C & C

[2006] FamCA 528

FAMILY LAW ACT 1975

IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA

AT SYDNEY Appeal No. EA121 of 2005

File No. PAF1960 of 2003

IN THE MATTER OF: C

Appellant Husband

AND: C

Respondent Wife

CORAM: BRYANT CJ, WARNICK AND BOLAND JJ

DATE OF HEARING: 4 APRIL 2006

DATE OF JUDGMENT: 16 JUNE 2006

JUDGMENT OF THE FULL COURT

Appearances: Mr Mater of counsel instructed by Marsdens Law Group, 49 Dumaresq Street, Campbelltown, NSW, 2560 appeared for the appellant husband

Mr Kearney of counsel instructed by Dignan & Hanrahan, 121 Queen Street, Campbelltown, NSW, 2560 appearing for the respondent wife

Name of Appeal	C & C
Appeal Number	EA121 OF 2005
Date of Appeal Hearing	4 APRIL 2006
Date of Judgment	16 JUNE 2006
Coram	BRYANT CJ, WARNICK & BOLAND JJ

Catchwords: APPEAL FROM DECISION OF FAMILY COURT JUDGE – PROPERTY SETTLEMENT –GAMBLING LOSSES – The parties commenced cohabitation in 1981, married in 1988 and separated in March 2003 – The wife was diagnosed with depression in 1995 and, from May 1999, used matrimonial funds on gambling – In proceedings for property settlement, the trial Judge accepted that the wife was unable to control her compulsive gambling behaviour and was not satisfied that the wife’s conduct was sufficiently reckless, negligent or wanton. His Honour held that to add back the monies lost by the wife through gambling would be to improperly impose strict liability, inconsistent with the nature of marriage and the terms of the marriage contract – On appeal, the husband argued that the evidence only established that the wife’s gambling was out of control, not necessarily that she could not control her gambling – The psychiatric evidence at trial was sufficient to support the trial Judge’s finding that he could not, to the requisite degree, find the wife had committed reckless, negligent or wanton behaviour – The essential question was whether overall the evidence about the gambling losses, including the wife’s secretiveness, demonstrated conduct which should result in her bearing the entirety or some other proportion of the losses
COMPANIES – WINDING UP –The husband argued that the trial Judge should have made an order winding up the family trust and a related corporation – The trial Judge found that there were sound commercial reasons for not dismantling the corporate and trust entities and held that the liquidation of the corporate infrastructure was not inevitable – The husband argued that, in circumstances in which he did not wish to continue either the trust or the company and the wife did not wish to take control of those entities, the trial Judge ought have ordered the liquidation of the entities – In considering whether to provide for the liquidation of the trust entities or not, the trial Judge had to consider the diminution in the asset pool which would follow upon liquidation – Based on the evidence before the trial Judge, the decision not to order liquidation was well open to him.
PROPERTY SETTLEMENT – CONTRIBUTIONS - The trial Judge assessed contributions of the parties at 55/45 in favour of the husband – The trial Judge found that while the husband made the greater direct and indirect financial contributions to property, the wife made the greater contribution as homemaker and wife, as well as making indirect financial contributions through her involvement in the corporate and trust structure – The husband argued that the trial Judge’s contribution findings were not reasonably open to him. According to the husband, the wife’s secondary contributions were very much in a passive role and very limited – Having regard to the width of discretion, the trial Judge’s conclusions on contributions were well open to him.

AB and GB (No 2) [2005] FMCAfam 402
Briginshaw and Briginshaw (1938) 60 CLR 336
Browne and Green (1999) FLC 92-873
De Angelis and De Angelis (2003) FLC 93-133
D and D [2005] FamCA 356
Fox v Percy (2003) 214 CLR 118
Kowaliw and Kowaliw (1981) FLC 91-092
Appeal dismissed. Cross-appeal allowed.

On 15 September 2005, Coleman J made orders following a trial of property settlement and spousal maintenance issues between the parties. Against some of the orders effecting property settlement, the husband has appealed.
The effect of the property orders was to divide an asset pool of approximately $1,864,000 55% to the wife and 45% to the husband. This apportionment was the result of an assessment of contributions as favouring the husband at 55%, counter balanced by an adjustment of 10% in the wife’s favour because of factors relevant under section 75(2) of the Family Law Act 1975 (Cth).
In submissions, counsel for the husband grouped the grounds of appeal into four major categories, being challenges:
(i)to the decision of the trial Judge not to add back to the asset pool an amount for the wife’s gambling losses;
(ii)to conclusions of the trial Judge about the treatment of the business assets, the major attack being upon the trial Judge’s decision to calculate tax following the agreed sale of real property only on distribution of the sale proceeds through a family trust, rather than, as invited by the husband, upon a winding up of the entities involved;
(iii)to the assessment of contributions;
(iv)to the assessment of section 75(2) factors.
The husband sought a re-exercise of discretion, so that he received 55% of an amended asset pool.
Further, the husband sought leave to adduce further evidence. We refused that application, indicating that we would give reasons in that respect together with these, our reasons for disposition of the appeal.
For her part, as well as opposing the appeal, the wife argued through her counsel that there was an error in the orders, in that in part they did not give effect mathematically to the trial Judge’s intention as deducible from the reasons. While counsel for the wife submitted that the error could be corrected under the “slip rule”, he sought in the alternative leave to raise the point by way of cross-appeal. Leave was not opposed and we granted it.
We will return to discussion of the grounds of appeal and the cross-appeal after:
(i)     a short background and summary of the reasons of the trial Judge;
(ii)    statement of our reasons for refusing the application to adduce further evidence;
(iii)   setting out the broader principles applicable to the appeal.

