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Massi & Kerbouche [2023] FedCFamC2F 190 (24 February 2023)

Last Updated: 18 April 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Massi & Kerbouche [2023] FedCFamC2F 190

File number(s):


Judgment of:


Date of judgment:
24 February 2023


Catchwords:
FAMILY LAW – PROPERTY SETTLEMENT – where the husband and wife agree on the overall division of the asset pool – where the main issue for determination is the nature and value of the asset pool - where there is significant dispute as to the validity of a loan agreement between the first respondent and the second respondent – where the wife challenges several other oral and written loan agreements - where the wife seeks that monies paid to the second respondent be notionally added back to the property pool- where the challenges to the written loan agreements are unsuccessful – where challenges to monies disbursed to strangers to the proceedings successful and notionally added back to the pool - orders made adjusting the property of the husband and wife.


Legislation:
Family Law Act 1975 (Cth) ss 75(2), 79, 79(4)(d)-(g)


Cases cited:
Edgehill & Edgehill [2007] FamCA 1102
Gollings & Scott [2007] FamCA 397
Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84.
In the Marriage of PJ and RM Farnell [1995] FamCA 140; (1996) 20 Fam LR 513
Kowaliw and Kowaliw [1981] FamCA70.
Stanford & Stanford [2012] HCA 52


Division:
Division 2 Family Law


Number of paragraphs:
118


Date of hearing:
29 November 2022 – 1 December 2022, 13 December 2022


Place:
Parramatta


Solicitor for the Applicant
Mr Lee of Counsel


Solicitor for the First Respondent
Mr Fantin of Counsel


Solicitor for the Second Respondent
Mr Havenstein of Counsel

ORDERS
PAC 3687 of 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
MS MASSI
Applicant
AND:
MR KERBOUCHE
First Respondent

MR B KERBOUCHE
Second Respondent

ORDER MADE BY:
JUDGE MURDOCH
DATE OF ORDER:
24 FEBRUARY 2023



THE COURT ORDERS THAT:

  1. Within 42 days of the date of these Orders the husband pay to the wife the sum of $15,858.
  2. Pursuant to Section 90XT(l)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of First Respondent Husband Mr Kerbouche’s interest in the fund Super Fund 1 (Member Number ...83) ('Super Fund 1'), the trustee of the Super Fund 1 Trust ('the trustee') shall pay to the Applicant Wife Ms Massi with the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a base about of $53,520 of the Husband's entitlement as a member of the Super Fund 1 Superannuation Trust and there should be a corresponding reduction in the entitlement of the person to whom a splittable payment would have made but for these orders.
  3. The Trustee of the Super Fund 1 Superannuation Trust do all such acts and things and sign all such documents as may be necessary to calculate, in accordance with the requirements of the Act and the Regulations, the entitlement awarded to the Wife in Order 2.
  4. The operative time for Orders 2 and 3 is 28 business days after service of a certified sealed copy of these Orders upon the Trustee, at which time these Orders shall have effect.
  5. Having been accorded procedural fairness in relation to the making of these Orders, Orders 2 - 4 shall bind the Trustee.
  6. The following Orders made by consent on 9 February 2022 are discharged:-
    1. That, without admission, the first respondent be restrained by injunction from transferring funds from any bank account held in his name or jointly with another person to an account held by a third party in Australia or overseas including superannuation, except for the following purposes:
1.1 Ordinary living expenses;
1.2 water, electricity, phone, internet, vehicle expenses;
1.3 Reasonable purchases made by way of credit or debit card.
  1. For the purposes of order 1, the scope of the injunction may be varied with the consent of the applicant.
  2. That the applicant provide the usual undertaking as to damages.
  3. That to the extent they are sought against the first respondent in the Amended Application in a Case dated 2 December 2021 be dismissed.
  4. That, without admission, the second respondent be restrained by injunction from transferring funds from any bank account held in his name or jointly with another person to an account held by a third party in Australia or overseas, except for the following purposes:

5.1 Ordinary living expenses;
5.2 Expenses associated with his children’s schooling, tutoring or extracurricular activities;
5.3 To tax, mortgage, rates, water, electricity, phone, internet, vehicle expenses;
5.4 Reasonable purchases made by way of credit or debit card;
  1. That upon the settlement of [B Street, Suburb C], the second respondent shall direct that the proceeds of sale be deposited into his personal bank account and the injunction shall continue to apply with respect to order 1.
  2. For the purposes of order 1, the scope of the injunction may be varied with the consent of the applicant.
  3. That the applicant provide the usual undertaking as to damages.
  4. That to the extent they are sought against the second respondent orders 4, 5, 10, 11, 12, 14 and 15 of the Amended Application in a Case dated 2 December 2021 be dismissed.
  1. The second respondent be at liberty to forthwith authorise and direct the payment to him of all funds held on his behalf by D Lawyers.
  2. The second respondent forthwith provide a sealed copy of these Orders to D Lawyers.
  3. Each party otherwise be solely entitled to the exclusion of the other to all property, assets, chattels and superannuation in their respective names or possession as at the date of these Orders and that each party indemnify the other in relation to any debt associated with any asset that is kept by each of them respectively.
  4. In the event that either party fails or neglects to sign any document pursuant to these Orders, a Registrar of the Federal Circuit and Family Court of Australia (Division 2) is hereby appointed to execute such documents in the name of the party in default so as to give validity and operation to these Orders pursuant to s 106A of the Family Law Act 1975 (Cth) upon being satisfied of such failure or neglect by way of affidavit evidence.
  5. Each party’s costs are reserved for a period of 28 days from the date of these Orders. Any such application for costs is to be by way of an Application in a Case and supporting Affidavit.
  6. All extant applications are otherwise dismissed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under a pseudonym Massi & Kerbouche has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUDGE MURDOCH

INTRODUCTION

  1. These are proceedings for property adjustment commenced by the wife pursuant to section 79 of the Family Law Act 1975 (Cth) (“the Act”).
  2. The parties commenced living together when they married in Country E in 2015. They separated on a final basis on 27 January 2021. There is one child of the relationship; X who is currently 3 years and 11 months of age.
  3. Mr B Kerbouche, (“the second respondent”) is a brother of the husband. He was joined to the proceedings pursuant to Orders made by a Senior Judicial Registrar on 25 January 2022.

