oral evidence, such as it is, as unreliable, and I do not accept this evidence. I find the 45 shares are assets of the husband.
It is however problematic to attribute a value of $8,239,050 to the 45 shares. There is of course no valuation evidence, primarily because of the husband’s non-disclosure. Attributing value is a common sense endeavour after consideration of all material to fix a value satisfactory to the mind of the Court as representing the value (The Commonwealth v Milledge (1953) 90 CLR 157 at 161–162; Waye & Waye [2023] FedCFamC1F 962 at [65]). The wife properly noted that an entity called BT Financial Services had lodged caveats over all the units, from which I infer there is likely to be some level of finance secured by the units. A common sense approach suggests the value is unlikely to be $8,239,050. For this reason I will exclude item 10 from the balance sheet. However, I infer the 45 shares likely have some value which may be significant, and I will take them into account under s 79(4)(e).
Item 11
This item is another interest apparently held by the husband about which he gave no disclosure. The undisputed evidence, uncovered by the wife by subpoena, was that the husband held 33 of 99 issued shares in a company called AT Pty Ltd which owns AW Street, Suburb AX, purchased in early 2023 for $1,700,000. The wife sought to include the value of the husband’s shareholding at $566,666 being one third of $1,700,000. However, there was no dispute the husband divested himself of his 33 shares on about mid-2024. For this reason, I will not include item 11 on the balance sheet, but again take account, under s 79(4)(e) of the fact the husband held the 33 shares at one point, but failed to disclose this or the fact he had divested himself of them.
Items 12 and 13
The wife accepted in submissions that the evidence did not support a finding that these properties were owned by the husband. They will be excluded.
Item 14
The husband mentioned this property in an earlier affidavit filed in the proceedings on 29 September 2022. It was not clear whether he still owned it. There was no compelling evidence about its current value. I will take account of it under s 79(4)(e).
Items 15, 16, 17 and 18
The wife accepted the ownership and value of these items cannot be established. They will be excluded.
Item 19
The wife currently uses this item, being Motor Vehicle 1, but claimed it was owned by the husband. The wife seeks an order that it be transferred to her. Counsel for the wife ultimately agreed the vehicle is owned by one of the companies in liquidation and the order for transfer cannot be made by the Court. It should be excluded from the balance sheet.
Items 20, 21 and 22
These are the wife’s bank account balances. I will include them.
Item 24
This was clearly an account held by the father. The wife argued that the Court should find it was in truth an account of the husband. I am not persuaded the evidence supports this conclusion. I will exclude this item.
Items 25, 28, 29 and 30
These are accounts of some of the companies in liquidation with de minimis balances. They will be excluded.
Items 26 and 27
These are also accounts of two of the companies in liquidation. They will be excluded.
Item 32
I will accept the wife’s value.
Items 33 to 40
There was no evidence in relation to these items and they will be excluded, noting item 33 relates to item 11 which was excluded.
Items 41 to 46
These will be included as liabilities of the wife.
Item 47 - Loans from the parents
As mentioned, the parents claimed to have lent the husband considerable sums for the purposes of his business activities. By the end of the trial they sought a declaration that this should be quantified at no less than the equivalent of $810,000. The wife did not dispute the parents provided some funds to the husband in the period between 2013 and 2022. But she argued the evidence of the parents was incredible, relied upon confected documentation and was so confused and contradictory that the Court could not make any secure finding either as to the quantum of any alleged loan or whether the payments were loans rather than gifts.
I agree that it is impossible on the evidence to make any clear finding that the parents are owed either $810,000 or any other amount. The evidence of the parents was deficient in several fundamental respects. First, both the mother and the father gave affidavit evidence in English annexing documents said to support payments from Country BL bank accounts to the husband. Yet both gave identical evidence that they did not speak or understand English, required an interpreter-expert and did not retain a lawyer who could speak their language. They gave oral evidence through interpreters. It was obvious that both required to have their affidavits interpreted to them before affirmation, but this did not happen. In cross-examination, the father agreed he did not understand his affidavit before affirming and did not know what it contained. He made mention during cross-examination of a version of his affidavit in Country BL language but no such version was tendered in evidence.
Secondly, the affidavit evidence in English of each parent was almost identical in important places, a feature which was not explained. This substantially devalued both witnesses’ affidavit evidence and the Court could not be satisfied their evidence reflected a genuine recollection of events (Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; Dentown Pty Ltd v PWI Group Pty Ltd (as trustee of the Australia No. 1 Group Trust) (2019) 141 ACSR 330 at [16]; Zegna & Zegna (No 2) [2022] FedCFamC1F 558 at [89], [90]).
Thirdly, both parents confirmed in their oral evidence that a substantial proportion of any funds they may have provided were lent to the companies, now in liquidation, and agreed they had the right to lodge proofs of debt with the liquidator, and intended to do so. This demonstrated that the husband was not the debtor, at least in relation to that substantial proportion.