Background and summary of the reasons of the trial Judge

The parties commenced cohabitation in 1981 and married in 1988. Prior to the commencement of cohabitation, the husband had fathered two children in a prior marriage, the first of those children born in 1979, the second in 1981.
The three children of the marriage of the parties were born in 1985, 1988 and 1990.
At the time the parties commenced their relationship, the husband had not resolved financial affairs with his first wife. The reasons of the trial Judge contain no identification of the comparative financial positions of the parties precisely at the commencement of cohabitation, but no complaint is made in this appeal about that. It is recorded that in 1980 the husband had, with others, commenced a partnership which at some stage was incorporated (“ET Pty Limited”).
In 1984, the parties purchased land and the wife contributed entitlements she received from the termination of her employment, being either $6,000 or $10,000. Of this sum, his Honour said:
“On any view of it, the sum contributed by the wife was significant at the time, whether it was 30% or 50% of the purchase price of the land.…”
A home was constructed on the land in 1986.
Coleman J also recorded that in 1986 the husband received approximately $30,000 by way of property settlement with his first wife. His Honour said:
“The sum, whatever the wife contributed, can be seen as being offset against the sum which the husband contributed some two years later from the resolution of his financial affairs with his first wife.”
His Honour then set out the history of the establishment of entities and the conduct of business from 1986, as well as the dealings of the entities and parties in real property. It is not necessary for the purposes of the appeal to repeat the detail of those matters here, a summary being sufficient.
The “K No.1 Trust” was created. “K Pty Limited”, of which the husband and wife were shareholders and directors, was trustee. The trust commenced to operate a retail franchise. ET Pty Limited ceased to operate the transport business and by that time there were no shareholders other than the parties in that corporation. In 1994 a company, “CW Pty Limited” was incorporated, the husband being sole shareholder and director. That company acquired an interest in real estate. In 1998 CW became the trustee of the “C Family Trust” established at that time. The husband’s shareholding in ET was transferred to the family trust.
The parties separated in March 2003 though both remained residing in the matrimonial home until the husband left in January 2004. Upon separation, the husband purchased a residential property with bank finance and borrowings from ET. In February 2004 the youngest child of the parties, “R”, commenced to reside with the husband and continued to reside with him at trial. The husband had paid some spousal maintenance after separation, but fell into arrears which approximated $10,000 at trial. However, the wife had retained two taxation refund cheques in the sum of about $16,000 and in May 2005 the Child Support Agency recovered arrears of child support and paid approximately $6,700 to the wife.
At trial the husband was 53 years of age, the wife 48 years of age.
As his Honour’s consideration of what ought constitute the pool of assets for division is in certain respects the subject of grounds of appeal, as is his assessment of contributions and section 75(2) factors, the relevant passages of his Honour’s reasons will be set out later.
Following his determination of the adjustment for section 75(2) factors, his Honour “stood back” and looked at the implications of the proposed apportionment of the net assets of the parties, during which he also considered the terms of the orders and the effect thereof on each party, before saying:
“145. Having regard to the disparity of contributions favouring the husband and the greater disparity of s 75(2) factors favouring the wife, and the somewhat different nature of the assets, the Court is satisfied that the proposed division is just and equitable. It will be appreciated that the balance of risk in relation to the assets to be received or retained favours the wife. On the other hand, the husband’s substantially greater earning capacity renders such an outcome appropriate. The Court will accordingly apportion the assets in the proportions proposed.”
Finally, his Honour addressed the issue of spousal maintenance, finding it appropriate to continue an interim order of $250 per week until implementation of the orders for property settlement, but otherwise rejecting the application for spousal maintenance.

The application to adduce further evidence

This was an application without real merit. The evidence put forward was that in an affidavit of the husband sworn 31 March 2006 in which he recounted that:
“Several things have happened which, in my view, impact upon:-
(a) the value of the business;
(b) the value of the real property.”
The husband then recounted a course of renovations which had taken place since the hearing and which he said had caused a significant disruption to business and a downturn in the turnover within the store. He said that there would continue to be obstructions to parking and pedestrian traffic for the next 12 months. He also deposed to events in the same shopping strip in which his business is located. In summary, there were two shops that had become vacant and available for lease and three shops that had been burnt down. The husband deposed that the aforegoing were relevant matters that impacted upon the value of the real estate and the value of the business and its future profitability.
Perhaps with a more circumspect and appropriate assessment of the impact of the events in the shopping strip, counsel for the husband did not describe the evidence as going beyond a possible impact on the valuation of the interests concerned. Counsel for the husband also conceded that, as the renovations must have been in contemplation at the time of the trial, evidence about their anticipated effect might have then been given. He also conceded, correctly in our view, that the husband’s deposition about the impact of the matters referred to, was speculative.
These concessions and the mere statement of the further evidence, demonstrate that the evidence proffered, even if received, would not offer support to any of the grounds of appeal, are sufficient reason for its rejection. As well there are other good reasons, such as availability of some of the evidence at trial, for it not being received.

Principles applicable to the appeal

Relevant principles applicable to the more confined arguments on appeal will be discussed when considering those arguments. However, as to the position of an appellate court generally in an appeal from a discretionary judgment, we refer to the decision of the High Court in House v The King (1936) 55 CLR 499 at 504‑505, where Dixon, Evatt and McTeirnan JJ said:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some of the material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his orders, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
With particular regard to a challenge based on the weight given by a trial Judge to factors relevant to an exercise of discretion, in Bellenden (formerly Satterthwaite v Satterthwaite) [1948) 1 All ER 343 at 345, Asquith LJ said:
“…It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”

The grounds of appeal

Overview

The further amended grounds of appeal contained 15 grounds, but grounds 13 and 14 were abandoned. As earlier indicated, the submissions on behalf of the appellant addressed the remaining grounds in four groups. Counsel for the wife also followed that pattern in his outline of argument.
In the following discussion we will first deal with the grounds (as grouped by counsel) in relation to the gambling losses, then the ground relating to the failure of the trial Judge to give effect to the husband’s request that the family trust and ET be wound up.
It will then be convenient to deal with the cross-appeal/slip-rule application before the grounds of appeal which relate to calculation, because the outcome of the cross-appeal affected, as counsel for the husband acknowledged, the bases of those grounds of appeal.
Finally, we will discuss the challenges to the assessments of contributions and section 75(2) factors.

The gambling losses

The seven grounds relevant to this issue are:
“1.    His Honour’s finding (J.2) that credit is not ‘even a significant issue in the proceedings’ was unwarrantedly generous to the wife having regard to the number and magnitude of the inconsistencies in her evidence, in particular, in relation to her gambling activities, the periods during which she engaged in it, her borrowings in relation thereto and the husband’s contributions as a homemaker and parent.
2.     His Honour’s acceptance (J.7) of the wife’s evidence that she had a belief that by continuing to gamble she would win back what she had lost was not reasonably open to him.
3.     His Honour did not correctly apply the Briginshaw requirement as to the strength of evidence as to the occurrence of an event.
4.     His Honour incorrectly considered (as he inferentially must have) that the onus concerning the wife’s belief, it being conceded that she lost about $108,000.00, fell on the husband.
5.     His Honour failed to draw any inference unfavourable to the wife on the question of her belief, as he should have done, from the untruths and evasions she proffered to friends from whom she borrowed monies, her signature on a bank loan application for funds purportedly required but not used for home renovations and her failure to inform the husband of her losses until they approached $140,000.00.
6.     His Honour’s invocation of the concept of the marriage contract (J.99, 100) was not correctly undertaken in that His Honour failed to draw upon it in relation to the wife’s failure to inform the husband of her losses until they approached $140,000.00.
7.     In consequence of each and all of the foregoing matters, His Honour erred in failing to write back the losses of the wife’s as a partial property settlement or reflect them in assessing the parties’ respective contributions or his assessing Section 75(2) factors.”

