Family Court of Australia Dismisses Appeal of Ex-husband Due to Tax Fraud

Family Court of Australia dismisses the appeal where the ex-husband argued that his financial contributions weren’t accepted because he engaged in tax fraud

On 19 December 2018, the Family Court of Australia dismissed an appeal by Mr. Hadlett in his appeal from property orders made in the Federal Circuit Court of Australia on 29 March 2018 in proceedings between him and his ex-partner Ms. Ralphson.

The property that was the subject of the dispute between the two were two houses, a boat, and superannuation. In the Federal Circuit Court proceedings, the parties’ assets and the superannuation were to be divided so that the wife received 63 percent of the total and the husband 37 percent. To give effect to that division they each retained the real property they owned. The husband was required to pay $108,800 to the wife and she was to transfer her interest in the boat to him. They could not agree on the value of a car owned by the wife, so orders were made for its sale and the division of the net proceeds in the same proportion. Each party was to retain the superannuation held by them.

In the appeal, Mr. Hadlett represented himself and his main submission was that he was not given a fair trial because the primary judge (Judge Cassidy) disregarded his evidence and only considered Ms. Ralphson’s evidence. His grounds of appeal were:

1. His contribution of $110,000.00 to the asset pool was rejected

Mr. Hadlett submitted that he had $110,000 in cash at the commencement of the relationship, and his evidence to that effect and as to how he acquired the cash was unfairly rejected. He said that the $110,000 comprised $54,000, which he received in March 2004 following a property settlement with his former wife, as well as the proceeds from the sale of assets from his former business which he began to sell from February 2002. He contended that the proceeds of the sale were not income and were not included in his tax returns.

The primary judge thus gave four reasons for rejecting the husband’s evidence, namely:

· The cash was first mentioned in an affidavit filed on the eve of the hearing;

· No documents were available to support that evidence;

· The husband could not recall the make-up of the cash; and

· The amount of cash was inconsistent with the notices of assessment.

The Full Court upheld the primary judge’s decision because there was not enough evidence. They held that his affidavit where he husband asserted that he had “Savings/Personal Funds” of $110,000 at the commencement of the relationship was not sufficient. Their honours cited the case of Robinson Helicopter Company Incorporated v McDermott (2016) 331 ALR 550 at [43] where it was held that a trial judge’s findings of fact will not be overturned unless “they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’”, or they are “glaringly improbable” or “contrary to compelling inferences”.

2. The primary judge unfairly excluded his debts

Mr. Hadlett submitted that the primary judge included the wife’s credit card debt as a liability to be borne by both parties but wrongly excluded his credit card, chattel mortgage and personal and business debts.’

The Full Court upheld the primary judge’s decision to exclude these debts as Mr. Hadlett did not produce any documents establishing the presence of these debts.

3. Evidence of his purchase of cars was unfairly rejected

During the primary hearing, Mr. Hadlett submitted that he contributed $112,500 to the acquisition of cars during the relationship and that his evidence was unfairly rejected.

The evidence that Mr. Hadlett submitted during the primary hearing was an annexure that had a spreadsheet of the family cars. Ms. Ralphson conceded that around $7,000.00 was paid but denied the remaining $105,000.00. The primary judge accepted Ms. Ralphson’s statement and held that it was consistent with Mr. Hadlett’s low income.

Once before the Full Court, Mr. Hadlett made oral submissions on the purchase of one of the cars he referred to in the spreadsheet for the amount of $54,000.00. He asserted that this car was acquired by him trading in another car he owned and he tendered a receipt.

The Full Court upheld the primary judge’s decision to accept Ms. Ralphsons evidence as Mr. Hadlett’s submissions did not establish an error.

4. His contribution of $95,000.00 to the boat was rejected

In 2010, the parties purchased a boat for $175,000.00. Ms. Hadlett’s evidence, accepted by the primary judge, was that it was financed by the payment of $54,000 from the parties’ joint account, $20,000 borrowed from her parents, and a refinancing of the mortgage over a property, increasing the debt by approximately $101,000.

5. The primary judge failed to take into account his greater contributions

Mr. Hadlett’s only submission on this ground was that the evidence he made in the previous proceedings was to be preferred. The Full Court was not persuaded to prefer Mr. Hadlett’s evidence as to the grounds seeking to establish that premise failed in the previous proceedings and as such, they upheld the Primary Judge’s findings.

6. The primary judge erred in her adjustments under s 75(2) of the Family Law Act 1975 (Cth)

After having found that the parties’ contributions favoured the wife as to 65 percent, the primary judge made an adjustment of 2 percent in favour of the husband. Mr. Hadlett submitted that this adjustment was inadequate because it did not pay proper regard to his age, health, and ability to work and overlooked his future needs.

The Full Court cited the case of Bahonko v Sterjov (2008) 166 FCR 415 at [3] where it was found that it is for the court to rummage around in the evidence to see if there was any material that supports these assertions. As there was no further evidence adduced, this ground was dismissed.

Costs

None of the grounds that Mr. Hadlett raised were established and the appeal was dismissed.

On the basis that the appeal was wholly unsuccessful, Ms. Ralphson sought an order for payment of her costs to the sum of $9,746.63. Mr. Hadlett opposed this order and argued that his income was insufficient to meet these expenses.

The Full Court cited the case of Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12] where it was held that impecuniosity is not necessarily a bar to a costs order because otherwise, an impecunious party could litigate with impunity. Taking these considerations into account, the cost orders sought by Ms. Ralphson were made.

Conclusion

When making an appeal for Property Orders in Family Law, it is important to carefully consider the judgment you wish to appeal. A failure to correctly raise the appropriate evidence and legal arguments against an initial decision will lead to your appeal to dismissed and potentially devastating cost orders against you.

Running a case as a self-represented litigant will be cheaper but this must be weighed against the danger of cost orders being made against you. It is always recommended to obtain legal advice or representation from a practicing lawyer. Please contact our Family Lawyers on 63238613 to discuss your matter and find out how we can help you.

If you would like to read more about this case you can find it on Austlii here:

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