Fourthly, I formed the view, observing both parents as witnesses, that their evidence was unreliable and not truthful in places. They both agreed that written loan agreements upon which they relied were brought into existence after these proceedings had been commenced, but then claimed the purported agreements were more in the nature of acknowledgements of debt. There was no history of any payment of interest, requirement for repayment or demand for repayment prior to early 2023.
I conclude that the parents have failed to establish any amount is owing to them by the husband. Their claim therefore fails and will be dismissed. I will not include this item on the balance sheet as a liability of the husband.
This conclusion makes it unnecessary to explore the question whether there is any power on the parents’ application to order the sale of property in the matrimonial pool as a source for them to be repaid directly.
However, bearing in mind the concession of the wife that the parents provided some funds, this will be taken into account in assessing contributions as a gift. Although the evidence of the parents’ intention in this regard was not entirely clear, I infer the “motivating circumstance” for this gift was the relationship between the parents and the husband. It was the evidence of the father that the parents made payments to the husband for the purposes of his business activities. Consequently, I find this was a contribution on behalf of the husband alone (Mabb & Mabband Anor (2020) FLC 93-947 at [35]–[38]).
Addbacks – Items 50–73
The wife sought $6,682,972 in notional property which she claims should be added back to the balance sheet, being items 50 to 73.
Adding back property is exceptional and may be appropriate where the parties have expended money on legal fees, where there has been a premature distribution of matrimonial assets, or “waste” or wanton, negligent, or reckless dissipation of assets designed to reduce the property pool (Candle & Falkner (2021) FLC 94-069 at [52]–[58]). Adding back non-existent property can have a distorting impact on the reality of property available for division (Bevan at [79]). Proper consideration must be given to existing interests in property (Vass v Vass (2015) 53 Fam LR 373 (“Vass”) at [139]). Adding back property may be done to address the inherent unfairness where but for the impugned expenditure the property interests available for division would be significantly greater (Watson v Ling (2013) FLC 93-527 at [29]–[34]). In cases that are not “exceptional”, justice and equity can be achieved not by adding back, but by taking up the same as a relevant s 75(2) factor which is, perhaps, “technically more correct” (Bevan at [79]; Trevi & Trevi (2018) FLC 93-858 (“Trevi”) at [30]; Vass at [138]–[139]).
In Trevi Murphy J explained at [47]:
The essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court [in Stanford]. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an “accounting” or “balance sheet” exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.
(Footnotes omitted)
The wife sought addbacks for funds not accounted for by the husband after refinancing the Suburb C, JJ Street and M Street properties, and numerous other amounts. In some cases the claim is based upon a transaction which was undertaken by the husband in breach of Court orders. These amounts together formed the basis for quantifying an order for the cash payment by the husband to her. In submissions she conceded it was not possible on the evidence to attribute sustainable values to all of these items. I have found the husband has likely dissipated funds, and has not disclosed where certain surplus funds have been applied. I am satisfied that the findings I have made about the husband’s failure to disclose and failures to adhere to Court orders are sufficient to characterise many of the amounts proposed as addbacks as relevantly exceptional.
The wife sets out the details of her claim to addbacks in Exhibit N, and I adopt her contentions, unless an item is specifically excluded in the following discussion. The parents made submissions about these items to which I have had regard but reject as unsupported by the evidence. It is unnecessary to repeat the details of the wife’s arguments here. I am satisfied that items 50, 51, 54, 55, 56, 58, 59, 60, 61, 62, 63, 67, 68, 70, 71 and 73 should be added back. These items total $5,886,841.98.
I point out here that the companies at items 58, 59, 62, 63 and 73 were and are controlled by the husband, and are not in liquidation. For clarity I find the assets of those companies were and are property of the husband.
Items 52, 64, 65, 66 and 69 cannot be given a value and will be excluded from the balance sheet although I note the details provided by the wife are examples of the non-disclosure by the husband. Item 53 relates to an unidentified property and will be excluded. Item 57 relates to a property owned by a company in which the husband was not the sole shareholder, and I do not accept the wife’s argument that I should infer full ownership. I will exclude item 57. Item 72 is a claim to $150,000 being the total of two transfers by the husband to BM Pty Ltd, a company in which he is a shareholder, but only as to 3,045 of 15,225 shares. I will exclude item 72.
Conclusions and asset pool
Based on these conclusions, the asset pool is as follows:
Ownership
Description
Agreed value
ASSETS
7.
Wife
BS Street, Suburb C
$1,200,000
8.
Wife
TT Street, Suburb UU
$840,000
9.
Husband
B Street, Suburb C
$4,000,000
20.
