Billington and Billington (No. 3) - [2007] FamCA 1465

FAMILY COURT OF AUSTRALIA

BILLINGTON & BILLINGTON (NO. 3)

[2007] FamCA 1465

FAMILY LAW – PROPERTY – Long marriage with no dependent children – Significant inheritances contributed to the acquisition of properties and to a share portfolio – Potential capital gains tax on shares unlikely to be sold – Gift by a party after separation to a child of the marriage – Payment added back to the pool of assets – Party has estate interest subject to life tenancy – Treatment of interest as a financial resource – Family Trust where loan accounts in name of children but husband found to be in control – Property of the parties – Family Company where shareholdings in the name of adult children but children have no active involvement – Source of company and trust assets is predominantly husband’s income – Valuation of professional practice business – Dispute over single expert’s valuation factors where adversarial witness refused – Responsibility for the payment of single expert’s fees – Responsibility for party’s accounting fees where that accountant has assisted the single expert – Wife sells some shares to enable bank account to retain cash – Whether the capital gains tax as a consequence should be a liability – Adjustments for contribution but no adjustments for factors under s 75(2) Family Law Act

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Ascot Investments Pty Ltd v Harper and Harper (1981) FLC 91-000
Ashton and Ashton (1986) FLC 91-777
Bonnici (1992) FLC 92-272, 15 Fam LR 138
Hickey & Hickey & Attorney-General for the Commonwealth of Australia(2003) FLC 93-143
Jones and Jones (1990) FLC 92-143
Kelly and Kelly (No. 2) (1981) FLC 91-108
Kowaliw and Kowaliw (1981) FLC 91-092
R v R (Full Court, 27 April 1990, Simpson, Strauss & Smithers JJ
unreported)
Rosati and Rosati (1998) FLC 92-804
Townsend and Townsend (1995) FLC 92-569
Webster and Webster (1998) FLC 92-832

APPLICANT:

Ms Billington

RESPONDENT:

Mr Billington

FILE NUMBER:

SYF

3567

2005

DATE DELIVERED:

14 December 2007

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Sydney

JUDGMENT OF:

Cronin J

HEARING DATE:

9, 10, 11 & 12 July 2007; 23 - 25 October 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Richardson SC with Mr Kearney

SOLICITOR FOR THE APPLICANT:

Barkus Edwards Doolan

COUNSEL FOR THE RESPONDENT:

Mr Batey

SOLICITOR FOR THE RESPONDENT:

Watts McCray

Orders

That on or before 4 pm on 1 March 2008 (“the settlement date”), the husband pay to the wife the sum of $1,690,991 (“the settlement sum”).
That forthwith, the wife sign any necessary written authority and direction addressed to … Council, for the Council to pay to the husband, the deposit held in respect of the proposed renovations to the H property and the wife relinquish any interest therein.
That forthwith, the husband cause to be removed at his expense, any caveat lodged by him or on his behalf, over or in respect of, the real property at …, B being the land described in Certificate of Title folio identifier …
Contemporaneously with the payment of the settlement sum, the wife:
(a)transfer to the husband at the expense of the husband, all of her interest in the real property at …, H being the land described in Certificate of Title volume … folio … (“[the H property]”);
(b)assign to the husband or his nominee, any right or interest she may have in any loan account due to her by either W Pty. Ltd. or the Billington Family Trust;
(c)sign any necessary document required and prepared by the husband such as would disclaim all of her interests of any nature and kind in the Billington Family Trust;
(d)sign any necessary document required and prepared by the husband to transfer to the husband or his nominee all of her interest and shareholding in W Pty Ltd and F Pty Ltd;
(e)do all acts and things required in a timely manner including voting at any necessary meeting to ensure her transfer of any interest in and resignation from, W Pty. Ltd and F Pty. Ltd. as well as sign any necessary document required prepared by the husband, to resign all directorships and positions as an officeholder in W Pty. Ltd. and F Pty. Ltd.
That in default of payment of the settlement sum due by the settlement date, then within a period of no more than 60 days thereafter or as otherwise agreed, the husband and the wife do all things required including signing any necessary document to sell the H property by public auction on terms and conditions to be agreed and in default of agreement, on such terms and conditions as an agreed real estate agent (“the agent”) shall determine.
If the parties do not agree on the agent, each of the parties shall provide to a registrar of the Sydney Registry of this Court, a list of 3 names for the registrar to nominate the agent using the provisions of Rule 15.46 of the Family Law Rules.
Upon the sale of the home, the proceeds of sale shall be applied as follows:
(a)first, to pay all costs, commissions and expenses of the said sale;
(b)secondly, to discharge any encumbrance affecting the home;
(c)thirdly, to pay to the wife the settlement sum together with interest calculated pursuant to the Family Law Rules from the settlement date; and
(d)fourthly, to pay to the husband, the balance.
That the husband pay and indemnify the wife against all claims and liabilities of any nature which the wife may have arising from the activities of or in respect of :
(a)F Pty. Ltd.;
(b)W Pty. Ltd.;
(c)The Billington Family Trust (collectively called “the entities”)
including as a result of her receipt of any monies from the entities.
That the husband retain and become the absolute owner of the MLC policies in his name and the wife retain and become the absolute owner of the MLC policies in her name and by 17 January 2008 or such other time as may be agreed, each party do all acts and things required and sign any necessary document requested by the other, to cause the ownership of their respective MLC policies as set out and described in the pool of assets referred to in the reasons for judgment this day, to be transferred to the relevant owner thereof should that be necessary.
That save for these orders, the husband retain and the wife relinquish any interest in, the assets in the possession of the husband.
That save for these orders, the wife retain and the husband relinquish any interest in, the assets in the possession of the wife.
That all extant applications of either party be otherwise dismissed save as to any application for costs by either party.
That any issue as to costs be determined upon written submission to the Honourable Justice Cronin and any such application for such costs:
(a)be filed with the Associate to Justice Cronin by 4 pm on 17 January 2008, and
(b)be served upon the other party by that date.
That in the event that an application is made for costs by either party pursuant to paragraph 13 hereof, the other party shall have until 4 pm on 1 February 2008 to reply.
If no further application by either party is filed by the date referred to in paragraph 13, all applications shall be deemed to be dismissed.
That all proceedings be otherwise removed from the list of cases awaiting a hearing.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3567 of 2005

MS BILLINGTON

Applicant

And

MR BILLINGTON

Respondent

REASONS FOR JUDGMENT

The facts in this property case are relatively simple; the issues are not.
Although the parties are divorced from each other, I shall refer to them as husband and wife for the sake of convenience.

Background

The husband is aged 56 years and the wife 57.
The parties commenced living together in 1973, married in 1974 and separated in December 2004. It is therefore a union of over 30 years. When they commenced living together, they were both studying. Much has changed since then.
There are 4 children of the marriage, all of whom are over 18 years of age. Their ages range from 19 to 30 years.
The husband is the Managing Partner of a successful professional practice. He obtained his initial qualification in 1973, an Honours Degree in 1976 and a Masters Degree in 1980. In March 2007, the husband began living with his new partner. They have a child together. That child is now 6½ months old. The husband supports his new partner.
The husband’s receipts from his practice at the moment are somewhere around $600,000 per annum. I shall refer to the financial circumstances in more detail below.
The wife obtained her Bachelor degree in 1973 but has not completed the formal qualification to practice. She has not re-partnered. The wife has received the benefits of monies from her wealthy family. Her income from investments including rent was said to be around $250,000 per annum.

The issues

There are numerous matters in dispute but in essence they were:
a)in determining the pool of assets;
i)the treatment of a contingent interest of the wife as residuary beneficiary under her father’s estate;
ii)what portion of the value of a company F Pty Ltd should be included in the pool having regard to the fact that the husband and wife each have one share out of a total of six shares;
iii)the valuation of the interest of the husband in his professional business, bearing in mind that I refused permission from the husband to call and rely upon an adversarial witness on that subject and about which I have already given an interlocutory judgment;
iv)the responsibility for the payment of the single expert’s fees and the fees of the husband’s accountants relating to advice to and discussions with, the single expert;
v)what, if any, allowance should be made for a significant contingent liability of the husband relating to his professional practice;
vi)whether the wife should be allowed a payment that she made for capital gains tax in respect of some shares that she sold in recent months;
vii)the treatment of capital gains tax on the wife’s unsold portfolio of shares;
viii)the correct figure to be inserted into the list of assets and liabilities relating to the husband’s credit card.
b)how to then weight and assess contributions;
c)what, if any, adjustment should be made for factors set out in s 75(2) of the Act; and
d)Ultimately, overall, what is a just and equitable outcome of the divisions of the assets of the parties.
It will therefore be seen that there are a number of issues that arise out of the conduct of the litigation itself rather than just the marriage.

The applications

The wife filed an application on 22 July 2005. She sought to retain a home at H, a property in her name at B, her shares and personal assets and for the husband to retain his professional practice business, the Billington Family Trust and a family company know as F Pty Ltd.
The husband filed his responding material on 7 September 2005. He sought the wife transfer to him the property at H, that he retain the Family Trust and F Pty Ltd, his professional business and that the wife retain what was left. In essence however, because of the valuation and asset pool disputes, the husband made clear that he wanted an equal division of the parties’ assets.
The case began in July 2007 and was conducted over three days. It was then adjourned until it resumed in October 2007. That delay has had some significance.
In final submissions, Mr Richardson of Senior Counsel for the wife said that whichever way one pushed the assets around, the wife should have 80% of the total assets. Mr Batey of Counsel for the husband said that the assets should be divided equally. As will be seen from the issues above, the very first step in determining what is to be divided is contentious.
What was common ground was that I should follow the four step process. I propose to do that.
That is the process set out by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia[1] where the Full Court said:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
[1] (2003) FLC 93-143 at pa 78,386
Before dealing with the contentious issues, I propose to set out the financial history of the marriage.

