FAMILY COURT OF AUSTRALIA

BOURKE & BOURKE AND ANOR (FINAL HEARING COSTS)	[2010] FamCA 199	

FAMILY LAW – PROPERTY – Husband has acted to frustrate the wife’s property application – s 106B application – Third party corporate entity – Trial involving wife and third party only – Third party director is good friends with husband – Consideration of transferral of property from husband to third party – Whether the transferral was under the husband and third party’s joint venture agreement – Wife asserted the transaction was a sham – Consideration of the standard of proof required to establish a sham transaction – Whether the non-fraudulent transferral falls under s 106B – Consideration of third party interests	

Family Law Act 1975 (Cth) ss 79, 90AE(2)(b), 106B, 117,117(2A)	

Abdullah and Abdullah (1981) FLC 91-003
Af Petersens and Af Petersens (1981) FLC 91-095
Aysom and Aysom  (1988) FLC 91-925
Balnaves and Balnaves (1988) FLC 91-952
Biltoft and Biltoft (1995) FLC 92-614
Commissioner of Taxation and Worsnop and Anor [2009] FamCAFC4
Halabi v Artillaga (1994) FLC 92-470
Heath v Westpac Banking Corporation (1984) FLC 91-517
In the Marriage of D and D (1984) 10 Fam LR 73
In the Marriage of Gould (1993) 17 Fam LR 156
In the Marriage of Heath (No 2) (1984) 9 Fam LR 642
In the Marriage of Pflugradt (1981) 7 Fam LR 188
In the Marriage of Whitaker (1980) 5 Fam LR 769
Official Trustee in Bankruptcy v Bassola  (No 3) (1986) FLC 91-760
Prince and Prince; General Credits Australia Ltd (Intervenor) (1984) FLC 91-501
Public Trustee (SA) v Keays (1985) FLC 91-651
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 82 ALR 530
Whitaker and Whitaker (1980) 5 Fam LR 769

APPLICANT:	Ms Bourke	

RESPONDENT:	Mr Bourke	

3rd PARTY:	S Finance Pty Ltd	

FILE NUMBER:	MLF	2814		of	2006	

DATE DELIVERED:	17 March 2010	

PLACE DELIVERED:	Brisbane	

PLACE HEARD:	Melbourne	

JUDGMENT OF:	Murphy J	

HEARING DATE:	4 & 5 June 2009	

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Ham	

SOLICITOR FOR THE APPLICANT:	Callahans Lawyers	

SOLICiTOR FOR THE RESPONDENT:	No appearance by the Husband	

COUNSEL FOR THE INTERVENOR:	Mr Davis	

SOLICITOR FOR THE INTERVENOR:	McBain Lawyers	

Orders
IT IS ORDERED THAT
(1)	Pursuant to s 106B of the Family Law Act 1975 (as amended), the transfer of the property situated at Unit 3, W, in the State of Victoria, being the whole of the land described in Certificate of Title Volume … Folio … (“the W property”) from the husband to S Finance Pty Ltd A.C.N. … (‘the company”) be set aside.
(2)	The company shall, within 14 days of the date of these Orders do all such things, sign all such documents and pay all such reasonable fees as might be necessary to effect the transfer of the W property to the husband free of encumbrance.
(3)	As and by way of settlement of property pursuant to s 79 of the Family Law Act:
(a)	the husband shall do all such things and sign all such documents as might be necessary to transfer to the wife, contemporaneously with the transfer contemplated by paragraph 2 of these orders, the W property;
(b)	Consequent upon the transfer of the W property, the wife be solely entitled to same to the exclusion of any right, title, claim or interest in and to the said property by either the husband or the third party;
(c)	The wife be solely entitled to any and all such property of the husband or wife or either of them, of whatever type or description, to the exclusion of any right, title, claim or interest in or to the said property by the husband.
(4)	Pursuant to s 106A of the Family Law Act 1975 (as amended), a Registrar of this Court, namely Registrar Field, be appointed to execute all such deeds, transfers or other documents as are necessary to give effect to these Orders:
(a)	In the case of the husband, forthwith;
(b)	In the case of the company, upon an affidavit being filed by the solicitor for the wife deposing to non-compliance with paragraph 2 of these orders, together with an affidavit of service of that affidavit upon the third party.
(5)	The husband and the company each respectively be restrained and an injunction issue restraining each of them from transferring, encumbering or otherwise dealing with the W property save as to give effect to these orders.
(6)	The husband and the company each respectively be restrained and an injunction issue restraining each of them from authorising or directing any person to act on their behalf or in their stead in transferring, encumbering or otherwise dealing with the W property save as to give effect to these orders.
(7)	The wife’s application for orders pursuant to Part VIIIAA of the Family Law Act 1975 (as amended) is dismissed.
(8)	The response of the company, including its defence, be dismissed.

Costs of Proceedings on 30 January 2009
(9)	The question of the costs of and incidental to the proceedings of 30 January 2009 be reserved to the trial.
(10)	Each party shall provide, within 21 days of the date of these Orders, such further written submissions on the issue of the costs of the proceedings of 30 January 2009 as they might wish in light of the findings of the court at trial contained in the reasons delivered herewith.
(11)	Each party shall:
(a)	Deliver any written submissions made in accordance with paragraph 9 of these Orders via e-mail to Murphy J’s associate provided same are provided contemporaneously therewith to each other party to the proceedings; and
(b)	Indicate therein whether they each consent to the issue being determined in chambers.

Costs of Trial
(12)	Any application for costs in respect of the trial of this action be contained within written submissions made in support of any such order, to be delivered within 21 days of the date of these Orders which such submissions shall
(a)	be delivered via e-mail to Murphy J’s associate provided same are provided contemporaneously therewith to each other party to the proceedings; and
(b)	Indicate therein whether consent is given to the issue being determined in chambers.

Further Hearing/s in Respect of Costs
(13)	In the event that either or both parties request an oral hearing in respect of the issue of the costs of the proceedings on 30 January 2009 or the trial, such hearing shall occur at a time and on a date to be advised and shall, if Murphy J is not sitting in the Melbourne Registry, occur, if at all possible, by video-link or, failing that, telephone link. 

IT IS NOTED that publication of this judgment under the pseudonym Bourke & Bourke (Final Hearing Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

Family Court of Australia at Brisbane	

FILE NUMBER: MLF 2814 of 2006

MS BOURKE 	
Applicant Wife

And

MR BOURKE 	
Respondent Husband

And

S FINANCE PTY LTD 	
Third Party

REASONS FOR JUDGMENT
1.	The trial of these proceedings brings to an end a very lengthy process of litigation.  That litigation has seen extreme recalcitrance on the part of the husband which, it is plain, was designed to frustrate the wife in obtaining such remedies to which she may have been entitled pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) (and otherwise).
2.	Proceedings by the wife for settlement of property resulted in the making of orders for a partial property settlement on 17 November 2008.  Those orders were made in the absence of, and without input from, the husband.  
3.	The orders provided for the wife to receive the whole of the then-available property.  Ex tempore reasons were given for the making of those orders on that day.
4.	Joined to those property proceedings was a claim by the wife against a corporate third party.  The claim, and the manner in which it was framed and particularised, have been the subject of earlier applications and cross-applications by the third party and the wife.
5.	The Reasons for Judgment delivered on 17 November 2008 also relate to those matters as do orders and Reasons delivered on 30 January 2009 (subsequently reported at (2009) 41 FamLR 85).  
6.	The orders made on each occasion related to a claim by the third party that the wife’s claim against it be struck out.  The third party’s application was dismissed on each occasion.
7.	But, the difficulties confronting the wife in reaching that point can be seen reflected in the fact that, despite the dismissal of the applications in each case that her action be struck out, she was ordered (on 17.11.08) to pay costs fixed at $4,000; ordered to provide security for costs in respect of the future conduct of the action thereafter and, subsequent to orders made on 30.1.09 (and pursuant to those orders) an application for costs by each party, including the “unsuccessful” third party, was made.  
8.	It is intended to deal with that issue separately from the substantive issues to be decided, but as part of these Reasons.

The Position of The Husband
9.	Prior to the orders for partial property made in his absence, the husband had been afforded many opportunities to both appear and present evidence on the wife’s s 79 claim against him.  
10.	In earlier proceedings conducted before me, he had been represented by a solicitor but, on 23 October 2008, that solicitor was given leave to withdraw.  Thereafter, there has been no further appearance by the husband or on his behalf.
11.	There is unchallenged evidence before the Court that he has engaged in extreme behaviour toward the matrimonial property.  
12.	Allegations of what is commonly called “waste” by the husband were made by the wife and allegations were also made that the husband had intentionally and deliberately damaged property with a view to reducing the wife’s prospective s 79 entitlement.  
13.	Orders previously made by this Court, were designed to have the husband comply with the Court’s procedures and his obligation of disclosure.  No such orders were, or have since been, complied with by the husband.
14.	As but one example of the ramifications for the wife of the actions and inaction of the husband, it can be observed that, prior to the initial proceedings before me on 17 November 2008, it had been necessary for the wife to appear before this court on approximately 15 occasions in attempts to extract compliance by the husband with his clear obligations pursuant to the Act and the Rules of this Court.  Ultimately, none of her actions in that respect have been successful.  
15.	As a result of the partial property settlement orders made by me, it was anticipated at the time that the wife would receive in the region of $290,000, that sum emanating from the sale of two properties the subject of those orders.
16.	As a result of the matters just discussed, the proceedings which proceeded to trial in June 2009 to which these Reasons result, involve only the wife and the respondent corporation, described in them as the “third party”, whose director Mr O provided affidavit evidence on its behalf and was cross-examined.