Wife
Funds in bank accounts
$15,088
21.
Wife
Shares in publicly listed companies
$24,149
22.
Wife
VV Pty Ltd as trustee for VV Trust
$1,567
50.
Husband
Surplus of funds from refinance of B Street, Suburb C not accounted for by Husband
$354,963.79
51.
Husband
Surplus of funds from refinance of JJ Street, Suburb O property not accounted for by Husband
$232,115
54.
Husband
Net proceeds of sale of LL Street, Suburb NN (KK Pty Ltd) (sold for $1,030,000 and settled in mid-2022)
$514,542
55.
Husband
Net proceeds of Lot 1 M Street, Suburb O (L Pty Ltd) (settled in mid-2023)
$128,420.61
56.
Husband
Net proceeds of lots 5 and 6 M Street, Suburb O (L Pty Ltd) (sold in mid-2022)
$122,118.87
58.
Husband
Net proceeds of sale of 2 BH Street, Suburb BJ (H2 Pty Ltd) (settlement in late 2022)
$769,616
59.
Husband
Net proceeds of sale of 1 BH Street, Suburb BJ (H2 Pty Ltd) (settlement in late 2022)
$42,391
60.
Husband
Net proceeds of sale of AK Street, Suburb AL (V Pty Ltd) (sold in late 2021 and settled in early 2022 for $3,350,000)
$1,483,832
61.
Husband
Net proceeds of sale of BN Street, Suburb BJ (Q Pty Ltd) (sold in early 2022 for $940,000)
$498,023.69
62.
Husband
Net proceeds of sale of BO Street, Suburb BJ (H3 Pty Ltd) (sold in mid-2021 for $780,000)
$125,311.40
63.
Husband
Net proceeds of sale of BO Street, Suburb BJ (H3 Pty Ltd) (sold in late 2021 for $830,000)
$156,769
67.
Husband
Net proceeds of lot 1 BP Street, Suburb AJ (sold in mid-2021 for $750,000)
$364,442.81
68.
Husband
Net proceeds of lot 2, BP Street, Suburb AJ (sold in mid-2021 for $840,000)
$696,066.48
70.
Husband
Net proceeds of lot 3 BP Street, Suburb AJ (sold in mid-2021 for $750,000)
$200,729.33
71.
Husband
Net proceeds of lot 4 BP Street, Suburb AJ (sold in mid-2021 for $750,000)
$120,000
73.
Husband
Forfeited deposit on failure to complete purchase of BQ Street, Suburb BR (AV Pty Ltd but paid from bank account held by AU Pty Ltd)
$77,500
Total
$11,967,646
LIABILITIES
32.
Husband
Mortgage over B Street, Suburb C
$3,760,881
41.
Wife
Mortgage over Suburb UU property
$290,779
42.
Wife
Mortgage over BS Street property
$573,290
43.
Wife
Westpac investment loan
$142,108
44.
Wife
Westpac credit card
$725
45.
Wife
ZZ Bank credit card
$593
46.
Wife
ANZ credit card
$2,329
Total
$4,770,705
SUPERANNUATION
Member
Name of Fund
Type of Interest
Agreed value
48.
Husband
Super Fund 1
Accumulation
$63,932
49.
Wife
Super Fund 2
Accumulation
$161,050
Total
$224,982
NET POOL (INCLUDING SUPERANNUATION):
$7,421,923
Consequently, if there was no property adjustment, with the percentages rounded, the wife would hold 17 per cent and the husband hold 83 per cent of the net assets per cent. As noted, both parties agreed there should be a just and equitable property adjustment, and it was therefore not appropriate to leave the assets and liabilities undisturbed.
I turn now to consider the application of Pt VIII of the Act and the factors set forth in s 79 and s 75(2).
CONTRIBUTIONS
I will deal first with s 79 of the Act. Section 79(4) sets out the considerations to be taken into account by the Court in determining what order (if any) should be made under s 79 in property settlement proceedings.
There was no dispute that I should take a global approach to the asset pool (Norbis v Norbis (1986) 161 CLR 513).
In accordance with s 79(4) of the Act, the Court must consider all the contributions overall, both financial and non-financial, to the acquisition, conservation, and improvement of the parties’ assets, as well as to the welfare of the family during cohabitation and after separation (Norman & Norman [2010] FamCAFC 66; Kowalski and Kowalski (1993) FLC 92-342; G and G (2000) FLC 93-043). A broad approach is preferred, rather than reference to precise mathematical calculations (Burke and Burke (1981) FLC 91-055), although an evaluation of each party’s respective contributions is necessary (JEL and DDF (2001) FLC 93-075). Assumptions about equality of contributions should not be made, and there is no assumption that equal division is the starting point for any exercise of the Court’s discretion (Mallet v Mallet (1984) 156 CLR 605 at 610, 613, 625, 635–636 and 646–647).