THE ISSUES FOR DETERMINATION

  1. At the commencement of the trial the husband and wife agreed that it was just and equitable to adjust their property interests as to 55 per cent to the wife and 45 per cent to the husband.
  2. During the course of the trial no enquiry was made in cross examination of either the husband or the wife as to their asserted contributions to the property pool. No questions were asked as to factors that may ground any adjustment to such contribution finding, nor were any submissions directed to these matters. Each of the husband and the wife confirmed during the course of final submissions that each sought orders from the court that would affect a 55/45 per cent division in the wife’s favour irrespective of the findings as to the nature and value of their superannuation and non-superannuation property available for adjustment.
  3. The parties identified that the pivotal issue at trial was the identification of the nature and value of the property of the husband and the wife available for adjustment. It was the husband’s case that the proceeds of two real properties sold by him after separation were in large applied to repay funds he contended had been advanced to him by the second respondent and other family members prior to and during the marriage. The wife put the fact and terms of the contended loan advances into issue and sought to recover the funds paid by the husband to the second respondent and other family members and friends pursuant to alleged loan agreements the husband had with them. The second respondent opposed the relief sought by the wife.

BACKGROUND

  1. Directions were made on 26 April 2022 as to the preparation of this matter for a final hearing, namely that the parties were to file a joint chronology, joint statement of issues and joint balance sheet by no later than 7 days prior to the final hearing.
  2. This task appeared to be beyond the ability of the parties and instead the court received:-
  3. The husband was born in Country E in 1983 and is currently 39 years of age.
  4. The wife was born in Country E in 1997 and is currently 25 years of age.
  5. The second respondent moved to Australia in 2002.
  6. The husband moved to Australia in 2007.
  7. Following the parties’ marriage in Country E in 2015 the husband returned to Australia in 2015. The wife remained living in Country E with the husband’s family.
  8. Upon his return to Australia the husband worked at Employer F. He undertook training to obtain his transport license and in approximately late 2015 commenced transport work in order to supplement his income.
  9. The husband returned to Country E for one month in 2016.
  10. The husband alleges that on 24 January 2017 he and the second respondent executed a document headed “Loan Agreement” marked as Exhibit H5 in the proceedings (“the 2017 loan agreement.”) This document records that the loan agreement was for the total sum of $100,000.
  11. The wife arrived in Australia from Country E in 2017 and commenced living with the husband in a rental property at Suburb G.
  12. On 14 May 2018 the husband purchased in his own name a vacant block of land at H Street, Suburb J in City K (“the H Street, Suburb J property”) for the sum of $195,000.00. The husband asserts that the deposit and purchase costs were obtained from the monies borrowed from the second respondent pursuant to the 2017 loan agreement.
  13. The husband alleges that on 28 January 2019 he and another brother, Mr L, entered into a document headed “Loan Agreement” marked as exhibit H7 in the proceedings (“the 2019 loan agreement”). This document records that the loan agreement was for the total sum of $36,000.
  14. In 2019 X was born. The husband deposes that towards the end of the wife’s pregnancy he had reduced his work hours and ceased working at Employer F and thereafter for the first 12 months of X’s life he did transport work on a part time basis.
  15. On 19 November 2019, the husband purchased a property located at and known as M Street, Suburb N, City K (“the M Street, Suburb N property”) for $395,000. The husband deposes he paid a deposit of $95,000 “again from loaned money obtained from various sources, including members of my family and a loan from Company O.” The balance owing on the purchase price was funded by way of mortgage with Bank P.”[1] Later in his affidavit the Husband asserts that to fund the deposit, stamp duty, legal costs and “other purchasing costs” of acquiring the M Street, Suburb N property he:-
  16. The H Street, Suburb J property was listed for sale by private treaty in June 2020. Contracts were exchanged for the property in August 2020 however the prospective purchaser rescinded the contract during the cooling off period and the sale did not proceed.
  17. The parties separated on a final basis on 27 January 2021.
  18. The husband asserts that in March 2021 he was encountering financial hardship and sold his Motor Vehicle 1 to the second respondent for the sum of $4,500 for which the second respondent paid cash.[2]
  19. The H Street, Suburb J property was sold on 11 May 2021 for the sum of $290,000. Settlement took place in August 2021.
  20. The M Street, Suburb N property was sold on 26 July 2021 for the sum of $491,000. Settlement took place in August 2021.
  21. The Husband’s unchallenged evidence was that on 15 August 2021, he received the sum of $291,220.48 into the Bank S account ending #...90 held jointly[3] with the second respondent from the proceeds of sale of the two properties. He received a further sum of $2,720 on 20 August 2021 into this same account, being the balance of the deposit. Thus in total the sum of $293,940.48 was received. The husband asserts later in his affidavit that a total sum of $293,940.71 was received. I have rounded the figure to the nearest dollar in any event.
  22. The husband deposes that at the time the H Street, Suburb J and M Street, Suburb N properties were sold he had outstanding liabilities in total in the sum of $316,479 as follows:
  23. The Husband deposes that after the deduction of bank fees and charges of $51.99 the husband applied the monies received from the sale of the properties as follows:-
  24. Of the $33,539 received by the husband he has paid the sum of $26,900 into his solicitor’s trust account. On the husband’s evidence the balance of $6,639 was applied to living expenses.
  25. The wife does not appear to put into issue the date, fact and quantum of each transfer and recipient of the funds. She puts into issue the fact and integrity of each of the transactions.
  26. On 9 February 2022 interim orders were made by consent restraining both the husband and the second respondent from transferring any funds held in any bank account either in their name or jointly with another party to an account held by a third party other than for ordinary living expenses and reasonable purchases made by way of debit or credit card. The second respondent was ordered to direct that the net proceeds of sale of an investment property held jointly with his wife at B Street, Suburb C be deposited into his bank account and thereafter the same injunction would apply. The sum of $171,500 is currently held in the trust account of the second respondent’s solicitor on trust for the second respondent and his wife pursuant to this order. The balance of the net monies received from the sale of this property was paid to the wife of the second respondent.
  27. The husband travelled to visit his parents in Country E in early 2022 and returned to Australia in late 2022.
  28. On 10 February 2022 the wife filed an undertaking as to damages pursuant to the orders of 9 February 2022.

