CABADAS & CABADAS

[2019] FamCAFC 179

AMENDED PURSUANT TO R 17.02A OF THE FAMILY LAW RULES 2004 (CTH) ON 15 OCTOBER 2019

FAMILY COURT OF AUSTRALIA

CABADAS & CABADAS [2019] FamCAFC 179

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the husband appeals from final property orders – Where the trial judge found the date of separation to be 28 August 2015 – Where the parties’ property interests totalled $901,078.63 – Where both parties concede that the trial judge erroneously included in that total as a notional asset of the husband a figure of $130,176 representing “livestock sales post-separation” – Where the trial judge took no account of the husband’s longstanding dependence upon income from livestock sales for his livelihood – Where the trial judge gave no consideration to the fact that reasonably incurred expenditure by the husband had to be taken into account as an offset to the gross amount of livestock sales income – Where error is established sufficient for the appeal to be allowed – Where the wife is granted a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) for her costs of the appeal.

FAMILY LAW – APPEAL – RE-EXERCISE – Where both parties sought this Court re-exercise the discretion rather than remit the proceedings – Where s 79(2) is readily satisfied – Where the parties agreed to adopt the values of property as found by the trial judge other than those successfully challenged on appeal – Where the majority of the parties’ property interests consist of the former matrimonial property consisting of two lots – Where the husband sought an equal distribution of property overall – Where the wife sought a finding of an equal contributions-based entitlement but a 3 per cent uplift in her favour to account for the husband’s non-disclosure – Where neither party addressed the Court on a guarantee given by the parties for a loan taken out by their son – Where such guarantee ought be included as a liability – Where the parties’ right to subrogation ought be included as an asset – Where a finding of equal contributions is appropriate – Where no adjustment pursuant to s 75(2) is called for – Where an equal division of the parties’ property interests is just and equitable in all the circumstances – Where the husband offered no evidence in support of his orders seeking only one lot of the former matrimonial property be sold – Where the entirety of the property must be sold.

Federal Proceedings (Costs) Act 1981 (Cth) s 6
Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4), 94AAA(3)

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Blake & Blake [2007] FamCA 10
Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654; [1981] HCA 62
C & C [1998] FamCA 143
Dautry & Wemple (2018) 59 Fam LR 184; [2018] FamCAFC 237
Dunbar and Dunbar (1987) FLC 91-846; [1987] FamCA 18
Goold v Commonwealth of Australia; Rootsey v Commonwealth of Australia (1993) 114 ALR 135; [1993] FCA 157
Hull & Hull (1983) 9 Fam LR 241; [1983] FamCA 23
Inghams Enterprises Pty Ltd v Kim Yen Tat [2018] QCA 182
Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Lenehan and Lenehan (1987) FLC 91-814; [1987] FamCA 8
McColl’s Wholesale Pty Ltd v State Bank of New South Wales (1984) 80 FLR 302; [1984] 3 NSWLR 365
McDonald v Deputy Federal Commissioner of Land Taxfor New South Wales (1915) 20 CLR 231; [1915] HCA 54
Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195
Petitt v Dunkley [1971] 1 NSWLR 376
Riordan v Dornan (1990) 24 FCR 564; [1990] FCA 264
Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228; [1969] HCA 59
Stirling v Forrester (1821) 4 ER 712
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173

APPELLANT: Mr Cabadas

RESPONDENT: Ms Cabadas

FILE NUMBER: BRC 8117 of 2016

APPEAL NUMBER: NOA 99 of 2018

DATE DELIVERED: 11 October 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 2 July 2019 and by an Agreed Statement of Facts filed on 1 August 2019

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 12 October 2018

LOWER COURT MNC: [2018] FCCA 2814

REPRESENTATION

THE APPELLANT: Self-represented

COUNSEL FOR THE RESPONDENT: Ms Pendergast

SOLICITOR FOR THE RESPONDENT: Gallagher Legal

Orders

1. The appeal be allowed.

2. Save and except for orders (7) and (8), the orders made in the Federal Circuit Court of Australia on 12 October 2018 be set aside and the following orders be made as and by way of property settlement.

3. The parties shall within thirty (30) days of the date hereof list for sale the property known as B Street, C Town comprising Lot 1 and Lot 2 on Crown Plan C … on Certificates of Title …94 and …95 respectively (“the C Town property”) with a real estate agent appointed jointly by the parties and failing agreement as nominated by the President of the Real Estate Institute of Queensland.

4. The C Town property is to be sold initially by private treaty, unless both parties agree to auction, and then by auction if the property has not sold within nine (9) months of being listed.

5. The listing price is to be as agreed by the parties and failing agreement $900,000.

6. On completion of the sale of the C Town property the proceeds are to be disbursed:

   (a)       In payment of real estate agent’s commission and any auction costs;

   (b)       In payment of any conveyancing costs and expenses;

   (c)       In payment of any local government rates and taxes;

   (d)In payment to the ANZ Bank of a sum sufficient to discharge the mortgage registered number …82;

   (e)       In payment of any capital gains tax arising from the sale;

   (f)       In payment to the wife of $26,955.50;

   (g)       In payment of the balance as to 50% to the husband and 50% to the wife.

7. The parties are to retain Gallagher Legal to act on the sale of the C Town, and are to do all things necessary to appoint Gallagher Legal and shall provide timely instructions to them.

8. Upon completion of the sale of the C Town property any residue of the proceeds of sale of livestock pursuant to orders made on 17 August 2018 is to be distributed equally to each party.

9. The wife is to transfer to the husband on or before the expiration of thirty (30) days from the date hereof her right, title and interest in the static bandsaw, motor vehicle 1, motor vehicle 2, ANZ Business Advantage account …91, ANZ account …04, ANZ Cheque account, the plant tools and equipment on the property at C Town and the contents in the home on that property.

10. The wife is declared solely entitled to the contents of the shipping container and the shipping container on the property at C Town and the husband shall permit the wife and/or her agents on reasonable notice to attend the property to remove the container and/or its contents, such removal to occur within thirty (30) days of the date hereof.

11. It is ordered that subject to the preceding the husband and wife are to have the sole right, title and interest in:

    (a)Any chattels, goods, furnishings and other property not previously dealt with as part of these orders which are, at the date hereof in their possession respectively;

    (b)Any monies, shares, debentures and superannuation entitlements not previously dealt with as part of these orders which stand in their sole name respectively at the date hereof.

12. That upon request in writing by one party of the other, the parties are to join in and do all acts and things and sign all necessary documents in order to secure and effect any rights of subrogation arising in favour of the parties consequent upon the parties, as guarantors, of the debt owing by Mr D Cabadas and Ms F to the Australia and New Zealand Banking Group Limited paying that debt from the proceeds of sale of the C Town property.

13. That the parties shall, from time to time, do all acts and things necessary to ensure that any amounts received by either or both of them from Mr D Cabadas and Ms F in repayment of their debt, are distributed forthwith equally between both parties.

14. That in the event that either party refuses or neglects to execute any deed or instrument within fourteen (14) days of being requested to do so then a Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.

15. The Court grants to the wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the wife in respect of the costs incurred by the wife in relation to the appeal.