In Dickons v Dickons (2012) 50 Fam LR 244, the Full Court said:
20. …consistent with authority, the s 79 discretion involves as a necessary requirement that “... trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such an assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.” ([Aleksovski and Aleksovski (1996) FLC 92-705] at 83,437 [(“Aleksovski”)]). In Aleksovski, Kay J outlined the well-known “gold bar” analogy and said “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (at 83,443).
21. Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79. That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?
(See also Jabour & Jabour (2019) FLC 93-898 at [31]–[87]; Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[49]; Barnell & Barnell (2020) FLC 93-961 at [30]–[43]; Benson & Drury (2020) FLC 93-998 at [35]).
I have already discussed a number of the contributions of the parties above, while setting out background facts. I have taken these findings into account but will not repeat here what has been said, except to the extent necessary.
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage
Initial contributions
I accept that neither party had any significant assets or liabilities at the commencement of the relationship, though both parties held some property in Country BL. No evidence of the value of any property in Country BL is before the Court.
Financial contributions during the relationship
During the relationship the parties built an extensive investment property portfolio. They commenced cohabitation in 2007 and purchased the Suburb AF property. They both contributed about $50,000 towards the deposit, and the balance of the purchase price was funded by mortgage to which they jointly made repayments. In 2010 the parties sold the Suburb AF property and used the proceeds to fund the purchase of the Suburb UU property, along with a mortgage. The parties continued to amass property, relying on the proceeds of sale of property, mortgages and from financial contributions by the wife’s parents.
At some point the parties began intermingling their joint finances with the husband’s companies. In 2012 the wife transferred $116,160 to KK Pty Ltd for the purchase of the LL Street property, when this property was sold in 2022 the net proceeds of $514,542.12 went to KK Pty Ltd. In 2015 as another example, the parties sold the Suburb AH property, and the entire net proceeds were deposited into the husband’s company G Pty Ltd and used to purchase the JJ Street property. The JJ Street property was a commercial space and the registered office of several business entities of the husband.
It is the wife’s case that the extensive property portfolio built thereafter by the husband’s companies was made possible from the use of joint funds or funds of both spouse parties which included the sale proceeds of joint property to which the wife, and her parents, made significant financial contribution. Between 2012 and 2022 the wife estimates she and her parents loaned approximately $1,600,000 to the husband’s businesses, which under cross-examination she said had been repaid by the husband.
As mentioned at [122], the husband’s parents gifted some quantum of funds to the husband during the marriage and I am satisfied this was a contribution of some significance made by the husband alone.
The husband was employed throughout the relationship. The wife returned to work two days a week between the birth of the first and second child, following which she has been unemployed.
The husband paid the eldest child’s private school fees in the amount of $25,900 for his first year of school.
Financial contributions post-separation
Post-separation the wife claims to have paid all outgoings for the Suburb C property due to the husband’s non-compliance with spousal maintenance. The wife stated that with the assistance of her parents she meets the majority of family expenses with the exception of school fees.
The husband’s non-disclosure made it impossible to form a clear view about his post-separation contributions, although I infer he made some such contributions.
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage
I take account of the wife’s non-financial contributions in managing the construction project at the Suburb C property such as through obtaining council approvals and hiring the building and engineering professionals required.
(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
I accept that the wife was the primary caregiver of the two children during the relationship and post-separation. I acknowledge that the husband does see the children in accordance with an informal agreement between the parties, but I find the wife made far greater contributions in the capacity of homemaker and parent.
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
The orders will not have an effect upon the earning capacity of either party.
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
The husband is required to pay spousal maintenance to the wife of $2,152 per week pursuant to Court orders made on 18 October 2022. The orders require the husband to also pay for non-periodic expenses including all outgoings for the Suburb C property, home insurance and private health insurance for the wife and children, and vehicle expenses.
The wife claims the husband is in default of these obligations and owes her $188,998.41. She states the husband’s non-compliance has made her reliant on her mother for financial help for living expenses.
(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.
The husband does not currently pay child support to the wife. The wife stated she intends to seek review of a prior child support assessment from June 2022 which she claims was based on incorrect income and parenting arrangements.
ASSESSMENT OF CONTRIBUTIONS
Overall, I am unable to find in the evidence a basis to differentiate the contributions of the parties. I find they should be assessed as equal.
I now turn to s 79(4)(e) and the s 75(2) factors.
SECTION 75(2) ADJUSTMENT
The Act requires me to take into account the matters referred to in s 75(2) of the Act, so far as they are relevant, when considering what orders should be made. As disclosed in the arguments of the parties, the following matters are relevant.
(a) the age and state of health of each of the parties
The wife is 41 years of age. The husband is 44 years of age.
There was no suggestion either party had health issues of significance.