The history

When the parties commenced living together in 1973, the wife was then aged about 24 years. She owned shares in a family company L Pty Ltd given to her by her father. She had also purchased shares in some public companies. In addition to those shares, the wife held shares in her grandmother’s company F Investments Pty Ltd. The wife said that she searched her records to ascertain what shares she had and then checked the state library newspaper details about values. The wife did not say exactly what the value of her financial interests was in 1973-1974 and I accept that she could not. In reality, it matters not because my task is to assess the contributions and weight them. On any view, in 1974 terms, the wife’s interests were significant. Her estimate of her public company shares was not less than $30,000. With the other interests to which I have referred, it is clear that there was more than $30,000 of equity in assets. Some guidance can be taken from her evidence that in 1973, the family company L Pty Ltd brought a property at R for $45,000. The evidence of the husband was that it was $35,000. The distinction does not matter. The assessment is simple. I find the weight to be given to the wife’s initial contribution is significantly greater than that of the husband.
The husband was 23 years of age and a student. He owned a three year old car and had some savings from working during holiday periods.
The disparity in the initial contributions can be seen to be quite stark notwithstanding that they were made 30 years ago.

The R Property

The parties commenced living in the R property owned by L Pty Ltd in the year after their marriage. The husband’s version about the acquisition of the R property was that whilst the parties were engaged to be married, the wife told him that her father had brought them a house. It was many years ago and that statement has a ring of reality about it but on any view, even if it was intended by the wife’s father to assist the parties, it must be remembered that the wife had shares in the company buying the property. On that basis, I find that the interest which is difficult to quantify, was a contribution by the wife through her shareholding. If it was a contribution by the wife’s family, it should be seen as a contribution by or on her behalf.
The husband went back to university and the wife worked to support him. When the husband finished his professional qualifications, he obtained employment and the wife went to university but during that year, she became pregnant with the parties’ first child and ceased studying.
Whilst living in the R property, renovations were undertaken. Both parties contributed financially and physically. The parties could not agree on the extent of their respective efforts. The husband alleged that he did the renovation drawings and lodged them with the Council. It was put to the wife that tradesmen did work based on contra-deals with the husband. The wife said she did not think that happened.

The 1976 Inheritance

It was the wife’s case that she had received $5,000 inheritance in 1976 and those funds went towards the renovations. When cross examined about where the renovations were paid from, she was uncertain about whether it was her account or the joint account in to which the husband’s income had gone. Counsel for the husband put to the wife that in respect of her assertion that she paid all of the money due to the builder, her memory had failed her and that what had occurred was that she had paid “the majority but not all”. The wife said she believed that she had paid all. The question put by Counsel was obviously on the basis of the husband’s instructions and it indicated that the wife did pay a significant amount of whatever it cost even though the quantum was in dispute.
Having heard the tested evidence of the husband and wife, I have concluded that in terms of detail, the wife presented as having a more accurate recollection notwithstanding the passing of time. Although as a contribution, the $5,000 is relatively modest, I accept the wife’s version.

1976 to 1979

Both parties then worked together from 1976 to 1979 in a small professional practice. The details of what each did in that practice have little relevance.
During those early years, the husband studied part-time whilst working to obtain his Masters Degree. The wife deposed to the fact that she assisted with typing, discussion and editing of his work. In some candid acknowledgments in cross examination, the husband said that the wife supported his advancement both practically and academically and that they fulfilled their plans. However, notwithstanding the acknowledgments, the success the parties have had and the fulfilment of the study and work plan, it was hard not to notice the husband’s reluctance to give full credit to the wife. For example when asked whether the wife assisted by typing his essays and his thesis, his response was that that did not happen in respect of his Masters Degree. I do not feel I have to make specific findings in relation to those issues because in a global way, the non-financial contributions by the parties at that time seem to have been similar.
Again in those early years, the wife said that her parents assisted by paying all of the household expenses. In addition, the wife was receiving a monthly allowance from her father which had been happening for a number of years. That allowance continued until the father’s death. When asked about the quantum of such assistance provided, the wife acknowledged that she didn’t precisely recall. I am quite satisfied that the wife was not deliberating exaggerating.

The N property

In 1978 the parties located a home at N. The wife said that her father gave her the 10% deposit and the balance was borrowed initially using her shares as security. There was a mortgage to the bank of $65,000. At that same time, the R property belonging to L Pty Ltd was sold and the proceeds were given to or retained by, the wife. In turn, the bank mortgage over the N property was then discharged.
The R property had been renovated as I have set out in paragraph 23. The parties’ contribution to it was not only a financial one but also through personal exertion. The increase in value was modest upon either view of what it originally cost. What is important is that the parties were able to acquire the unencumbered title to the N property because of the wife’s initial interest in the R property as well as her family’s generosity rather than any significant joint contribution of their own.
The parties then lived with the wife’s father while they renovated the N property. Again, the parties differed on how that occurred. The wife’s version was that the husband prepared the drawings and submitted them to the Council. A builder was engaged who failed to complete the work and another had to be employed. The wife said she went to the property to check on progress and both she and the husband worked on the property on weekends. In terms of expenditure, the wife said she paid the workers’ wages, bought items and engaged an interior decorator. All up, she thought the total cost was about $17,000 which was provided by her father.

The husband’s version of the renovations was more detailed but not significantly different from the wife. However, he set out no evidence in his affidavit about where the money came from. In evidence in chief, he said he sourced and paid for material and equipment which he used in the renovation, but said nothing about the wife’s assertion of the majority of the money coming from her father. When the wife was cross-examined, she maintained that some things were paid for by the husband but there was no serious challenge to the fact that her father provided a significant sum of money.
The wife had had the role of managing the home and caring for the then two young children and the husband was working in his profession. The parties jointly had the benefit of rent-free accommodation but the husband was using his income for the support of the family.
The importance of the wife’s contribution becomes apparent when one looks at the chain of events that leads to the present pool of assets. Although there is no specific evidence as to the values of these contributions other than the wife’s estimation that the total cost of the renovations was $17,000, I find that the contribution of the wife was greater than that of the husband.

The Wife’s Mother’s Estate

The wife’s mother died in 1979 and from her estate, the wife received a large sum of money which she thought was about $200,000, along with some shares which she retrospectively valued at not less than $32,931.

The S Property

The further generosity of the wife’s family can also be seen in that in 1979, the wife’s father bought a property at S in the name of the wife and her brother. Upon the father’s death in 1981 and upon the sale of the S property, the wife received her one half share which amounted to somewhere around $125,000. The wife was cross-examined about the S property. It was put to her that part of the proceeds of sale were used to buy a home for her father. She denied that. It was also put that she did not receive half of the proceeds of sale as she asserted. Again, the wife confidently replied that she did.
The husband’s evidence, however, (see paragraph 116 of his affidavit) was that he did not know how the proceeds were applied or distributed. Accordingly, I have no hesitation in accepting the wife’s evidence about that issue.

The Wife’s Father’s Estate

Subsequent to the death of the wife’s mother, her father remarried Ms D. Upon his death, the father created a life estate for Ms D. The wife and Ms D are the Trustees. Ms D is currently 70 years of age.
The wife’s entitlement to her father’s estate is an issue of controversy in respect of how I treat it.
Mr H is an actuary. He was appointed to prepare a valuation report in respect of the value of the wife’s interest in the estate of her father arising out of a will which was executed in November 1980. Mr H’s evidence was not challenged, nor was he required for cross-examination. However, his valuation was the subject of written questions by the solicitor for the husband. In response, Mr H made the following points:
(a)the wife’s interest in the estate is her interest in the current value of the estate. It is therefore a share of a current market value of the assets of the estate;
(b)the wife has an entitlement to all of the assets. However, this is not an immediate entitlement and because of this, the value of the assets to her is diminished; and
(c)the economic value of an asset in the end is simply the value of the right to the future income stream that it generates. The wife is sharing the income stream with her step-mother. The step-mother receives the right to all of the income until her death.
The questioning of Mr H by the solicitor was about methodology, factors and assumptions. One of the questions under examination highlighted by the solicitor was the longevity of the life of Ms D. It was put that it was to be not less than 16.29 years up to 28 years.
The will of the wife’s father created the life estate and upon the death of Ms D, that estate was to have been divided between the wife and her brother. The wife’s brother has since died. The wife is now the only beneficiary. There is an assumption however, that the wife will be alive upon the death of Ms D. If she is not alive, then her surviving children divide that interest.
Leaving aside for the moment the value of such an interest, the evidence highlights the dilemma of dealing with it where:
(a)the probability of receiving the entitlement, regardless of whatever it is, is a long while away; and
(b)there is a possibility of not receiving anything at all if the remainderman predeceases the life tenant.
I shall deal with the life interest more precisely when I deal with the treatment of each of the issues for determination. However, this estate has been effectively dormant in the hands of the wife for many years requiring only her involvement as a trustee. There has otherwise been no direct contribution by the parties.

The Wife’s Grandparents’ Estate

In 1981, the same year as the wife’s father died, her grandparents died as well. Again, the wife was a beneficiary. One of the major assets was F Investments Pty Ltd. The wife received cash and shares totalling $295,750 and F Investments Pty Ltd was wound up.

The H Property

In 1982, the parties purchased the property at H for $350,000. The wife said the funds for the purchase came from her accrued resources and no funds were borrowed. The husband did not dispute the source of the funds. He did say that the deposit of $35,000 and the legal costs and stamp duty which totalled about $10,500 were paid by the parties themselves. A proposition was put to the wife that the husband paid the stamp duty. The wife moved from a position of saying she did not think so to being definite in saying that the husband did not pay it. She was then adamant that she paid the stamp duty from her broker’s account. The husband was not able to be really confident about any of these transactions and accordingly, I accept the version of the wife. Even if there was some doubt about it, and in my mind there is not, the contribution from the parties’ own exertions must have been modest because they had one wage earner and they were committing their funds to their joint family needs. Again I find the contribution of the wife to the acquisition of the H property very significant.
The H property was a large property but it needed renovation. There was considerable work done. There was some dispute about where the funds came from for this project. The wife said that to the best of her recollection, the money was from her account and from the sale of shares. It seems to me important that the parties moved in about January 1983 and it was around that same time that the N property was sold for $182,500 and the wife retained the proceeds. The husband’s version was that the renovations came from the wife’s inherited money, the N property proceeds and some of his income. Tracing back the N property and adding in the wife’s available inherited funds which she already had at that stage, the contribution from the wife to the renovation must be seen as significantly greater than the husband.