16. The husband pay the wife’s costs thrown away by the adjournment of the appeal on 28 May 2019 on a party and party basis in the total sum of $2,612.26.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Cabadas & Cabadas has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT
BRISBANE

Appeal Number: NOA 99 of 2018
File Number: BRC 8117 of 2016

Mr Cabadas

Appellant

And

Ms Cabadas

Respondent

REASONS FOR JUDGMENT

1. On 12 October 2018, a trial judge in the Federal Circuit Court of Australia (“the Federal Circuit Court”) made orders for settlement of property[1] following a trial of property proceedings between Mr Cabadas (“the husband”) and Ms Cabadas (“the wife”).

   [1] Pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).

2. The trial judge also made orders in the wife’s favour with respect to costs of interlocutory applications determined in the course of the property proceedings. Whilst, by his Notice of Appeal filed on 9 November 2018 the husband purports to appeal from all of the orders made, no ground of appeal contained in that Notice is directed to the costs orders, nor are any submissions contained in the husband’s Summary of Argument addressed to those orders. Notably, whilst the husband is self-represented on the hearing of this appeal the husband emphasised that his Notice of Appeal was drawn by counsel, as the husband then had assistance from a solicitor and counsel. There is no arguable basis identified by the husband for setting aside the costs orders so the appeal from those orders must fail.

3. Whilst on the topic of costs, an adjournment of the appeal hearing initially listed for 28 May 2019 was brought about by the husband’s failure to file his Summary of Argument by 12 April 2019, as he was ordered to do by directions made by the Appeals Registrar on 14 January 2019. The husband produced his Summary of Argument only on the day of the hearing with no advance copy of it being provided to the wife. The orders made on 28 May 2019 included an order that the husband pay the wife’s costs thrown away by the adjournment. At the subsequent hearing of the appeal, the wife provided a schedule detailing her costs thrown away by the adjournment on a party and party basis in the total sum of $2,612.26. The husband raised no opposition to the appropriateness of that sum. That sum seems to me to be modest. I am satisfied that it is just to order the husband to pay the wife that sum and I will so order.

4. The husband’s appeal has been heard by me as a single judge exercising appellate jurisdiction pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”).

The trial judge’s determination

1. The trial judge determined that the net value of the parties’ property interests, including the wife’s modest superannuation interests, totalled $901,078.63.[2] However, included in that total as a notional asset of the husband, is an item described as “[livestock sales] post separation” at a figure of $130,176. That sum is the total of bank deposited proceeds of livestock sales effected by the husband from the modest livestock grazing enterprise conducted on the parties’ major asset, being the two lots comprising B Street, C Town (“the C Town property”), over the period commencing 6 August 2013 with the last recorded sale prior to the trial being dated 15 September 2017. That period prior to the trial is five years.

   [2] Reasons for judgment at [67] and [110].

2. The trial judge’s notional adding back of this sum into the “pool” of property interests to be considered, and the crediting of that sum to the husband as part of his entitlement, is the focus of all nine of the husband’s grounds of appeal as contained in the husband’s Notice of Appeal filed on 9 November 2018.

3. The trial judge assessed that the parties’ contributions-based entitlements[3] were equal and that no adjustment for s 75(2) factors was to be made.[4] Thus, on the combined “pool” of property interests of the parties as found by the trial judge to be worth $901,078.63, his Honour concluded that “the parties are each to receive assets worth approximately $450,539”.[5]

   [3] Pursuant to s 79(4)(a) to (c) inclusive of the Act.

   [4] Reasons for judgment at [108].

   [5] Reasons for judgment at [111].

4. Of course, the husband’s entitlement to $450,539 included, on his Honour’s approach to the addback of livestock sale proceeds of $130,176, notional property to that value, there being no suggestion that the husband retained that amount or any part of it as at trial.

5. Aside from the addback issue, in making orders to give effect to his conclusions the trial judge made an obvious mathematical error. The trial judge determined that, leaving aside the C Town property which was to be sold pursuant to the orders his Honour made, the husband would retain or have the benefit of property worth $193,462 (including the added back sum of $130,176), whilst the wife had property worth $9,555 (a difference between them of $184,047). However, rather than providing for an equalising adjustment of one-half of that difference ($92,023.50), as his Honour plainly intended,[6] the trial judge adjusted the full amount of $184,047 in the wife’s favour.

   [6] Reasons for judgment at [114].

6. Taken from the wife’s Summary of Argument for the appeal filed on 31 May 2019, the wife acknowledged this error. The wife contended on appeal that the relevant order made by the trial judge (Order 5(f)) required amendment of the monetary amount to replace the figure there stated of $184,087 with the correct figure of $92,043.50 and that such amendment could be made on appeal by consent. Otherwise, the wife’s Summary of Argument reflected the wife’s opposition to the appeal.

7. However, as argument of the appeal progressed the wife withdrew her opposition. That is the wife, by her counsel, acknowledged that the trial judge’s approach in adding back the sum of $130,176 as a notional asset credited to the husband, was erroneous. The wife acknowledged that, consequently, the appeal would have to be allowed.

Errors in the trial judge’s approach in adding back livestock sale proceeds

1. Notwithstanding the wife’s frank concession as to the trial judge’s erroneous approach to adding back, it is necessary to traverse this topic in some detail as the wife seeks a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”) in respect of her costs of the appeal and it is necessary that this Court be satisfied that the appeal ought be allowed by reason of error of law. Moreover, as will be further discussed, both parties sought that this Court re-exercise the discretion rather than remit the proceedings to the Federal Circuit Court for rehearing. The following is also relevant to any

   
   

   re-exercise of the discretion.

2. Tendered by the wife and admitted into evidence at trial as Exhibits “B” and “C” respectively, are schedules prepared in the wife’s case drawn from bank statements and other subpoenaed documents detailing sales of livestock, and proceeds banked from such sales, over the period 6 August 2013 to 15 September 2017. Exhibit “B” reflects all bank deposits from sales over that approximate four year period, totalling $130,176.45. Exhibit “C” reflects that, out of that total, $66,617.76 was deposited to a bank account in the husband’s sole name, whilst the balance was deposited to a joint account of the parties.

3. At trial the wife contended, and the husband disputed, that the parties had separated on 7 July 2013, albeit that both parties continued living on the C Town property until August 2015. Based upon that contention, the wife’s schedules admitted as Exhibits “B” and “C” are predicated upon the separation as having occurred on 7 July 2013, and lists all livestock sales and proceeds subsequent to that date.

4. However, the finding of the trial judge was that the parties’ separation occurred on 28 August 2015 when the wife left the C Town property whilst the husband remained living there.[7] Neither party sought, on appeal, to challenge the trial judge’s finding that final separation occurred in August 2015.

   [7] Reasons for judgment at [82] and [90].

5. Given that finding as to the date of separation, it was wrong for the trial judge to characterise the entirety of the $130,176.45 in livestock sales as being “post” or “since” the parties’ separation, as the trial judge does in his reasons for judgment. Approximately $60,000 of that total amount of about $130,000 pre-dates the date of the parties’ separation as found by the trial judge. As earlier noted, the first recorded sale in the schedule is dated 6 August 2013 being about two years prior to the date of the parties’ separation. Viewed another way, his Honour seems to have approached the question of adding back the full amount of $130,000 on the footing that this represented the proceeds of sales effected post-separation of the parties when on his Honour’s own finding that was not so.