THE COMPETING PROPOSALS

  1. The orders sought by the wife at the commencement of the trial were either unenforceable, repetitive, or confusing. She was afforded the opportunity to submit a further draft minute of order particularising the orders sought by her on a final basis. Whilst the wife sought a superannuation splitting order she had not provided procedural fairness to the superannuation trustee of the husband’s superannuation fund.
  2. On the third day of the trial an updated minute of orders sought by the wife was tendered. It did little to progress the deficiencies in the initial orders sought. The wife had not engaged with the provision of procedural fairness being afforded to the superannuation trustee.
  3. Immediately prior to the commencement of final submissions copies of correspondence forwarded by the wife’s solicitors to the superannuation trustee of the husband superannuation fund on 9 December 2022 was forwarded to Chambers and marked as an exhibit. The Minute of Order attached to this correspondence did not accord with the Minute of Orders sought by the wife at the trial. It was only when this was raised with the wife was the court advised that the document attached to the correspondence was in fact the relief the wife is seeking.
  4. The husband and the wife agreed that in the circumstances of the lack of procedural fairness afforded to the superannuation trustee, any orders made splitting the husband’s superannuation entitlements should not come into effect until 28 days after the making of orders and their service on the trustee.
  5. The wife now seeks that:-
    1. The husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
    2. In the event that any party refuses or neglects to comply with any provision of these orders:
      1. A registrar of the Federal Circuit Court is hereby appointed pursuant to section 106A of the Family Law Act to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these orders;
      2. The defaulting party pay all reasonable costs incurred by the other party for the purpose of exercising this order.
    3. All property disclosed but not dealt within these orders remain the property of the party who has possession of that property as at the date of these orders.
    4. That each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
    5. The Loan agreement dated 24 January 2017 between the first respondent and the second respondent is void and be set aside.
    6. The second respondent pay to the applicant wife $119,069.00 within 7 days of this order.
    7. The Monies that were in the [Bank S] Account# [...09] on 16/08/2021 be declared as matrimonial assets and be added to the assets pool for the parties to the marriage.
    8. Pursuant to Section 90XT(l)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of First Respondent Husband [Mr Kerbouche] interest in the fund [Super Fund 1] (Member Number [...83]) ('[Super Fund 1’] ), the trustee of the [Super Fund 1] Trust ('the trustee') shall pay to the Applicant Wife [Ms Massi] with the amount calculated in accordance with Part 6 of The Family Law (Superannuation) Regulations 2001 (Cth), using a base about of $28,796.00 of the Husband's entitlement as a member of the [Super Fund 1] Superannuation Trust and there should be a corresponding reduction in the entitlement of the person to whom a splittable payment would have made but for these orders.
    9. The Trustee of the [Super Fund 1] Superannuation Trust do all such acts and things and sign all such documents as may be necessary to calculate, in accordance with the requirements of the Act and the Regulations, the entitlement awarded to the Wife in Order 8.
    10. The operative time for Orders 8 and 9 is four (4) business days after service of a certified sealed copy of these Orders upon the Trustee, at which time these Orders shall have effect.
    11. Having been accorded procedural fairness in relation to the making of these Orders, Orders 8 to 10 shall bind the Trustee.
    12. The division of the matrimonial monies and valued assets be divided as follow:
      1. Payment of $147,865.00 to the wife; and
      2. Payment of $120,982.00 to the Husband.
    13. Any other orders the court may deem appropriate.
  6. In final submissions the wife clarified that she seeks a payment to her by the second respondent of $119,069 and an additional payment to her of $147,865. This second sum is to also be paid by the second respondent. Thus the wife seeks that the second respondent pay to her the sum of $266,934. She seeks that the Husband be paid (it is not stated by whom) the sum of $120,982.
  7. The husband seeks orders that the wife receive a superannuation splitting order in her favour of the husband’s superannuation entitlements in a base amount of $20,000 and that each party otherwise retain all assets in their name or control.
  8. The second respondent seeks that the orders sought by the wife that affect him be dismissed and that the wife pay his costs on an indemnity basis.