The Wife’s Aunt’s Estate

In 1986 the wife’s Aunt died. The wife was an estate beneficiary. Significant sums of cash, bonds and shares were received which the wife said totalled $534,680.10. The wife also received and still retains, furniture and paintings. The husband’s version was that to the best of his recollection, the wife received an inheritance but he could not recall how much, nor, more importantly, how the funds were applied. The husband said the wife managed her inheritances so he had no records.

The K Property

In 1987, the parties bought the K property for $170,000. The wife’s version was that these funds came from the estate of her Aunt. The husband’s version was that the funds came from the accrued savings of income augmented by the wife’s inheritance. The inheritance details were not recalled by the husband but the wife’s evidence was that the inheritance of her aunt had been received only the year before. It is the wife’s evidence that I accept in relation to the source of the funds rather than that of the husband.
A number of improvements were undertaken to the K property, some by the parties themselves and others by tradesmen. As with other disputes, the parties disagreed about who paid. I accept that the funds predominantly came from the wife.

The parties’ incomes in the 1980’s

It is important to digress momentarily here and look at what the parties’ income and employment positions were in the 1980’s to assist in determining just how much of a financial contribution they were able or likely to be making towards these acquisitions and renovations.

The P Group

The husband commenced employment with the P Group (“[the P Group]”) in 1982. He became a partner in 1988. During the years therefore leading up to the acquisition and renovation of the K property, the husband was employed on a salary. His evidence was that after he became a partner, he had a declared taxable income of $102,000 in that first year. The wife during this period was not engaged in paid employment and between 1977 and 1987 was caring for the four children, the youngest of whom was born in November 1987.
It stands to reason therefore that with family obligations, income limited by earnings, the capacity to acquire these properties and largely to renovate them, came from the wife. There can be no dispute that the husband and wife contributed to the best of their abilities at this time but were it not for the inherited and gifted funds, the parties would not have what they have today.
Having bought the H property, the Certificate of Title was put into the joint names of the parties. At the time that the husband became a partner in the P Group, the H property was transferred from joint proprietorship to tenants-in-common as to one per cent to the husband and ninety nine per cent to the wife. This exercise cost the parties about $20,000 in stamp duty. In my view, the original acquisition as joint proprietors and the subsequent restructuring to tenants-in-common, makes little difference in this case having regard to the contribution issues to which I have referred.

Renovations in 1990

The parties then renovated the H property again in 1990. This time, the renovations were extensive. A company, A Constructions was engaged. The wife says it cost not significantly more than $160,000 but a further $150,000 was paid to an interior designer. The wife said that between 1990 and 1992, she sold shares worth almost $357,000 which went towards the renovations and to what she described as living expenses.
The husband said both parties carried out substantial work. He said he drew up the plans. The wife agreed but said that the design was done by both. When cross-examined, the wife acknowledged a variety of things were done by the husband. Her evidence was that there was input from her as well. There was debate between the parties about who supervised the work and as the husband’s counsel pointed out, that was a contribution claimed by the husband. As for the payment of accounts on the work, the wife maintained that she had paid “all” but her evidence varied to “most” of them. This was an interesting issue because, as with previous financial matters, the husband’s evidence was that he could not recall how the costs were paid. By 1990, the husband’s taxable income was significant but even on his own evidence, the wife was spending considerable sums from her inherited funds.
The husband asserted that on the evidence it was not possible to discern what sums the wife received from these inheritances. I reject that. Over a period of 30 years it is unreasonable to expect people to retain records that would establish every financial expenditure. That principle applies more so in a family which is functional at the time and working jointly towards its goal. In a case where money was available and the parties enjoyed a lifestyle of affluence, it is also not reasonable to expect them to remember precise details that far back. As with all cases of this nature, the standard of proof is that set out in s 140 of the Evidence Act 1995 (Cth). I have to be satisfied on the balance of probabilities about any disputed issue.
In this case, in respect of the issues to which I have referred, I found the wife to be honest and responsive. In respect of the husband’s evidence about the same issues, I have no reason to doubt that he was also doing the best he could to remember things from many years before.
In each of the issues to which I have just referred, I find the circumstances did happen as described by the wife.

The C Property

In 1992, the K property was sold and the wife bought the C property. This property was called “[the C property]”. The K property was sold for $290,000 and the C property purchased for $345,000. The C property was intended as a “weekend away” property.
The wife asserted that she used the K property funds and with extra funds from her resources, she paid for the C property. About that, the husband agreed. From a contribution point of view, there was clearly physical contribution by the husband and also the wife and these have to be assessed and weighted. Using the logic of the previous real estate purchases, it is clear that the overall contributions to the C property were greater by the wife than the husband. As with all contributions, I propose to deal with contributions globally.
Having acquired the C property, renovations were also undertaken but not for some years. This time, the wife acknowledged the husband’s contributions. She said the renovation cost about $475,000. She said that to the best of her recollection, the husband paid $60,000 and also a builder’s claim, but otherwise she paid the balance. She pointed to records showing her funds of $411,000 being spent.
The husband’s evidence was that in or about 2001, he recalled providing a lump sum of $80,000 to $90,000 to the wife to pay for the renovations yet counsel for the husband put to the wife that the husband paid more than $160,000, to which she responded that she thought that that was way in excess of what he paid. This cross-examination was a testing time for the wife. She was asked whether she did not want the Court to know how much the husband had contributed and she said that, quite to the contrary, that is why she had produced the records that she had.
Again, I am left with the evidence of the husband saying that he contributed but not with anything near the particularity of the wife. As I have said, on these issues, I found the wife an honest and responsive witness and in counsel’s probing of her, it simply reinforced in my mind that the wife was endeavouring to paint an accurate picture. Accordingly on this issue, I accept her evidence.

Household spending

Within the daily lives of the parties, they spent significant amounts on private school fees and living expenses. A schedule of overseas holidays was provided.
The husband’s evidence was that all of his income was made available to support the family, whilst the wife’s income and inheritances were applied to the acquisition of assets. Counsel for the husband put that proposition to the wife in a general way. The wife’s evidence was that she did not have access to the husband’s funds. She said that in the early days, he paid bills and gave her housekeeping money although it was what she described as “haphazard”. She said that once he became a partner in the practice, she received a regular monthly deposit into her account of $2,000. She acknowledged that the husband paid household expenses. In 2003, there was a monthly payment of $7,000 paid into the wife’s account. It must be remembered however that this is towards the end of the marriage.
There is therefore no doubt that in the 1990s, the parties’ lifestyle was such that significant sums of money were coming into the family household and they were expended on the parties’ lifestyle. I am satisfied that the wife’s income was used for household expenses as well as that of the husband.
The parties set out their respective incomes. The wife showed taxable income figures for the period from 1990 to 2005. When averaged out, it amounts to about $246,000 per annum. It would not be sensible to compare the husband’s taxable income with the wife because although the husband’s income was higher in recent years, it does not reflect the cash flow effect because the parties had the benefit of income splitting through the Billington Family Trust. Nonetheless, the husband’s cash flow from his professional practice was significant, particularly in the last 10 years.

The Billington Family Trust created

In 1997, the husband created the Billington Family Trust, the trustee of which was and still is, W Pty Ltd. The husband and the wife and each child have one share in W Pty Ltd. The husband and the wife are directors of W Pty Ltd. All are nominated beneficiaries of the Trust.
One of the things that caused significant consternation in the hearing was the wife’s assertion that she did not personally receive distributions from the Trust and further that she paid her own tax on and from her investment income. In July 2007, it was put to the wife that occasionally she had asked the husband for assistance to pay her tax, an assertion she denied. When the hearing resumed in October 2007, counsel for the husband tendered “Exhibit H5”, some correspondence from 1996 showing the drawing of a cheque in May 1996 for the payment of the wife’s 1995 taxes. Also in the same exhibit are copies of cheques signed by the husband and the wife from 1998 relating to the wife’s tax with an assessment notice relating to provisional tax. The wife’s evidence in July 2007 was initially that she was definite about the tax but then she moved to a situation where that is what she “thought” had happened. On 23 October 2007 when the hearing resumed, senior counsel for the wife produced a schedule “Exhibit W7” indicating all of the distributions from the Trust for the period from 1997 to 2006. The distributions were significant. However, there were no distributions to the wife. The husband was cross-examined again in October 2007. He was asked about the 1995 taxation documents. Specifically, he was asked whether he declared the income in the wife’s name through the practice. He was unable to confirm that that was so. He was asked whether he accepted that it was probable that the tax paid in 1995 was a distribution from the P Group partnership declared in the wife’s name and again he indicated that he was not able to confirm that and went so far as to say that he didn’t not know whether it was probable.
Insofar as it was put as an issue of credit, I do not find that the wife set out to deliberately mislead the Court. I repeat what I earlier said about the tyranny of time. Just exactly what the tendered documents establish, I am unsure but with the experienced accountants involved in the case, I was perplexed that the issue was controversial. As I pointed out above, this assessment related to a provisional tax payment. It was for a sum of $6,973 and in a year where the wife earned somewhere in excess of $200,000, that small payment seems odd. I do not propose to draw any adverse inference against the wife from this evidence.

F Pty Ltd

Also in 1997, the husband incorporated a company known as F Pty Ltd. There may be some quaint similarity between that company and the wife’s grandmother’s company referred to earlier but that is the only connection. F Pty Ltd is a company in which the husband and wife each own one share. Each of the four children owns a share in F Pty Ltd as well. It manages a variety of investments.
I have also mentioned earlier the fact that the husband became a partner in the professional practice in 1988. He is now the Managing Director of the company having been appointed to that position in 1996. It was common ground that there are a number of associated entities which run the practice and that the husband does not hold a controlling interest. The P Group however has a formula for the acquisition of shares by partners. It is not in the Partnership Deed but is certainly something that has been practised by the partners for many years. The husband set out in his affidavit, all of the details about the structure. The valuation issue and the evidence of Ms W who is the Court appointed single expert, are matters that I shall return to below.

