Public interest – referral of litigant to A-G and ATO

Public interest – referral of litigant to A-G and ATO

Just and equitable conclusion

108. On the 29 August, 2016 there was an interim hearing in this matter. Counsel for the Applicant complained that amongst other matters, the Respondent was not providing full and proper disclosure of all documents under her control or in her possession. In response to this claim, the then Counsel for the Respondent said as follows… “I concede the issue of discovery is not perfect. My client and I spoke and I have set her straight, but what she understands what they have provided in compliance with Your Honour’s orders for discovery would not be sufficient. That I can indicate to Your Honour, my client has a comprehensive understanding now as to her obligations.”
109. An example of her lack of disclosure and frankness was when she was cross-examined during the trial about her BAS statement for the quarter ended 30 March, 2016, when she said that was with the liquidator, but when the documents produced by the liquidator were inspected, they were not present. She said that she did not keep copies of any of these documents. She said she did not know she had to produce documents and she was not asked to produce any particular documents.
110. Her reply was she did not know she had to produce those documents, flew in the face of the assurance from her Counsel made to this court on 29 August 2016, over 2 years before the trial.
111. In her confessional affidavit filed 22 May, 2019 at paragraph 26 the Respondent says the following,…“I would like to tell The Honourable Court that I am really sorry for not disclosing the right documents for my final court hearing and placing false information into an affidavit.” There is no doubt in my mind that the Respondent has not been complying with the duty to provide a full and frank disclosure of all financial records and documents.
112. In my view, the cases of Oriolo (1985) FLC 91653 and Briese (1986) FLC 91-713 apply to this situation. The Respondent intentionally told lies and created such an opaque image of her financial circumstances that it led to the court not being fully and properly informed about the financial history and current circumstances of the Respondent. Further, when one reads the cases of Weir (1993) FLC 92-338, Mezzacappa (1987) FLC 91-853 and Chang v Su (2002) FLC 93-117 they establish that I should have no sympathy for the Respondent or her behaviour, noting however I must follow the criteria in the Family Law Act 1975 particularly section 90SM and section 90SF(3).
113. In Chang v Su (2002) FLC 93-117 their Honours Justice Kay and Justice Dawe said the following:
     

     “67.  The law to be applied and the approach that may be adopted in cases where, through the lack of a full and frank disclosure, the Court is unable to fully ascertain the extent of a party’s wealth, is well settled (see Stein v Stein [1986] FamCA 27; (1986) FLC 91-779; 11 Fam LR 353; Mezzacappa v Mezzacappa [1987] FamCA 20; (1987) FLC 91-853; 11 Fam LR 957; Black and Kellner (1992) FLC 92-287; 15 Fam LR 343 and Weir v Weir (1993) FLC 92-338; 16 Fam LR 154).

     68.    In Black and Kellner (supra) the appellant had submitted that, absent findings as to the extent of his wealth, the order made by the trial Judge was plainly unjust. The key finding of the trial Judge was:

     “…the failure on the part of the [husband] to disclose his financial position to the court and his attempts to conceal this matter from the court, which has left the court in the position of not knowing what the [husband’s] financial position is, except that he deliberately underestimated it.”

     69.    Chief Justice Nicholson (with whom Ellis and Cohen JJ agreed), said in dismissing the appeal:

     “As senior counsel for the wife pointed out, the first step in proceedings for a property settlement is for the court to ascertain the wealth of the parties and in this regard it is of interest to note the remarks of the Full Court in the case of Giunti and Giunti [1986] FamCA 15; (1986) FLC 91-759, particularly at 75,555 where the court commented:

     ‘It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make a full and substantive disclosure of their financial affairs- see Briese and Briese; (1986) FLC 91-713, affirmed by the Full Court in Oriolo v Oriolo (1985) FLC 91-653, there is no problem, although there may be disputes as to valuation.

     However if, as here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion.’

     The Full Court in Oriolo and Oriolo, supra, referred with approval to the remarks of Smithers J in Briese and Briese, and it is perhaps worth reiterating a portion of his Honour’s statement at 75,181 where he said, after referring to the decision of the House of Lords in Livesey v Jenkins [1984] UKHL 3; (1985) All ER 106:

     ‘… I believe that the conclusion of the House of Lords in the case of Livesey v Jenkins… is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.

     In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred’.”