Background And Earlier Proceedings
17.	The husband and the wife (and the wife’s child by a former relationship) commenced cohabitation in 1996.  The parties married in 1999.  
18.	The wife asserts, and I accept, that there then followed a number of separations.  No coherent chronology is given of those separations and it has been necessary to attempt to piece together a cogent chronology.  
19.	The wife deposes that “an Order for Child Support was obtained on 9 May 2000”.  In another part of her affidavit, the wife deposes that “in mid-2002”, she separated “for several months”.  Intervention orders were obtained (among others) on 25 July 2002.  She deposes to reconciling with the husband in September 2002.
20.	Piecing together part of the wife’s affidavit together with Mr O’s Response thereto, it seems that the year 2002 saw the following:
•	In March, the corporation, which Mr O swears, “is the company trading as [the third party]” bought with the husband a piece of real property.  It was sold and the profit thereby made was divided equally.  No formal agreement effecting the relationship between the husband and the corporation is deposed to.
•	The husband and Mr O were, by March 2002, very good friends and in that month, the husband was Mr O’s best man at his wedding.
•	The husband bought in his own name vacant land upon which the W development subsequently proceeded “on or about 28 June 2002 or 17 June 2002”.  Mr O admits to the joint venture project involving that land and, inferentially, to discussions and arrangements in respect of it occurring at about that time.
21.	A joint venture agreement was made between the husband and Mr O and the respondent corporation, the latter of whom are collectively described in the agreement as “Party 1”.  The agreement is dated 4 July 2002. 
22.	It is not asserted in material on behalf of the wife, nor was it put in cross examination to Mr O, that this document is a sham or that it is other than genuine and valid. 
23.	As well as the events occurring in 2002, just referred to, the wife deposes: 
	52.	After introducing himself to [the husband] and myself, Mr [O] established a strong social connection with the respondent and me.  He would come to our home as regularly as four days a week when I was at home with the children and would stay for a number of hours.  He would also visit in the evenings.
24.	Mr O admits that and says further that:
	The husband and wife have also visited me and looked after my mother while I was overseas on my honeymoon.
25.	The wife deposes:
	74.	The respondent was very secretive at this time and very abusive.  In fact, the respondent became violent to me around this time … He no longer involved me in much of his business affairs and would disappear from the matrimonial home and for periods of time without explanation.
26.	To this assertion, Mr O responds:
	(a)	I refer to paragraph 74 … and say that in February 2003, the wife commenced calling me and my wife, alleging that we were attempting to ‘rip her off’.  In order to placate the wife, I delivered to the factory of [B Business] … a cardboard box containing all of the documentation including the contract that is referred to by the wife in her affidavit material, to the wife.
27.	In an affidavit sworn by Mr O on 12 September 2008 and filed the same day, he deposes to what he says were the arrangements which carried into effect the joint venture between them.
28.	The parties finally separated on 29 March 2006.  The disposition the subject of the s 106B proceedings occurred about six months later.

Previous Proceedings and Pleadings
29.	Particularisation of the wife’s claim has, as earlier briefly alluded to, been attended by significant difficulty and has been the subject of two applications to strike it out.  
30.	In light of the history of procedural applications and what can fairly be described as confusion about the nature and particularisation of the wife’s claim, it is necessary to refer to the history and background to the current proceedings in some detail.
31.	It is convenient, I think, to deal with that by incorporating into these reasons paragraphs 13 to 37 of the Reasons for Judgment delivered on 30 January 2009 but which I will not repeat here.  
32.	Those reasons supported orders which included a requirement for the applicant wife to file a Statement of Claim and the respondent third party a defence.

The Case As Ultimately Pleaded
33.	At the outset of the trial, Mr Ham, counsel for the applicant wife, indicated that his client relied on “the third amended Application of the wife filed 7 November” together with two affidavits.  That reference is an error, being a reference to an earlier set of orders sought by the wife.  
34.	Consequent upon the orders made by me on 17 November 2008, the wife filed a Further Amended Application on 1 December 2008.  That document makes it clear by its heading that the application was filed pursuant to the orders made by me on 17 November that year.  In accordance with that order, the application attaches a Statement of Claim.
35.	That Application seeks the following orders:
	2.	That pursuant to s 90AE(2)(b) (in these s 79 proceedings) the Third Party Company, [S Finance] Pty Ltd, within twenty-one days of the date of this order pay to the wife via her solicitors the market value of [W property] in the State of Victoria … (“the [W] property”).
3.	Alternatively to paragraph 2 herein, pursuant to s 90AE(2)(b) (in these s 79 proceedings) the Third Party Company, [S Finance] Pty Ltd, within twenty-one days of the date of this order at the expense of the Third Party Company transfer to the wife Title and interest in the [W] property and sign all instruments and documents and do all acts and things necessary to effect such a transfer.
4.	Further and alternatively to paragraph 2 and 3 herein, pursuant to s 90AE(2)(b) (in these s 79 proceedings) that the [W] property be sold, and the wife be paid the balance of proceeds of sale.
5.	An order pursuant to s 106B setting aside the transfer of the [W] property from the husband [Mr Bourke] to the Third Party which transfer (“the transfer”) occurred 11 September 2006.
6.	That the Third Party immediately upon the making of these orders transfer to the husband its interest in the [W] property.
7.	That both the husband and the Third Party do all such acts and things and execute all such documents as may be required to transfer the [W] property.
8.	Immediately upon the [W] property being transferred to the husband as set out in paragraph 5 above, the husband transfer to the wife his interest in the [W] property.
9.	That both the husband and the third party do all such acts and things and execute all such documents as may be required to transfer to the husband the [W] property”.
36.	In the Amended Response filed 11 December 2008, the Third Party sought, in effect, dismissal of the wife’s claims against it and ancillary orders.  
37.	The Third party filed a Defence in response to the Statement of Claim consequent upon my orders dismissing the Application to strike out the wife’s claim. In essence this Defence seeks dismissal of the wife’s claim.
38.	Of the third party corporation, Mr O deposes:
	The Third Party is a finance broking company which arranges mortgage loans, overdrafts, loans for building projects, loans for company purchases and equipment purchases.  
39.	Mr O goes on to depose that the husband in these proceedings operated a company known as B Business.  He deposes to being referred to the husband by a friend and there being some business transacted between the husband and he, including the re-financing of “his home” and thereafter, “as a result of my dealings with the husband, we became friends”.  
40.	In broad overview, that relationship is said to have resulted in a business arrangement commencing from about March/April 2002.  The husband planned to develop a site at W.  Unit 3 (the W property) in the W Joint Venture Development, originally registered in the name of the husband, was transferred by him to the Third Party on 11 September 2006.
41.	In broad terms, the Third Party asserts that the transfer was for valuable consideration, being in part payment of 50 percent of the profit on the W venture.  It is asserted that the profits were paid to the husband and he did not, and has not, properly accounted to the Third Party for 50% of them.
The Statement of Claim
42.	The wife’s Statement of Claim is an odd document consisting of assertions of fact as well as statements of opinion and assertion.  It is pleaded there that:
9.	At the time of the transfer, s 79 proceedings were reasonably anticipated by the Third Party in all the circumstances of the case (i.e. determined objectively).
		Particulars
	The Third Party’s knowledge can be implied from the following:
	The husband and the director of the Third Party, [Mr O], were at all material times between 2001 and the time of transfer, close personal friends (the husband being the best man at [Mr O’s] wedding in March 2002).
	[Mr O] and his companies, including the Third Party, were at all material times the finance broker for the husband and acted for the husband in all his finance applications and was fully aware of the financial affairs of the parties to the marriage.
	At all material times, the Third Party and husband were partners involved in business ventures together.
	10.	The [W] property was not offered for sale to the public prior to the transfer.
	11.	The [W] property was not valued prior to the sale or transfer.
	12.	No money passed between the husband and the Third Party on the sale or transfer of the [W] property from the husband to the Third Party.
		Particulars
	The wife refers to the Third Party’s subpoenaed documents in paragraph 3(v) of [Mr O’s] affidavit filed 6 October 2006, where [Mr O] claims the [W] property was transferred pursuant to the “Joint Venture Agreement”.
13.	No other consideration was provided by the Third Party to the husband for the transfer.
		Particulars
	The wife refers to the Third Party’s subpoenaed documents and also the material in the wife’s affidavit filed 22 September 2008 (and in particular paragraphs 72 – 97 and 196 – 199) which shows that the husband obtained a substantial financial gain as a result of the seven-unit [W] property development and it resulted in him having a substantial equity in the [W] property.  If the Third Party was entitled to a division of profits under the “Joint Venture Agreement”, the husband remained entitled to a substantial equity in the [W] property.
	14.	The transfer was a sham.
	15.	The Third party did not pay any or any adequate consideration for the transfer.
		Particulars for paragraphs 14 and 15
The wife refers to and repeats the allegations contained in paragraphs 10 – 13 herein.
	16.	In all the circumstances, the Court should set aside the transfer pursuant to s 106B(1) and make the consequential orders sought by the wife herein.
	17.	Further and in the alternative, orders should be made (as sought by the wife herein) pursuant to s 90AE(2)(b) altering the rights, liabilities or property interests of the Third Party in relation to the marriage as:
(a)	the making of such an order is reasonably necessary or reasonably appropriate and adapted to effect the division of property between the parties to the marriage; and
(b)	in all the circumstances, it is just and equitable for that order to be made.
The Defence
43.	The third party’s defence has pleaded, as particulars of it, a “balance sheet” of the “Joint Venture Project”, the net result of which is that, after account is taken of the unit transferred to the third party, the husband owes it approximately $99,000.
44.	In light of the issues raised as the case was presented and to give context to the cross-examination on behalf of the wife which was, for the most part, an attack on the particulars and the conclusion which they underpin, it is necessary to set out those particulars:
FURTHER PARTICULARS
	Total proceeds – Land & Construction		$1,550,000.00	
	LESS COSTS			
	Construction	$870,000.00		
	Land Settlement	$325,000.00		
	Freedom Through Diversity Interest	$60,000.00		
	Interest/Holding Costs	$20,000.00		
	Council Costs	$12,500.00		
	[…] Land Surveyors	$3,000.00		
	Total Costs		$1,290,500.00	
	PROFIT		$259,500.00	
	Plus 1 year rental for Unit 3 collected by [the husband]		$11,440.00	
	Total Profit		$270,940.00	
				