THE ALLEGED LOANS

  1. The wife in effect disputes the facts and terms of all loans alleged by the husband.
  2. Whilst the husband alleges that two of such loans have been reduced to writing, only the party to the 2017 alleged loan agreement has been joined as a party to the proceedings. The case of the husband and the second respondent was that the contended loans were initially orally made in a familial Country E environment and later embodied in a written document.
  3. The foundations of the wife’s challenges to the purported loan transactions were from a number of differing foundations and took differing guises over the history of this matter and the commencement of the final trial. This included:
  4. At the direction of the court on the third day of the trial the following was submitted as the findings of fact the wife seeks to be made to ground her relief on this subject matter:-
    1. 1st respondent was served with initiating application in July 2021 via his then current solicitors and directly to himself via his email.
    2. 1st respondent gave an undertaking to the applicant in July 2021 through his then current solicitor to deposit proceeds of sale of two Tasmanian properties to that solicitor’s trust account pending settlement.
    3. 1st respondent breached the undertaking given via his then solicitor to the applicant wife.
    4. 1st respondent made a disposition of the proceeds of sale of the two Tasmanian properties by transferring monies to the second respondent.
    5. 1st respondent made voidable loan agreement with 2nd respondent and this agreement was improperly executed;
    6. The Moines [sic] from the sale of the two Tasmanian properties were part of the matrimonial asset.
    7. The properties were disposed of, and 1st respondent made a disposition of the proceeds of sale of the two Tasmanian properties after the service of the court sealed initiating application to 1st respondent;
    8. The agreement signed in 28/01/2017 was improperly executed;
    9. Monies advanced by family members and friends were not properly recorded and were not intended to be enforceable loans;
    10. 1st respondent’s disposition of the funds from the sale of the two Tasmanian properties would then defeat property settlement orders or anticipated property settlement orders of the court.
  5. The wife’s final position was difficult to ascertain even with the assistance of counsel during the course of final submissions. With the benefit of reading the transcript the wife conceded during the course of final submissions that:-
HER HONOUR: She concedes then that with respect to those three sums of money that there was an agreement between the respondents that at some time the first respondent would pay the second respondent back when he could?
COUNSEL FOR THE WIFE: When he was in a position to, yes. I’m trying to remember his exact words, and I’ve wrote them down, but I can’t – the exact words that he put in his Affidavit.
If it’s a legal loan agreement, it’s legal in [Country E] and not enforceable in New South Wales. If it’s a loan agreement made in New South Wales, it’s not a legal document. The best it can be is an indication of a loan, we will say.
It’s not a document that’s made in Australia. It’s not a legal document – It’s not an Australian legal document,
If it was an Australian legal document it would have complied with the External Witness Act which means that if you signed for it in a separate area, it has to be attested onto the document itself, which it wasn’t.
Yes, you can take as being a loan that has been – that – you would have to decide whether has to be repaid or not, but it can’t be enforced in Australia that’s all...... If money is advanced and it’s supposed to be returned and it’s taken to be like a loan, then it becomes an obligation to repay, not an enforcement to repay.
If it’s true that it’s owed, it’s owed.... But I can’t make any comment on the loans themselves, other than there is an obligation to pay and if the court feels that that obligation should be met, then it should be met...... But....... All the amounts prior to that were not based on that they needed to be repaid, and so all I can say is that these amounts may, in fact, be under that same obligation. If that sounds unclear, I can make it clear on the basis that the obligation is to pay ‘when you’re able to’, but there is no penalty.
  1. By way of summary, the wife’s final position was that unless there is documentary evidence to show the monies being paid by the second respondent to the husband, I should ignore, effectively, the purported written loan agreement between them. This is on the basis that:-
The wife doesn’t know anything about this. That’s her evidence. ‘I wasn’t aware of the loans. I wasn’t aware of anything.’ So all we can deal with is the documentary proof that is given to us by the first and second respondents, and if they don’t get the proof that would be enough to show that money was lent... The amount that they allege are lent, then they should fail in that regard.
  1. Counsel then stated that with respect to the 2017 loan agreement that I could not accept the loan agreement because it is void on the basis that it incorporates two items that are not related:
The agreements are not valid agreements in Australia and the best they can be held is that the agreement indicates an obligation that the husband should repay the seventeen odd thousand dollars which she has- if you like, he has given 5000, but that need not have been repayment of any loan. It just may have been that he advanced second respondent $5000... In fact, the loan agreement is not a loan agreement, it’s just an indication of an obligation to pay back monies advanced.
  1. Counsel agreed with me that what the wife is effectively asking me to do is accept part of the obligation arising from the 2017 loan agreement – being the obligation to pay back the sum of $17,000, but not the balance of the obligations set out in the 2017 loan agreement being the balance of the monies said to be paid and owed. Counsel conceded that the finding the wife is effectively asking me to make is that the 2017 agreement was executed by the first and second respondent, and whilst on the face of it, states that there is an obligation by the first respondent to pay the second respondent monies advanced by him in the sum of $100,000 together with interest if certain conditions are met, what I should actually find is that the 2017 loan agreement was an understanding between the respondents that the husband was only required to pay back (when he was able to) the sum of $17,000.
  2. The wife then submitted that I should effectively ignore the loan agreement as “it has been complied with.”
  3. With respect to the loans from other family members, it was submitted on behalf of the wife that there is no documentary evidence to show the payment of any monies to the husband “so all the other loans are not loans at all.”

THE LAW

  1. In determining claims for alteration of property interests I am required to:
    (a) Make findings as to the identity and value of the property (including superannuation interests), liabilities, and financial resources of the parties, or either of them, at the time of the final hearing, and determine the legal and equitable interests of the parties in such property;

    (b) Consider, identify and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non-financial contributions and any contributions to the welfare of the family before, during and after the relationship came to an end; and

    (c) After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(d)-(g) of the Act, including any relevant considerations under s 75(2); and

    (d) Ensure that any order made is just and equitable.