Homemaking and parenting roles

An important issue in any proceedings when assessing contribution is that of the non-financial nature relating to the management of a household and the care of children.
The wife’s evidence was that she had the assistance of a live-in nanny for a period of time but otherwise, she attended to all of the housework. She asserted that she organised the children for school and their extra curricular activities. She pointed to the fact that the husband was a hardworking man who not only worked long hours, but was away overseas and interstate at various times. In addition, his work commitments, according to the wife, included various activities associated with his profession, the local community and the school of the children. The wife was a public official from 1995 until 1999.
The husband’s evidence was that whilst the wife had been the primary homemaker throughout the marriage, he assisted from time to time cooking meals, frequently doing the dishes, purchasing food at the supermarket and greengrocer and from time to time, he cleaned the home. He included the tasks of supervising of all of the maintenance of the property and the supervision of the various tradesmen. He said he assisted with the children and, in particular, attended their various activities. In respect of the period of time that the wife was a public official, he said that the wife attended meetings and social functions after hours and he looked after the two younger children.
It is difficult to make any precise mathematical quantification of contributions in a situation like this but the wife was not challenged about the evidence of her husband’s extensive work and extra curricular activities. She was certainly challenged about the assistance that he provided to her in relation to the period of time that she was a public official but even then, the wife insisted that with the youngest child then aged seven years, the older children provided the necessary care and attention in her absence. The list of extra-curricular activities of the husband is impressive and I have no doubt with his responsibilities in his profession, he was away much of the time asserted by the wife. Each subjectively saw that they contributed significantly to the management of the home and the care of the children and to a very large degree, I have no doubt that that is exactly what they did do.
However, in making an assessment of the non-financial contributions in relation to this issue, I have no doubt that the wife’s role was much greater than that of the husband. That is not a criticism of the husband as his activities clearly provided the large financial income from which the parties and the family benefited. However, as has been said in many of the recorded authorities, the role of the homemaker and parent is a significant one and must be given proper weight. Having regard to the fact that there were four children in this family over a long period of time, I accept the wife’s version that she did a significantly greater portion of that role than did the husband.
One of the other non-financial roles in this relationship related to the decisions to be made about where family assets were invested. The husband’s evidence was that the wife undertook most of that role within the family although in the later years subsequent to the creation of the Billington Family Trust, I accept that he managed that resource.
The wife was cross-examined about the fact that she and the husband discussed investments and it was put to her that there were “significant or regular” discussions about investment strategies. The wife was adamant that that did not occur.
I find that the wife certainly told the husband about the investments but in relation to the questions of strategies and the like, I find that it was the wife who was the prime decision-maker in relation to the investment portfolio under her control.
I have also previously made reference to the school fees. One of the common practices of the private school system is the request for funds over and above school fees. In the case of the husband and the wife, there were requests from the children’s private school. The wife was candid in acknowledging that both parties from their separate resources made contributions to those campaigns.

The husband’s father’s estate

In October 2005, the husband’s father died. This was 10 months after the parties had separated. There is an agreement between the parties that various funds were provided from the husband’s resources prior to separation to assist his late father and that is now acknowledged as a debt due to the husband from his estate. However, over and above that, the husband will ultimately receive $123,685 directly from a distribution.
The wife’s evidence was that various funds were provided to the husband’s father during the marriage and she did not quibble with the fact that it was done. There was no specific evidence from the husband about what, if any, portion of the interest in the estate was related to monies advanced to his father as distinct from money lent. The boundary is blurred.
I propose to treat the interest in the estate as an asset in the pool for division but as part of the overall global contribution issue, to give some significant weight to the fact that at least some of that money has come in at the end of the marriage and there has been little or no contribution to it by the wife.

The D property

The parties separated on 17 December 2004 when the wife left the former matrimonial home at H and began renting a property. Ten months later, she purchased the D property and expended $1.87 million plus costs. There was no dispute that she sold shares to achieve that. That property with its current value has been included in the pool of assets.

The wife gives money to E

An issue of significant contention and one that I found very hard to understand was that in November 2005, that is, 11 months after separation, the wife provided to the parties’ daughter E the sum of just over $330,000 to enable her to put that sum towards the purchase of a home and to discharge a debt. The husband’s response was to insist that that sum be added back into the pool of assets. In his affidavit, he said he did not agree with his wife unilaterally deciding to provide funds to one child only and then to have the funds ignored. The wife’s evidence was that it was always her intention to provide financial assistance to the children from time to time and particularly to enable them to purchase a home. The husband’s evidence was that the parties had not purchased nor contributed to the purchase of a house for the other three children, nor had they purchased a car for two of the children.
When cross-examined about the issue, the wife said that it was her desire to assist the children in purchasing a home from her inheritance. The wife conceded that she had not discussed the issue of the payment to E with the husband at the time that it was made. The wife clearly indicated that it was a gift to E.
It is clear that the husband’s objection was the unilateral nature of the decision and that there was no common policy about financially assisting the children. It was very sad that the very day the issue was ventilated in the Court, E was apparently giving birth to the first grandchild of the parties. There is no suggestion of any relationship problem between the parties and E.
I shall return to the specific issue of whether this should be added back below.

The loan accounts in the trust

Another subject of some dispute related to distributions from the Billington Family Trust and more particularly, the loan accounts within it. The husband’s evidence was that E continued to receive distributions from the Trust. He said that insofar as E had her own income, the Trust met any taxation obligation arising out of the distributions. He expressed concern that as E’s income increased, her ability to receive Trust distributions would diminish because of the tax effectiveness of it. This subject was ventilated at some length when the proceedings resumed in October. An unusual situation occurred in that E received a refund from the Australian Taxation Office. The husband agreed that normally if there was any refund, it was paid back into the Trust. He said that was because of the fact that the Trust had actually paid the tax in the first place.
Throughout the proceedings, the husband had maintained that the loan accounts which were in effect, undistributed monies in the names of the children, belonged to them. He was asked if that was in fact the case, why was it necessary for him to indicate that E could retain the tax refund when it was her money anyway. His response was that that was not the way the financial matters had been conducted in the past. He said that both he and the wife administered the Trust that way.
This issue relates to whether or not the loan accounts in the Trust should be included in the pool of assets. It was put to the husband that he could resolve the dispute between he and the wife by simply paying out the loan accounts, rather than the Court having to determine the issue as to whether they were in the pool of assets or not. He was specifically asked whether he would be prepared to undertake to pay out the loan accounts without the children making any demand for them and he replied that he would not.
I have already made reference to the distributions from the Trust over a period of more than 10 years and it is quite clear that something in the vicinity of $1.7 million was paid into the Trust and that has given rise to a significant portion of the loan accounts.
The same position arose in respect of F Pty Ltd. The company paid the tax on profit but did not declare any dividends and that has also given rise to an interest in the company which the husband maintains belongs to the children.
The husband acknowledged that he was the person solely responsible for directions in relation to profit and that over $1,000,000 was marked to the children by way of distribution. Counsel for the wife endeavoured to link this distribution issue to that of the payment by the wife to E. The husband denied that there was any similarity between the two issues.
When asked about the question of ownership of these funds from the Trust and F Pty Ltd, the husband asserted that the children would in future determine how the entities are administered. Notwithstanding that they are two separate legal entities, the husband maintained that one is simply an extension of the other and the administration in the future will be a matter for the children.
However, the husband was asked whether or not if the children wanted to, they could exercise their legal right to the money and interestingly, the husband said that he hadn’t said that. In fact, the husband’s evidence was that he had no reason to believe that any demand would be made by the children.
“W12” was an exhibit in the proceedings. It is the content of two letters. The first is a letter dated 23 July 2007 from the wife’s solicitors to the husband’s solicitors in which the wife asserted that three out of the four children (the fourth being away) had expressed a strong view that they did not consider they had any right or entitlement to either of the entities. The letter was not tendered on the basis of the truth of that statement but on the basis that the statement was apparently made. The second part of the exhibit was a letter dated 11 September 2007 from the husband’s solicitors to the wife’s solicitors in response. The letter conveyed the husband’s view that he did not concur with the wife’s belief that the four children agreed that they wished to relinquish their interests in the entities. That also cannot be seen as a statement as to the truth of the proposition. Fundamentally, however, the letter went on to say:
Further, our client sees no benefit to the children, in the short or the long term, in requiring them to do so.
The letter dated 11 September 2007 went on to say that the husband’s position was that the children’s rights remain and they could be exercised if they chose to do so. Notwithstanding that that was what the letter said, when questioned, the husband said that he accepted that no child would ever sue for their entitlement and in fact, he said he would be horrified if they did so. He said that in the event that any child required funds, they would obviously approach him and if the funds were needed, then by agreement between he and the child, the funds would be paid.
This whole issue boils down to the question of whether or not the funds are property of the parties notwithstanding the way they are described in the books of accounts of the two entities. There is no doubt that the husband has control over those funds as his evidence indicates. I shall return to the specific issue of those funds below.