6. However, with respect to the trial judge, even more fundamental is the error of notionally adding back sums of money that may have been available to a party post-separation, as a notional asset, without any necessary finding to support that approach. Here, it can be seen that the trial judge took no account of the husband’s longstanding dependence upon income from livestock sales for his livelihood which continued in the post-separation period; nor did his Honour have any regard to likely business expenses or expenditure offsetting the gross livestock sales income over a five year period between the first recorded sale in August 2013 and trial in August 2018. In short, his Honour gave no consideration to the fact that reasonably incurred expenditure by the husband, either for his own living expenses and support or for business expenses to maintain the livestock/business operation, had to be taken into account as an offset to the gross amount of livestock sales income produced over a period of some five years.

7. His Honour’s reasons for judgment discuss the topic in the following paragraphs commencing with discussion of the wife’s evidence which was given in the context of the wife’s contention that final separation occurred in July 2013. It will be seen that in the following discussion the trial judge fails to take account of his own finding that separation occurred in August 2015, more than two years after the wife’s asserted date:

   59.She says [Mr Cabadas] has since separation sold [livestock] and retained some of the sales monies.  Exhibit B is a summary of the sales since the date of separation being $130,176.45.

   60.Exhibit C is a summary of the sale proceeds retained exclusively by [Mr Cabadas] being $66,617.76.  (There were a number of documents from which this summary was derived.  The Evidence Acts permits such summaries.)

   …

   67.Having regard to exhibits A, B and C and Annexure 1 and other evidence I find the parties [sic] assets and liabilities are as set out as follows:

   [following is a schedule including an item described as “[livestock] sales post separation” attributed to the husband in the amount of $130,176]

   …

   99.Of greatest significance is the proceeds from [livestock] sales that [Mr Cabadas] has had access to post the parties [sic] final separation.  On balance I determine he has had access to the whole $130,176.  He led no compelling evidence to the contrary.  All his affidavit statements sought to justify him being a sole trader post the parties’ first divorce.  The [livestock] sales were an asset generated during the parties relationship.  Whilst living together both made a contribution to the [livestock] business.

   100.Although banked on occasion to a joint account those sales have benefitted [Mr Cabadas] to the sum of $130,176 equal to about 16% of the nett pool of assets.  This is to be balanced by the concession that since final separation [Ms Cabadas] made no contribution, apart from the payment of $700, to the parties’ assets and [Mr Cabadas] continued to work the farm and the [livestock] in that 3 year period from 28 August 2015 to final hearing.

   (Emphasis added)

1. For the reasons already noted, the findings recorded by his Honour at [59], [67] and [99] to the effect that the total sum of $130,176 was derived from livestock sales post-separation are wrong.

2. That aside, whilst it is strictly correct that, as recorded by the trial judge at [99], the husband “has had access to the whole $130,176” that was not the extent of necessary inquiry to justify, as a legitimate exercise of discretion, an addback of that sum against the husband, nor a sufficient finding consistent with authority, to addback that sum as a notional asset, as distinct from consideration whether, in order to achieve justice and equity, any issue should be dealt with as relevant to the assessment of contribution, or as a matter to be considered under s 75(2)(o) of the Act.

3. As recently discussed and considered by the Full Court in Trevi & Trevi,[8] longstanding Full Court authority emphasises that the adding back of notional property to the property interests to be considered, which notional property in fact no longer exists, is exceptional and an approach that can only be legitimately taken in exceptional circumstances.[9] Moreover, “parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives”.[10]

   [8] (2018) FLC 93-858 (“Trevi”) per Murphy J (with whom Alstergren DCJ and Kent J agreed) at [27] to [78].

   [9] C & C [1998] FamCA 143 (“C & C”) at [46] and Omacini & Omacini (2005) FLC 93-218 at [39] cited with approval in Trevi.

   [10]C &C at [46] cited with approval in Trevi.

4. As observed in Trevi at [29], by reference to settled authority there discussed and referred to:

   … Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.

5. As further observed in Trevi at [30]:

   30.Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.

   (Footnotes omitted)

6. It was fundamental that the trial judge consider, not simply the husband’s ability to access post-separation livestock sale proceeds, but also the use made of those proceeds, before the approach of adding any amount back as a notional asset for the purpose of undertaking the s 79(4) assessment could legitimately be adopted.

7. It is true that, as referenced by the trial judge at [99] quoted in full above, the self-represented husband was, misguidedly it must be said, determined to establish that he acted as a “sole trader” in the post-separation period; and that the husband did not adduce evidence in the form of a comprehensive accounting for his use of all funds derived from livestock sales; and in fact did not fully account for what livestock had been sold, and when, as he had been previously ordered to do. In these respects the husband invited adverse findings. However, there was otherwise a body of evidence before the trial judge concerning the likely expenditure by the husband of the proceeds he accessed over the five year period under consideration and the husband’s failures did not remove the need for that evidence to be properly considered.

8. That evidence included the following, by way of example. First, on the wife’s evidence, for example at paragraphs 64 to 67 of the wife’s affidavit filed on 13 July 2018, part of the subject sale proceeds were applied to the parties’ mortgage account secured by the C Town property and also to the parties’ GST account. That is, both parties benefited from that use of funds, yet the entire amount was added back against the husband. As another example, that same affidavit of the wife deals with gross income received from livestock sales. However, evidence at the trial during the husband’s re-examination included that, as confirmed via the parties’ accountant, the husband was not required to lodge an income taxation return for the 2015 financial year due to the fact that his taxable (after expenses) income was insufficient to meet the tax threshold. Notably, by reference to Exhibit “B”, banked livestock sale proceeds for that financial year totalled about $40,000. Self-evidently, by necessary inference, the expenses to operate the C Town property/the livestock operation so as to produce taxable or net income from livestock sales must have been substantial relative to the gross amount of sales in any given year or period.

9. The trial judge found that, from the date of the parties’ separation in August 2015, the husband had solely attended to management of the C Town property and the livestock operation undertaken on the property. The husband’s unchallenged evidence, at paragraph 15 of his affidavit for trial filed on 14 August 2018, was to the effect that the husband had never drawn a wage and that “beyond the barest of necessary food and toiletries, all money generated has gone to the servicing of business commitments” (emphasis added). That evidence is corroborated to a significant extent by reference to the extensive bank statements annexed to the husband’s affidavit. Further, with respect to the husband’s additional “K Service” business, the wife deposed in her affidavit filed on 19 October 2016 at paragraph 56 that the husband “earned only around $5,000 per year from that work”. Taken also with the husband’s evidence, there is simply no evidence to suggest that the husband’s “K business” was ever sufficiently viable to wholly sustain the husband’s livelihood.

10. Moreover, the husband’s continued work upon, and management of, the C Town property and the livestock operation in the post-separation (post-August 2015) period can be seen to have some reflection in the fact that, as at the trial, there remained livestock to be sold. On the second day of the trial, 17 August 2018, the trial judge made an order, with the consent of the parties, that all but two males and ten females of the remaining livestock on the C Town property be sold at a public auction to take place in October 2018. On the hearing of the appeal I was informed by both parties that 91 head of livestock were sold for gross sale proceeds of $53,000. Relevantly, by necessary inference, at least part of the subject sale proceeds can be taken to have sustained the business operations in order to produce that outcome more than three years after the parties separated.