THE BALANCE SHEET

  1. Despite concessions made by each of the parties during the course of the hearing the draft joint balance sheet tendered at the commencement of the hearing was not formally amended at any time. Applying the concessions made by each of the parties and in circumstances where the wife’s position with respect to conceded advances made by the second respondent to the husband was inconsistent, I have proceeded on the basis that the wife disputes that any of the monies advanced by the second respondent to the husband are repayable by the husband and thus the wife seeks that the entire net proceeds of the sale of the two Tasmanian properties are to be notionally added back to the property pool. I have ignored the $2 the wife submits is in a bank account of the husband’s. The balance sheet is as follows:-
Ownership Description Wife's Value Husband's Value

ASSETS

1 H CBA Account ...35 a/c ...45 $296 $296
2 W CBA Account ...23 a/c ...94 $163 $163
3 W Household Contents $1,000 $1,000
4 H Household Contents $200 $200
Total $1,659 $1,659

NOTIONAL ADDBACKS

Ownership Description Wife's Value Husband's Value
5 H Proceeds of sale of two Tasmanian properties $293,940 $0
6 H Motor Vehicle 1 $4,500 $0
Total $298,440 $0


SUPERANNUATION

Ownership Description Wife's Value Husband's Value
7 H Super Fund 1 $52,357 $52,357
Total $52,357 $52,357


LIABILITIES

Ownership Description Wife's Value Husband's Value
8 H Company O $25,493 $25,228
9 H Income Tax owing to ATO $6,959 $6,959
10 H Capital Gains Tax $21,822 $21,822
11 H Loan balance to Second Respondent $0 $14,850
Total $54,274 $68,859
TOTAL NET PROPERTY POOL $298,182 -$14,843

BALANCE SHEET DETERMINATIONS

Notional Addbacks

  1. The Full Court in AJO & GRO (2005) FLC 93-218; [2005] FamCA 195, identified three clear categories where it may be appropriate to notionally add back an item of expenditure:
  2. Notionally “adding back” items to the asset pool is a discretionary exercise which ought to be the exception rather than the rule: NHC & RCH (2004) FLC 93-204; [2004] FamCA 633.

Item 5 – Addback against the husband of $293,940 being the proceeds of sale of the two Tasmanian properties

  1. The husband bears the evidentiary onus to establish on the evidence a credible foundation as to the existence of loans asserted by him to enable findings as to:
    (a) whether there were agreements for loans as alleged;

    (b) if so, when were those agreements were made; and

    (c) the terms of the loans.

Payment to the Second Respondent of $119,350

  1. The Husband’s written evidence with respect to the alleged advancement of $100,000 by the second respondent is that:-
  2. During the course of cross examination it was the Husband’s evidence that:-
  3. The husband was clear and firm in his evidence. He was unable to be successfully challenged on his evidence and I accept it.
  4. The second respondent’s written evidence is that:-
Further payments were made from my wife’s account to [Mr Kerbouche] account to make up to agreed loan amount:
  • On 18 May 2018, my wife gave [Mr Kerbouche] $5,000 in cash;
  • On I October 2019, my wife transferred $5,000 by electronic transfer;
  • On 9 October 2019, my wife transferred $2,000 by electronic transfer.
  1. The second respondent gave his oral evidence in a calm and measured manner. He was polite and firm. His oral evidence was that:-
  2. The second respondent was unable to be successfully challenged on his evidence and I accept it.
  3. The wife’s written evidence was that she simply did not know anything about the 2017 loan agreement prior to the separation of the parties.
  4. Her oral evidence was that:
He never told me how much he was earning. He never showed me his bank accounts but he used to get money out of eftpos.
  1. I had the opportunity to observe the wife during the course of her cross examination which was given with the assistance of a Country E interpreter. Whilst taken into account the English language difficulties the wife has, I still found her evidence to be evasive. She was focused on providing her case to the court and had to be reminded on several occasions by me to simply answer the questions asked of her. She was loathe to make concessions. I treat her evidence with caution.
  2. Whilst the court would have been assisted by more specific detail as to the circumstances giving rise to the advances, I accept that the assertions of the respondents are not fanciful; they are consistent and logical. Both were unwavering in their evidence. I accept it as logical in the circumstances of the husband’s financial circumstances that he required financial assistance to acquire the two Tasmanian properties. There is no other logical source of funds outside of the marriage having regard to the evidence and reasons identified earlier as to the husband’s income and financial resources. I find that the second respondent advanced a total sum of $100,000 to the husband. I accept it as reasonable that in the circumstances of the familial relationship it is on balance more probable than not that such sums were advanced initially without the benefit of any written agreement.
  3. The second respondent was clear and firm in his evidence that he expected repayment of the monies advanced by him to the husband. He was unshaken in this evidence and I accept it. I accept the loan agreement was executed in 2017; prior to the separation of the parties. I accept that the 2017 loan agreement records the fact of the earlier agreement entered into between the parties as to the sums advanced by the second respondent to the husband and the terms and conditions of such advances including that they were to be repaid within a certain period of time failing which interest would accrue. I accept and find that the second respondent advanced sums totalling $100,000 to the husband and that the second respondent required such sums to be repaid.
  4. There was no reason advanced by the wife as to why the respondents would enter into a loan document particularising and acknowledging past and future monies advanced by the second respondent to the husband during the time that the husband and the wife were still in a relationship when there is no suggestion that the husband and wife were having marital difficulties. There was no challenge as to the source of funds advanced by the second respondent. It is nonsensical to suggest that I could find that in fact the agreement between the respondents was that the second respondent advanced the sum of $17,000 which was to be repaid when the husband was in a position to do so.
  5. On balance, I accept the husband’s evidence over that of the wife that he advised the wife at the time of the advances of money from the second respondent. The wife was an unimpressive witness.
  6. I find that the terms and conditions of this advance were as set out in the 2017 written loan agreement. The wife’s application to have the sum of $119,350 paid by the husband to the second respondent notionally added back to the property pool is unsuccessful.