The husband’s contingent liability

The husband has a contingent liability in respect of the P Group. It currently stands are $413,125. The husband contends it should be included as a liability to be deducted from the assets in the pool. He produced a copy letter from the wife to a financial planner dated 19 June 2002 attached to which was a schedule showing the husband having a liability for a bank guarantee for P Group of $225,000 and a letter dated 25 June 2002 from the financial planner to the husband and the wife with a schedule, presumably in the planner’s handwriting, which just reiterates what the wife had said. There was no evidence otherwise about this. There was no evidence that the bank had called upon the guarantee. When looked at in the light of evidence about the financial strength and assets of the P Group, it is not surprising that the guarantee would not be likely to be called upon. The P Group has a healthy balance sheet. I shall return to the treatment of the guarantee below.
Whilst the P Group financials looked sound, the evidence was that all of the valuation exercise was done on the figures to 30 June 2006. When the case was part heard in July 2007, it stood to reason that the 2006-2007 figures would not have been done. Because of the benefits that the husband was entitled to, along with his capacity to make superannuation payments and distributions through the Family Trust, the wife’s solicitors asked for details. It transpires that letters of enquiry were sent on 18 July and 8 August 2007. Nothing from the husband’s perspective happened. He was asked about distributions subsequent to 1 July and his response was that he didn’t believe he had made any but he couldn’t recall. When asked how his income was therefore distributed, he said he didn’t know because it was still subject to an accountant’s review; it was “unclassified”.

Financial disclosure by husband

Several questions were asked of the husband about the post-July financial position and his response was that he did not know. I had not been made aware at that stage of the requests referred to in the letters that I have mentioned. Senior counsel for the wife asked for an admission that the husband’s accountants had written a letter on 2 August 2007 about the Family Trust’s gain for the year ended 30 June 2007 and that the response had only been produced at the hearing. On the basis of an objection as to its relevance, no admission was forthcoming from the husband. This required the wife’s solicitor to give evidence of the trail of enquiry from July to the date of the hearing. The significance of this material was the fact that the husband had possessed some detail about the Trust from his accountants and not produced it. His evidence before me was that the income was unclassified and that he could not remember details about distributions. In light of the requests from the wife’s solicitor from July, it is hard to understand the husband’s rather flippant attitude to the obligation of disclosure. He is the Managing Partner of the P Group and I find that he managed the Family Trust.
Having watched the energy expended on the financial issues in this case and in particular, the involvement of the husband’s accountants, his shadow expert and knowing that the P Group had its own internal accountants in the exercise undertaken by the single expert of the valuation of the husband’s interest in the P Group, the husband’s attitude about the 2007 figures is not acceptable. What saves the husband from stronger criticism is firstly the quantum of the valuation of all of the assets was not really in dispute and secondly, he acknowledged that his ongoing drawing from the P Group will be much the same as it had been in the past. It is a significant income and very relevant to the issue of the factors under s 75(2) of the Act.
The same issue gave rise to a dispute as to what particular value should go into the pool of assets. This issue was clouded because of a lack of evidence. In the joint schedule of property and liabilities, exhibit C2, it was suggested by the wife that I could add the 2006 balance to the increment for 2007. I am uncomfortable about what exactly the figure should be and doing the best I can, I have accepted the husband’s figure of $187,157 on the assumption that distributions of earlier income have been made. I have included them in the loan accounts issue in any event.

The wife’s shares

The dispute between the husband and the wife in respect of her shares was over an amount of about $100,000. The husband says that the figure should be $5,831,749 and the wife says $5,731,817. On 15 August 2007, the wife sold shares netting her $99,932.33 and deposited that sum in her Macquarie Bank account. On 12 October 2007, the balance of the Macquarie Bank account was $112,854.22. In her column on the aide memoire or “balance sheet”, the wife included the $112,854.22. To add the extra sum into shares amount would be double dipping. The correct figures therefore are:
Investment account $112,854
Shares $5,731,817

The value of the shares in the P Group

The value of the shares was a significant dispute. Because of the availability of financial data, the valuation was done on the figures up to 30 June 2006. That is now almost 16 months out of date. The disparity between the two positions here, in a pool of over $16 million was $87,972.
The husband says that the shares should be in the pool at $604,110 and the wife says $692,082.
The Act does not set out a method for the valuation of assets. I am obliged to exercise a discretion in each case as to the method of the valuation which is most appropriate. In this case, the only evidence that I permitted was that of the single expert. I had earlier refused to allow an adversarial witness sought by the husband and I shall not go over those reasons which I gave in writing in July 2007. Counsel for the husband said that I was entitled to accept a different valuation based upon accepting the same methodology but with a different multiplier. For reasons which I shall now set out, I reject the husband’s proposed valuation. This is not a case in which I need to take that course of action because I accept the evidence of the single expert.
The single expert was Ms W. She initially said the parcel of shares was worth $786,937. By letter dated 22 October 2007 (bearing in mind this case started in July and was part heard until October), Ms W changed her valuation to a lower figure of $692,082. The reason for the change was explained on the basis that Ms W understood that the interest on the loans by the principal directors was accounted for in the consolidated profit and loss account. Ms W said she understood that the husband received a reasonable return for his investment of $375,000 in the business. Ms W said that in July 2007, she had discussions with the husband’s “shadow” expert and changed her interpretation of a letter sent by the husband’s accountants to the husband’s solicitors on 7 March 2007. She said that the P Group figures had been adjusted to not reflect interest on directors’ loans as an expense but that the interest had been taken into account. She said her discussions in July with the “shadow” expert enabled her to do an analysis of salaries and wages and that confirmed that the interest had not been taken into account at all. It was put to Ms W that that is exactly what the March letter had said but Ms W was adamant that that was not how she interpreted it. The importance of this issue was that it also affected the credibility and expertise of the witness whose dealing with the multiple to be applied to the EBITDA was the centre of the valuation dispute.

Ms W was challenged about her checking and efforts but she maintained that she had interpreted matters as she had seen them. She explained the process that she followed and the organisations that she had spoken to for the purposes of determining the appropriate calculations. For example, she was asked about whether she had considered an interest rate of 12.5% on the cost of replacing the husband’s $1.5 million loan in the books of account with debt factoring interest. Ms W said she considered 11%. These are all subjective judgments by an expert and her credibility was therefore important.
The $1.5 million loan is a non-current shareholder loan but rather than remove it as one might normally expect, Ms W left it as a liability because she said she was satisfied it supported the working capital of the business.
Essentially, the valuation issue in this area revolved around the multiple which Ms W found to be 3.65.
Ms W was challenged about the comparables that gave rise to the average multiple of 3.65. The first challenge to the comparables was to a laser and allied cutting service. Ms W said that this company provided professional services to perform particular tasks. That is, a similar method of providing services as would be provided by a professional firm. She pointed to the skilled workforce but acknowledged that the “deal value” in 2004 of that service was $23.5 million. That of course was outside the range of comparable transactions that she relied upon, namely $2.9 million to $10 million. She denied putting that EBITDA in just to get her multiple of 3.65. She acknowledged that without the laser cutting multiple in the equation, the average of the other four multiples she considered would have been distinctly different. In her written report, Ms W said that the December 2006 BIZ Exchange Index for companies with turnover of $5 million to $15 million in the “Personal and Business Services” area was between 2.83 and 5.87 times EBIT. However, she said she had done some more research on the BIZ Exchange Index for September 2007 quarter and that gave her range support.
Ms W was challenged that she had used the wrong category in December and repeated it again in the recent quarterly figures. She acknowledged the error in the December figures. The consequence of that was that the fifth comparable did not fit. Notwithstanding these apparent errors, the issue was still a subjective one. It was more than just a mathematical exercise; it required the application of subjectivity to come up with a figure based on comparables that supported the use of ultimate capitalisation multiple. Each of the comparables used and even excluding those which were not really comparable, still put the witness in a position where she had to subjectively determine the point. According to the evidence, there were more issues to consider than just the comparables. Ms W said the BIZ Exchange Index supported the range into which the multiple she wanted to use, fell.
Ms W produced the newsletter called “[…]”in which a report was made of a seminar facilitated by the husband in which he was reputed to have said the most commonly accepted valuation method was Earnings Before Interest Tax (EBIT) times a multiple of 4 to 8. Ms W initially used an EBIT multiple of 3.52. With the $165,000 amendment arising out of the misinterpretation of the interest issue, the EBITDA multiple, translated to an EBIT, came to 4.66 and that fell within the range not only of what the husband himself said, but also to what Ms W had referred in item 6 of her appendix 8 attached to her affidavit.
Having then determined from the books of account what the implied goodwill would be, namely $3,302,964, Ms W said that the calculations showed after-tax maintainable profits of $635,797. That goodwill was 5.19 times the maintainable profit and that according to Ms W was “within an acceptable range”. To achieve that, Ms W had determined what assets were surplus and what were needed for the business to function. She was questioned about why she had adopted various stances. For example, she was challenged that “fees in advance” would be in the bank and therefore, she should not put cash in the bank into that calculation as a surplus asset as well. Her view was that the cash at the bank was surplus to the needs of the business but the fees in advance would have to repaid at any time the business was sold. The same logic applied about the provision of tax as against the provision for the deferred tax liability.
Ms W came across as having examined the financial position carefully. She readily acknowledged the need to make the interest adjustment when the position was clear in her mind. When challenged about her figures, she conceded there was an error but that that did not alter the ultimate range of possible outcomes and she was subjectively comfortable with the calculations she had done which put her well within the range.
Counsel for the husband said that Ms W did not justify her multiple of 3.65 and in fact on the interest figure she had tried to “fudge” the figures. He said she had erred in the BIZ Exchange value description twice. However, in respect of both of these matters, I find the exercise was not one of simple mathematics but rather, it required the subjective approach which was undertaken and which was tested objectively. I find that the assessment of Ms W was proper in the circumstances and that the multiple of 3.65 is the appropriate one. The valuation of Ms W of $692,082 is therefore the appropriate amount to add to the pool of assets.