11. On any analysis of the evidence that was before the trial judge, historically the parties had depended upon the C Town property and the livestock operation conducted to, in part, sustain their livelihood. As a corollary, historically, the C Town property and the livestock operation had never been sufficiently viable to wholly sustain the parties’ living expenses. Indeed, it had been necessary for the wife to engage in off-farm external employment, for substantial periods, to sustain the household. Likewise, the husband had engaged in an additional business “K Service” to supplement farm income.

12. Whilst no doubt properly considered to be an asset, the livestock existing from time to time was the stock-in-trade of a trading business. Post-separation of the parties, that stock-in-trade continued to be used to support the C Town property and also was used by the husband to sustain his livelihood in circumstances where he was continuing to sustain the livestock operation.

13. Counsel for the wife did not challenge the husband in cross-examination at trial as to his use of any proceeds of livestock sales as being unreasonable. In the

    
    

    post-separation period from August 2015 to the trial in August 2018, a period of three years, gross sale proceeds totalled about $70,000 equating to about $23,000 gross per year for each of those three years. There was no suggestion that the husband had retained or accumulated for himself any of these funds as still in existence at trial. Nor was there any contention that these funds had been expended by the husband on anything other than the explanation he gave, namely, basic living expenses and to sustain the business operation. As already noted, no challenge was made to the husband on his explanation. The husband’s affidavit evidence as quoted above went unchallenged.

14. On the evidence as a whole, it could not be seen that the husband embarked upon “a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets”;[11] nor could it be said that the husband had “acted recklessly, negligently or wantonly with matrimonial assets”.[12] Nor could it be seen that the husband made some premature distribution to himself of matrimonial assets given that post-separation all that occurred was a continuation of what had gone on before in terms of operation of the livestock business to sustain the C Town property and to sustain the husband’s livelihood. It bears repetition that the husband’s unchallenged evidence was to the effect that any livestock sale proceeds he accessed were used by him for reasonable living necessities and were otherwise applied to sustain the business operation.

    [11]Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644.

    [12] Ibid.

15. There was, thus, no basis, consistent with guidelines established by the authorities discussed in detail in Trevi, to adopt the exceptional approach of adding back a notional asset and crediting that to the husband of the subject livestock sale proceeds in the amount of $130,176.45. If it were possible to conclude in these circumstances that the husband had enjoyed some benefit not had by the wife, perhaps in association with the husband’s failure to make full disclosure about livestock sold and the like, then this properly fell to be dealt with not as a notional addback, but as relevant to assessing contribution or, most logically, as a s 75(2)(o) consideration. In no event could the husband justly and equitably be treated as having had, to the exclusion of the wife, the benefit of a capital sum totalling $130,176.45, or anything like that amount.

16. For these reasons, the trial judge’s approach in adding back the subject sum was erroneous. It also follows from the foregoing discussion that the trial judge’s reasons were inadequate to explain his Honour’s adoption of the exceptional approach of adding back any sum, let alone the full amount of $130,176.45, on all of the evidence. The failure to provide adequate reasons is itself an error of law.[13]

    [13] Inghams Enterprises Pty Ltd v Kim Yen Tat [2018] QCA 182 at [50] citing Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219 at [57]; Dornan v Riordan (1990) 24 FCR 564 at 573; Petitt v Dunkley [1971] 1 NSWLR 376 at 382; Dautry & Wemple (2018) 59 Fam LR 184 at [44] per Austin J sitting as a single judge citing Pettitt v Dunkley [1971] 1 NSWLR 376 at 382 and DL v The Queen (2018) 356 ALR 197 at [131].

17. For these reasons, error is established sufficient for the appeal to be allowed and for the wife to be granted a costs certificate for her costs of the appeal.

Husband’s challenge – denial of procedural fairness

1. The foregoing discussion essentially disposes of all of the grounds of appeal advanced by the husband, save that by Ground 8 the husband contends for an error in the form of a denial to him of procedural fairness as follows:

   8.That the Applicant (Appellant) was not afforded procedural fairness in relation to the admission into evidence of exhibits A, B and C.

   (As per the original)

2. The “balance sheet” which was revised and ultimately admitted as Exhibit “A” is a Schedule of Assets and Liabilities of both parties prepared by the wife’s legal representatives.

3. The wife’s balance sheet was handed up to the trial judge at the outset of the trial.[14] Review of the trial transcript reveals that after being submitted to his Honour, the trial judge thereafter painstakingly addressed each item in the schedule in exchanges with the husband to determine what was agreed, or not agreed, with respect to items and values appearing on the schedule.

   [14] Transcript 16 August 2018, p.5 lines 1-13.

4. Item 3 in the balance sheet, the parties’ partnership, was removed from the sheet by agreement as the amount noted represents the amount of livestock sales since separation already discussed. The husband initially took issue with that value[15] before being shown the subpoenaed bundles from which the wife’s solicitor created Exhibits “B” and “C” already referred to. The husband ultimately agreed to that value representing the proceeds which were deposited into the bank accounts.[16]

   [15] Transcript 16 August 2018, p.6 line 15 to p.7 line 31.

   [16] Transcript 16 August 2018, p.15 lines 33-45.

5. Likewise, the remaining values which were added on to the balance sheet were done so with the agreement of both parties.[17]

   [17] See, for example, Transcript 16 August 2018, p.30 lines 41-42 and Transcript 17 August 2018, p.113 lines 6-10 where item 20A was added to the sheet.

6. Review of the transcript confirms that Exhibits “B” and “C” were collated by the wife’s solicitor after perusing subpoenaed bundles from E Auctioneers.[18] These are the same subpoenaed documents the husband was given to satisfy himself of the total amount in Exhibit “C” as being correct. The husband was given the subpoenaed documents before there was an adjournment in order to allow the husband to look through the subpoenaed bundles to confirm he was satisfied with the accuracy of the documents.[19] After the adjournment, the husband confirmed he was satisfied.

   [18] Transcript 16 August 2018, p.7 lines 22-24.

   [19] Transcript 16 August 2018, p.15 lines 23-26.

7. Likewise that is so with respect to Exhibit “B” already discussed.

8. Review of the transcript reveals that with respect to each of Exhibits “A”, “B” and “C” the trial judge took careful efforts with the husband to confirm that the documents as ultimately tendered and marked as Exhibits were accurate in the sense of accurately recording what they purported to record with the agreement of both parties. As noted, the trial judge was careful to allow the husband ample time to confirm the accuracy of the documents. This the husband did.

9. This occurred in the context that there could be no doubt that the wife was agitating issues with respect to livestock sales since August 2013, her contended date of separation. The husband could have been in no doubt that he faced a case that the wife sought some redress with respect to livestock sales. Moreover, the wife clearly was agitating issues concerning the husband’s failure to provide full and frank disclosure regarding livestock sales. As noted, the trial was adjourned for about 40 minutes to allow the husband to satisfy himself of the figures in the summaries and after that adjournment he expressed his agreement with the correctness of them.