The wife’s credit

On the first page of his reasons, Coleman J addressed the issue of “Credit”. He said:
“2. To the extent that it might be thought, having regard to some of the matters in contention, that credit impacts upon the determination of the proceedings, credit is ultimately not a conclusive or even significant aspect of the proceedings. Each party impressed as an honest witness and displayed a refreshing ability to make concessions, both with respect to their own inability to explain or account for certain matters and with respect to the contributions of the other party.…”
In his written submissions, counsel for the husband set out in detail the asserted inconsistencies in the wife’s evidence at trial. In oral argument, counsel for the husband took us to the transcript of the wife’s responses to questions about the number of times she had raised money from pawn shops and he advised us that documentary evidence tendered at trial showed an extent of such instances dramatically different to the evidence of the wife. Although the wife indicated she had been under some misapprehension in the initial answers she gave on this issue, even accepting the validity of counsel for the husband’s proposition, it is of course nonetheless the position that conclusions about credit are often arrived at upon the totality of a party’s evidence and matters such as demeanour (although that aspect was not specifically mentioned by Coleman J in this instance.) His Honour’s assessment of credit quoted earlier appears to be upon such an overview.
It is apparent from paragraph 72 of his reasons that even if his Honour had concerns about some parts of the wife’s evidence, he found aspects of the wife’s evidence supportive of her creditworthiness. Paragraph 72 reads:
“73. The wife’s evidence in relation to the bank statements recording the withdrawals which could have been attributable to her gambling (see Exhibit A1) was frank. The wife readily admitted to a number of transactions (marked in yellow), suggesting that others (blue) she had not done, whilst others she was unsure of. Cross-examination of the husband in relation to a number of the transactions confirmed the wife’s belief that a number of the transactions had not been undertaken by her.”