	50% of profit		$135,470.00	
	Plus [S Finance] Contributions to be reimbursed		$33,613.00	
	Plus disbursement to [the husband] on transfer Unit 3		$37,000.00	
	Less equity in unit 3 – 
Borrowed $188,000 Value $235,000		$47,000.00	
	Less Collection from [LT]		$60,000.00	
			$99,083.00	

Section 106B - Principles, Issues and the Presentation of the Case
45.	By reference to the terms of s 106B, there must be evidence upon which the Court could conclude that:
•	There are proceedings under this Act;
•	There is an instrument or disposition sought to be attacked;
•	The instrument or disposition was made by or on behalf of, relevantly, the husband;
•	That the disposition was, relevantly, made to defeat an existing or anticipated order in the proceedings;
•	The disposition was, irrespective of intention, likely to defeat any such order.
46.	There is no question here that there is sufficient evidence to establish proceedings under the Act, the making of an instrument or disposition (being the transfer by the husband to the Third Party) and that such a transfer was made by a party, (here the husband).
47.	The issues in this case relate to whether the disposition was made to defeat an anticipated order or, irrespective of intention, was in fact likely to defeat that order.  
48.	The Court’s wide power pursuant to s 106B is discretionary.  The section describes a number of pre-conditions to the enlivening of the discretion.  Once enlivened, the discretion must also be measured by the Act’s requirement to have regard to third party interests.  The position of the respondent as a third party is, then, also to be considered.
49.	As is clear from the applicant’s Statement of Claim, an allegation of sham is at the centre of the wife’s case.  So, too, more generally, she asserts dishonesty on the part of Mr O and, thus, the respondent third party.  The latter appears from the manner in which Mr O was cross-examined to which further reference will shortly be made.  
50.	Plainly, if the applicant establishes sham or, indeed, dishonesty, the transaction ought be set aside.  Shams can always be disregarded:  Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 82 ALR 530.  Further, not only can sham transactions confer no interest, but justice and equity would not permit collusion and/or dishonesty to prevent the wife receiving her further proper s 79 entitlement: Halabi v Artillaga (1994) FLC 92-470 esp. at 80,886.)
Matters Relevant to the Assertion of Sham
51.	The wife alleges reprehensible behaviour by the husband toward her and the property of the parties.  A serious fire occurred at the property of the parties.  The husband cannot by evidence, at least in these proceedings, be linked to that fire but the wife deposes to the police investigating that possibility.  
52.	Interestingly, in that respect, as part of submissions on behalf of the Third Party, its counsel, Mr Davis, said: 
I wouldn’t urge your Honour [to accept the evidence of the husband in his sworn Financial Statement] because I would suspect that the Finance Statement of a man who is prepared to burn his own house down would have so little probative value as to be hardly worth mentioning.  
53.	The wife deposes (hearsay) to the husband being charged with drug possession and the discovery of a drug laboratory at real property owned by the parties and to the husband having decamped whilst on bail.
54.	There is no doubt that the wife, who lives with the parties’ children, has been left in a very difficult position.  There is also no doubt that her position is deserving of sympathy. In situations such as this, it is, perhaps, understandable for a party to focus on misdeeds and disgraceful behaviour of the other party, and the shadow which they must, almost inevitably, cast. But, sad or reprehensible circumstances do not per se result in a legal remedy; they may, or may not, sustain a “cause of action”.  
55.	That is all the more so when any such cause of action is directed not to the perpetrator of the behaviour, but a third party and, in particular, a third party in matrimonial litigation. By definition, that litigation should normally be expected to be between parties to a marriage.  Plainly, as the Act recognises, the rights of third parties unconnected with the litigation must be considered (s 106B(3)).  
56.	Whilst a specific provision of the Act permits the court, upon appropriate satisfaction of specified circumstances, to make orders significantly impacting upon third party rights, courts cannot be engaged in acts of “judicial mercy”.  The Court’s task is to arrive at a result embodying justice and equity, but a result dictated by the law and the evidence.  
57.	It is submitted by the respondent that, where sham or dishonesty is alleged, the person making the accusation (who bears the onus of establishing it) must meet a standard of proof that was conveniently described as “the Briginshaw standard”.  I agree.
58.	The respondent third party’s defence pleads, in effect, that the transfer from the husband to it occurred for valuable consideration – the “balance sheet” contained within the defence is directed to that issue; the property was transferred, it is said, because a debt comprising 50% of the profit in the joint venture project was owed by the husband and the property was transferred in part satisfaction of it.
59.	If an applicant asserts lack of bona fides (as the applicant does here) it is, in my view, the applicant who bears the onus of establishing same and the standard is, again, the higher standard referred to in the proceedings as “the Briginshaw onus”.  
60.	Having said that, in the case of “non-tainted” dispositions, the consideration of a third party’s interests is likely to involve a number of discretionary considerations and it seems to me to fall on each of the parties (the applicant and the third party) to produce evidence of, and persuade a court about, the merits of same on the balance of probabilities.
61.	Here, though, a central part of the applicant’s case was that the disposition was tainted and that Mr O’s involvement in it was also tainted.  The applicant sought to establish that principally by a cross-examination that sought to establish that valuable consideration did not attend the disposition.  
62.	It will be appreciated, then, that significant evidentiary difficulties confronted the wife, not only because of the standard of proof required in respect of each aspect of the case as presented, but also because she was seeking to attack a disposition arising from a joint venture of which, as she admits, she knew very little.
63.	The difficulties facing the wife in respect of the central allegation of sham can also be seen in ultimate submissions made on her behalf by her counsel.  First, counsel submitted that findings of sham could only arise by inference.  The requisite inference could, it was submitted, be drawn from:
1.	The failure on the part of Mr [O] to properly or adequately disclose documents.
2.	Late disclosure of documents
3.	The letter which is Exhibit 21 to the affidavit of the wife’s solicitor purports to be from the husband wherein he asserts (contrary to the Third Party’s assertion that $100,000 is owed to it) that despite the transfer of the unit to the Third Party he retained “an equitable interest in the property”.
4.	The husband’s Statement of Financial Circumstances filed in 2007 makes no reference to any debt owing by him to the Third Party of any amount. (But, neither, it should be noted, did it disclose the “equitable interest” referred to in the letter just referred to).
5.	The close relationship between the husband and Mr [O] is such as to give rise to an inescapable inference that Mr [O] must have known about the matters relating to the breakdown of the relationship between the parties.
64.	With respect to those representing the wife, this case suffers, despite the best efforts of earlier interlocutory orders, from the fact that issues have not been delineated in the pleadings as they might have been.  In final submissions, counsel for the third party submitted that, in effect, evidence of varying degrees of probative value has been thrown at the Court by the applicant in the hope that some cogency may be made of it.  I think there is some merit in that assertion.
65.	Certainly, the court’s task has been made very significantly more difficult as a result of the factors just mentioned, and included the necessity to obtain and to read, and re-read, the transcript. 
66.	The court’s overriding obligation is to do justice between the parties on the issues joined between them.  Here, the applicant’s case can be seen to fall broadly into two categories or “causes of action”.  
67.	First, Part VIIIAA of the Act is called in aid of the relief sought.  In my view, no case was ultimately articulated by reference to that Part of the Act and it is not possible to discern a path through the evidence that might satisfy the relevant requirements of the sections founding relief.  I propose to dismiss that part of the claim.
68.	The second “cause of action” is relief pursuant to s 106B of the Act.  Reference to the Statement of Claim reveals clearly enough that the central assertion said to found that relief is that the disposition was a sham and/or that there was, in effect, collusive dishonesty between the husband and the third party (via the actions of Mr O).  
69.	Generally, pleadings can be seen to mark the parameters of a case.  An important function of the claimant’s pleadings is to put a defendant on notice about the case that must be met.  In this court, however, because the court’s Rules (and interlocutory orders) provide for evidence to be given by affidavit (and, without leave, solely by affidavit) those documents, too, form an important part of the foundation of a party’s case and serve notice of it upon the other party/ies.
70.	Although, a central part of the applicant’s case is sham or dishonesty, the matters pleaded and deposed to relevant to that issue can also become relevant to the exercise of discretion and the consideration of third party interests (s 106B(3)).  The applicant’s pleading clearly invokes relief pursuant to s 106B, as does her affidavit material, and relief under that section is available if the case for sham or dishonesty fails because the section can impugn “non-tainted” or “innocent” dispositions.  (See eg. Abdullah and Abdullah (1981) FLC 91-003 per Barker J).