10. It follows that there is no substance whatsoever in the husband’s complaint to the effect that he was somehow denied procedural fairness in the admission of these documents. There is no merit in this ground of appeal.

Conclusion on appealable error

1. Whilst error in the form of procedural unfairness is not established, for the reasons given identifying errors, the appeal is to be allowed from the orders made on 12 October 2018, save and except for Orders (7) and (8) with respect to costs already discussed.

Re-exercise or remitter?

1. Both parties sought that this Court re-exercise the discretion rather than the proceedings being remitted for rehearing in the Federal Circuit Court.

2. Obviously enough, were there any substance in the husband’s complaint about a lack of procedural fairness attending the trial, there would be no alternative but to remit the proceedings for rehearing as it would be potentially unsafe to rely upon any findings of the trial judge if it were concluded that the trial process had been infected by some denial of procedural fairness. In the result, for the reasons stated, there is no substance in the husband’s complaint about lack of procedural fairness and moreover, the husband joins the wife in seeking that this Court

   
   

   re-exercise the discretion rather than the proceedings being remitted.

3. It was explained to the husband, who I repeat was self-represented, that each party must have the opportunity to adduce evidence of circumstances as they currently exist, given that the re-exercise of discretion occurs by reference to the facts and circumstances existing at the time the discretion is to be exercised.[20] That explanation included reference to the example of values of items of property likely having changed since the trial. It was explained to the husband that if either party sought to adduce evidence as to the current values, or current circumstances, and any of that evidence was disputed, this Court was

   
   

   ill-equipped to resolve factual disputes and inevitably this would mean the proceedings would have to be remitted to the Federal Circuit Court for rehearing.

   [20]Allesch v Maunz (2000) 203 CLR 172.

4. The husband maintained that he did not wish to avail himself of any opportunity to put further evidence before this Court of current facts and circumstances for the purpose of the discretion being re-exercised.

5. Both parties sought that this Court should proceed on the basis that those findings of the trial judge which are not the subject of challenge and interference by this Court, should be accepted for the purpose of re-exercising the discretion.

6. Despite both parties agreeing upon this basis upon which this Court might

   
   

   re-exercise the discretion – largely by reference to facts and findings made by the trial judge and thus pertaining as at the date of trial – that approach creates a degree of unease. Inevitably, facts and circumstances have likely changed since the trial was heard some 12 months ago.

7. However, despite that unease, I propose to re-exercise the discretion primarily because of the risk of greater injustice occurring if the proceedings are remitted for rehearing. That is so because of, first, the ages of the parties. The husband is 63 years of age and the wife 62 years of age. Their property interests combined are of relatively modest net overall value. Neither party can readily afford the delay, stress and added expense of another trial in circumstances also where the property settlement proceedings commenced some three years ago.

8. Second, the parties finally separated on 28 August 2015, now more than four years ago, when the wife vacated the C Town property. Since then, the husband has continued to reside on the property. However, for her part, the wife has struggled to accommodate herself without the assistance and goodwill of others. Both parties have relied on modest employment – the husband on the livestock operation and his “K Service” work and the wife as a part-time retail assistant, supplementing Centrelink benefits. Both parties can be seen as having limited income and no surplus funds.

9. Third, there is plain evidence that even when he was represented by lawyers during the proceedings, and despite orders or directions, the husband was not always forthcoming with responses to requests for information from the wife; or with making full disclosure concerning bank account movements and livestock sales and the like, despite Court orders. As another example, despite directions for the filing of trial material well in advance of the trial, the husband filed an affidavit on 14 August 2018 for a trial commencing on 16 August 2018. That led to the wife applying to proceed on an undefended basis but the trial judge indicating that he would not proceed on an undefended basis but may be prepared to grant an adjournment to the wife. The situation being as it was, the wife preferred to proceed with the trial rather than to attempt to obtain any adjournment. As yet further examples, the wife was put to the trouble and expense of bringing interlocutory applications because of defaults by the husband. Whilst the wife received the benefit of costs orders made in her favour in respect of these applications, these were made on a party and party basis so the wife was left out of pocket. As a further example, the hearing of this appeal had to be adjourned on 28 May 2019 because the husband had failed to comply with the orders of the Appeals Registrar that he file his Summary of Argument for the appeal by 12 April 2019. Only on the morning of the hearing did the husband produce his proposed Summary of Argument. All of this points to the likely difficulties that would be encountered by the wife if the husband’s approach to the litigation, as indicated by these examples, continued upon the remitter of proceedings for rehearing in the Federal Circuit Court.

1. Fourth, it is only 12 months or so since the trial was conducted by the trial judge. Notably, the major asset of the parties, the C Town property, was valued at $900,000 for the trial and that value was adopted by the parties and by the trial judge. That property overwhelmingly constitutes, in terms of value, the property of the parties. At the hearing of the appeal I was informed from the bar table that a contract of purchase had been submitted by a prospective purchaser at a figure of $892,500 which the wife was keen to execute, but the husband was not. Whilst this aspect will be discussed further below, and there are reservations about an offer being treated as evidencing value,[21] it would seem that neither party contends that there has likely been any significant fluctuation in the value of the C Town property since the trial.

   [21] McDonald v Deputy Federal Commissioner of Land Tax for New South Wales (1915) 20 CLR 231; Goold v Commonwealth of Australia; Rootsey v Commonwealth of Australia and Another (1993) 114 ALR 135; Blake & Blake [2007] FamCA 10.

2. Finally, the remaining areas of dispute between the parties do not include any substantial disagreement as to how their respective s 79(4) contributions ought be assessed, or that there ought be a substantial adjustment for s 75(2) matters. On the hearing of the appeal, the husband contended that there should be an equal division of property. This reflected the husband’s approach that the parties’ respective contributions should be seen as equal and that there ought be no adjustment for any s 75(2) factors. Counsel for the wife contended that contributions should be assessed as equal but, whilst no longer agitating that there ought be any “addback” for livestock sales, submitted that there ought be an adjustment under s 75(2)(o) in respect of the unaccounted for (by the husband) livestock sales leading to an overall 53 per cent/47 per cent outcome in the wife’s favour.

3. Given the limited areas of dispute in this respect and the other factors referred to, I propose to re-exercise the discretion rather than remit the proceedings for a retrial.

Short summary of the parties’ relationship

1. The husband was born in 1956 and is 63 years of age. The wife was born in 1957 and is 62 years of age.

2. As the trial judge noted, for each of the parties this was their second marriage and they married each other twice during their relationship. They commenced cohabitation in 1985, married in 1986, separated in 2000 and in 2005. They re-married in 2007 and the trial judge found that they finally separated in August 2015.[22]

   [22] Reasons for judgment at [90].

3. A fundamentally important feature of the relationship is that it produced two now adult children born in 1987 and 1989 respectively.

4. On the trial judge’s unchallenged findings, in the approximately 30 year period between 1985 and August 2015, for about 23 years of that period the parties cohabitated and, as noted, their marriage produced two now adult children.

5. Reference will be made to the trial judge’s unchallenged findings concerning each party’s contribution. Suffice to note here that the trial judge found that each party worked hard in their respective spheres with the greater proportion of the homemaking and parenting tasks falling to the wife.