The trust

I have already referred formally to the Billington Family Trust.
Single Expert Witness Ms W examined the balance sheet to 30 June 2006 and made some adjustments for share valuations.
Ms W valued the trust at $103,895.00. That figure is determined by the value of the assets of $1,089,842 less the beneficiary loan accounts in the names of the children of $297,471, the inter-entity loan by F Pty Ltd (which is picked up in the asset pool under that entity’s value) of $335,531 and the debts of the trust to the husband and wife totalling $352,945.
Thus, regardless of the dispute about the beneficiary loan accounts, the trust itself had assets worth $103,895 at 30 June 2006. For reasons to which I shall turn, I have increased that to $187,157 being the husband’s suggested value as at 30 June 2007.
The books of account include the loans by the husband and wife and the total of $352,945 has been added to the pool of assets. The wife will “transfer” her $5,000 loan to the husband.
The husband maintained that only the direct entitlements of he and the wife as recorded should be added to the pool.
The wife maintained that the children’s beneficiary loan accounts should be added in.
It is to be remembered that the husband said in evidence in chief that his desire in setting up the trust was to safeguard family assets as well as to deal with income in a tax effective manner. That is effectively what has occurred. Control becomes important in this case. The husband not only had a capacity as trustee in his role as a director with the wife of W Pty Ltd but he was also a beneficiary of the trust. When tested about all of this, he said that notwithstanding that the wife was a director, the majority of decisions fell to him. When the issue of control therefore was put to him, he said he did not dispute that he in fact had that control. He was emphatic however that the assets of the trust belonged to the trustee in its capacity as trustee and the loan accounts belonged to the children. I have earlier mentioned that none of the adult children has challenged the trustee nor sought to benefit directly in recent times. Most importantly, the husband said he had no expectation of that occurring. The husband has the ability under the trust deed to distribute to himself. This trust is a simple discretionary family trust, the trustee of which is a company under the control of both the husband and the wife. Apart from the husband and the wife, the only other beneficiaries are the adult children.
The jurisprudence of this court has stood the test of time and the principle applied has been supported by the High Court of Australia in Ascot Investments Pty Ltd v Harper and Harper (1981) FLC 91-000.
There is no question here of a sham. However, as far as the concept of an alter ego is concerned, the assets of the trust are in reality the property of the husband.
Discretionary trusts in Australia are vehicles used for the very reasons articulated by the husband. The words of the husband about not being sued nor expecting a demand from the children have a resonance about them similar to what was said in Kelly and Kelly (No. 2) (1981) FLC 91-108.
In R v R (unreported) delivered 27 April 1990, the Full Court said:
77.However, once again we emphasise that the question whether the property of the trust is in reality, the property of the parties or one of them, or a financial resource of the parties or one of them, is a matter dependent on the facts and circumstances of each particular case including the terms of the relevant trust deed.

In Ashton and Ashton (1986) FLC 91-777, the Full Court said at 75,652:
It was conceded throughout that the husband was in full control of the assets of the trust, and the evidence made it clear that he was applying them and income from them as he wished and for his own benefit. Having regard to the admissions made during the hearing, there are good grounds for saying that the trust is no more than the husband’s alter ego.
In Ashton, the Full Court went on to say that as a result of the powers, the discretion the husband had, the husband’s power of appointment and all of the attributes that went with it, for the purposes of s 79 of the Act, that amounted to de facto ownership of the property of the trust.
A contrary view about treating the assets as property of the husband was taken in Webster and Webster (1998) FLC 92-832 where the Full Court applied Ashton and Ashton and said:
109. … given that it was the intention of both the husband and the wife that the children would have an interest in the property or income of the trust and the undisputed factual matters to which we have been referred by senior counsel for the wife, it was open to the trial judge in the somewhat unusual circumstances of this case, to conclude that the trust property should be taken into account in the proceedings as a financial resource of the wife and not as her property.
Because of the issues to which I have referred about the husband being a beneficiary, his control and the lack of any prospect of a child making a claim to any funds, I do not find that it would be appropriate in this case to treat the trust as a financial resource. Added to that is the fact that all of the funds in this trust have come from earnings of the husband and subsequent investments. To quarantine these loan accounts would not be just and equitable to the wife.
Counsel for the husband said that orders should not be made because the children were not parties and no notice had been given them of proposed orders that may affect their rights. Against that proposition, I have the controversial views of both parties about what their children wanted. One thing is certain, the children were not seeking orders for the trust to pay them their entitlements nor was the husband expecting that to occur.
The fact that notional distributions of income have been made is irrelevant because notwithstanding his protestations that these amounts are the property of the children, as I have said, the husband treats them as his own and the children are unlikely to make any call upon them.
Accordingly, I shall add $297,471 to the pool.

The shares of the children in F Pty Ltd

The same factual considerations apply to the shares in F Pty Ltd concerning the loan accounts and interests in the trust. The husband in his evidence did not distinguish between the two and in fact saw those entities as being an integral part of the financial planning of the family. As with the trust, he did not expect that the children would take any course of action that would affect F Pty Ltd.
For the same reasons as I have set out in relation to the trust, the full value of the shares in F Pty Ltd should be added back to the pool.

The funds advanced by the wife to E

I earlier dealt with the question of the $330,000 gift to E.
On 14 November 2005, the solicitors for the wife wrote to the solicitors for the husband and volunteered that the wife was in the process of providing assistance to E in respect of the purchase of the home. One month later, on 13 December 2005, the solicitors for the husband responded saying that they were not aware of any such assistance being provided and simply added that those particular funds “will be taken into account in the current property proceedings”.
Counsel for the husband said that notwithstanding that there may have been distributions to the children during the marriage, once they had separated, their property was deemed to be “joint” and as a consequence, the wife could not make distributions without consultation. He said that this was a significant amount and to ignore it would be effectively treating the payment as a gift by both parties which would be inequitable in the circumstances. Counsel made it clear that his client was saying that it was the actions of not consulting him about which he was complaining. Having regard to what I have just said about the correspondence between the parties, there was clearly consultation but more importantly, disagreement. Senior counsel for the wife said that this was not a capricious or wasteful act and E was the daughter of a wealthy family and hence, entitled to share. He pointed out that it was important to note that this payment from the wife to a very large degree came from the wife’s portfolio of assets which was largely made up from the inherited money and the subsequent investments therefrom. He noted that the husband had given away significant sums of income in the family trust as a result of which the children had benefited and that this was similar. He said, justice and equity required the court to look at those two different scenarios. As I have already said however, I propose to add back the whole of the trust as well as the shares in F Pty Ltd.
In Jones and Jones (1990) FLC 92-143, the trial judge had found that the husband had dealt with a significant sum of property without consultation with the wife at a time that separation had just occurred and made distributions to the children. The trial judge said that the husband should have at least waited because the parties were separated and that there was likely to be dispute concerning the proceeds. The Full Court however, simply said that this was not a case in which such moneys should be added back. The logic from the decision is not entirely clear. More clear is the Full Court judgment in Townsend and Townsend (1995) FLC 92-569, in particular the judgment of Nicholson CJ. In that case, the husband sold a taxi licence and disposed of some of the proceeds as well as lived on them. His Honour said at 81,652 and 81,654:
At about the same time the husband made arrangements for the sale of his taxi and also attempted to sell the matrimonial home. He was unsuccessful in relation to the sale of the matrimonial home but he did sell the taxi and received in respect of the taxi a sum of $148,000 which he deposited in the National Australia Bank. Thereafter, the husband did not work and it appears that he used the moneys obtained from the sale of the taxi largely for his own purposes although, to some extent, also for the purposes of the children.
…
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
Ultimately, the inclusion of an asset into the pool for division is a discretionary matter. The division of the assets in the pool or any of them has to ultimately be based upon what is just and equitable and as such, that same fairness principle must apply in respect of what is added into the pool. I have no doubt that the wife had every right to spend the money as she saw fit to assist E. However in this case, as it is my intention to add back into the pool the trust, the payment to E can only be seen as a premature distribution by the wife. That is particularly so in circumstances where the husband through his solicitors made it clear that the funds were to be added back in the ultimate property dispute. Accordingly, I propose to add back those funds.

The Husband’s Credit Card

There was a dispute between the parties about which there was no significant evidence but in the joint schedule of property and liabilities dated 23 October 2007, two distinctly different figures for the husband’s credit card liability appeared. The husband suggested that I should allow $65,466 whilst the wife said $34,366. The difference between the two figures is in the timing. The husband’s position was actually taken as at December 2006 whilst the wife’s figure was right up to date. The wife’s senior counsel tendered “exhibit W19”, the bank details, showing as at 21 October 2007, the figure was as she suggested, $34,366.63. It is difficult in circumstances when one is trying to obtain amounts right up to date. Assets such as the P Group figure have been determined as at 30 June 2006 whilst others use a current figure. Whilst the reduction of the credit card subsequent to December 2006 has presumably come from the husband’s income, it is also from the professional practice which is an asset to which the wife has contributed indirectly in a significant way over many years. To some extent, it is the same logic as the justice and equity principle relating to the adding back of the money paid to E. Accordingly, I propose to use the updated figure for the purposes of the pool of assets.

The Husband’s Contingent Liability in Respect of the P Group

I have earlier set out the history in relation to the contingent liability of the husband. Having regard to the fact that the P Group has significant assets and there has been no recent call upon the husband to pay, notwithstanding the fact that the liability was acknowledged by the wife in 2002, it is not realistic to expect that the husband will have to pay that particular sum in the foreseeable future if at all. As it says, it is a contingent liability. If the husband ever sold his interest in the P Group publicly or to the other partners as was certainly apparently contemplated, rather than the liability be repaid, I have inferred that the husband would have either sought a release from the guarantee or alternatively at least an indemnity from the other partners. The partnership agreement between the partners was tendered in evidence and I was invited to read it in relation to the question of how the partners dealt with the question of the acquisition and disposal of interests. I have not been able to find anything in the partnership deed indicating that there is any obligation to take over and/or pay out such a contingent liability.

Counsel for the husband conceded that the highest he could put the argument was that nothing definite could be said about it and that if I was not prepared to put the liability in the balance sheet as a fixed sum, I should take it into account under s 75(2) of the Act. At least at that point in time, there is an acknowledgment that the husband could be called upon to pay the liability. I do not accept that there is any realistic possibility of that occurring but I will take into account that the husband may have to work out some commercial way for his then partners to relieve him of that contingent liability. In my view, it is not something which is likely to be a significant problem for the husband.