The Case for Sham
71.	Central to the case for sham or dishonesty is a finding about the veracity and reliability of Mr O’s evidence.
72.	I listened very carefully to his evidence.  Mr O expressed some frustration – understandable as it seems to me – at the overall approach which was, primarily, an attack on “the balance sheet” forming the particulars of defence.  I have taken account of the impact that this understandable reaction had upon his demeanour and made allowance for it. 
73.	Notwithstanding allowance for that factor, I was, nevertheless, singularly unimpressed with Mr O as a witness.  I thought him evasive.  I consider that many of his answers were disingenuous at best.  
74.	I do not believe Mr O’s denials that he does not maintain an on-going relationship with the husband, and did not do so at the time of the disposition.  I strongly suspect that a relationship between the two existed at the time and has done since.
75.	The evidence reveals a volatile relationship between the husband and wife.  There were a number of separations and significant domestic violence was perpetrated by the husband on the wife.
76.	The project ultimately leading to the disposition in issue in these proceedings commenced its life early in 2002.  Within months of its commencement, the husband and wife had separated and remained separated for some months while the project continued.  
77.	By early 2003, the wife was expressing concerns, to the third party that she was being “ripped off” by Mr O and the husband in their joint venture project.  
78.	Those findings combine with what I consider to be a number of oddities about the joint venture project and the dispositions within it, including the disposition the subject of these proceedings.
79.	I propose to look at those matters in more detail in a moment, but it is first necessary to mention the third party’s disclosure - a matter raised specifically in submissions by counsel for the applicant.
The Third Party’s Disclosure 
80.	Mr O swears that a “box of documents” was delivered to the business premises of the husband at the time when the wife said to him that she thought she was being “ripped off”. Thereafter, Mr O’s position is that he has provided to his solicitors all relevant documents which were within his power, possession or control.  I very much doubt the truth of that.   
81.	It emerged during the trial that documents had been produced by the third party’s solicitors very late despite the issue of disclosure generally having been live for some considerable time.  In response to my expressed concern about the late disclosure of documents, which was said to be as a result of the solicitor’s “inadvertence”, counsel for the Third Party said:
	“ … It’s not a submission of convenience.  It’s the reality that my solicitor handled the discovery process very poorly, but whether or not you can use that as an inference against my client in circumstances where at the end of the day the unchallenged evidence was he gave [the solicitor] all of the documents some time around the end of last year …”
82.	That statement is true only to the extent that it is accepted that Mr O was being truthful about disclosing all that he had within his power, possession and control.  I have grave doubts about that based on my assessment of Mr O’s credibility generally.  
83.	The very late provision of documents adds to my disquiet about aspects of the joint venture project generally. 

The Joint Venture Project and its Transactions
84.	In overview, the joint venture project emerged consequent upon the husband purchasing a block of land intending to develop it.  Mr O’s company was to attract financing and the partners would work together to market and sell the improved lots.
85.	Exhibit DB31 to the wife’s affidavit is a letter from a conveyancing firm who “acted for” the husband.  It says:
…[C] Conveyancing was engaged by [the husband] to carry out conveyancing work associated with a 7 lot subdivision of the parent property at … (which had been previously acquired by [the husband]) as well as the subsequent sale of those 7 units.
It was proposed that the sales were to be effected in the form of house and land packages whereby each Purchaser would enter into a contract to purchase the land from the Vendor ([the husband]) on the basis that each Purchaser would also be obliged to enter into a building contract with nominated builder ([T] Constructions).
86.	The builder was engaged to construct the seven lots for an “all up” price.  The husband had, under the joint venture agreement, the responsibility for “locat[ing] and manag[ing] the relationship with an appointed builder to construct seven units on the property …”.  Profit was to be generated for the joint venturers from the sale of completed house and land lots. 
87.	Complete documentation is not available so as to enable a “reconstruction” of what occurred.  The joint venture agreement, the building contract and some of the contractual and conveyancing documents in respect of sale are in evidence. 
Chronology of the Project
88.	Piecing together the affidavit of Mr O, his evidence in the witness box, the affidavit evidence of the wife and the documents exhibited to each of the affidavits of the wife and Mr O, I arrive at findings about what occurred in and about the joint venture project and the dates on which they occurred summarised in the following table. 

	DATE	EVENT	
	March 02	Mr O swears that, by this time, he and the husband had become friends	
	March/April 02	Mr O is told about the husband’s plans to build upon land owned by the husband at W	
	“mid-2002”	Husband and wife separate “for a number of months”	
	4.07.02	Joint venture agreement is signed	
	25.07.02	Wife obtains intervention order against husband	
	June 2002	Mr O swears that plans were submitted (swears that he and husband were misled by real estate agent who said plans were already approved)	
	November 2002	Mr O swears that this is the beginning of the period during which “six house and land packages were sold”	

	DATE	EVENT	
	January 2003	Mr O swears in his affidavit that the last of six house and land packages is sold
No explanation is offered in the affidavit for why the seventh unit (ultimately obtained by the Respondent) was not sold at this time	
	Contract 20.03.03	Contract Document Lot 7 shows purchase from husband by “[K Company] Pty Ltd”, the latter admitted by Mr O to be “a holding company for the third party”	
	Settlement 20.08.03	No settlement statement document is in evidence. Wife alleges that the lot was “ultimately sold” to a person, V, who, she asserts, is a friend of Mr O.
Mr O swears that K Company did not proceed with the purchase, and (inferentially) admits the purchase by[V, but says purchase monies payable by him were “paid to the husband as a result of court proceedings initiated by the husband against him”. No contract or Settlement Statement in respect of that sale is in evidence.	
	Contract 10.04.03	Contract documents Lot 4 show purchase from husband by LT who is an employee of the Third Party.	
	Finance 01.07.03
Settlement 18.07.03	No settlement statement is in evidence.
The particulars of the third party’s defence show $60,000 as owing by LT to the third party. No documentation in evidence supports that claim, nor is there evidence as to how a debt owed to the husband became a debt owed to the third party.	
	Contract #1 27.04.03	Contract document Lot 2 shows purchase from husband by G.	
	Finance 9.05.03
Settlement 28.06.03	No settlement statement is in evidence.	
	Settlement #2 1.07.04	Settlement statement in evidence showing settlement of Contract Lot 2 purchase from husband by N	

	DATE	EVENT	
	Contract 7.05.03	Contract document Lot 6 showing purchase from husband by G	
	Finance 9.06.03
Settlement 28.06.03
Settlement 1.07.03	Settlement statement in evidence showing settlement by G on 1.07.03	
	Contract 2.06.03	Contract document Lot 1 showing purchase from husband by ND.	
	Finance 2.07.03
Settlement 15.07.03	No settlement statement is in evidence	
	27.05.04
	Plan of subdivision of W development is registered	
	17.06.04	Date of document described as “Agreement for Distribution of Proceeds between builder and “[the husband] and [B Business] Pty Ltd and [A] Pty Ltd” referred to collectively in the documents as “[husband]”	
	Contract date unknown	No contract document is in evidence for Lot 5
	
	18.06.04	Settlement statement in evidence showing settlement of a sale from the husband to Mr O’s wife	
	18.08.04	Date appended to document in which the husband purportedly signs a document giving notice pursuant to Clause 6.2 of the Joint Venture Agreement but in which the details of the lots of which he is giving notice remain blank.	
	September 2004

Possibly early 2005	Counsel for wife puts this date to Mr O as when the last payments were made from trust account to the builder.  That is, the builder had been paid all that he was owed.  Mr O says he recalls it being “… a little later than that but it would be a matter of months.  It wouldn’t be a year or anything like that”	

	DATE	EVENT	
	Earlier Contract subject lot – unknown date
	Contract document Lot 3 showing purchase from husband by Mr O’s brother (Mr AO)
Three dates are specified – none contains a year.  Contract date is shown as “1st June”;  finance date “1st July” and settlement as “1st August”	
	15.08.06	Date of contract Lot 3 exhibited to Mr O’s affidavit of 12.09.08 showing purchase from husband by respondent Third Party.  Price $235,000 with no deposit	
	14.08.06	Contract specifies settlement 30 days from contract
No settlement statement is in evidence	
	11.09.06	Lot 3 is transferred from husband to Third Party	