Payment to Mr L of $46,000

  1. It is uncontested that between 22 August 2021 and 6 September 2021 the second respondent transferred sums totalling $46,000 to Mr L at the request of the husband. The husband alleges that such monies were in full payment of the monies owed to him pursuant to the 2019 loan agreement.
  2. As set out in paragraph 21 of these reasons the husband deposes that he borrowed the sum of $36,000 from Mr L to assist him in purchasing the M Street, Suburb N property. The only evidence as to this alleged loan is a copy of the 2019 loan agreement the husband deposes was executed by him in Australia and then sent to his family in Country E. There is no evidence as to any conversations that gave rise to such advance of funds. The lender is not on Affidavit.
  3. The 2019 loan agreement document dated 28 January 2019 records that the husband is in need of financial assistance to “purchase some gold jewellery in Country E and to buy a house in Tasmania, Australia.” It records that the husband will repay the sum lent of $36,000 within two years and in those circumstances no interest will accrue. If the sum is not repaid within this time then interest will accrue at 12 per cent per annum and the total amount payable will be $46,800. In the event the husband failed to make full repayment within six months Mr L may take further legal action. The lender appointed his elder brother Mr B Kerbouche to “monitor the loan and receive the repayment amount after maturity on behalf of the lender for onward sending to Country E.”
  4. The Husband deposes that in 2019 he said to the Wife: “I need to borrow money from a family friend to buy M Street, Suburb N. Ms Massi said: ‘Ok’”.
  5. In evidence is a summary prepared by the husband of monies deposited into his Commonwealth Bank Account #...45 “from Mr L as per loan agreement in January 2019.” The husband further tendered bank accounts for this account. The wife concedes that the bank statements show the following cash deposits being made to the account:-
Date
Mode of Receiving
Amount (AUD)
3 October 2019
Cash Deposit in Bank Account
$5,000
8 October 2019
Cash Deposit in Bank Account
$1,900
8 October 2019
Cash Deposit in Bank Account
$8,100
11 October 2019
Cash Deposit in Bank Account
$10,000
14 October 2019
Cash Deposit in Bank Account
$5,000
15 October 2019
Cash Deposit in Bank Account
$4,000
15 October 2019
Cash Deposit in Bank Account
$1,000
15 October 2019
Cash Deposit in Bank Account
$1,000
Total

$36,000
  1. The wife does not concede that such funds came from Mr L.
  2. There is no evidence that such monies were from Mr L. The deposits are made via cash from various places including Suburb V Shopping Centre, Suburb W Shopping Centre and Suburb Y on the same day, Suburb Z, City AB and Suburb AC.
  3. Whilst the evidence of the husband to support his contention is sparse in its particularity, I am satisfied on balance that the husband has discharged his evidentiary onus to establish that the loan agreement evidences an agreement entered into between the husband and Mr L to advance and repay the sum of $36,000.00 with interest arising in the event the sum was not repaid within the time specified. It was entered into during the husband and wife’s relationship. There is no logical reason provided by the wife as to the source or application of the monies received by the husband as set out in paragraph 76 above, nor as to why the husband would otherwise enter into such a written agreement. All the sums were advanced one month prior to the Husband settling on the purchase of the M Street, Suburb N property.
  4. The challenge to this loan is unsuccessful and the wife’s application to have the sum of $46,000 notionally added back to the property pool is unsuccessful.

Payment to Mr R of $35,000

  1. The Husband’s evidence as to this alleged loan is sparse. He deposes that the purpose of the loan of $35,000 was to assist in paying the acquisition costs of M Street, Suburb N including the deposit, stamp duty, legal costs and “other costs.” The entirety of the Husband’s evidence otherwise is:-
I did not have a written loan agreement with my father [Mr Q] or [Mr R] however, there was an oral agreement based on the following terms:
[Mr R]:
  • i. Principle amount: $35,000
  • ii. Interest: 10%.
  • iii. Repayment period: 3 years.
  1. Mr R is not on Affidavit.
  2. The evidence tendered by the husband to support his assertion that he received the funds is again that contained in Exhibit H8, being a “summary of the loans from family and friends to my CBA account #...45.” Such summary is as follows:-
Date
Mode of Receiving
Amount (AUD)
15 October 2019
Cash Deposit in Bank Account
$5,500
25 October 2019
Cash
$8,500
5 November 2019
Cash Deposit in Bank Account
$11,000
13 May 2020
Cash Deposit in Bank Account
$10,000
Total

$35,000
  1. The husband’s bank statements show cash deposits from branches in City AB, Suburb AD Shopping Centre and Suburb AE. The husband’s summary indicates that the sum of $8,500 was received by way of “cash” on 25 October 2019. This transaction thus does not appear on the husband’s bank statement.
  2. There is no evidence that these monies came from Mr R. The last deposit of $10,000 into the husband’s bank account occurred some six months after the settlement of the purchase of the M Street, Suburb N property.
  3. The nature of the husband’s evidence to support his assertion is so lacking that I cannot find, on balance, that he has met the evidentiary onus to establish that he received these funds from Mr R, let alone that they were the subject of a loan agreement.
  4. The wife’s challenge to this asserted loan is successful. I am satisfied that the husband prematurely distributed monies that would ordinarily have been part of the property pool available for adjustment between the parties. The sum of $35,000 will be notionally added back to the property pool.