Just and equitable requirement – s 79(2)

1. Set out below, mainly relying upon the findings of the trial judge which neither party seeks to disturb for the purpose of re-exercise of discretion by this Court, are the parties’ respective existing property interests.

2. It is clear that the parties’ final separation in August 2015 brought an end to their common use of property and that such separation was voluntary. Both parties seek that the Court makes property settlement orders pursuant to s 79 of the Act. Consistent then with Stanford v Stanford,[23] the just and equitable requirement in s 79(2) of the Act is readily satisfied.

   [23] (2012) 247 CLR 108 at [42].

The parties’ existing property interests

1. For the purpose of this Court re-exercising the discretion, both parties submitted to the effect that this Court could adopt those of the items and values of property interests as found by the trial judge, which were not the subject of challenge on this appeal. The trial judge set out the property interests of the parties or either of them at [67] of the reasons.

2. As already noted, the trial judge took the approach of including, as an asset belonging to the husband, the sum of $130,176 in respect of an item described as “[livestock] sales post separation.” For the reasons already stated, this does not present as a case where the proper exercise of discretion results in the exceptional approach of adding back the subject proceeds of livestock sales as notional property. That item does not in fact exist, and, for the reasons already stated, it ought not be “added back” as notional property to be considered.

3. The parties agreed before me that in respect of the livestock sale proceeds from the remaining livestock sold pursuant to the order made on 17 August 2018, that after payment of joint expenses including for rates and mortgage payments relating to the C Town property, a residual amount of $25,297.59 is held in the trust account of the solicitors for the wife. As I understand it that amount continues to be needed for rates and mortgage payments for the C Town property as and when these arise. On that basis, whilst the amount obviously exists it will be quarantined from inclusion in the “pool” to be considered for adjustment and will be dealt with separately by orders.

4. There exists other items, in particular liabilities, which need not be included in the schedule for adjustment purposes. For example, the trial judge refers to some accumulated credit card debt of the wife but does not include it on the basis that it was accumulated post-separation. As another example, there are references to the evidence in the husband having some liability, apparently disputed by him, for legal fees in respect of his former lawyers who acted for him in the earlier stages of these proceedings. In the event, neither party sought to supplement the Schedule of Assets and Liabilities compiled by the trial judge and both parties, as noted, agreed that for the purpose of this Court re-exercising the discretion the findings of the trial judge ought be relied upon, save only in respect of the livestock sales issue already dealt with.

The C Town property

1. Lot 1 and Lot c on Crown Plan C … on Certificates of Title …94 and …95 respectively constitute the C Town property. Taken from the expert valuer’s report for the trial, each of Lot 1 and Lot 2 are very similar in size and each contain about 258 hectares for a combined total area of about 516 hectares or about 1,275 acres. Whilst similar in size, the valuation report reflects that the nature of the land is variable because of the topography. Such infrastructure as exists on the C Town property, comprising livestock yards, a storage shed and an incomplete shed is located on Lot 1. I note in passing that the valuation report confirms that such divisional fencing as exists between the two lots is in poor condition and could not be regarded as stock proof.

2. It is uncontroversial that the C Town property as a whole (that is both lots) was valued by an expert for the trial and neither party disputed that expert valuation at trial and the trial judge correctly adopted that valuation of $900,000 as the value for the purposes of making the s 79(4) assessment. However, if that property is to be sold, as the wife contends should occur, then obviously the market will determine the value at the time of sale and the orders made will need to make provision for any rise or fall on the price secured compared to the valuation figure of $900,000. Thus the amount of $900,000 is adopted only for the purposes of assessment.

3. For his part, the husband contends as he did at trial, that only one lot of the two lots comprising the C Town property ought be sold (Lot 2) with the husband to retain the other lot (Lot 1). The husband contends that from the sale proceeds of Lot 2 the ANZ Bank loan in the joint names of the parties in the amount of $203,425 ought be paid with the proceeds otherwise being available to meet the wife’s entitlement to property settlement.

4. It is trite that it is fundamental to the making of orders under s 79 for assets to be valued or for the value to be determined by the Court.[24] In Dunbar and Dunbar[25] the Full Court accepted the test of the real value of an asset which was laid down by the High Court in Spencer v The Commonwealth[26] as “[t]he object of any valuation exercise is to establish what a willing but not anxious purchaser would be prepared to pay and a willing but not anxious seller would be prepared to accept”.

   [24] See, for example, Lenehan and Lenehan (1987) FLC 91-814 and Hull & Hull (1983) 9 Fam LR 241.

   [25] (1987) FLC 91-846 at 76,399.

   [26] (1907) 5 CLR 418.

5. The valuation evidence in this case is directed to the valuation of the C Town property as a whole, not its individual component lots. The husband adduced no expert evidence at trial as to the value of the individual lots, nor in maintaining his current claim does he offer any such expert evidence to this Court. There is thus no means by which this Court could determine the value of Lot 2 as distinct from Lot 1, and vice versa, and importantly as to the effect (if any) upon the value of each individual lot of its separation from the other lot. A substantial focus of the wife’s evidence at trial was the potential difficulty involved in attempting to sell Lot 2 separately from Lot 1 given the access issues she refers to in considerable detail in her affidavit evidence.

6. The husband asserted from the bar table during the hearing of the appeal to the effect that he had a neighbour willing to purchase Lot 2. Leaving aside that this was mere assertion, and not the subject of formal evidence, the husband declined to inform the Court, despite invitation, as to any price the putative purchaser was willing to pay for Lot 2. The husband did not identify any terms of sale at all.

7. It is to be noted that in advance of the trial, the wife sought the husband’s cooperation in obtaining a separate valuation of the two lots but received no response to this request, with the end result being that only a valuation of the combined lots was the subject of expert evidence. That expert was not

   
   

   cross-examined at trial in any attempt by the husband to identify the separate value of Lot 2.

8. The trial judge’s determination of this issue was as follows:

   72.      The [C Town] property consists of two lots being [lot 2] and [lot 1].

   73.[Mr Cabadas] wants to effectively “subdivide” the property at [B Street, C Town] by selling [lot 2] thereof and distributing the sale proceeds and that he retain [lot 1].

   74.[Ms Cabadas] proposes the sale of the whole property and distribution of the sale proceeds.

   75.      [Lot 2] will not be easy to sell.

   76.There are access difficulties to it.  Access is via an unformed road.  [G Council] is not responsible to maintain the road.

   77.There is no evidence as to the capital gains tax payable if [lot 2] is sold separately.  Indeed there is no evidence about Capital Gains Tax liability on sale of the whole property.

   78.The ANZ Bank has security over both lots and may take all monies owed to them from the sale of [Lot 2].

   79.The delay in sale will leave [Mr Cabadas] comfortably housed on [Lot 1] and [Ms Cabadas] without any settlement monies and precarious housing.

   80.There is no evidence as to what if any costs will be incurred to create two titles to enable the sale of [Lot 2] separately.

   81.A more just and equitable outcome is to sell the property as a whole because:

   •         No access issues arise.

   •         The sale may occur quicker.

   •Capital Gains Tax may be avoided on at least part of the property surrounding the house, thereby maximising value in the hands of the parties.