89.	Aspects of the evidence in and about the findings there contained give rise to suspicions about many of the transactions and whether Mr O has given a complete and truthful picture about the project in arriving at the “balance sheet” contained in the defence.
90.	First, it will be apparent that the documents in evidence before the court do not present a coherent picture of the transactions said to result in the ultimate indebtedness of the husband to the third party.  My earlier comments in respect of disclosure pertain.
91.	Secondly, in his evidence about the chronology surrounding the completion of the project Mr O in my view dissembled.  I had the strong impression that Mr O was “making it up as he went along” and was deliberately obfuscating the issue in the knowledge (plain from the material, the wife’s admission as to the fact and earlier proceedings) that the wife had, at best, an incomplete picture of the joint venture project.
92.	An attempt was made to understand when the project was completed because that had potential importance in giving rise to obligations under the joint venture agreement and as an end-point for the calculation of profit between the joint venturers.  That issue was also potentially important in putting the subject disposition into a proper chronological context.
93.	Clause 6 of the joint venture agreement is headed “Conclusion to the Development”.  It provides:
	6.1	The parties deem the development project to be at a conclusion when:
(a)	all seven units are constructed and all associated works are completed and the relevant authorities provide their approval and that the works were carried out in compliance with the relevant permits and plans; and
(b)	all financial relationships with third parties are secured to the mutual satisfaction of the parties.
6.2	Party 2 must upon conclusion of the project provide notice in the form of a letter contained in the annexure to party 1 stipulating which units remain in its position …
94.	Paragraph 18 of the joint venture agreement is entitled “Termination”:
	The joint venture shall, save as otherwise herein provided, be dissolved on the completion of the development and distribution of the net profits or losses of the joint venture, as the case may be.
95.	Compliance with the agreement, then, would mean that a notice was given “in the form in the Annexure” pursuant to Clause 6.2 only upon “conclusion of the project”.
96.	This could occur, pursuant to the agreement only when “all seven units are completed and all associated works are completed and the relevant authorities provide their approval and that the works were carried out in compliance with the relevant permits and plans”.
The Incomplete Completion Notice
97.	A copy of the joint venture agreement annexed to the affidavit of Mr O has an initialled “Annexure 1 – Notification pursuant to Clause 6.2”.  It contains, as would be expected of an agreement signed at that time, no text other than the heading.  Equally unremarkable, the wife’s copy of the agreement has the same annexure in the same form.
98.	Mr O deposes to “a true copy of the Joint Venture Agreement” entered into between him (and his entity) and the husband on 4 July 2002 being exhibited to his affidavit.  Interestingly, though, the copy of the agreement annexed to Mr O’s affidavit also contains (without further explanation) an additional page following those otherwise comprising the agreement.
99.	The additional page plainly on its face purports to be a completion notice as contemplated by Clause 6.2 of the joint venture agreement.
100.	The additional page has at the top of it “<<Date>>”; that is, there is a space reserved for the inclusion of a typed date.  It is not completed.  The additional page is initialled in a manner identical to each page of the joint venture (including the blank page entitled Annexure 1 – Notification pursuant to Clause 6.2” which precedes it in the exhibit).  
101.	The agreement was made and dated on 4 July 2002.  The additional page has added to it a date (“August 20th, 2004”) in handwriting.  It is unknown whose handwriting it is.  
102.	It was put to Mr O in the witness box that the last of the payments to the builder in respect of the joint venture project occurred in September 2004.  Mr O appeared to accept that this is what documents from the relevant solicitors revealed, but said that he recalled it being “… a little later than that but it would be a matter of months.  It wouldn’t be a year or anything like that”.  
103.	It is to be noted that the builder was contracted to build seven units.
104.	The typed text of the additional page to the exhibit says “[p]ursuant to clause 6.2 of the Joint Venture Agreement, I write to confirm that the following unit(s) remains in my ownership:” Curiously, although the document is purportedly signed by the husband and bears a date approximate to September 2004, no units or lots are specified within the document as being retained by him.  
105.	The affidavit evidence of Mr O gives no clue as to the document’s origins or timing.  No cross-examination was directed to him in respect of it.  
Other Evidence about Completion of the Project
106.	In his affidavit sworn 12 September 2008, Mr O deposed that six house and land packages were sold “between November 2002 and January 2003”. Mr O gave evidence in the witness box to the effect that all contracts for the ultimate sale and purchase of the house and land packages within the development settled on the same date.  Mr O said that was a condition of the subdivision of the land.  That does not appear to accord with the documents in evidence outlined in the earlier table.
107.	In oral evidence, under cross examination, the following exchange occurred:
	… the transfer was done in August 2006? - - - From memory, yes.
	The last payments to the builder which were going to [the builder’s solicitor’s Trust Account] were in September 2004? - - - Four, was it?
		Yes.
	So that’s about when the building had finished? - - -I recall it to be a little later than that, but it would be a matter of months.  It wouldn’t be not a year or anything like that.
	Let’s not quibble too much.  The end of 2004, beginning 2005? - - - Five.  I seem to remember it.
	I am not going to quibble about it.  So it was some 18 months after that that it would appear that a very hurried arrangement was made for the transfer of [the subject property] to you.  Agree with that? - - - No, it was a long drawn-out affair to try to locate [the husband], call from the heavens and not find him.  He only appeared apparently because he was kicked out of his house or something and said, “I need help and (indistinct) to latch on to”.
And what period do you say you didn’t see him? - - - Look, that would have been a year and a half.
A year and a half? - - - I’d say about that, yes.
He had been best man at your wedding? - - - Yes, in 2003.
You continued to have discussions about the problem he was having in his marriage? - - - No.
You weren’t aware of those? - - - I was aware he had problems but he was in the – I mean, I’m aware he’s still having problems and he’s still uncontactable - - - -
108.	Later, the issue of the completion of the contracts was taken up with Mr O in the witness box by me:
HIS HONOUR:	Just have a look at paragraph 21 and is this is the affidavit, for the record, of yours filed 12 September 2008 - - -Yes.
It says between November 2002 and January 2003, six house and land packages were sold.  Does that mean sold to the ultimate purchasers? - - -Yes.
So does that mean that the last of the six were sold by January 2003? - - - Sold, as in the Contracts of Sale were entered into.
When was the last settlement of any of the six house and land? - - - They all settled on the same day.  That was the requirement.  It was a requirement of the subdivision.  They wouldn’t apply a subdivision unless – because they didn’t want a subdivision that - - -
So all six units settle on the same day? - - - Yes.
Do you remember what it was? - - - No.
It was sometime early 2003? - - - It was probably a couple of months after that.
So mid-2003.  So does that mean that the joint venture project had come to an end within the meaning of the joint venture agreement by that time? - -  No, I wouldn’t say so because the disbursements had to come through and then we had responsibilities to ensure that even though the builder had taken up the contract, we were aware we were the guys out there flying the flag saying “Buy off us”, so we had to make sure the builder finished his construction and we had to make sure that - - -
You mean if there are disputes about the building and the like? - - -Yes, somebody would have said, “He said we were going to bring carpet,” and things like that and they were always going to call on us.  So we had to sort of see that - - -
When was that concluded by, approximately? - - -That was all about sometime in ’06 it all finished.  It took about two years to build.
Three? - - - No, it was – because - - -
The settlements of the contracts had completed by the middle of 2003? - - -Probably about 5.  Sorry, I tell a lie.  Yes.
And it took you another two and a half almost - - - Two years.  
So they were finished fiddling about, as it were - - - It wasn’t that they were fiddling about.  There was some distress that started appearing in [the husband’s] life. So it all sort of, just started to fall apart and all that. 
There were people who bought the units who said, “You haven’t built the unit as contracted, because you haven’t done this and haven’t done that”, standard building contract arguments and that took 18 months.  Is that right? - - - It required us to do it within 18 months.
Of the complaint? - - - No, of the settlement of the land.
So they needed to be finished then, by about the end of 2004? - - - Yes, and they went into ’05 and we had disputes with the builder and things like that, from memory, it went over that period.
So by early ’05 that was done? - - - Yes, and then there was a year there, where I really didn’t – I was trying all sorts of methods to contact [the husband] and things and it became difficult.
109.	Again, that does not appear to accord with the chronology provided by the documents in evidence referred to in the table earlier set out.
The Contract with LT
110.	Reference is made in the tabular chronology above to this contract in respect of an alleged purchase by a person named LT, who is an employee of Mr O.  Settlement of the contract dated 10.04.03 was due on 18.07.03.  
111.	No documents with respect to any subsequent settlement of the house and land package in respect of that lot are in evidence.  
112.	The particulars in the Defence allow for the collection of $60,000 from LT.  That is, the particulars assume that $60,000 will be payable by LT to the Third Party.  In answer to my question, Mr O said in evidence:
HIS HONOUR:  Why is it part of your share?- - - Well, what happened was all the money from the construction was paid through to [the husband].  We didn’t see any of that.  We did an adjustment of all that and we said, ‘Well, look, this fellow owes that much.  He has an association with me.  I’ll make sure I collect that.’  And I haven’t collected that, by the way.  But I’ve said, ‘Look, at least I can say I’ll get that myself or it’s my responsibility’.
	When was it due and owing?- - - It was due and owing as a second mortgage.
	When was it due and owing? - - - I can’t remember the exact details of that second mortgage. …
113.	The issue was also addressed by counsel for the wife:
MR HAM:	So you took a $50,000 hit for [the husband]?- - -No, the point was we had a guy there that wasn’t giving me any money and it was going straight from [the builder’s solicitor’s Trust Account] into his pocket and then said, ‘We need it for our family’, and I wasn’t getting any money.  I don’t intend to have a hit for that long term.  I have a relationship with that individual …
114.	It remains unexplained as to how LT (an employee of the Third Party) can be obliged to pay money to Mr O (or the Third Party) in circumstances where no contractual relationship is said to exist between the Third Party (or Mr O) and Mr LT and where, whatever arrangement allegedly exists between the husband and Mr O, there is no evidence of the communication of that arrangement to LT and/or any acceptance by LT of same.
115.	No documents of any type are produced indicating an acceptance by LT of any liability to the third party, Mr O or anyone else in lieu of the husband.  No documents of any type are produced evidencing any arrangement to that effect as between the husband and Mr O (or the third party).
116.	Rather, the situation, as contended for by Mr O, is that the third party - who, on his case, is already owed money by the husband – is, nevertheless, through its director Mr O, prepared to assume the risk of obtaining money from a person who, apparently, has no contractual obligation to pay it to the third party.
117.	Furthermore, no explanation at all is offered for the fact that, although the contract was, apparently, due to settle in July 2003, some $60,000 has remained owing for over six years by the time of the disposition, by a person who was in an employer / employee relationship with one of the joint venturers and with whom that same joint venturer admits to “maintaining a relationship”.
The Earlier Lot 3 Contract
118.	Mr O deposes, at par 25 that “[Unit 3, W] was the seventh unit to be built and remained in the husband’s name” [emphasis added].  
119.	But, Mr O’s affidavit makes no mention of the fact that a contract had previously existed in respect of Lot 3.  That contract was between the husband and Mr O’s brother.  It was dated 1 June 2003.  It was due to settle on 1 August 2003.  
120.	In his affidavit in reply, filed 6 October 2008, some two weeks subsequent to his initial affidavit, Mr O (in responding to the specific assertion by the wife about that former contract) says - for the first time - that “this contract did not proceed because the finance could not be obtained”. 
The Contract with Mr O’s Other Company
121.	The tabular chronology earlier detailed refers to a contract in respect of Lot 7 dated 20.03.2003, due to complete on 20.08.03. That sale was referred to at paragraph 79 of the wife’s affidavit.  In response to that paragraph of that affidavit, Mr O deposes: 
	I refer to paragraph 79 thereof and say that [K Company] Pty Ltd did not proceed with the purchase.  Several contracts were prepared and issued to prospective purchasers, subject to finance.  Several of these contracts did not proceed due to the fact that the finance could not be secured.
122.	It should be noted that it is left to inference as to whether that general statement applies to the contract with K Company (although that seems to be the intention of what is deposed).  According to Mr O’s evidence, the purchaser is a corporation which is a “holding company” for the third party entity which he controls.  
123.	Thus, one joint venturer [the husband] was selling to a company under the control of the other joint venturer which is, in turn, a “holding company” for the corporation that is itself a joint venturer and which the other party to the joint venture agreement (Mr O) controls.
124.	This contract, which Mr O’s other company did not proceed with, is in respect of a lot that is said to have been subsequently sold to a person whom Mr O admits is a friend (“V”), but in respect of which, no contract or settlement statement is in evidence.  
“Equitable Interests”
125.	The joint venture agreement provides that:
“… each joint venturer shares an equitable interest in the property, to the extent that any interest that has not been divested through a valid Contract of Sale to a third party.  Either party may lodge a Caveat or other instrument in order to protect their respective equitable interest in the property”.
126.	Exhibit XXI to the affidavit of the wife’s solicitor is a typewritten letter dated 1 September 2006.  It purports to be over the hand of the husband and says:
Re:  Irrevocable Undertaking and Instructions Settlement Unit 3, [W]
Further to the sale of the above property please note the following matters relevant to settlement of the same to [S Finance] Pty Ltd which is scheduled for Friday 1 September, 2006.
1.	Pursuant to the joint venture agreement in place between [S Finance] Pty Ltd, [Mr O] and myself in relation to the development of the property … I note that [S Finance] Pty Ltd has an equitable interest in the subject unit.  This being the case, I hereby irrevocably waive collection of any difference between the purchase price ($235,000) and the amount to be received by me upon settlement of the sale (approximately $175,450.88) …
2	…
3.	Following settlement I will retain a 50% equitable interest in the property.  Further details and instructions on this will be provided to you post-settlement.
127.	I do not know what is intended by this letter.  I don’t know how the purported 50% equitable interest in a specific property has anything to do with the purported “irrevocable waiver”. I do not know what is intended by an “irrevocable waiver” that, apparently, sees the balance of settlement funds going to the respondent but sees the husband retaining “a 50% equitable interest in the property”.  
128.	In circumstances where the title to property has, allegedly, been validly transferred and where the vendor is, apparently, disclaiming any entitlement to any part of the purchase price, the basis of any equitable interest is not immediately clear.
129.	That letter ought also be seen in the context of evidence from Mr O as follows:
	… The statement of account which you say occurred between yourself and the husband that took place, what, in August or so of 2006.  Is that right? - - - Potentially a little earlier.
	… 
	When did it occur? - - - June, July, August, around that period.
	Where did it occur? - - - Various times.  It was conversations.  It was a point that – [the husband] since, as has probably become apparent to this Court, has gone – it is some sort of a hit and miss – he appears and disappears since his family relationship broke down and he’s, from what I can gather, gone right off the track.  So he’s the type of person you hunt down as best you can when you’re owed money.  So over that period we had various conversations and we had various attempts to meet him at his old factory and various times we got together, yes.
You must have completed detailed figures relating to the project? - - - He was always saying, ‘I don’t have them’ or ‘The wife’s got them’, ‘This was paid’, [The builder’s solicitors] is still owed – ‘Are you going to give me money’ and all sorts of different stories.  So we tried our best …with the information we still had, or I still had, and with the knowledge of the project and who owed what, and accounts.  And we were obviously shortfalled significantly on that because we’d received no money from the construction …
130.	It might be thought that each of the joint venturers would be concerned to monitor expenses (they being a vital component in arriving at the ultimate 50% profit to be enjoyed).  I don’t accept Mr O’s evidence which is to the effect that he could not, or did not.