Payment to Mr Q of $60,000

  1. The nature of the husband’s evidence to support this assertion is consistent with his evidence asserting the loan from Mr R. Again the husband asserts that the purpose of the loan of $60,000 was to assist in paying the acquisition costs of M Street, Suburb N including the deposit, stamp duty, legal costs and “other costs.” The entirety of the Husband’s evidence otherwise is:-
I did not have a written loan agreement with my father [Mr Q] or [Mr R] however, there was an oral agreement based on the following terms:
[Mr Q]:
  • i. Principle amount: $60,000
  • ii. Interest: 10%.
  • iii. Repayment period: 3 years.
  1. Mr Q is not on Affidavit.
  2. The evidence tendered by the husband to support his assertion that he received the funds is again that contained in Exhibit H8, being a “summary of the loans from family and friends to my CBA account #...45.” Such summary for Mr Q lists fifteen cash deposits into his bank account during the period 4 October 2016 to 20 August 2020 for sums ranging from $1,000 to $9,990. The bank statements which may evidence the first three transactions in the husband’s summary in the sum of $5,000, $6,600 and $3,000 are not in evidence. The sum of $3,000 received by the husband by way of “cash” on 20 October 2019 does not of course appear in the husband’s banks statements. The balance of transactions listed by the husband in his summary appear in his bank statements and show two cash deposits from City AB, cash deposits from Suburb AF Shopping Centre and Suburb AG on the same day, a cash deposit in Suburb AH Shopping Centre, a bank transfer from a Mr AJ on 27 July 2020, a cash deposit in Town AK, two cash deposits in Suburb AL, one in City AM, and one at a Location AN.
  3. There is no evidence that the sums received by the husband as listed in Exhibit H8 were from Mr L. There is no explanation as to why the monies were advanced from Mr L as far back as 2016 when the monies were allegedly used to purchase the M Street, Suburb N property in 2019. There is no explanation as to why such sums continued to be advanced up to 20 August 2020. The nature of the husband’s evidence to support his assertion is so lacking that I cannot safely find, on balance, that he has met the evidentiary onus to establish that he received these funds from Mr Q, nor that that they were the subject of a loan agreement.
  4. The wife’s challenge to these asserted loans is successful. I am satisfied that the husband prematurely distributed monies that would ordinarily have been part of the property pool available for adjustment between the parties. The sum of $60,000 will be notionally added back to the property pool.

Monies received by the husband of $33,539

  1. It was not challenged that $26,900 was paid by the husband to his solicitor’s trust account. A costs notice filed by the husband on 26 April 2022 records that as at 26 April 2022 the husband had incurred $24,700 in professional fees and disbursements billed. There is no evidence that such sum has been paid but the draft joint balance sheet notes that the husband had paid $26,900 in legal fees and I find this is so.
  2. Counsel for the husband was asked for submissions as to why this sum should not be notionally added back to the property pool. Counsel for the wife cited Purdy J in the case of In the Marriage of PJ and RM Farnell [1995] FamCA 140; (1996) 20 Fam LR 513 where His Honour said:
It’s my usual practice not to take the parties legal costs into account. This is not to indicate that they lack reality but they can just inject a false dimension into property proceedings. The true picture is least distorted by ignoring the parties’ legal costs.
  1. The full Court in NHC & RCH [2004] FamCA 633; (2004) 186 FLR 240 stated that whilst the treatment of funds used to pay legal costs ultimately remains a discretionary matter for the trial judge, in determining how to exercise that discretion regard should be had to the source of the funds. Having regard to Full Court authority I am satisfied in the circumstances where the husband’s legal fees have been paid from the property that would otherwise have been available for distribution between the parties that it is proper and reasonable to notionally add back to the property pool the sum expended by the husband in legal fees.
  2. On the husband’s evidence the balance of $6,639 was applied to general living expenses. The wife did not challenge this evidence in cross examination. Parties are entitled to reasonably conduct their affairs post separation: Gollings & Scott (2007) FLC 93-319; [2007] FamCA 397. Reasonably incurred expenditure usually does not come within the accepted categories of an “addback”. A party is not expected to be able to provide a precise audit as to every post separation expenditure: Edgehill & Edgehill [2007] FamCA 1102. I am satisfied that the monies expended by the husband on general living expenses post separation should not be notionally added back to the property pool.

Item 6: Proceeds of Sale of the Motor Vehicle 1 of $4,500

  1. The husband deposes that due to financial hardship in March 2021 he was forced to sell the Motor Vehicle 1 for the sum of $4,500. The husband sold the motor vehicle to the second respondent and the respondents both assert that a cash sum was paid for the motor vehicle. There is no evidence as to how such sum was arrived at save that the second respondent asserts that the motor vehicle had significant damage to the windscreen that needed to be repaired. Further there is no evidence as to:-
  2. Counsel for the husband submitted that the proceeds of sale of the motor vehicle were used to pay the husband’s criminal legal costs with respect to the apprehended domestic violence order. There is no evidence to support this evidence from the bar table and I place no weight on it.
  3. The vague and unparticularised nature of the husband’s evidence as to his application of such funds leads me to find that this was a premature distribution of a matrimonial asset and I am satisfied in those circumstances that it is proper and reasonable that the sum of $4,500 should be notionally added back to the pool of property available for adjustment between the parties.