Moreover, as will shortly be seen from passages of his Honour’s reasons, in some specific respects, such as the wife’s asserted belief that she would recover her gambling losses if she continued to gamble, evidence other than that of the wife supported what the wife said.
The position of an appellate court asked to overturn a trial Judge’s findings on credit has been discussed in the High Court of Australia on more than one occasion. For present purposes we refer to what was there said by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118, as to the function of an appellate court:
“23. …it must, of necessity, observe the ‘natural limitations’ that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the ‘feeling’ of a case which an appellate court, reading the transcript, cannot always fully share.…
…
26. After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde (42), Abalos v Australian Postal Commission (43) and Devries v Australian National Railways Commission (44). This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges.”
We are not satisfied that the trial Judge erred in his acceptance, where he did, of the wife’s evidence. It follows that, contrary to the assertion in ground 2, we are not satisfied that his Honour erred in accepting the wife’s evidence that she had a belief that by continuing to gamble she would win back what she had lost.
The other issues raised by these grounds are probably more easily appreciated in the knowledge of the trial Judge’s findings and reasons on point.
Findings made by his Honour relevant to the issue of the gambling losses included that in 1995 the wife attended upon a psychiatrist and was treated for 12 months for depression and prescribed medication. In 1997 she underwent a hysterectomy and again afterwards experienced symptoms of depression. His Honour recorded:
“27. From May 1999 until at least later the following year the wife commenced to utilise matrimonial funds for gambling. The wife admits that such activity resulted in losses to the family of approximately $100,000.00. The husband contends that a far greater figure, exceeding $200,000.00, was in fact thus lost.”
In April 2000 the wife commenced to attend Gamblers Anonymous. In August of that year she commenced to attend upon “Dr H”, a psychiatrist. At about that time, the wife revealed to the husband her gambling problem.
His Honour addressed evidence of the wife which he said, in its relevant portions, was not seriously challenged. He recorded that the wife had said of herself that she began, in 1995 to “feel isolated from my husband”. She said of herself that in 1999 “…she could not ‘organise’ her thoughts and felt ‘confused…alone and isolated’”. She deposed to ceasing to interact with “other people outside the home except for my husband. I felt very detached from him.” His Honour said:
“70. The wife admitted that in May 1999 ‘I started to gamble on a poker machine’. The wife deposed to the state of the marriage at the time (paragraph 5) and to feeling ‘isolated and alone’ and being ‘pre-occupied with worry’ and unable to concentrate. The wife said that she ‘felt like my world was closing in on me. I felt I no longer knew my own identity’”.
…
72. Whilst there is no suggestion that the wife gambled with the intention of losing money, her evidence in cross-examination is that she was aware that she was losing money and that she was borrowing from pawn shops and a ‘loan shark’ as well as from friends and drawing down bank accounts. Whilst to an outsider the wife’s assertion that it was ‘not apparent at all’ that she could not win on the poker machine until the year 2000 seems naïve or even absurd, there is no rational basis for rejecting the wife’s assertions. The wife said that she continued to gamble in the belief and hope that she would win back what she had lost. The wife re-iterated, as she had said to [Dr H], that playing the poker machine was ‘not an enjoyable experience’.
…
76. The probabilities are that the sums lost by the wife are in reality closer to the sum of $140,000.00 than the $108,000.00 urged on behalf of the wife..…”
His Honour then turned to the evidence of Dr H, a consultant psychiatrist. He recorded:
“77. …[Dr H] diagnosed a ‘dysthymic disorder’ (DSM IV 300.4) which had caused an episode of pathological gambling over a period of around 12 months.…
…
79.    [Dr H] referred to the ‘depressive relapse’ experienced by the wife in ‘around 1999’ suggesting that, during such relapse there was an ‘inability of the individual to control impulsive behaviours, such as gambling, which appears to be consistent with the situation which developed in 1999 with [the wife]’. The doctor’s opinion was that ‘the relapse of the dysthymic disorder contributed directly to the pathological gambling behaviour’.
80.    [Dr H] was cross-examined. Nothing arising from the course of [Dr H’s] cross-examination provides cause for disquiet in relation to the opinions expressed by him in his report.… [Dr H] concluded that the wife’s symptoms ‘added up to a pretty strong diagnosis of dysthymic disorder’. [Dr H] clarified that his reference to ‘pathological gambling’ was intended to convey ‘gambling which was out of control’, describing a situation in which the individual involved places herself at risk financially, socially and in terms of her family.
81.    …In cross-examination [Dr H] re-iterated that, in his opinion, the wife’s gambling had been ‘compulsive, out of control’. The degree of her gambling was thus rendered ‘pathological’.
82.    [Dr H] rejected the suggestion that ‘an inability to understand what one is doing is not part of a dysthymic condition’, suggesting that it is consistent with dysthymic disorder for the patient to be unclear about motives or why they are getting into things with which they are becoming involved and unable to control them.
…
84.    [Dr H] said that it was ‘not necessarily’ the case that the wife would have been capable of appreciating early on that the outcome of her gambling would be a loss, adding that a person with this diagnosis could be ‘capable of knowing where it was going but nevertheless go on in hope, not expectation’. That too accords with the evidence of the wife.
85.    [Dr H] readily agreed that the husband had ‘sounded quite concerned’ when the doctor spoke to him about the wife’s condition. [Dr H’s] opinion was that the wife’s delay in telling the husband what she had been doing and the financial consequences of it, suggested that she felt ‘bad and guilty’ about it and did not want the husband to know.”
His Honour then turned to consider the decision of Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 and that of the Full Court of the Family Court in Browne v Green (1999) FLC 92-873. He then turned to focus on the question of proof, referring to the decision of Carmody J in D and D [2005] FamCA 356:
“88. Carmody J astutely observed at paragraph 137:
The point at which the party who recklessly or wantonly incurs debts or increases unsecured liabilities may be penalised for economic fault under the Kowaliw principle is not always easy to define as a concept or identify in practice.
Those words have application to this case.”
Further discussion of the decision of Carmody J, relating to questions of the degree of satisfaction necessary in fact-finding as discussed by Dixon J in Briginshaw and Briginshaw (1938) 60 CLR 336 at 361-362 followed. His Honour Coleman J then expressly adopted the contents of paragraph 147 of Carmody J’s reasons in D and D which he set out as follows:
“147. Thus, civil proof is not a simple matter of belief and persuasion but of ‘reasonable satisfaction’ following a real search for the truth and evaluating the evidence adduced with regard to the matters mentioned in s140(2) and other relevant variable factors, including those referred to by Dixon J in Briginshaw and in the light of the parties' respective power or capacity to produce or contradict it.
The balance of probability standard takes account of the instinctive judicial feeling that even in civil proceedings a court should be surer before finding serious allegations proved than when deciding less serious or trivial matters. However, the law looks for probability not certainty. There are degrees of probability but, when the law talks about ‘the balance of probabilities’, it envisages a degree of probability to the point that a court can be satisfied that the alleged fact in issue is more likely than not.” (footnotes omitted)
His Honour then said:
“94. Applying the authorities to which his Honour referred, and his formulation of the test for present purposes, the Court is not reasonably satisfied in the Briginshaw sense that the wife’s conduct should be seen as involving the kind of recklessness negligence or wantonness envisaged by Kowaliw or Browne v Green. Although it taxes credulity, the wife’s own evidence is that it was not until she had expended the very large amounts which the evidence reveals that she realised that her efforts would be in vain and that she would fail in her attempts to win back what she had lost. Whilst the fictional reasonable person created by the law of tort would perhaps have come to a different conclusion, and come to it much sooner, the Court is concerned with this wife in the circumstances in which she then existed.
…
96.    The frequency of the wife’s need to replenish her stocks for further gambling and the almost bizarre nature of some of the ways in which she did so, is more consistent with a person who should not properly be regarded as having been responsible for her actions than the converse. The evidence of [Dr H] provides further support for concluding that the wife should not be held accountable for the losses which her gambling occasioned the parties.
97.    [Dr H] was a treating specialist medical practitioner, not simply a medico-legal ‘hired gun’ obtained for the purpose of these proceedings. [Dr H’s] diagnosis of the wife’s dysthymic disorder is entitled to be accepted. His evidence provides a reasonable and rational explanation for what otherwise could not be explained in such terms.
98.    The wife suffered from an illness. The illness may not have caused the wife to do what she did, but the Court is satisfied that it deprived her actions of the degree of wantonness, negligence or recklessness which is required for a ‘Kowaliw’ claim to succeed. To her credit, the wife sought to have her illness treated. She went to Gamblers Anonymous on numerous occasions, having realised what most rational members of the community know, finding that so doing did not significantly ameliorate her pathological gambling, she sought expert medical assistance. It is not without significance that, notwithstanding that there were clearly, as Exhibit R1 confirms, subsequent gambling episodes, the wife’s pathological gambling declined once the underlying medical condition (dysthymic disorder) was treated with appropriate medication. Logic suggests that it would be illogical in those circumstances to deny that there was a measure of the involuntary in the wife’s pathological gambling. Otherwise it is unlikely that the advent of successful medication for her dysthymic disorder would have been accompanied by the diminution of her pathological gambling which the evidence clearly establishes.
99.    In all the circumstances of this case, to ‘add back’ the monies lost by the wife through gambling would be to impose almost strict liability of the kind usually reserved to workplace safety and similar statutes (e.g. Workplace Relations Act 1996 (Cth) and State Occupational, Health and Safety Acts) and be quite inconsistent with the nature of marriage and the terms of the marriage contract.
100.It could be suggested, as it has been on behalf of the husband in this case, that if the Court declines to add back any sums representing loses of the kind occasioned by the wife’s gambling in this case, that factor could be taken into account to the detriment of the wife via evaluation of contributions. There can be no doubt that on a strict mathematical basis, the wife’s contributions have potentially resulted in the parties’ assets being diminished by between $100,000.00 and $140,000.00. On the other hand, as Carmody J also pointed out in D and D, marriage differs from commercial partnerships in that parties to a marriage:
… promise to take and to hold for richer or poorer and for better or worse. They impliedly agree to accept the usual risks and unpredictable turns that marriage involves and to take the good with the bad. (paragraph 130)”
101.     In circumstances where the evidence does not suggest that the wife’s contributions during the period of her illness were otherwise deficient, it would be somewhat harsh to in effect after the event, change the terms of the contract of marriage entered into by the parties. Indeed, to visit upon the wife in the context of contributions the consequences of acts done by her while she was ill would have the potential to change the very nature of marriage, imposing no more and no less than strict liability upon each of the parties for the consequences, however unforeseeable, for anything for which they were responsible by act or omission. The events in question pre-dated the parties’ separation. To his credit, the husband supported the wife during the troubled times which her illness caused. To take a quite different view of those events now would be somewhat unrealistic. The Court thus does not propose reflecting the losses incurred by the wife’s pathological gambling during the time of her illness in the contribution arena.”
Counsel for the husband argued that the evidence only established that the wife’s gambling was “out of control”, not necessarily that she could not control her gambling. However, during exchanges between this bench and bar-table, counsel for the husband conceded that the evidence of Dr H supported a finding that the wife’s capacity to control her gambling had been diminished by illness. There then seems little left in the argument except perhaps issues of degree.
In our view, the evidence of Dr H, quoted by the trial Judge in paragraphs 76, 78, 79, 80, 81 and 83 of his reasons, (earlier quoted) rendered it open to Coleman J to find, on the critical point:
“98. …The illness may not have caused the wife to do what she did, but the Court is satisfied that it deprived her actions of the degree of wantonness, negligence or recklessness which is required for a ‘Kowaliw’ claim to succeed.…”
In our view it is also clear from the quotation immediately above and the discussion that preceded it, that it was in relation to that critical point that his Honour was not satisfied to what he considered a requisite degree.
During his submissions at trial, counsel for the husband acknowledged the onus on the husband on this issue when he said:
“…I have got to show something in the order of recklessness of negligence, waste has been a term that’s been used often enough and your Honour I will set out to do that.…”
For these reasons we see no merit in grounds 3 and 4, to the effect that the trial Judge incorrectly placed an onus on the husband to disprove the wife’s belief (that she would win back monies lost) or to establish any other subsidiary event.
Counsel for the husband also contended that even if the trial Judge was entitled to find that ill health removed or diminished the wife’s capacity to control her gambling, had she not been secretive, in other words, had she told the husband of the losses, the probabilities were that he would have been able to take steps to prevent further losses or at least diminish them. The wife had not, counsel argued, established that her illness prevented her from, or diminished her capacity to, inform the husband of her problem and its consequences. Indeed, counsel for the husband contended, referring us to the evidence and the passages already noted from his Honour’s judgment dealing with the wife’s failure to tell the husband of the gambling losses, this was due to her feelings of guilt and concern as to the husband’s reaction.
In the end, we think that there is a flaw in the approach taken by counsel for the husband, which implies a need for the medical evidence to establish that the secretiveness was a symptom of the wife’s illness before she is “excused” from bearing the gambling losses. The essential question was whether overall the evidence about gambling losses, including the wife’s secretiveness, demonstrated conduct which should result in her bearing the entirety or some other proportion of the losses. The trial Judge accepted evidence which established:
·the pathological nature of the wife’s gambling
·her irrational belief that she would recover the losses
·the estrangement in her relationship with the husband, from as early as 1995
·that the wife suffered an illness, symptoms of which included “an inability to understand what one is doing”, preoccupation “with worry” and inability “to concentrate”
We consider that in these circumstances, it was open to the trial Judge to make the finding that he did, namely that the wife’s conduct was not such as should see her bear the gambling losses.
Following completion of the appeal hearing counsel for the husband, via the Appeals Registrar, referred us to two decisions in support of his submissions about the gambling losses. We are advised by the Appeals Registrar that counsel for the wife had no objection to counsel’s reference to the authorities. The cases concerned are the decision of the Full Court of the Family Court in De Angelis and De Angelis, a judgment delivered in November 1999 but reported in (2003) FLC 93-133 and AB and GB (No.2) [2005] FMCAfam 402, a decision of Ryan FM. Both cases involved issues about the treatment of gambling losses.
In De Angelis, the trial Judge required the wife to pay to the husband 55%, (that being the apportionment on a contributions basis in favour of the husband), of gambling losses from the parties’ funds. It is apparent from the reasons of the majority, Lindenmayer and Finn JJ, in De Angelis, that the wife, among other arguments, relied upon some medical evidence bearing upon her gambling.
The Full Court said:
“61. Later in paragraphs 50-52 of his judgment, his Honour referred to the wife’s claims to have given up gambling.…He then referred in paragraphs 53-59 of his judgment to ‘a medical legal report’ prepared on behalf of the wife by a consultant psychiatrist, Dr Wilkins, and to the evidence which Dr Wilkins gave at the trial. During the course of that evidence, Dr Wilkins apparently changed his opinion to conclude that the wife was ‘a pathological gambler who has not so far made enough effort to overcome her gambling problem’.”
62. His Honour then considered and rejected (at paragraphs 60-63) the wife’s claim that her gambling was not ‘negligent, reckless or wanton’, but rather due to her psychological condition caused by the husband’s treatment of her.”
Later, with reference to the arguments put on appeal, the majority said:
“74. In support of these grounds, it was first submitted that his Honour erred in concluding that a legal activity, which gambling is, can amount to waste. There is no substance in this submissions. It seems to us that most of the activities which can come within the concept of ‘waste’ (as used in this jurisdiction following the decision in Kowaliw and Kowaliw (1981) FLC¶91-092) are legal activities.
75. It was next submitted that the wife’s gambling had to be seen as a form of entertainment for her; that the money she spend on it had to be balanced against the money which the husband spent on playing golf; and that when this balance was considered, the wife’s expenditure on gambling could not be said to be so reckless, that it should now be taken into account against her.
76. We agree that gambling is for some people a form of entertainment and that a party can be no more criticised for spending money on it than the other party can be criticised for spending money on sporting or other forms of entertainment. However every case must depend on its own particular circumstances. In the present case his Honour had the advantage of evidence which permitted him to arrive at actual, or at least approximate, figures for the wife’s expenditure on gambling, and in addition he had expert psychiatric evidence regarding her propensity for gambling. Against the background of the availability of this evidence, we consider that he was entitled to treat the wife’s gambling losses as he did.”