Findings As To Sham And Deliberate Dishonesty
131.	It will be plain from what I have already said that there is, in my view, much justification for a view that the disposition between the husband and the third party has about it an aura of collusion and concoction.
132.	I have, as I have said, grave doubts about the veracity of Mr O’s evidence and, as a general proposition, I am disinclined to believe him.  His evidence had about it a general flavour of “making it up as he went along”.  
133.	There are inconsistencies in his evidence (for example, his affidavit evidence about the sale of lots with the documentary evidence about same) and confusing evidence in purported explanation.  There are curious omissions (for example the failure to mention, or ultimately explain, a transaction involving the lot the subject of the attacked disposition which was the subject of a sale between the husband and Mr O’s brother).
134.	Yet, I impose upon the probative product of the evidence a high standard.  As it seems to me, a finding of sham in this case is a finding of deliberate, collusive fraud between the husband and Mr O. The question is, is the evidence sufficient to convert suspicion into proof to the requisite standard?
135.	In my view it is not.  
136.	To find sham, or the asserted collusive dishonesty, would, to my mind be to give to the evidence an ultimate cogency which it does not have to the requisite standard.  
137.	Here, despite my grave misgivings about the evidence of Mr O, I am left more in a state of confusion than in a state of conviction about fraud or dishonesty.  
138.	I consider that an insufficiently safe basis upon which to ground a finding of improper, fraudulent conduct as serious as that which is contended.