(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
The wife has been unemployed since 2022 following the birth of the parties’ second child and the conclusion of her maternity leave. Prior to 2022 she worked in administration, earning approximately $85,000 per annum. Currently she remains reliant on financial support from her parents to meet living expenses. She believes her earning capacity is limited by the time she has spent out of the workforce raising the two children and by her ongoing parenting responsibilities, in particular the time she spends taking the children to numerous extra-curricular activities. She plans to return to part time work when the younger child is about 4 years old.
I take into account here the husband’s 45 shares in AS Pty Ltd which likely have some value of significance. I also take account of the husband’s possible ownership of the City AN property and that he failed to disclose his holding and divestiture of 33 shares in AT Pty Ltd (above items 10, 11 and 14).
More generally I take account of the husband’s numerous undisclosed or unexplained dealings and the likely financial resources these generated for his benefit.
(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;
(e) the responsibilities of either party to support any other person; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation
The wife is the primary carer of the two children aged seven years and three years old. The youngest child attends childcare three days per week. The husband does not provide child support and is in default of spousal maintenance obligations.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
It was the wife’s case that the husband’s non-disclosure and dissipation of assets warrant an adjustment in her favour. I accept this is correct. I find that the asset pool is greater than the known assets on the balance sheet. I accept the husband has dealt continuously with shareholdings and property about which he has made inadequate or no disclosure. The scale of the husband’s non-disclosure and egregious breaches of Court orders support a very significant adjustment in favour of the wife.
Conclusion
There should be a substantial adjustment in favour of the wife under s 79(4)(e).
I declined to express an overall assessment of the mandatory considerations under s 79 in terms of a percentage. It is unnecessary to do so. I venture to repeat and adopt my statement of principle in Magnus & Sandri (No 4) [2024] FedCFamC1F 499 at [152]:
…The Court’s ultimate conclusions about the appropriate, just and equitable adjustment of property interests is usually informed by percentages. Nonetheless, as long ago as Norbis v Norbis (1986) 161 CLR 513 at 533–534, Wilson and Dawson JJ observed that the Act confers a discretion which, provided the required matters are taken into account, does not dictate a particular method of formulating an appropriate order. It has long been recognised that the application of percentages does not necessarily result in a just and equitable outcome; the real impact in money terms is the critical issue (JEL and DDF (2001) FLC 93-075 at [139]–[140]). It is the ultimate order which must be just and equitable not the underlying assessment of contributions (Russell and Russell (1999) FLC 92-877 at [80]; Keehan & Keehan [2015] FamCAFC 122 (Ainslie-Wallace, Murphy & and Tree JJ) at [78]).
In this case, it is also inappropriate to express an assessment in terms of percentages for the purposes of either the s 79(4)(a)–(c) or s 79(4)(e) considerations. In circumstances where I have found the husband has engaged in serious non-disclosure, breaches of Court orders and that there are likely to be assets beyond the ascertained pool, attempting to express the wife’s entitlement as a percentage is artificial and futile. I accept the wife’s contention that she should be awarded the entirety of the known assets of the spouse parties. As explained below, there should also be an order for the husband to make a cash payment to the wife.
SPOUSE MAINTENANCE
It was part of the wife’s claim that the husband should be ordered to pay arrears of unpaid spouse maintenance. The wife claimed a payment of $188,998.41. The husband conceded in cross-examination that he owed this amount, including interest. I will order the husband to pay this amount, in addition to the assets awarded to the wife.
LIQUIDATOR’S REMUNERATION.
As mentioned, the liquidator sought orders approving his remuneration as liquidator, and as receiver, for both past and future work, for disbursements and his release and discharge as receiver. His claim for remuneration was $183,058. He seeks approval for reimbursement of disbursements comprising $245,532.82 and $27,989.92 for legal fees for solicitors and counsel. The total claimed is $456,580.74 for work performed and disbursements. The liquidator also seeks approval to retain a further $107,000 on account of future fees and disbursements, including additional legal fees and taxation advice.
Although this Court has jurisdiction conferred upon it by the Corporations Act (s 58AA and s 1337C), the liquidator made his claim for remuneration and disbursements under this Court’s inherent equitable jurisdiction, rather than under s 60-10 of the Insolvency Practice Schedule (Corporations) (“IPS”) being Sch 2 of the Corporations Act. The appointment of the liquidator was made pursuant to the wide powers of this Court grounded in its statutory jurisdiction and the winding up of the companies in insolvency was ordered pursuant to this Court’s statutory jurisdiction conferred by the Corporations Act.
