John Wayne Millwood bankruptcy: How Sarah Millwood became very wealthy in space of 24 hours
The daughter of a disgraced Tasmanian art collector has told a bankruptcy hearing how she acquired two residences, expensive furnishings, and an interest in commercial property in the space of a day.
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On the day disgraced Launceston businessman and art collector John Wayne Millwood was sentenced to four years’ imprisonment for historical child sexual abuse, his daughter became a very wealthy woman, a court has heard.
Sydney woman Sarah Kate Millwood was cross-examined in the Edward Braddon Commonwealth Law Courts Building on Tuesday as part of ongoing action by Millwood’s bankruptcy trustee, Sheahan Lock Partners, against his bankrupt estate.
Sheahan Lock is seeking to recover millions it claims Millwood divested himself of in order to prevent the payment of $5.3m compensation to his victim, who is yet to receive a cent.
Millwood was sentenced on December 7, 2016.
That same day, a flurry of financial activity occurred between his former partner Sonia Finlay and Ms Millwood, facilitated by family accountant Ken Davey, of Findex Hobart.
Ms Millwood told the court that on December 6, the only real property she owned was a vehicle, home furnishings and several artworks. She did not control any companies.
However, by the following day, things had improved for Ms Millwood.
“On December 7, it’s fair to say your asset position changed somewhat?” Sheahan Lock counsel Stuart Lewin put to her.
“Yes,” Ms Millwood responded.
Ms Millwood, or companies she became director of on December 7, suddenly became the owners of two residences in Launceston, chattels and furnishings worth $110,000, an interest in commercial property in Hobart that paid $13–$15,000 quarterly, and one-third of the Millwood superannuation fund, according to financial documents shown to the court.
Ms Millwood conceded that none of the money used to acquire the property and interests – $800,000 for a house at 159 St John St, Launceston, $110,000 for its home contents, $340,000 for an additional house at 114 Frederick St, Launceston, and $185,000 for shares in the company that owned the commercial property – was her own.
Rather, all funds were loaned to her by Ms Finlay.
Ms Millwood conceded that no loan agreement was ever drawn up.
She further conceded that at no point did she obtain any independent advice on whether the amounts represented fair value for the assets.
Mr Lewin pointed out that six months after Ms Millwood and Ms Finlay purchased the Frederick St property conjointly for $340,000, it was sold for $503,308.07.
“Did you and Ms Finlay buy under value?” Mr Lewin asked.
“I don’t think so,” Ms Millwood responded.
When discussing the $110,000 worth of chattels and furnishings Ms Millwood purchased using a loan from Ms Finlay, Mr Lewin asked her bluntly whether it was all a ruse.
“I put it to you that the reason you purchased these items was because it was a scheme engineered by Ken Davey to liquidate your father’s assets, convert them to cash, and then to distribute the cash so it was beyond the reach of any claimants,” Mr Lewin said.
Ms Millwood denied the assertion.
She said the items held sentimental value to her.
Ms Millwood told the court that all arrangements for the asset transfers were facilitated by Ms Finlay and Mr Davey, with Millwood playing no role in the specifics.
“He thought he was facing jail and he said, if I go to jail I would never come out. He had debts and he wanted his business affairs taken care of by myself,” she said.
Ms Millwood said her father, believing he would die in jail, wanted his will executed early.
Asked why he would want to do that, Ms Millwood responded, “I don’t know.”
Mr Lewin put it to her that Millwood told his daughter that it was in fact because he was concerned about the compensation claim.
“He absolutely did not,” she responded.
Ms Millwood claimed she was not made aware of the compensation claim until August 2019.
The hearing continues on Wednesday.
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