The Disposition In The Absence of Sham or Fraud
139.	As previously outlined, it is plain that non-fraudulent dispositions can nevertheless be set aside under the section.  
140.	In that respect, it is repeated that a number of the pre-requisites for the operation of the section and resulting enlivening of the discretion are met here.
Likely to Defeat?
141.	An issue that emerges in that context, however, is whether the disposition was likely to defeat an anticipated order. 
142.	The test has been expressed as whether “… a reasonable disponor, at the time of the disposition, properly considering all of the circumstances of the case” should reasonably anticipate the making of orders under s 79 (see In the Marriage of Pflugradt (1981) 7 Fam LR 188 at 192).  Put another way, Gee J said In the Marriage of D and D (1984) 10 Fam LR 73 at 83:
… Would a reasonable person in [the disponor’s] position, have considered that there was a real chance as distinct from a remote possibility that such a situation would occur?
143.	It should also be noted that in the case of a non-fraudulent disposition, it is the anticipation of the disponor (rather than the disponee) to which attention ought be focussed, in this case, the husband.
144.	The Full Court In the Marriage of Heath (No 2) (1984) 9 Fam LR 642 at 645 discussed various interpretations of the word “likely” with reference to a number of decisions, and yet stopped short of indicating any preferred definition.  
145.	Elliott J, In the Marriage of Pflugradt (1981) 7 Fam LR 188 at 183 held that it was not whether a party to the marriage:
	… expected or foresaw a subsequent property application … and ‘anticipated’ an order being made, but whether, considering all of the circumstances at the time of disposition, such an application [by one party] at some time, with a consequent order, was objectively to be foreseen or to be expected by [the other party] as being likely or reasonably probable.
146.	I have accepted the unchallenged evidence of the wife.  It includes a number of facts which point clearly to a reasonable person in the position of the husband anticipating an order being made at the time of the disposition.
147.	The husband was taking steps in respect of the parties’ joint bank accounts so as to preclude her operation of them and her access to money.  He was secretive with the wife about the joint venture project and financial matters generally.  Over three years prior to the disposition, the wife flagged that she considered she was being “ripped off” in respect of the joint venture project.  
148.	As has been observed, the disposition occurred some six months after the parties separated.  The disposition also occurred, it might be noted, some two years or so after the last of the transfers of the other house and land packages revealed by any of the evidence in these proceedings.
149.	I have little doubt that the husband, in making the disposition, sought to place an asset out of the potential reach of the wife with the possibility of her s 79 claim very much in his mind.
Diminution of the “Pool” of Property Available for Distribution
150.	An applicant for an order pursuant to s 106B must show that the disposition would have the effect of diminishing the pool of assets available for distribution upon the making of s 79 orders (see e.g. In the Marriage of Gould (1993) 17 Fam LR 156).  
151.	In Whitaker and Whitaker (1980) 5 Fam LR 769 at 773, Nygh J held:
	… The disposition must be shown to have the direct effect or the likely effect of defeating an existing or anticipated order in the sense that if that disposition had not taken place, the order would have been effective.  Hence, if the order was, or would in any event have been, defeated by other supervening circumstances, it cannot be said that the order was defeated by the disposition or was at any time likely to have been defeated.
152.	In Official Trustee in Bankruptcy v Bassola  (No 3) (1986) FLC 91-760, the court declined to re-vest property because doing so would have been, as Nygh J described it, “nugatory” and as “serv[ing] no purpose whatsoever”.  In Public Trustee (SA) v Keays (1985) FLC 91-651 at 80,247-8, the Full Court held:
… the setting aside of the indenture would not re-vest in the husband any right to property which he previously possessed … it would simply re-vest the fund in the trustees of the pension fund subject to the exercise of their discretion under the deed which this Court cannot control … In those circumstances, the Court should not exercise its discretion under s 85(1)[now s 106B] when no good purpose can be achieved.
153.	Those matters have particular relevance to an argument advanced on behalf of the third party.  It is submitted that:
	… The Trial Judge needs to make a finding that property forms part of the entitlement to the parties.  Therefore, you need to make, in my respectful submission, an accurate assessment of what that property was, and then determine, considering … that Third Party rights are involved, whether it is an appropriate case to exercise your discretion to interfere with those rights.  But, you can’t get to Step 2 until you have been satisfied as to Step 1.
154.	In other words, I took the submission to argue that, because a legitimate debt was owed to the Third Party by the husband, it would have been taken into account in assessing the net property of the parties, or either of them, within the meaning of s 79.  That being the case, if the debt was (part) satisfied by the transfer of the property, the transfer could not be likely to defeat any anticipated claim because, as the property the subject of the transfer was needed to satisfy the debt, it could never have formed part of the “property of the parties or either of them”.
155.	But, in my view, that cannot be the test - at least expressed in that way:  if a disposition is likely to defeat a claim within the meaning of s 106B, the purpose of s 106B would always be defeated by establishing that, at that time, the disposition had the effect of removing the property from s 79’s reach.  
156.	In my view, it is to avoid that situation, that the section provides, not that a bona fide purchaser will defeat the claim but that the third party’s interests must be considered.  That is, if the pre-conditions of the section are met, the court’s discretion is enlivened and is controlled and measured by the justice of the situation and, in that respect, proper consideration of a “bona fide purchaser or other person interested”.
157.	In Commissioner of Taxation and Worsnop and Anor [2009] FamCAFC 4, the Full Court (at par 59) specifically approved an earlier statement by the Full Court in Biltoft and Biltoft (1995) FLC 92-614 at 82,128 that:
	There is no requirement that the rights of an unsecured creditor or a claim by a Third Party must be considered and dealt with prior to the Court making an order under s 79, nor is there a rule of priority as between a creditor claimant and a spouse.  Those rights, however, cannot be ignored.  They must be recognised, taken into account and balanced against the rights of a spouse”.  [Emphasis added by the Full Court in Worsnop]
158.	In my view, similar considerations apply in the application of s 106B where, perhaps axiomatically, a spouse’s interests will compete with a third party’s interests.
159.	The property the subject of the disposition formed a significant component of the property of the parties or either of them, particularly considering that the then-existing s 79 property was subject to a mortgage debt.  
160.	Factors such as the significant family violence, the husband’s likely deliberate or wanton or reckless regard for the other property of the parties; the wife’s care of the parties children, the husband’s claimed meagre income (said in his Financial Statement to be about $30,000 per year) and the resultant effect on any child support, his likely attitude to paying child support and the contributions otherwise deposed to, all point to the subject unit being likely to be an important part of the wife receiving a just and equitable entitlement.

Non-Sham Disposition - Summary
161.	By reason of the matters just discussed, I consider that the pre-requisites for the application of s 106B have been met in respect of the disposition from the husband to the third party despite it not being a sham or there being any finding of dishonesty to the requisite standard.
162.	Accordingly, the disposition is liable to be set aside if the factors affecting the exercise of the discretion and proper consideration of the third party’s interests permit of such a result.

Discretion and Consideration of Third Party Interests
163.	In considering third party interests as s 106B(3) requires, it can, I think, be said that, while the section might authorise the setting aside of a disposition, there is great reluctance to disentitle the person who is a stranger to the matrimonial affairs of parties (and thus, in the usual course, to matrimonial litigation) who, for full value, receives the benefit of a disposition in an arms-length commercial transaction.
164.	The Full Court in Aysom and Aysom  (1988) FLC 91-925 at 76,691 held:
	[The Third Party] however morally innocent he may be, acted with notice and therefore not in the strict legal sense as a bona fide purchaser, but all the same as ‘another person interested’; his interest insofar as this is compatible with the protection of the interests of the wife, ought be protected.
165.	In Balnaves and Balnaves (1988) FLC 91-952, the Full Court said:
	… [Section 106(3)] refers to two categories, the well known category of bona fide purchase of [for value] which is traditionally accorded a high level of protection in proceedings under s 85 or analogous provisions, and a second category of “persons interested”.  A person may still be “interested” whether they acted bona fide or not, although of course the presence or absence of bona fides (or negligence or other conduct of a like kind) no doubt will have an impact upon the extent to which, if at all, a Court will extend to that person the protection which ss 3 allows (see Heath and Heath v Westpac Banking Corporation (1983) FLC 91-362 and also reported in (1984) as FLC 91-517 (Full Court)).
166.	Citing Heath v Westpac Banking Corporation (1984) FLC 91-517 at 79,195, Dickey Family Law 5th Edition, at 645 says:
	The test of whether a purchaser has acted in good faith is whether at the time of the transaction, he or she was aware, or should have been aware by making due enquiry, that the transaction would affect a claim under the Act.  The test is thus objective, and not subjective” (As to the latter proposition citing in Halabi v Artillaga (1994) FLC 92-470 at 8,886).
167.	I have made adverse credit findings in respect of Mr O.  Whilst the findings fall short of what is required to found fraud, they provide a sufficient foundation to conclude that the disposition cannot be described as an arms-length commercial transaction.  
168.	On no view of it can the third party be said to be a disinterested purchaser of the unit.  I have grave doubts about the calculations and other evidence of Mr O said to found the alleged debt owing by the husband which, in turn, is said to found the consideration for the transfer of the subject lot.  I have grave doubts that any such debt existed, or exists, as alleged.
169.	The matters earlier referred to, including the adverse findings in respect of Mr O’s credit (and, through those, that of the third party) point to the discretionary considerations invoked by the pre-requisites of s 106B having been met pointing to the disposition being set aside.
170.	Moreover, those same matters point to a consideration of the interests of this particular third party not standing in the way of the disposition being set aside.