   •         It doesn’t necessitate further valuations of each lot separately.

   •The valuation relied on at the final hearing valued the whole of the property and not individual lots.

9. The wife provided detailed evidence concerning the access issues regarding Lot 2 in her affidavit sworn on 12 July 2018. That evidence includes the costs of a survey involved in having a formal easement registered over Lot 1 to facilitate access to Lot 2 which has no means of access other than via Lot 1. The wife, as did the valuer as already noted, provides evidence of the lack of internal fencing between the two lots or divisible fencing that could be regarded as stock proof. The wife’s evidence details the difficulties, because of the topography, in constructing a dividing fence between the lots.

10. Whilst the trial judge was incorrect to approach the question on the footing that two titles needed to be “created” to facilitate the sale,[27] the trial judge’s observations about the difficulties of sale of Lot 2 and the difficulties of access to Lot 2 were informed not only by the wife’s evidence but by the oral evidence at trial of the Director of Operations at G Council in relation to the road access to the C Town property, as well as the valuation report.

    [27] Reasons for judgment at [80].

11. Having reviewed the evidence referred to, there is no reason, in my judgment, to doubt the findings of the trial judge concerning the access issues regarding Lot 2 and the trial judge’s conclusion that Lot 2 as a stand-alone proposition “will not be easy to sell”.

12. However, most fundamentally, there is simply no evidence of value as earlier referred to. That is, it is unknown what price or approximate price Lot 2 would sell for and conversely what would be the residual value of Lot 1 alone. The subject property is a grazing property and it is trite that the overall area available can be significant in terms of the value of such property. For the reasons already stated, historically even the combined lots constituting the C Town property could not be said to have provided a viable livestock grazing operation in terms of not requiring the parties to engage in supplement forms of gaining income. The impact upon that operation if it were to be confined only to Lot 1, about one half of the area utilised to date, would be to further reduce that viability. Taken from the valuation report the C Town property (the two lots combined) has a carrying capacity of only 90 breeders and progeny or only 130 dry livestock.

13. As to capital gains tax referred to by the trial judge, the evidence is that the C Town property as a whole was purchased in March 2008 for $850,000. As noted, the valuation is at the figure of $900,000 and there is the suggestion earlier noted that an offer has been made close to the valuation figure. The short point is that on the assumption the property can be sold at or about the valuation figure, then, allowing for the 50 per cent discount for ownership longer than 12 months under the capital gains taxation regime, there would only be a relatively modest amount of capital gains to split between the parties as joint owners. However, it is a complete unknown, as the trial judge observed, as to the capital gains tax position if Lot 2 were to be sold separately.

14. I will, for the purpose of undertaking the s 79(4) assessment, include the C Town property at its valuation of $900,000. For the reasons discussed, I am unable to assign a separate value to each lot comprising the C Town property. Nor is there, as referred to, any evidence of the capital gains taxation result if the lots are sold separately.

The parties’ guarantee

1. In 2014, the parties agreed to guarantee repayment of a loan provided by the ANZ Bank to their son and his partner in the amount of $150,000 for the purchase of a business. The loan was later extended to the amount of $180,000.

2. I was informed at the appeal hearing that the balance of the loan amount is now $138,000.

3. The trial judge made an order for the sale of the C Town property. That gives context to the following order the trial judge also made:

   (9)Prior to the completion of sale of [B Street, C Town], the parties are to cause the extinguishment of the ANZ Bank guarantee securing the loan to their son and daughter-in-law.

4. The trial judge’s reasons for judgment make no mention of this order or its consequences with respect to the parties’ rights to recover the debt from their son and his partner. No item appears in the Schedule of Assets and Liabilities at [67] of the trial judge’s reasons concerning this contingent liability.

5. It is unclear from the terms of the order then as to what was envisaged by the trial judge in terms of extinguishment of the guarantee. That would seem to require the payment of the debt. It is unclear by what means the parties would be capable of extinguishing the subject guarantee “prior to” the completion of the sale of the C Town property or otherwise than by paying the amount of the debt. Moreover, the reasons are silent as to the parties’ rights of subrogation and rights to recover the debt from the debtors.

6. The wife’s evidence for trial, whilst by no means definitive on the point, indicated that the parties were obliged to provide security to support their guarantee. For example, at paragraph 87 of her affidavit filed on 19 October 2016 the wife deposes:

   87.Also in 2014 [Mr Cabadas] and I agreed to guarantee and make available one of the two titles for the [C Town] property to secure borrowings for our son [Mr D Cabadas] to allow him to buy a business.

7. Paragraphs 153 to 155 of that same affidavit are as follows:

   153.I refer to paragraph 85. I agree in 2014 [Mr Cabadas] and I gave a Guarantee for a loan of $150,000 for our son [Mr D Cabadas] to open his own [Business in H Town].

   154.I refer to paragraph 86. [Mr D Cabadas] and his partner [Ms F] service the loan.

   155.I refer to paragraph 87. I agree with the contents therein and say this loan was also extended to $180,000 in July, 2016.

8. I note also that at paragraph 184 of the same affidavit the wife deposes that:

   … On 29 August 2014, Lot 156 was valued for the bank guarantee for our son [Mr D Cabadas] by [J Group], rural valuers.

9. Notably in other parts of her affidavit material the wife deposes to Lot 2 being unencumbered.

10. The position being unclear, subsequent to the hearing of the appeal, the Court caused the Appeals Registrar to seek a Statement of Agreed Facts from the parties concerning relevant facts surrounding the guarantee together with relevant documents. That statement and documents are admitted and marked as Exhibit 1 on the hearing of the appeal.

11. From those documents the following relevant facts can be distilled:

    a)Security for the guarantee is held over Lot 1 via a registered mortgage held by the ANZ Bank;

    b)Sale of Lot 1 either alone or with Lot 2 will crystallise the liability of the parties to pay the sum then owing to the ANZ Bank;

    c)The sale of Lot 2 alone will not crystallise the parties’ liability under the mortgage in respect of the guarantee.

12. It follows that sale of the C Town property (both lots) as sought by the wife will crystallise the parties’ present contingent liability in respect of the guarantee amount of the debt into an actual liability for the amount owing (and payable) at the time of sale of the C Town property.

13. The orders sought by the husband on appeal as contained in his Notice of Appeal which, as earlier noted, was drawn by the husband’s lawyers at the time, seek (proposed Order 2(b)) that the liabilities include “the amount necessary to extinguish the ANZ Bank guarantee securing the loan to the parties’ son and daughter-in-law”; and proposed Order 7(c) requires the husband to “[c]ause the extinguishment of the Respondent wife’s liability to ANZ Bank in respect of the guarantee securing the loan to the parties’ son and daughter-in-law.”

1. Thus, whilst recognising that at present the parties have only a contingent liability with respect to the guarantee amount balance of $138,000, that amount must be accounted for as an actual liability rather than a contingent liability if the C town property as a whole is ordered to be sold, as distinct from only an order in respect of Lot 2. However, counterbalancing this is the accrual to the parties of rights of subrogation with respect to the debt.