Capital Gains Tax

The taxation issue has two aspects. The first relates to the sale of shares by the wife subsequent to the adjournment in July resulting in a capital gains tax liability of $17,889. Counsel for the husband said that it should not be included as a liability on the basis that the wife did not need to dispose of the shares and she had done so “just to bolster her bank account”. Senior counsel for the wife however said that no matter what one did, there was a reality about the situation and the obligation had arisen. The wife was entitled to have the cash in the bank account and as such, the liability should be included.
With this issue I have little doubt that it should be included. There was no suggestion that this action of the wife fell within the principles of Kowaliw and Kowaliw (1981) FLC 91-092 per Baker J. The question of how the wife dealt with her money can otherwise not be a subject of criticism if there is no wastage or irrational behaviour. Presumably, had she left the shares where they were and significant dividends were paid on them, a tax liability would arise. Whilst the quantum of the liability may be different in each case, there is a distinct reality about the fact that the wife now has to pay the tax and in those circumstances, I propose to include it as a liability to be paid.
The second aspect of the capital gains tax issue is entirely different. It relates to the question of potential tax liability on the wife’s shares. The quantum of tax has been agreed at $483,279 should those assets be liquidated. What is not agreed is whether or not there is such a liability at the moment or likely to arise in the future. Accordingly, the wife wants the whole of the liability allowed and the husband wants nothing allowed.
Counsel for the husband said that I had to look at the likelihood or expectation of the capital gains tax event arising. In his cross-examination, counsel for the husband elicited from the wife that she saw herself as a long term investor rather than a trader. That gave rise to the question of what was the prospect of the shares being realised in the future. In relation to the question of the settlement arising out of any orders that I make, the evidence is that the wife would first sell the property at H, followed by the B property before she would dispose of any of the shares. Counsel’s logic was that it is therefore most unlikely that the shares would be sold because any obligation that the wife had towards the husband would come out of the two real properties first. The argument was therefore that there would be no capital gains tax event likely. The history in this case shows that the wife did sell shares but usually to buy or renovate a house and when one looks at that history there has been nothing of any great significance in recent years which has required the disposal of shares to undertake such a project. Counsel therefore urged me not to take the capital gains tax into account at all because there was no evidence to suggest that any capital gains tax event would be likely to arise. Senior counsel for the wife highlighted the fact that the inclusion or exclusion was a matter of discretion but, as he pointed out, part of the difficulty is that whilst the shares themselves have a finite value as at the date they are placed into the balance sheet or pool of assets, if one is comparing “apples with apples” it would be unfair not to take into account the potential for future tax liabilities because if the other assets in the pool included cash, the real values between the two assets is significantly different. We know what the value of the cash is today and it will always remain that way but there is significant uncertainty about the future value of the shares not only because of the tax but also because of the prospect that the capital value might change. Senior counsel urged me to take a course of allowing the capital gains tax because on any view, the shares were impregnated with that tax. If I rejected that view, he said that I should at least take it into account under s 75(2) of the Act.
The Full Court examined the matter in Rosati and Rosati (1998) FLC 92-804 and set out the now well known passage as follows:
6.36 It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s 79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.
All of those general principles however, are no more than guidelines and the court must exercise its discretion as the fairness of the case requires. On the evidence, I am satisfied that the wife does from time to time dispose of shares but she is not a trader in the sense of turning over shares annually for short term profits. On the evidence, I am not satisfied that she would be likely to realise a significant portion of the shares in the foreseeable future even if she realised some of them. I agree with counsel for the husband that on the evidence, it is unlikely that the wife would dip into the shares to satisfy any order that I make. On the evidence, I could not be satisfied that all of the shares, or any significant part of them, will be sold in the short term, or for that matter, in the next five years.
As I have said, the shares are impregnated with tax. However, I do not know whether the amount suggested by the wife is a figure which would be incurred if all of the shares were sold in the one year and if not, what would happen if they were sold progressively over a number of years. I do not know, nor could I predict, changes of income let alone taxation rates. All of those problems contain so many variables that even a formula approach would be difficult and in any event, in this case, it seems unnecessary having regard to the fact that I am satisfied that the wife does not propose to sell the shares in the foreseeable future.
Having said that, I return to the argument that senior counsel for the wife raised namely that the shares have been put in at their current market value alongside other assets which are not impregnated with any cost or tax and that then creates some unfairness if the wife is bearing the risk of such expense being incurred in the future. In my view, the appropriate way to deal with that problem is to treat the risk as a significant factor and deal with it under s 75(2) of the Act. In this case, that is the only course of action that I see as realistic in the circumstances and it is the one that I propose to take.

The Accounting Fees Incurred by the Husband

In the scheme of things having regard to the pool of assets, one might wonder why there was a dispute over $10,835 for half of the husband’s accounting fees.
The husband’s argument was that as a result of the appointment of the single expert Ms W, he was required to provide significant information for her valuation purposes. His evidence was that he was not capable of dealing with the matters himself and accordingly, passed the request onto his accountants to deal with the issue. They in turn prepared bills of account and the husband’s argument is that the wife should pay one half.
Two issues arise for consideration. The first is whether or not in the circumstances, the husband had access to resources within his own business practice that would have avoided the incurring of accounting fees and secondly, whether what was done was necessary in the circumstances by that accounting firm.
In relation to the first issue, the husband asserted strongly in cross-examination that his in-house accountant did not have the capacity to deal with the issue and to ensure that matters were dealt with properly, he passed the request onto his accountants. During the hearing, the husband was handed a list of items that he was requested to provide and to mark those that he said were outside of his capacity or control such as would require the assistance of his accountants. Some of those items were in fact the provision of financial documents that I would have thought were readily available to him and even if they were not, they were documents that were easily preparable by his accountants because the records had already been completed in previous years. The difficulty with this exercise is that the evidence is unclear about what would be appropriate for the accountants to charge because items were outside of the husband’s expertise as against those which should not have required any accounting expertise.
The second issue to a large degree, is an extension of the first. The records show that in the fees charged, a number of expenses arose because of different attendances by different people and just exactly why that was necessary was not clear on the evidence.
I do not accept the assertion by senior counsel for the wife that there was absolutely no justification for the husband adopting the course of simply handing the responsibility to his accountants. There are a number of entities involved in this case and the very fact that Ms W requested information other than just documentation suggested that the task was not simple. That is not the dilemma. The problem here is that I am not able to be confident that the fees charged were reasonable in the circumstances because I have no idea whether the task was extensive nor whether it was reasonable for various professionals to be involved in the exercise. In regard to those issues, I do not believe that I could allow the whole of the costs nor could I by some formula method, determine as a matter of discretion, some amount less than the full amount claimed. Having regard to the fact also that this is not a significant sum in the scheme of the total pool of assets, I propose to simply ignore that item.

The Extra Fees of the Single Expert

Another of the disputes between the parties was the fact that they incurred extra fees for the single expert other than those for which they were jointly responsible by virtue of the court order.
Counsel for the husband argued that the bulk of these fees only related to the time that Ms W spent with the husband’s shadow expert Mr G. It must be remembered that I refused permission for Mr G to be an adversarial witness. In May 2007, an application was made to Le Poer Trench J for permission to use an adversarial witness and his Honour left that issue for determination by me. As a matter of prudence, the husband required Mr G to carry out all of the work in anticipation that that might be necessary for the purposes of the trial. When the case commenced in July, the wife adopted the figure provided by Ms W which as I have earlier mentioned, was substantially reduced after she had a discussion with Mr G. It is clear that the amount claimed as a liability only relates to the time spent with Mr G.
Senior counsel for the wife pointed to the fact that at all times, the shadow expert was disputed as being necessary and that her argument had been vindicated by virtue of the orders that I made in July. He said that therefore, the fees raised by Ms W and incurred by the parties were wasted because the exercise was unnecessary. He said that Ms W did not change her evidence as result of discussions with Mr G. I reject that. In cross-examination Ms W said that it was because of her discussions that she reread the material and then undertook the course of action that ultimately resulted in a significant reduction in the value of the husband’s interest in the P Group.
The starting principle in the Family Law Rules is that subject to any order to the contrary the parties equally pay for the costs of the single expert. Notwithstanding the refusal to include the adversarial witness, had the exercise not been undertaken between Mr G and Ms W, it may have very well have been that the issue would have been determined during the running of the hearing. That would have added extra costs.
In my view, this is a case in which the parties should equally contribute towards the costs of Ms W because the discussions ultimately resulted in a correction of the figures. Accordingly, I propose to include that as a liability.

The pool

The exhibit C2 is a schedule prepared by the parties as an aide memoire. It sets out the agreed and disputed figures as well as all items whether they were in the pool for division or not. I am using that document and will set out the final pool below.
PROPERTY
Assets
The H Property  $2,400,000
The B Property   $880,000
Wife’s shares   $5,731,817
Wife’s Macquarie account   $112,854
Wife’s Westpac account   $18,655
Wife’s MLC policy   $22,500
Wife’s car   $10,000
The D Property  $1,875,000
Shares in P Group   $692,082
Loan account P Group Services Pty Ltd                   $158,412
Loan account P Group   $375,000
Husband’s shares   $163,125
Billington Family Trust (husband’s and wife’s
accounts)   $352,945
Billington Family Trust   $187,157
Billington Family Trust loan accounts   $297,471
Husband’s car  $5,000
Husband’s Westpac accounts   $12,556
Husband’s MLC policies   $78,883
F Pty Ltd   $404,031
Husband’s superannuation  $1,372,920
Wife’s chattels   $100,000
Husband’s chattels   $20,000
Debt owed by husband’s father   $35,141
Husband’s interest in father’s estate   $123,685
O Lodge  $8,167
E’s received money   $330,888
Add back legal fees:
  Husband   $334,011
  Wife   $209,079
Deposit held by local council  $5,000
TOTAL  $16,316,379
Liabilities
Husband’s credit cards   $34,366
Loan to P Group   $345,367
Loan to Billington Family Trust   $16,085
Wife’s anticipated tax liabilities   $51,429
Wife’s Westpac loan   $50,000
Husband’s Westpac loan   $41,196
W Pty Ltd overdraft   $219,000
Husband’s CGT liability   $23,552
V Company fees   $18,620
TOTAL   $799,615
TOTAL PROPERTY  $15,516,764
FINANCIAL RESOURCES
Wife’s interest in father’s estate  $1,632,501
Husband’s long service and other leave
entitlements   $123,779
TOTAL  $1,756,280