Once its jurisdiction is regularly invoked this Court can “make whatever orders it regards as appropriate” (s 80(1) of the Act and s 44 of the Federal Circuit and Family Court of Australia Act2021 (Cth) (“FCFCOA Act”); Zhuo & Ji (No 3) at [18]). There was no dispute that this Court has the relevant inherent jurisdiction. I accept this is correct, because this Court is a superior court of record and a court of law and equity (s 9 of the FCFCOA Act). In any event, the wide powers to make any order the Court thinks necessary to do justice (s 80(1)(k) of the Act) include the power to approve the remuneration and disbursements of a liquidator and receiver appointed by the Court in aid of the exercise of its jurisdiction to divide the assets of parties to a marriage. Both the liquidator and receiver are officers of the Court which can therefore supervise their conduct. A further supervisory power previously lay in s 1321 of the Corporations Act (Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 (“Starpicket”) at [18], [21]), but this section has been repealed and now the sections of subdivision B of Div 90 of the IPS provides similar supervisory powers to the Court.
I also agree with the submission of the liquidator that where the Court is asked to determine the remuneration of a liquidator and receiver and manager of trust assets in its inherent equitable jurisdiction, there is no material difference between the principles that apply to the liquidator’s remuneration and those which apply to the remuneration of a receiver and manager of the assets of a trust (Re Say Enterprises Pty Ltd [2018] NSWSC 396 at [6]; Re M & J Super Fund Pty Ltd (in liq) [2021] NSWSC 279 at [16]). I also take the view the position is no different if the Court is exercising its statutory jurisdiction and powers.
The status of the companies in liquidation as trustee companies in these proceedings should be borne in mind. In Re JML Property Services Pty Ltd (in liquidation) [2018] NSWSC 1069, Black J at [12] explained the principles applicable in the inherent equitable jurisdiction to allowing the remuneration of a liquidator of a trustee company, identifying reasonableness and proportionality as informing the appropriate standard:
In allowing remuneration to the liquidator of a trustee company, in its inherent equitable jurisdiction to allow remuneration out of trust assets in connection with the administration of a trust fund, the Court will have regard to the factors that are applicable in a court-appointed liquidator’s claim for approval of remuneration, including those specified in former s 473(10) of the Corporations Act: Alphena Pty Ltd (in liq) v PS Securities Pty Ltd (ACN 141 021 445) (as trustee of the Joseph Family Trust) [2013] NSWSC 447; (2013) 94 ACSR 160 at [53], [63]–[64]; Re Houben Marine Pty Ltd (in liq) above at [20]. The Court has regard to whether the remuneration for which approval is sought is reasonable, and proportionality in terms of work done as compared with the size of the property which is the subject of the insolvency administration or the benefit to be obtained from the work, is an important consideration: Templeton v Australian Securities and Investments Commission [2015] FCAFC 137 at [32]; (2015) 108 ACSR 545; Sanderson, as liquidator ofSakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38.
It is also settled that the Court has power to approve an amount for future remuneration, to avoid unnecessary further applications to the Court (Re JPD Media & Design Pty Ltd (subject to Deed of Company Arrangement) [2020] NSWSC 1311 at [15], [16]).
The liquidator is only required to make a prima facie case that the claimed remuneration is reasonable (Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 at [60]; Morgan, Re Brighton Hall Securities Pty Ltd [2018] FCA 2029 at [17]–[22]). McLure JA explained “prima facie” in this context in Conlan as liquidator of Rowena Nominees Pty Ltd (rec and mngr appt) (in liq) v Adams (2008) 65 ACSR 521 at [31]:
The expression “prima facie” is used…to mean that the claimant’s evidence is sufficient to enable the court to determine whether the claimed remuneration is fair and reasonable. So, for example, there must be evidence relating to the work done by particular persons, how long it took to do the work, their hourly rate and the reasonableness of the rate.
In relation to the remuneration of a receiver in Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in liq) [2006] NSWSC 4 at [8], Barrett J adopted the principle that the court constituted by a judge “never considers a review of quantum, but only matters of principle”.
In any event, there was no dispute that the liquidator was entitled to remuneration as liquidator and receiver and there was no challenge to his remuneration, including future remuneration, or suggestion it was not fair and reasonable. I accept he provided evidence establishing a prima facie case based on work done by particular persons, how long it took and their hourly rate which was reasonable.
However, it is settled that disbursements do not form part of remuneration and legal fees incurred are disbursements (Re Timeshare Resort Club Ltd (in liq) (2010) 187 FCR 13 at [45]). The onus lies upon the liquidator to satisfy the Court that claimed disbursements have been reasonably incurred and are of a reasonable amount (Starpicket at [27]; Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347 at [83]).