Effect of Setting Aside the Disposition?
171.	The unit was, prior to its transfer, owned by the husband.  The effect of the setting aside of the disposition will be (as a result of appropriate orders effecting same) to re-vest it in the husband.
172.	An issue then arises as to whether, in that event, a proper consideration of the third party’s interests requires a process by which it could seek to prove in this court that it was owed money by the husband.  Any such debt would, it seems, be a debt of the husband (or, perhaps, the husband and corporations apparently controlled by him – see the collective use of “husband” as party in the joint venture agreement).  The wife was not a contracting party to the joint venture agreement.
173.	That dispute is a matter for ordinary civil law remedies unless it can be shown (even on a prima facie basis) that any claim for debt by it against the husband should be taken into account in arriving at “the property of the parties or either of them” within the meaning of s 79 of the Act.
174.	If that question is answered in the affirmative, there is an argument that, consequent upon orders being made for the re-vesting of the property, there ought be a continuation of s 79 proceedings in which the properly-joined third party would have a right to present such case as it might to that effect.
175.	The joint venture was a significant part of the means by which “the property of the parties or either of them” arose.  If there is a legitimate debt owing, it might be argued that, in the usual course, it would be taken into account in arriving at the property to which an order made pursuant to s 79 might apply.
176.	It is, of course, well established that, as a general rule, the “property” for s 79 purposes is arrived at by deducting from the value of the marriage partners’ assets the value of their total liabilities.  
177.	Unsecured liabilities will frequently come within the terms of that general rule and, it is frequently the case that a debt - although incurred by only one of the marriage partners – will be treated in that manner. (See eg. Prince and Prince; General Credits Australia Ltd (Intervenor) (1984) FLC 91-501.  But, as the Full Court pointed out in Biltoft and Biltoft (1995) FLC 92-614 at 82,128:  “… although [that] is a general rule … the rule is not absolute, is not prescribed by statute and there are a number of well-recognised exceptions”.  
178.	In Af Petersens and Af Petersens (1981) FLC 91-095, the Full Court held at 76,699:
Nor, as has been pointed out earlier, is there anything in the decision of the High Court in Ascot Investments Pty Ltd v Harper and Harper to suggest that this Court cannot make an order dividing the assets of the parties because such a division might hamper a third party in his or her chances of recovery of a debt.
179.	The principle set forth in the passage cited above from Worsnop  can be seen to be consistent not only with what an earlier Full Court had said 14 years previously in Biltoft, but also with what an even earlier Full Court had said in Prince at 79,076:
In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under s. 79 as between the parties to the marriage …
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect ‘contribute’ to the liability by having that spouse’s fair share reduced by virtue of its existence…”
180.	In yet other cases, the nature of the alleged debt, including doubts about its existence; uncertainties about its enforcement and the like, permit of the court disregarding it entirely.  (See, eg. Af Petersens, above; Biltoft, above.)
181.	Here, whilst I have my doubts, there may in fact be a debt owing by the husband to the third party. The third party can, if it considers appropriate, pursue the husband for that debt.  Of course, if I accept the evidence of Mr O, he may not have had any contact with him and may have difficulty bringing those proceedings or enforcing any order.  I do not accept that evidence of Mr O, but, even if I did, that is but one factor resulting from them to be taken into account.
182.	The real issue is whether the justice and equity of the situation demand of any such claim for any such debt as between the third party and the husband being litigated in matrimonial proceedings involving the wife.
183.	In my view, they ought not by reason of the matters earlier discussed, including my significant reservation about whether there is, in fact, any debt owing. The justice and equity of the situation points clearly to any debt allegedly owing by the husband not being taken up as a liability of the parties in s 79 proceedings in reducing the available pool of property. Rather, any such debt (if it exists) is a matter more justly left to litigation between the third party and the husband.
The Wife’s s 79 Relief?
184.	If, as contemplated, the disposition is set aside, and consequential orders are made re-transferring the property to the husband, it will, in the s 79 context, form part of “the property of the parties or either of them”.
185.	A question then arises as to what s 79 order should be made between the parties. 
186.	I repeat in this context the findings made earlier in respect of the non-participation in the proceedings by the husband, his failures to appear, his failures to comply with procedural orders, including with respect to disclosure, his violence; his conduct in disposing of the subject property, the wife’s financial position, and the wife’s past, current and future care of young children all apply. 
187.	Further, the wife’s application as against the husband for costs of these proceedings, is, when regard is had to conduct of the proceedings and the financial circumstances of the parties, within the measures of s 117(2A), unanswerable. 
188.	I have no hesitation in ordering, then, that the husband transfer the subject property to the wife to effect an entitlement by her to a just and equitable settlement of property. 
189.	I will order a Registrar to sign in lieu of that husband in light of his recalcitrance; the wife should not be put to the additional expense of seeking the husband’s signature. The husband’s conduct disentitles him to that consideration. That recalcitrance, together with the matters earlier outlined, constitute the “other reasons” within the meaning of s 106A(2)(b) why such an order should be made.  
190.	I will order accordingly.

the application for costs of 30 january 2009 proceedings
191.	At the conclusion of the proceedings on 30 January 2009 to which reference was earlier made, I made orders that, if an application was to be made in respect of the costs of that application, it be the subject of written submissions.  Written submissions were subsequently received from each of the Third Party and the wife.
192.	The initial application by the Third Party to strike out the wife’s claim was directed towards an application on behalf of the wife in these terms:
3(a)	That the company … within 21 days of the date of this order at the expense of the company transfer to the wife, title and interest in Unit 3 … and assign all instruments and documents and do all acts and things … [etc] …
(b)	Alternatively, … the property be sold … and … there be a distribution to [the wife] …
193.	Section 106B of the Act and Part VIIIAA of the Act were mentioned for the first time in a Summary of Argument filed on behalf of the wife, by leave, at the hearing before me on 17 November 2008.
194.	On 17 November 2008, I ordered that the wife pay the Third Party’s costs fixed in the sum of $4,000 and ordered that the wife provide security for costs in respect of the balance of the action.  I described the case then appearing as being “somewhat thin”.
195.	It will be recalled that on that date, I required the wife to file a second Further Amended Application “in the nature of a pleading”, for the purpose of properly setting out and particularising her case against the Third Party.  It was consequent upon the wife’s compliance with that order that the Third Party renewed the application to strike out and it was that renewed application that was the subject of my orders made on 30 January 2009 and, thereafter, submissions as to costs.
196.	The wife applies for her costs of the proceedings of 30 January 2009.  In support of same, it is argued that the Third Party “was wholly unsuccessful in their strike-out application …”  It is submitted that:
In persisting with their application post 17 November 2008, the Third Party should, properly advised, have realised their application was hopeless … The Third Party should have known that the wife had a fairly arguable case that at the time of transfer of Unit 3, a s 79 order could have been foreseen by a reasonable person in the position of the husband.
197.	I do not accept the former of the contentions; I do not consider that, properly advised, the Third Party ought to have considered that the pursuit of the application was hopeless or that it “should have known” that which is contended.
198.	The oddities in the pleading, which, as I have said, is a strange document and an amalgam of facts, comment and evidence is, I think, sufficient to answer that.
199.	The consideration of whether a costs order should be made contrary to the general rule contained in s 117(1) of the Act requires a consideration of all of the matters enumerated in s 117(2A) relevant to the application.
200.	Included among those is, as the wife asserts, a consideration of whether any party to the proceedings has been “wholly unsuccessful” in them.  It seems to me that the wife has a sufficient basis upon which to argue that the Third Party was wholly unsuccessful.  Its application was to strike out the wife’s claim and the complete lack of success in that respect is measured by the fact that its application was itself dismissed.
201.	But, success is by no means the only factor which needs to be considered in the context of this costs application.
202.	The conduct of the parties to the proceedings including “the conduct of the parties in relation to pleadings, particulars, discovery … and similar matters” also looms large in the context of this case.
203.	Credit findings were always likely to be significant in the proper consideration of that factor as was a consideration of the case pleaded by the wife pursuant to the order made by me.
204.	In written submissions received from the Third Party, it was argued:
The issue of whether the wife’s costs pursuant to the application to strike out her proceedings and the Third Party’s costs of being involved in the proceedings should be reserved until the Court has determined the wife’s Statement of Claim and the Third Party’s Defence.
205.	The conduct of the trial and its attendant pleadings, disclosure and the like have been the subject of consideration in the Reasons appearing above.  It seems to me that this was always likely, given the allegations at the centre of the applicant’s case.  So, too, consequent on the proceedings of 30 January 2009, there was also likely to be a consideration at the final trial of issues that might be relevant to an application for costs such as, for example, whether the wife has presented her case in a way which allowed for the orderly and expeditious conduct of the proceedings and whether findings adverse to the credit of one party or the other, might impact upon same.
206.	So has it proved to be, as the Reasons above exemplify.
207.	Accordingly, there is, in my view, considerable merit in the submission made on behalf of the Third Party to which reference has just been made.
208.	Accordingly, in respect of the costs of the proceedings of 30 January 2009, I reserve those costs to the trial just conducted.
209.	Although written submissions have been received in respect of the earlier proceedings, a decision reserving the question of costs to the trial might raise, in light of findings made at the trial, matters directly relevant to submissions as to costs that need to be addressed by each of the parties in respect of those 30 January proceedings.
210.	I consider that, in those circumstances, each of the parties should have an opportunity to present such further submissions as they might consider appropriate in respect of any order for costs in respect of the 30 January 2009 proceedings informed by the findings at the trial and the ultimate orders made.
211.	I will, then, make orders affording the parties the opportunity to do so in writing and to make submissions on whether oral submissions are required in addition, both in respect of the 30 January 2009 proceedings and also in respect of any applications for costs arising out of the trial proceedings as well.
212.	I order accordingly.

I certify that the preceding two hundred and twelve (212) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy. 

Associate:  

Date:  17 March 2010