An obvious and important distinction between the instant case and the decision of the trial Judge in De Angelis is that the medical evidence was of a different character and effect and was found not to provide any excuse for the wife.
Overall, the decision of the majority in De Angelis amounts to no more than is expressed in paragraph 76 namely, that on the case before the trial Judge, he was entitled to treat the wife’s gambling losses as he did.
In AB and GB (No.2) Ryan FM, in addressing the treatment of economic consequences of gambling losses, referred to a number of authorities including De Angelis and deduced “principles” from them. However, as we have already indicated, there is no challenge to what Coleman J said of the principles in the instant case. Further, as appears from paragraph 70 of the reasons of Ryan FM, the evidence surrounding the husband’s gambling in that case differed in important respects from that in the instant case.
As to ground 6, that the trial Judge failed to draw upon the “marriage contract” in relation to the wife’s failure to inform the husband of her losses (notwithstanding that he had invoked it in relation to the element of “for better or worse”), counsel for the husband acknowledged the difficulty in identifying just what obligations the “marriage contract” might include, and he accepted that the formulation above of the “essential question” about the wife’s conduct was the more accurate enquiry in respect of his Honour’s reasoning.
In support of ground 7, counsel for the husband argued that his Honour failed to consider the submission made at trial that gambling losses might be reflected as a section 75(2) factor. It does appear that his Honour did not address that submission.
However, in paragraph 54 of his reasons, his Honour referred to a choice between adding back the losses to an asset pool or reflecting them in contribution entitlements. Then, of significance to the submission under consideration, at paragraph 67 his Honour said:
“67. The question of the wife’s gambling losses potentially arises in the context of the add back urged on behalf of the husband or, in the alternative, the evaluation of the wife’s contributions. It is convenient to consider both aspects of the issue together. Ultimately, the Court’s findings and conclusions in relation to the incurring of losses by the wife as a result of her gambling is likely to have the same consequences however approached.”
In paragraph 107 of his reasons, Coleman J said:
“108. The effect of the Court’s conclusions is that the net asset pool as previously determined will be not disturbed by virtue of add backs on either side of the ledger, nor will the contribution entitlements of the parties be affected by reason of such matters.”
The effect of the above paragraph is that his Honour dismissed the argument that an adjustment should be made in the assessment of contributions on account of gambling losses for the very reasons (and no further reasons) for which he declined to add losses back to the asset pool.
In our view it is beyond doubt that had his Honour addressed the prospect of reflecting the losses as a section 75(2) factor, he would have come to the same conclusion.
His Honour’s failure to deal with gambling losses in his consideration of s 75(2) factors ought be seen in the light of the diffident submission at trial about the application of that section.
“[COUNSEL FOR THE HUSBAND]: But yes, so that might be some caution about throwing it in the contributions step rather than the ascertainment of the pool by write back. Third possibility is section 75(2), particularly (2)(o) I suppose as being something that just can’t be ignored having regard to its impact on the pool that’s available. Perhaps you can use section 75(2)(o) as a rationale or I suppose the jurisdictional base or perhaps rational is a better term for throwing it in at write back level in ascertainment of the pool.”
We find no merit in grounds 1-7.