The husband made some challenge to the legal fees charged to the liquidator. This was a brave position to take, in light of the husband’s failure to co-operate with the liquidator, which alone was likely to engender higher legal and other costs. He eschewed any suggestion of malfeasance or misfeasance by the liquidator. His submissions in this regard took up observations made by Finkelstein J in Re Stockton Ltd (2004) 140 FCR 424 at [51]:
An insolvency practitioner stands in a fiduciary relationship with the creditors. He must act with the same care as a prudent businessman would act in his own affairs at his own cost and risk. A prudent businessman will run litigation as a last resort and when he embarks upon litigation he will keep it under close scrutiny. A prudent businessman will shop around to ensure that he obtains the services of good lawyers (solicitors and counsel) at the best possible rate. Personal relationships should not obscure the practitioner’s duty. The sole selection criteria should be the benefit to him as a litigant. So he will avoid cosy relationships with solicitors and counsel. He will negotiate over fees with both solicitors and counsel. He will closely monitor the fees as they are incurred….
The husband pointed out that the liquidator provided no evidence of any costs agreements with lawyers he instructed or of any attempt to negotiate the best possible rate. He also argued a number of line items in solicitor’s bills of costs tendered in the liquidator’s evidence raised the inference that they were excessive charges and led to doubt that the costs were proportional to the amount recovered. For example, the husband pointed to a solicitor’s charge of $408 on 7 February 2024 for considering whether the liquidator had a caveatable interest and the charge of $225 on 15 February 2024 for reviewing a selling agency agreement and contract of sale when a different solicitor was acting on conveyances. The husband argued these charges were unnecessary and unreasonable. He argued the same work was undertaken by more than one person unnecessarily.
I reject these submissions. The liquidator relied upon an affidavit sworn by the solicitor engaged by him, Mr BF of Cornwalls, in support of the liquidator. It is not the role of this Court constituted by a judge to engage in some costs assessment task to approve disbursements where the challenge is not one of principle but simply an attempt to impugn individual charges. I do not accept the matters pointed to by the husband go any distance to establish the disbursements were either unreasonably incurred or not of a reasonable amount. Indeed, they satisfy me of the opposite, and tend to demonstrate that the liquidator has been careful and reasonable in the disbursements he incurred.
I will make the orders sought by the liquidator.
The consequence of these orders and the lien held by the liquidator is that the funds held by him will be reduced by $563,580.74 ($456,580.74 plus $107,000). The balance can be retained by him to satisfy unsecured creditors once the proof of debt process has been completed.
PROPOSED ORDERS
I am satisfied the wife should receive the entirety of the known assets of the parties, including the net balance of the proceeds of sale of the Suburb C property, other than superannuation. The husband will also be ordered to pay arrears of spouse maintenance.
Since no splitting order has been sought, the parties should retain their superannuation interests.
As noted earlier, Motor Vehicle 1 is owned by a company in liquidation. I will not make an order for its transfer to the wife. The wife can deal with the liquidator directly in this regard.
One remaining question is whether the husband should be ordered to make a cash payment to the wife, as she sought. My findings about the husband’s failures in disclosure and breaches of Court orders mean there is an indeterminate undisclosed amount of property held by the husband which enables me to make orders without reference to the overall pool (Chang v Su (2002) FLC 93-117 at [57]–[72]). Having considered the wife’s proposal in this regard I have concluded that the husband should be ordered to pay her the sum of $5,886,842 (rounded), being the total amount equivalent to the value of the property added back to the balance sheet, which I have found was dissipated by the husband from assets held by the companies and trusts but which I have found on the probabilities was property of the husband, at least prior to the appointment of the liquidator in the case of companies in liquidation. On the values as presented at trial, without the payment of $5,886,842 the wife would retain net assets worth $1,471,149 after the sale of the Suburb C property. As already mentioned, the facts of this case, and in particular the conduct of the husband, are ample basis to support an order in favour of the wife beyond the known assets. I am also satisfied on the probabilities that the husband likely has the capacity to make the proposed payment from undisclosed resources.
Another question is whether the Court should make an order for any surplus in the liquidator’s hands at the termination of the winding up to be paid to the wife. In a voluntary winding up, s 501 of the Corporations Act dictates how the liquidator disperses a surplus to contributories. In a compulsory winding up, this Court’s special leave is required before the liquidator can pay out any surplus (s 488(2)). A winding up in insolvency generally ends when the Court stays or terminates the winding up, or the company in liquidation is deregistered. None of those points had been reached by the end of the trial. This Court retains jurisdiction over the liquidator and the winding up. Since the liquidation is not yet terminated, I will grant leave to the liquidator to apply for further directions concerning the distribution of any surplus, if one actually comes into existence.
As regards the liquidator, the wife sought an order requiring the liquidator to keep the parties informed of the sale process of trust properties. This order seems to be superfluous now that the properties have been sold and only V Pty Ltd as trustee for the V Trust and DD Pty Ltd as trustee for the DD Trust are in surplus before any dividend is declared for creditors. I will not make such an order.