114. What I can discover from the evidence is that on commencing cohabitation it appears that the Respondent made a greater financial contribution and subsequently a greater contribution as primary carer and home-maker but these were eroded by her subsequent negative contributions. Both the Applicant and Respondent worked hard in their respective businesses. The Applicant initially as a customer service representative and then subsequently in the business in Suburb F. The Respondent brought into the relationship a humble business that operated from her residence. This grew into a significant shop front business known as “Business H.”
115. It appears that by 2016, the year the parties separated, both businesses were financially successful. The Respondent in her affidavit filed 10 October, 2017 alleges that the Suburb F business generated cash receipts from 29 January, 2016 to June, 2016 of around $51,000 and Eftpos receipts from 29 January, 2016 to 29 August, 2016 of $128,649. The evidence from the experts is that the turnover for the C Street, Suburb D and Suburb F business branches was around $749,000 in 2016/2017.
116. Ironically and sadly, the Respondent post-separation appears to have made every effort to undermine those businesses including;
     

     a)           Without notice liquidating the company operating the C Street, Suburb D business;

     b)           Pretending to sell the C Street, Suburb D business to her then friend Ms P;

     c)           Clearly wasting significant monies of around $100,000 by leasing premises at J Street, Suburb F, and setting up separate competitive structure with the intent, (I infer from all the evidence), to undermine the husbands operation at E Street, Suburb F; and

     d)           Without notice selling the realty she brought into the relationship at Suburb M leaving a net balance $60,590 after sale costs and discharge of mortgage. Given her poor credibility, misleading the court and lack of complete discovery I am not satisfied these monies were used as she suggested. In any event, on any view she retained those funds and used them for her benefit either directly or indirectly. I will treat this as an addback, (see Kowaliw (1981) FLC 91-092 above).

117. In all the circumstances of this opaque fog that this lady has created, it is my assessment of the best evidence available, that the divisible pool of assets is made up as follows;
     

     a)           Net proceeds from the sale of C Street, Suburb D – $60,590;

     b)           A Street, Suburb B – $785,000;

     c)           Business H, C Street, Suburb D – $94,000E;

     d)           Business H Pty Ltd, Suburb F – $94,297; and

     e)           Monies that the Applicant sent to his parents overseas – $90,000E.

     which totals $1,123,887 less the mortgage over the parties’ home of $529,000, which then leaves $594,887 net.

118. I have excluded the other liabilities personal to them that they will continue to be solely responsible for, given this approach in the Applicant’s and the Respondent’s Outlines of Case, and the evidence at the trial.
119. When considering all the facts peculiar to this most unusual case, I have formed the view that the contributions both positive and negative in all forms by both parties are ultimately very similar during cohabitation and post-separation. Initially I was considering that perhaps the Respondent made greater contributions than the Applicant, particularly as homemaker or parent and with the assets she brought into the relationship, but on further reflection I believe she offset those contributions by her negative post-separation waste of funds on trying to establish a business to compete with the Applicant at J Street, Suburb F. She also made it more difficult to assess the section 90SM(4) factors with her lying to the court and not providing full disclosure, which caused me to doubt the reliability of her evidence.
120. When I then turn to section 90SF(3), I find these factors are also of similar weight or importance save for the serious responsibility of the primary carer, (in this case the Respondent), to provide care and accommodation for the two children of the relationship. Therefore, in all the circumstances there should be an adjustment in the primary carer’s favour of 10% providing a 55/45 division. In my assessment, the payment of $280,000 sought by the Applicant did not satisfy sub-sections 90SM(3) and (4) of the Act.
121. Given the net pool of $594,887 the Applicant’s share of 45% is $267,700. He will retain the E Street, Suburb F business valued at $94,297 and be responsible for the $90,000 addback, he is to be paid a further $83,400 in rounded figures. The Respondent will retain $256,000 equity in the Suburb B home and business of $94,000(c) with the $60,590 Suburb M addback, totalling $410,590 less the $83,400 payment, leaving a net of $327,190 in rounded figures.
122. Finally, I cannot ignore page 5 of the indicative valuation report by the Respondent’s agent Mr EE where he referred to …“possible taxation and accounting compliance breaches. These breaches suggest that there are undisclosed income amounts and over claimed expense amounts…The observed possible compliance breaches are as follows:
     

     ·    BAS’s not reconciling with financial information provided (mainly Financial Statements)

     ·    Alleged undisclosed sales/cash income (as noted by Forensic Report of Mr U dated 22 September 2017)

     ·    Possible avoidance of GST & Income Tax Obligations by using Trustee company of Trust for invoicing and banking of business income, along with possible “double dipping” expenses (claiming expenses in both entities when only one is conducting business activity)

     ·    Owners Drawings/Loan account has not been examined but shows there is activity which could suggest further cash being drawn from out of the business…”

     Therefore, given it is in the public interest to investigate this and a possible breach or breaches of the laws of Australia, I am requesting that a copy of my judgment be forwarded to the relevant officials at the Attorney-General’s Office and the Australian Taxation Office for further investigation and an officer of those bodies may have access to the parties material filed in this court for that purpose, if so required.

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