The argument that the trial Judge ought have ordered that the C Family Trust and ET Pty Ltd be wound up or liquidated – grounds 8 and 9

Grounds 8 and 9 of the appellant’s grounds of appeal provide as follows:

“8. His Honour’s rejection of the husband’s evidence as his intention to wind up ET Pty. Ltd. and the C Family Trust:-
(a)was inconsistent with his finding as to credit insofar as it applied to the husband;
(b)was not reasonably open to him;
(c)was, so it would appear, based on a conclusion that the husband might use the ET Pty. Ltd./C Family Trust structure to operate [the retail] franchise, whereas the husband’s involvement in the operation of the current [retail] franchises was not through that structure but through the [K] Trust No. 1 and the [K] Trust No. 2 respectively.

9. By reason of the foregoing matters, His Honour’s determination that the tax payable on distribution of all surplus assets and debts in the C Family Trust rather than merely that referable to the distribution of the nett proceeds of the sale of [the W property] should not be brought to account as a liability in the pool was not reasonably open to him.”

The trial Judge recorded that the parties agreed that a consequence of the proceedings would be the sale by ET of its half interest in the W property, and, at the least, the distribution of the sale proceeds through the family trust. Then his Honour said:
“61. …The question which then arises is whether, as the husband seeks, the trust and related entities be liquidated or, as the wife asserts, only the capital profit on the sale of [the W property] be distributed, leaving the husband with the balance of the trust and corporate structure.”
…
63. Notwithstanding his formal stance, the evidence of the husband suggests that there are sound commercial reasons for not dismantling the corporate and trust entities which are relevant to this issue. His evidence in relation to the [ABSC] suggests that to liquidate the corporate entities would result in the calling up of a debt with respect to the [ABSC] which may not otherwise be called up or may, if the entities continue, be able to be used to advantage in terms of future trading activities. Moreover, the husband’s evidence is clear that he intends, certainly by at least 2006, commencing to operate another [retail] franchise.
64. It is difficult to understand why he would not do so through the existing corporate infrastructure which he has been responsible for assembling over a period of years. The Court is not persuaded that the liquidation of the corporate infrastructure is ‘inevitable’. There can be no doubt that, in order to distribute the capital funds flowing from the realisation of the interest in [the W property] income tax will be payable by one or both parties depending upon the form of the Court’s orders, but the evidence does not establish the necessity, desirability or inevitability of the entities themselves being liquidated. The minutes of the husband’s own orders, which seek to vest those entities in him, are consistent with the Court’s reasoning in this regard.”
In short, the submissions for the husband on appeal were that, in circumstances in which the husband did not wish to continue ET or the family trust and the wife certainly did not wish to take control over those entities, the proper course was as where neither party wishes to retain real property, an order that such property be sold or, in this instance, liquidated.
We think such positions are not truly analogous. Both parties did not wish the entities liquidated. The wife’s position was merely that the real estate needed to be sold to provide a cash adjustment to her.
Further, in assessing the weight of the argument for the husband, it is appropriate to have regard to the course of the issue at the trial. It is conceded that in the orders sought by the husband at the commencement of trial, no orders for liquidation of the entities were sought. It is further conceded that, even though in submissions the trial Judge was “invited” to make orders liquidating the entities, no amendment was sought to any written application for orders and in consequence no form of order was suggested to the trial Judge.
Moreover, such evidence as was given by the husband in support of a winding-up commenced during his cross-examination when the following exchange occurred:
“[COUNSEL FOR THE WIFE AT TRIAL]: So provided the proceeds of the sale of the [W] property is distributed out from [ET], there’s no necessity for that company then to be, if you like, wound up or put into liquidation is there?---Well, there’s no point in having it in real terms and I think there is a need to draw the money down from [ET] to satisfy the debts. I mean, there’s debts – debts are outstanding there in taxation for instance. So, you know, I mean, I can’t materialise that type of money in any other way. That’s where our money sits.”
Then, during the husband’s re-examination, his Honour the trial Judge asked some questions including:
“Well, you know that [the husband] is suggesting that whilst – well, he’s not conceding, he disputes that, as I understand it, that it will be necessary or even desirable for you to sell or cause the [W property] to be sold. But you understand the second part of his case is that even if that happens, there’s no necessity or I think desirability in liquidating the entities. What he, as I understand it, says is that you could extract the capital gain on the realisation of [the W property], pay the tax on the distributions to yourself and your wife of that capital profit after tax is paid by the corporate owner of the interest and still, having paid a lot less in tax, I think about 60,000 less in round figures, still not be disadvantaged by retaining the corporate structure?--- I can’t see that at all.
…
But what happens – what do you envisage will happen with the investment in [ABSC] when you liquidate – if you liquidate the corporate and trust entities, what ---? --- Well, it might not be, at this stage, an imprudent[sic] decision to exit ABSC because of the massive losses it’s making at the moment. I think last year was about 500 grand and this year roughly about $200,000. There’s a debt in there that’s somewhere around the $1.3 million mark that ABSC owes to the [HN] entities. So that’s not a business you would sit there and say; gee, wish I had that. So I think it’s a good – to me it would make little difference whether I had ABSC or didn’t have ABSC. The other thing is that the [H] shop has made – it’s basically had a hole in the aorta this year and haemorrhaged everywhere so ---”
There was no further relevant evidence.
The question of how the wife might receive any cash to be paid to her in property settlement was raised during addresses and in turn led to discussion of the issue as to whether the sale of the real estate owned by ET would be necessary and further, whether the liquidation of the trust entities and ET would be necessary. Perhaps somewhat to the advantage of Counsel for the husband’s argument, shortly before the luncheon adjournment on the final day of hearing, during the address of counsel for the wife, his Honour said:
“HIS HONOUR: The ball’s in [counsel for the husband’s] court. If he – I don’t suggest he’s precluded from any of the courses we’ve been discussing by virtue of [the husband’s] evidence but I think the practical position is if on return his instructions are that his client seeks that I make the orders for sale and the liquidation of the entities then it’s very difficult to see given that your client doesn’t seek them that – it’s very difficult to see why I wouldn’t make those orders and then on a Rosati basis the two adjustments I would have thought would follow as a logical consequence wouldn’t they?”
Counsel for the wife responded by saying:
“I couldn’t say anything else.”
After resumption from the luncheon adjournment the following exchange occurred:
“[COUNSEL FOR THE HUSBAND]: …my client invites you to make an order for sale.
HIS HONOUR: And the order to liquidate?
[COUNSEL FOR THE HUSBAND]: And the order to liquidate, yes”
Then counsel for the wife resumed his submissions and pointed to some difficulties with liquidation, arising from the absence of up to date financial information. This raised the danger that there might, in the period for which records were absent, have been events which would affect the value of the entities on liquidation, about which events the wife knew nothing. That led to discussion about the structure of an order to provide that, whatever the end financial result of liquidation, the wife receive not less than an amount arrived at on the material before the trial Judge.
Then, towards the end of addresses, further discussion occurred between the trial Judge and counsel for the wife at trial, during which an exchange occurred which makes it obvious that the question of whether or not orders would be made for the winding up of the trust entities was very much unresolved. His Honour at one point said:
“And then objectively whether [the husband] then decides to liquidate these entities or not, that’s entirely up to him and no concern ---”
In considering whether, in resolving this issue of liquidation or not, the trial Judge fell into error, we observe firstly that the course of ordering liquidation, but making an order for the wife to receive not less than a particular sum thereupon, carried with it the undesirable consequence that the ultimate division might differ, possibly substantially, from the percentage assessments considered appropriate. Such a result might well have worked to the disadvantage of the husband.
Secondly, the husband’s evidence and the statements by counsel at trial demonstrate that proposals to liquidate the entities only developed during the course of the hearing. The tenor of the evidence of the husband set out above, was more about an absence of any particular future use for the entities, rather than of clear advantage to be gained by liquidating the entities. Indeed, on the evidence liquidation involved, as is agreed before us, an increase in the incidence of taxation. It also, as his Honour noted, brought up the question of the indebtedness of the trust to HN interests, for the trust’s share of the set up costs of ABSC.
While it may be that his Honour was somewhat speculative and perhaps even wrong in referring to the prospect of advantage being taken of past losses and/or the conduct of a future HN retail franchise through the trust structure, we do not understand his Honour to have been making findings about these matters on the balance of probabilities, but rather indicating as a matter of possibility that use may be found for the entities. Whether right or wrong in that speculation, it does not detract from his Honour’s conclusions about the definite disadvantages identified.
Counsel for the husband did not argue that on the other findings of the trial Judge, it could be seen that liquidation was a necessary consequence of proposed orders under section 79. His argument rested simply on the proposition earlier outlined. He conceded that, on the evidence, there was “not a great deal to be lost in hanging on to it” (the entities).
The trial Judge had the obligation to make orders that were ultimately just and equitable as between the parties. In considering whether to provide for the liquidation of the trust entities or not, his Honour had to consider the diminution in the asset pool which would follow upon liquidation. Having regard to the way in which the invitation to his Honour to make orders providing for the liquidation of the trust entities was delivered at such a late stage, the brevity and nature of the evidence of the husband about his attitude to continuation of the trust entities, the evidence of positive disadvantage to the net asset pool resulting from liquidation and the absence of evidence of positive disadvantage if the entities were allowed to remain, we consider that his Honour’s choice not to order liquidation was well open to him.