Liabilities

Item 9: Monies Owing to Company O

  1. The parties dispute the amount of monies still owed by the husband to Company O. There was there no cross examination by either party or submissions made as to this issue. In evidence before me by way of Exhibit H12 is an undated screenshot of a statement from Company O. That statement does not show the current amount owing on the loan, but rather that the loan was taken out on 6 November 2019 and the amount borrowed at that time was $34,402.09. The monthly repayments are $580.81. In the circumstances where the husband bears the evidentiary onus to prove the value of a liability he is retaining, I accept the wife’s asserted value of $25,493.

Item 12: Loan Balance to the Second Respondent

  1. The husband paid to the second respondent a further sum of $5,000 on April 2020, bringing the sum paid by him to the second respondent to $130,150 for monies lent totalling $100,000. The husband and second respondent assert that there remains a further $14,850 outstanding.
  2. I am not satisfied that, as between the husband and the wife, it is just and equitable for this further sum to be listed as a matrimonial liability on the balance sheet as monies still owed and I refuse to do so. The second respondent is at liberty to sue the husband for the remainder if he wishes to do so.
  3. On the findings I have made the property available for adjustment between the parties is:-
OWNERSHIP DESCRIPTION VALUE

ASSETS

H CBA Account ...35 a/c ...45 $296

W CBA Account ...23 a/c ...94 $163

W Household Contents $1,000

H Household Contents $200
Total $1,659

NOTIONAL ADDBACKS

H Premature Distribution of Monies $35,000

H Premature Distribution of Monies $60,000

H Proceeds of sale of Motor Vehicle 1 $4,500

H Legal fees paid by Husband $26,900
Total $126,400


SUPERANNUATION
Ownership Description Value

H Super Fund 1 $52,357
Total $52,357


LIABILITIES
Ownership Description Value

H Company O $25,493

H Income Tax owing to ATO $6,959

H Capital Gains Tax $21,822
Total $54,274
Net Total $126,142
  1. There is further the sum of $171,500 remaining in the solicitor’s trust account being the proceeds of sale of the property owned jointly by the second respondent with his wife.

WHETHER AN ORDER ALTERING PROPERTY INTERESTS SHOULD BE MADE

  1. I should only make orders pursuant to s 79 of the Act if I am first satisfied that it is just and equitable to do so. It must not be assumed that the parties’ rights or interests should be different to that which already exists: Stanford & Stanford (2012) FLC 93-518; [2012] HCA 52 (“Stanford”).
  2. I find that the requirements identified in Stanford are satisfied in this matter having regard to:
  3. It is therefore just and equitable in all the circumstances to make orders pursuant to s 79 of the Act adjusting the financial interest of the parties.

CONCLUSION

  1. Consistent with the agreement reached by the husband and wife I accept and find that their agreed adjustment as to 55 percent to the wife and 45 per cent to the husband falls within the broad range of discretion afforded to this Court: see Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84.
  2. The total net property pool including superannuation available for adjustment between the parties is valued at $126,142. Of this, $52,357 is superannuation property of the husband’s. In addition to the superannuation property there remains, in existence and in reality property to the value of $1,659.
  3. The husband has paid to the second respondent sums totalling $130,150. By way of consent orders the net proceeds of sale of a property at B Street, Suburb C held jointly by the second respondent and his wife in the sum of $171,500 is being held in the second respondent solicitor’s trust account pending the final determination of this matter. The wife seeks that this money be applied towards paying the adjustment required by the husband in cash to effect a 55 percent division of the property pool in her favour. She further seeks a payment by the second respondent to her of the sum of $95,434. The wife of the second respondent is not a party to these proceedings.
  4. The wife seeks that the second respondent be responsible for and pay the adjustment she is to receive as between the husband and the wife. She did not identify any source of power to ground such a relief. No submissions were made nor authority provided to support this position.
  5. It was never put to the husband or the second respondent that the monies paid by the husband to the second respondent were not disbursed as set out above at the husband’s direction. Any adjustment required to be paid is the sole responsibility of the husband, not the second respondent. Orders will be made discharging the restraint on the second respondent accessing the monies held on behalf of himself and his wife.
  6. Neither the husband nor the wife made any submissions that the agreed property adjustment should be applied to anything other than one pool of property. Each of the parties are bound by the case they ran at trial and the evidence they relied upon to support it, including omissions.
  7. Thus in accordance with the parties’ agreement the wife is to receive assets to a value of $69,378. She is retaining:-

Description Value
CBA Account ...23 a/c ...94 $163
Household Contents $1,000
TOTAL $1,163
  1. Thus the wife requires an adjustment of assets to the value of $68,215.
  2. In circumstances where there is little value to the property pool that exists other than the husband’s superannuation benefits, it is just and equitable that a superannuation splitting order be made that the wife receive the total of the husband’s superannuation, being $52,357 and a superannuation splitting order will be made to this effect.
  3. The 55% adjustment as agreed to by the parties to the wife will require orders to be made that the wife will receive and an additional cash payment of $15,858 and an order will be made in these terms. It will be a matter for the husband to source sufficient funds to comply with this order. It will be a matter for him, should he consider it appropriate to do so, to recover some of the monies disbursed at his direction to Mr B Kerbouche and Mr L. I will allow him 42 days to pay.
  4. I am satisfied that the proposed orders are just and equitable in all the circumstances and orders will be made accordingly.
I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Murdoch.

Associate:

Dated: 24 February 2023

[1] Husband’s Affidavit, paragraph 35.
[2] Second Respondent’s Affidavit paragraph 45.
[3] Husband Affidavit paragraph 120 to 122.
[4] Husband Affidavit paragraph 124.
[5] Husband Affidavit, paragraph 27.
[6] Husband Affidavit, annexure J.
[7] Husband Affidavit, annexure F.

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