The wife also sought orders requiring the liquidator to keep the parties informed of the proof of debt process and permitting a relisting in the event of a dispute between her and the companies in liquidation about a proof of debt. Since the companies are in liquidation, such orders are inappropriate. Any such dispute would lie between the wife and the liquidator. No submissions were directed to these orders by either the wife or the liquidator. However, I accept there is power to make such an order either pursuant to s 114(3) of the Act, or s 90-15 of the IPS. I will make such an order in favour of the wife, as a person with a financial interest in the external administration of the companies (s 90-20(1)(a) of the IPS), since the winding up is not yet completed.
The wife also sought an order that the liquidator pay to her 100 per cent of any surplus remaining at the completion of the winding up. As already mentioned, such a surplus would be impressed with a trust, so I do not consider such an order should be made at this point in time. Again the wife or the liquidator may apply pursuant to the Court’s powers to make orders about the liquidation.
Finally, the wife sought an order that the husband pay the costs of the liquidation. I have already examined at length the principles applicable to the payment of the liquidator’s remuneration of disbursements. I am not persuaded such an order is appropriate, even if there was power to make it.
For his part, the liquidator sought a range of orders concerning the liquidation which I will make. He sought a release by the spouse parties from claims arising from his appointment as receiver of the trust assets. This order was not opposed and I will make it. He also sought an order dismissing the proceedings against him and the companies. However, since the liquidation is not completed, I will not make such an order at present.
WHETHER THE PROPOSED ORDERS BETWEEN THE SPOUSE PARTIES ARE JUST AND EQUITABLE
I am satisfied that the proposed orders as between the spouse parties are just and equitable in the circumstances of this case.
On the assumption all orders are complied with the wife will receive in total $7,357,991, as set out in the table below. The husband will retain his superannuation, but will have to meet his obligation to pay the wife $5,886,842.
Assets and liabilities to be retained by the wife
Value ($)
BS Street, Suburb C
$1,200,000
TT Street, Suburb UU
$840,000
B Street, Suburb C
$4,000,000
Funds in bank accounts
$15,088
Shares in publicly listed companies
$24,149
VV Pty Ltd as trustee for VV Trust
$1,567
Superannuation – Super Fund 2
$161,050
Cash payment from husband
$5,886,842
Mortgage over B Street, Suburb C
-$3,760,881
Mortgage over Suburb UU property
-$290,779
Mortgage over BS Street property
-$573,290
Westpac Investment Loan
-$142,108
Westpac credit card
-$725
ZZ Bank credit card
-$593
ANZ credit card
-$2,329
Total:
$7,357,991
COSTS
I will order that any party who seeks costs to file the relevant application within 28 days of these orders.
CONCLUSION
For all the foregoing reasons I am satisfied the orders set out at the commencement of these reasons should be made.
I certify that the preceding one hundred and ninety-five (195) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 23 January 2025
SCHEDULE 1 – MATERIAL TENDERED AND RELIED UPON BY THE PARTIES
Exhibit Label
Document
Tendered by
A
Summary and bundle of transactions to and from the husband’s parents
AW
B
Email from Ms R to Mr Ji
AW
C
Updated balance sheet comprising nine pages
AW
D
Bundle of annexures to wife’s affidavit
AW
E
Tender bundle of wife
AW
F
Supplementary tender bundle of wife
AW
G
Index to tender bundle documents
AW
H
Balance sheet
AW
I
Tender bundle of wife
AW
J
Wife’s objections to evidence
AW
K
Documents in Country BL language
AW
L
Summary of transactions between the husband’s parents from bank accounts held in husband’s name or companies
AW
M
Minute of Order with parts in handwriting
AW
N
Balance Sheet
AW
O
Bundle of letters to former solicitors
AW
P
Loan agreement between Ms R and DD Pty Ltd for the sum $1,200,000
AW
Q
S50 Schedule of transactions
AW
R
Document in Country BL language
2/3R
S
Correspondence between Mr Hall and Lander & Rodgers
AW
T
Wife’s proposed Minute of Order
AW
U
Parents’ proposed Minute of Order
2/3R
V
Parents’ Case Outline
2/3R
SCHEDULE OF PARTIES
SYC 3409 of 2022 Respondents
Fourth Respondent:
MR CARUANA IN HIS CAPACITY AS LIQUIDATOR AND RECEIVER
Fifth Respondent:
G PTY LTD (IN LIQUIDATION)
Sixth Respondent:
G HOLDINGS PTY LTD (IN LIQUIDATION)
Seventh Respondent:
V PTY LTD (IN LIQUIDATION)
Eighth Respondent:
L PTY LTD (IN LIQUIDATION)
Ninth Respondent:
DD PTY LTD (IN LIQUIDATION)
Tenth Respondent:
KK PTY LTD (IN LIQUIDATION)
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