The cross-appeal/slip-rule application

Counsel for the husband did not wish to say anything against what counsel for the wife said in support of the cross-appeal, though he did not adopt counsel for the wife’s submission, which he said may be right.
As indicated, counsel for the wife said we could correct the error under the rules. Counsel for the husband said we could not, that any correction needed to be done on a cross-appeal. We think it unnecessary to decide, but treat the point as raised by way of cross-appeal.
The argument on the cross-appeal is essentially this. The trial Judge intended that the wife receive 55% of the asset pool, which would result in her retaining/receiving $1,025,250. His Honour set out what the wife would retain or receive in real property and personalty in her possession, which amounted to $719,314, leading his Honour to the conclusion that she should receive another $305,936.
Later, his Honour indicated that he would order that tax on the distribution of the proceeds of sale of the W property be shared equally by the parties. The anticipated amount of this tax had been included in full in the asset table used to derive the net assets, before calculation of the wife’s 55% share.
The effect of this approach was that the wife in fact received less than 55% of the net assets because she had, from her 55% to contribute to tax, already deducted from the pool.
Moreover, when his Honour was setting out the position in which the husband would be after orders, he provided for the payment of the entire tax as a deduction for the husband. This was, in our view, a second, but not a compounding error.
The cross-appeal succeeds and will result in amendment to the orders of Coleman J.
The success of the cross-appeal also renders it unnecessary, as counsel for the husband acknowledged, to consider grounds 12 and 15 of the appeal.

The assessment of contributions – ground 10

Ground 10 of the appellant’s grounds of appeal provides as follows:

“10. His Honour’s findings that the respective contributions of the parties should be adjusted to be 55% to the husband and 45% to the wife was not reasonably open to him.”

Passages of his Honour’s judgment relevant to his assessment of contributions include the following:
“109. The identity of the contributions made by the parties is not in dispute. There is no doubt that the husband made the greater financial contribution both direct and indirect during the course of the parties’ cohabitation. There is little doubt that the wife made the greater contribution as homemaker and parent. That is not to suggest that the husband made no significant contributions in that regard. So far as financial contributions were concerned, the evidence suggests that the wife made indirect financial contributions over the years of cohabitation via her involvement in the corporate and trust structure which the husband caused to be put in place.
110. No ‘special contributions’ or, howsoever styled, contributions having the potential to elevate the wife’s periodic contributions beyond the status of equality with those of the husband have been asserted on the wife’s behalf. That is not said critically of the wife or the very substantial contributions made by her. Perusal of the written submissions on behalf of the wife does not suggest any fact or circumstance inconsistent with so concluding.
111. On behalf of the husband it was submitted that the Court would recognise as facts and circumstances entitling the husband’s contributions to be regarded as more significant than those of the wife, the husband’s contributions to the acquisition, conservation and improvement of the assets of the parties through his ‘entrepreneurial efforts and skills’. The thrust of the husband’s case in that regard was valiantly sought to be deflected by counsel for the wife on the basis that the husband was ‘simply in the right place at the right time’ to be able to take advantage of opportunities which fortuitously came his way.…
112. It was submitted on behalf of the husband in this context that it was his ‘connection with [Mr H] and the [HN] Group that enabled the husband to do what he did.”