contribution

In relation to the second step in the four step process, s 79(1) of the Act says that the Court may make such order as it considers appropriate. However, the Court is not to make an order unless it is satisfied that it is just and equitable to make it. In considering what order should be made, the Court is obliged to take into account under s 79(4):
(a)      the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)      the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)      the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)      the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)      the matters referred to in subsection 75(2) so far as they are relevant; and
(f)       …
(g)      …
As has been said many times, the exercise is not one which is strictly mathematical. The determination must be guided by the principles that I have just set out.
Looking at the pool of assets, what is strikingly clear is that as a result of the significant inheritances from the wife, the parties were able to include in the pool, the property at H, the B property, the D property, the wife’s significant share portfolio and the investment account.
What is also strikingly clear is that the assets in the pool that have come from the direct efforts of the husband are what might be described as the P Group, the husband’s superannuation, his savings and his shares.
However, the husband’s profession which gave rise to the significant capital asset including the flow-on effects into the trust and F Pty Ltd could only have come about as a result of the wife assisting in an indirect way by enabling the husband to obtain his qualifications, her significant role as a homemaker and parent and the joint efforts of the parties in respect of what work they did on various properties. There is clearly an overlap but in respect of the contributions subsequent to separation, the earnings from the P Group and indirectly therefore the Billington Family Trust and F Pty Ltd must also be connected to the efforts of the husband and the wife during this long marriage. The one exception to that relates to the husband’s interest in his father’s estate which although less than 1 per cent of the total pool, is still significant because the wife had made no contribution towards it. I have taken it into account in the way in which the Full Court did in the case of Bonnici (1992) FLC 92-272, 15 Fam LR 138.

Mr Richardson of Senior Counsel for the wife said that if I used the “but for” approach, it is abundantly clear that the contribution by the wife makes it obvious that the parties could not have had what they now have were it not for her inheritances. That must also be said of their early years in relation to the question of having unencumbered properties as a result of those inheritances. Whilst it is not an appropriate way to determine the matter strictly, if one looked at the values of the inherited related assets, about 28 per cent could be said to have not come from the inheritances. If one then took the view that there were modest contributions by the husband and the wife as I have set out earlier, then allowing a further 2 per cent of non-inheritance contributions, one is still left with the fact that there is a direct contribution to this pool of about 70 per cent from the inherited funds.
The husband and wife contributed from their separate incomes various sums towards the support of the family. There would be little justification for a further adjustment as a result of those contributions. The indirect contributions clearly show that the wife was the major homemaker and parent whilst the husband was out developing his practice giving rise to not only the significant income that has been earned in the last few years but also the value of the asset as capitalised in the pool.
It is important to examine not only the values of the percentages, that is the underlying values, but also the disparity between the parties in that distribution. For each 10 per cent added to one pile is a 20 per cent gap between the parties.
If I accepted the wife’s position as put, there would be a huge gap between the parties and should I accept the husband’s position, there would be effectively none. The latter would not recognise any finding that I have made as to disparate contributions.
Thus, taking into account the financial and non-financial contributions in all of the matters referred to in s 79(4) of the Act as I have applied them to the facts that I have found, it is my view that there is a justification for a distribution of the assets based on contribution as to 70 per cent to the wife and 30 per cent to the husband.
In respect of the third step, I am obliged to take into account the matters set out in s 75(2) of the Act. That provision says:
(2)      The matters to be so taken into account are:
(a)      the age and state of health of each of the parties;
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
(e)the responsibilities of either party to support any other person;
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l)the need to protect a party who wishes to continue that party's role as a parent;
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)       the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party;
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
Of those matters that are relevant, I say that I accept that the husband will not work for many more years and that it is improbable that the wife will either obtain employment at her age or have the need to do so. There was some evidence about the respective health positions of the parties but in my view, it does not affect the financial issues that I have to determine.
The income of each party is as I have set it out. It is imprecise but it is clear that the husband has a greater income than does the wife.
When considering the property of each party, I have taken into account that the wife has more property as a result of these orders and also that her financial resources are much greater than the husband particularly having regard to her interest in her father’s estate albeit that it must be considered of limited immediate use to her because of the potential time she has to wait and the risk that she may not receive it. On the other hand, the husband has the benefit of accrued employment benefits such as long service leave and those will also come in at some stage in the future and they have not been included as an asset for division within the pool.
I have also taken into account that a significant portion of the husband’s direct and indirect income comes from the P Group and by virtue of the capitalisation of the value of that group, his income has already been counted and taken into account to some extent. Having said that, I find that there is still a large difference between the actual income of the husband and the wife and I accept that anything taken from the husband in a capital sense could be made up by virtue of his ongoing high income from the business.
There can be little dispute that each party lives an affluent lifestyle and is able to have their commitments met by the capital and income.
At the request of the parties, I have taken the husband’s superannuation into account in the pool as if it were a cashable asset. Neither party addressed me on that issue. The husband is still some years away from retirement and will have the capacity from his large income to build on that superannuation. That is a significant factor that favours the husband.
It is important not to ignore s 75(2)(h) and (j). Although the sub-paragraphs refer to the maintenance issue, s 79(4) refers to s 75 as a whole. This provision is a timely reminder in this case that the wife’s employment, income, encouragement, assistance to the husband and her role within the family enabled the husband to undertake and obtain his current qualifications which I find were in large part, the basis of his ability to have the successful business interest that he has today. That is also very much linked to the income and earning capacity of the husband.
This is a very long marriage and its duration has meant that the wife could not now be expected to alter her financial course by taking alternative employment. That will not be necessary in any event in this case having regard to the income that the wife will have from her investments.
I have also taken into account that the husband has now taken on an obligation which he did not have prior to separation and with a very young child, he will most likely have that financial responsibility for more years ahead than his probable working life. However, having regard to the financial position of the husband, I find that he has the capacity to manage that responsibility without difficulty.
In terms of the orders that I propose to make under s 79, there is a significantly greater portion in the hands of the wife than the husband by virtue of my findings relating to contribution. I have taken into account that the husband has control of the trust and F Pty Ltd and that there is no likelihood of a claim by the adult children. Any disparity between the parties will largely be made up by the husband’s capacity to generate income from his business and to use that in a tax effective way which the wife cannot do with her share portfolio.
I have taken into account in saying those things that the husband is conscious that if he does distribute his income through the Billington Family Trust in the future, it may not be tax-effective for him. That however is something within his control and I find that even without that tax minimisation capacity, his income is still significant. I have made an allowance in that statement for the capitalised component of the income in the P Group.
Accordingly what is evident in the balancing of these factors as they apply to each party, is that even with the disparity of capital, the husband is still in a very strong position to reduce if not make up that disparity. Having regard to the disparity of capital including the mix of assets, it would not be just and equitable to make any further adjustment and I decline therefore to do so.
In respect of the fourth step, I need to step back and determine whether the division I have made is just and equitable in the circumstances.
On the basis of those calculations and on the indication about what each party desires to retain, if the wife wishes to keep the property at H, she will have to pay the husband something in the vicinity of $700,000. I shall do the precise details in a moment. In my view, having regard to the evidence of the wife about what course of action she would take to raise money to pay the husband, there would either be no capital gains tax or an amount that would be of limited significance and that that would not make a large difference to her capital resources. It is likely to be an amount which would not significantly alter the capital entitlements of either party from the pool of assets nor alter the percentage divisions that I would have determined in steps two and three above.
That division would leave the wife with the significant portion of the real estate assets depending upon what she decides to do with the property at H and the husband would be left with the business interests, his shares, the family trust and F Pty Ltd, his savings, his father’s estate, his superannuation and his long service leave and other benefits. I have also taken into account that of the pool of assets, the wife has already distributed $330,000 to her daughter E and has paid over $200,000 in legal fees. She has to find money to pay tax and the Westpac Bank loan. Even taking into account those matters, each party is still in a strong financial position to secure their respective futures.
In taking into account all of those factors, there is no justification for any further adjustment.
Accordingly, I say that having regard to the matters that I have arrived at in steps two and three, the division that I have decided as to 70/30 in favour of the wife is just and equitable in the circumstances.
The parties left me uncertain about insurance policies and I have determined my calculations on the basis that each party retains their respective MLC policies. I have also allocated the modest sum currently held by the local council to the husband. If that was not intended, the parties can make the necessary adjustments by agreement.
I have ordered the husband to repay the wife the V Company account but I have taken that into account in the calculations.
Accordingly, the calculations appear as follows:
The Pool is $15,516,764
70% to the wife is $10,861,735
The wife retains assets (including the money paid out to E and also her paid legal fees) of $9,290,793
The wife however carries liabilities from the pool totalling $101,429
Thus, the wife in reality receives $9,189,364 of her entitlement and as a consequence, the husband owes her a further $1,672,371.
The wife is to also be repaid the V Company fees of $18,620, paid by her which I have allowed as a liability in the pool.
Accordingly, the husband is to pay the wife $1,672,371 and $18,620 which totals $1,690,991.
Looking conversely at what the husband receives, I am satisfied that the division according to what I have earlier said is just and equitable to both parties.
The husband will have the opportunity to retain the H property on the basis that he pays to the wife the requisite sum set out in my orders. The wife sought a default order that required vacation by the husband and a transfer to her but I have declined to follow that path. If the payment to the wife is not made as required and the wife and husband then agree for the wife to retain the property subject to a payment by her to the husband, the parties can do the calculations. However if there is any dispute about that course of action, I propose the property be auctioned and the parties can bid. If that becomes the necessary course, I have made provision for an agent appropriately appointed to have the power to determine the various aspects of the sale process.

I certify that the preceding Two Hundred and Two (202) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate

Date: 14 December 2007