His Honour turned to a consideration of the activities of the husband which might deserve particular recognition, finding “…a course of conduct over a period of time which is highly suggestive of sustained skill and diligence, albeit augmented by good fortune, rather than an absence of such efforts and abundance of ‘good luck’” and his Honour concluded:
“115. … To fail to recognise the husband’s ‘entrepreneurial’ contributions as entitling his overall contributions to be seen as somewhat greater than those of the wife would, having regard to the nature and quality of the contributions and their impact on the wealth of the family, be to fail to justly and equitably reflect the relative contributions of the parties.
…
118. The marriage of the parties was of long duration. The nature and extent of the contributions each party made over that long duration is significant. It must be recognised that the wife’s contributions enabled the husband to make his ‘entrepreneurial’ contributions. Those contributions ought not be evaluated in isolation from the other very substantial and ongoing contributions each party made.
119. The net asset pool having been fixed at $1,864,091.00, regard must be had to the monetary value of a percentage adjustment away from equality. To reflect the contribution entitlements of the parties as 55 per cent to the husband and 45 per cent to the wife would in the Court’s view be to effect a reasonable reflection of the disparity in the nature and quality of the contributions of the parties. Such a disparity translates as $186,409.10. When one looks at the composition of the net assets of the parties, such an adjustment is considered in all the circumstances to be a reasonable although necessarily unscientific reflection of the disparity of contributions and their impact upon the family’s wealth.”
His Honour then turned his attention to the post-separation period finding no further adjustment warranted.
In his written submissions, counsel for the husband on appeal said:
“53. Apart from the possibility that it might be considered appropriate to reflect the losses brought about by the Wife’s gambling in the area of contribution, there is but one area in relation to which it is asserted on behalf of the Husband that an error was made by his Honour in relation to contribution. It is put that a proper reflection of the parties contributions should have been in the order of 60% to the Husband and 40% to the Wife rather than 55%/45%.” (emphasis added)
The argument here was that acknowledging the wife’s primary contribution as homemaker and parent, the wife’s secondary contribution, to “bread winning activities”, was very much in a passive role and very limited. In contrast, while the husband’s primary contribution was as the bread winner, in his secondary contributions, to homemaking and parenting, he played a considerable role.
Counsel in passing, notwithstanding the limitation in his written submissions, was critical also of the trial Judge’s treatment of initial contributions. That treatment, as seen in the summary, offset a 1986 contribution by the wife to the purchase of land in the sum of up to $10,000 against a 1986 contribution by the husband of about $30,000.
Having regard to what we have said of the principles relating to an appeal argued on the basis that, while all relevant matters were taken into account, improper weight was given to them, we are not satisfied that the conclusion of the trial Judge as to contributions was not open to him.

The assessment of section 75(2) factors – ground 11

Ground 11 of the appellant’s grounds of appeal provide as follows:

“11. His Honour’s findings that there should be an adjustment in favour of the wife of 10% for Section 75(2) factors was not reasonably open to him.”

Relevantly to his consideration of section 75(2) factors his Honour said:
“125. The evidence which emerged in cross-examination of the husband of his earnings in recent years, exclusive of funds referrable to the realisation of assets, suggests that he has a significant and continuing capacity to earn income.…”
His Honour said that the husband would be left:
“125. …in a materially more advantageous position than the wife whose earning capacity was not suggested to exceed $500 per week, which sum she clearly earns in circumstances which are rather more full of uncertainty than are those of the husband, either at present or in the foreseeable future.
126. On any view of the evidence, a significant adjustment in the wife’s favour by virtue of the disparity of earning capacity of the parties is called for.
127. Neither party’s health would be a factor which would incline the Court to make a s 75(2) adjustment, nor would the age of each party. Whilst the wife has in the past suffered from dysthymic disorder, there is no evidence that this currently limits her earning capacity, or that it is likely to in the future, nor is there any reliable evidence as to the probable cost of medication, either relative to that condition or for HRT.
…
129. Each party has the care of a child of the marriage although, albeit to a modest extent, the husband is likely to have the greater burden in that regard in the foreseeable future. Although of minor proportions, an offset to the s 75(2) adjustment which is otherwise appropriate to be made in the wife’s favour is appropriate in those circumstances.
130. …Given that the wife will retain the major tangible asset of the marriage free of encumbrance, which provides more accommodation than she reasonably needs, and will have a cash sum, albeit that will be reduced by the payment of legal fees, it cannot reasonably be suggested that the wife will not enjoy a standard of living which is reasonable in all the circumstances. No adjustment for this factor would in the circumstances be warranted
…
137. … The circumstances of this case persuade the Court that an adjustment of 10 per cent in the wife’s favour would in all the circumstances be appropriate, translating as a differential in her favour of 20 per cent or $365,000.00, which arises by the wife’s share increasing by 10 per cent and the husband’s declining by a corresponding proportion.…”
Our attention was drawn to the age of the youngest child of the parties who was living with the husband by comparison with that of the child in the wife’s care. Counsel submitted that the 10% adjustment was beyond range, but that the appropriate adjustment would have been 5%.
Having regard to the evidence of the husband’s earning capacity, but also taking account of the husband’s child care obligations in relation to the child R, and to the monetary effect of the 10% adjustment, again we are simply not satisfied, when regard is had to the appropriate principles, that his Honour’s conclusion to effect a 10% adjustment on account of section 75(2) factors, was not well open to him.

Conclusion

It follows from the preceding discussion that we find no merit in the grounds of appeal and the cross-appeal succeeds.

Costs

The parties requested the opportunity to make submissions about costs after the results of the appeal and cross-appeal were known. We will make appropriate directions.

ORDERS

That the appeal be dismissed.
That the cross-appeal be allowed.
That order 7.4 of the orders of 15 September 2005 be amended by deleting the balance of the paragraph from the words “and the parties shall each be responsible…” and inserting in lieu thereof the words:
“and upon the issue of an assessment of the taxation to be paid by each party consequent upon the receipt of such dividend, the husband shall be responsible for the payment of an amount of $162,800 of such assessment and, in the event that the total of the assessments issued to each of the husband and wife:
7.4.1 exceeds the amount of $162,800, each of the husband and wife shall be responsible for the payment of one-half of such excess; and,
7.4.2 is less than the amount of $162,800, the husband shall pay to the wife an amount equal to one-half of the difference between the total of the assessments and $162,800.”
That either party be at liberty to make an application by way of written submissions in respect of costs incurred by him or her in relation to the appeal by filing such submissions at the Sydney Registry of the Family Court and serving them on the other party within 21 days of the date hereof.
That the other party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Sydney Registry of the Family Court and serving them on the other party.
That either party be at liberty to reply to an answer by way of written submissions by filing such reply at the Sydney Registry of the Family Court and serving it on the other party within a further 7 days.
That each party endorse on the cover sheet the date on which a copy of that submission was served on the other party.

I certify that the 106 preceding
Paragraphs are a true copy of the reasons for judgment delivered by this
Honourable Full Court.
Sgnd:

Associate

[2006] FamCA 528

16 JUNE 2006

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