2. Payment of the debt by the parties as guarantors will give rise to their entitlement to be subrogated to the creditors’ rights against the debtors.[28] That is, the parties will assume an entitlement to the creditors’ rights as regards repayment from the debtors of the debt to them.

   [28] Stirling v Forrester (1821) 4 ER 712; Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654; State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228; McColl’s Wholesale Pty Ltd v State Bank of New South Wales (1984) 80 FLR 302; [1984] 3 NSWLR 365.

3. The wife seeks that the guaranteed debt be paid from the sale proceeds of the C Town property. However, her evidence does not descend into any detail as to whether or not she intends that subsequent to repayment to the Bank, repayment of the debt from the son and his partner to the parties is to be formally pursued. Likewise, in this event, the husband’s position is unclear. There is somewhat of a contradiction between the orders he seeks on appeal (as set out in his Notice of Appeal) concerning the debt being taken into account as a liability, and his oral argument on appeal to the effect that he proposed to indemnify the wife with respect to the guarantee.

4. In short, it is unclear whether the parties or either of them intend to pursue rights of subrogation, or otherwise to seek to recover the debt from their son and his partner in the event the debt to the Bank were to be paid by them as guarantors, or whether they will not in fact pursue recovery.

5. In circumstances where the parties’ son and his partner have been meeting repayments to the Bank on the debt apparently from their business operation since the first borrowing in 2014 (later extended) and the loan has been reduced from a capital sum of $180,000, at its high point, to the current balance of about $138,000, there is no reason to suppose that the parties’ son and his partner cannot make repayment of the debt to the parties. That is, to continue making the repayments they are currently making to the Bank but to the parties. Nor do the parties’ circumstances, individually or collectively, support a conclusion to the effect that the parties are obviously intent on forgiving the debt owed by their son and his partner.

6. I will return to this subject when discussing the topic of the just and equitable orders to be made, but for present purposes it will be seen that in the following schedule I will include the current amount of the debt the subject of the guarantee as a liability to be taken into account, and I will leave, in a separate schedule, the rights of subrogation as a separate asset to be dealt with.

Schedule of property interests

1. Making then the necessary modifications to the Schedule of Assets and Liabilities appearing at [67] of the trial judge’s reasons for judgment, but adopting the values not disputed which both parties seek be adopted for the purpose of re-exercise of discretion and the orders to be made, I find that the parties’ existing assets and liabilities are as follows:

Assets	Ownership	Value
Real Property
B Street, C Town QLD (2 lots)	Joint	900,000
Businesses
K Service	Husband	Nil
Static bandsaw	Joint	3,500
Vehicles
Motor vehicle 1	Joint	2,700
Motor vehicle 2	Joint	2,500
Motor vehicle 3	Husband	15,500
Tractor	Husband	15,000
Motor vehicle 4	Wife	3,000
Bank Accounts
ANZ Bank (last four nos.)
Business Advantage – …91	Joint	15
GST Account – …04	Joint	1
Cheque Account – …58 (o/drawn)	Joint	-214
Online Saver – …31	Wife	293
Progress Saver – …71	Wife	20
Savings Account – …23	Wife	188
Online Saver – …77	Husband	45.73
Access Advantage – …69	Husband	21.14
Business Account – …91	Husband	1,453.76
N Group	Wife	113
Shares
204 O Group Shares 13/8/18 $3.39	Wife	692
Other Assets
Livestock pursuant to order 17 August 2018	Husband	11,890
Plant, equipment & tools	Joint	10,325
Husband’s tools, valued L Group	Husband	35
Domestic contents	Joint	2,000
Shipping container	Joint	1,000
Jewellery, valued by L Group	Wife	500
Superannuation
Super Fund 1	Wife	1,834
Super Fund 2	Wife	1,915
TOTAL ASSETS INCLUDING SUPERANNUATION	$974,327.63
Liabilities
ANZ Bank Loan – …07	Joint	203,425
Liability under ANZ Bank guarantee	138,000
NET VALUE	$632,902.63

PLUS: Rights of subrogation, in the event the guaranteed debt is paid by  the parties, to the debt of approximately $138,000.

Assessment of contribution

1. The trial judge made the following findings, none of which are challenged on appeal, concerning the parties’ respective contributions pursuant to s 79(4):

   82.Apart from the initial 10 head of [livestock] gifted by the husband’s parents and the two inheritances received by the wife in 2002 in the sum of $38,000 and in 2011 in the sum of $40,000, I find the parties’ contributions to the date of their last separation on 29 August 2015 were otherwise equal because of the following evidence.

   83.Both were in paid employment for periods during their two marriages.

   84.[Mr Cabadas] worked hard at farming, carpentry and in his [K Service] business.

   85.[MS Cabadas] assisted as able, doing bookwork and helping with construction tasks, on the house they built, within her physical capacity.  She diligently undertook off farm work to enhance the parties’ financial circumstances.

   86.Because [Mr Cabadas] was a hard worker more of the parenting tasks fell to [Ms Cabadas] relevant to the parties’ two children and for a 3½ year period for the daughter of [Mr Cabadas’] first marriage when that daughter was living with the parties.

   87.[Ms Cabadas] banked her wages to her own account but used them to meet household expenses and the needs of the family.

   …

   91.There is no evidence as to what increase in values, if any, happened first to the [M Town] property from July 2000 to the parties remarrying on 1 September 2007.  Then secondly to the [C Town] property from August 2015 to the valuation date on 8 January 2017.

   92.As such no party is credited with any additional contribution for valuation increases during these periods.

   93.From 28 August 2015 to the date of final hearing there is no evidence as to valuation increases in the [C Town] property.

   94.There is no evidence as to any improvements being undertaking [sic] on the property in his period.

   95.The land subsisted and [livestock] breed naturally and were sold.  [Mr Cabadas] managed and looked after the herd by himself in this period.

   96.The inheritances received by the wife found their way by one means or another, which are not entirely clear, for the benefit of the family unit.

   97.Although some years ago these sums have to be reflected in the contribution analysis as does the gift of the initial 10 head of [livestock] by [Mr Cabadas’] father.

   98.A tiny adjustment pursuant to the decision in Robb & Robb relevant to the 3½ year provision for [Mr Cabadas’] daughter is also necessary.

   (Footnotes omitted) (As per the original)

2. Albeit that he added back the notional sum for livestock sales as discussed, the trial judge ultimately concluded that the parties’ contributions from the outset of the relationship until trial were to be assessed as equal.[29]

   [29] Reasons for judgment at [101].

3. It can be seen that, in broad and simple terms, both parties made extensive contributions within the meaning of s 79(4) over a long period.

4. For the husband, the following can be seen to constitute the most significant of his contributions:

   ·His external employment as a tradesman and later as a livestock grazier and contractor during the marriage;

   ·The gift from his parents of 10 head of livestock;

   ·His contribution to homemaking and parenting tasks;

   ·His post-separation work to maintain the C Town property and the livestock operation.

5. With respect to the wife it can be seen that the most significant of her contributions include:

   ·Her paid employment undertaken during the relationship;

   ·Her assistance with book work and clerical tasks in the business activities;

   ·Her major share of responsibility for homemaking and parenting tasks, not only for the parties’ children but also with respect to the husband’s children from his first marriage and in particular the daughter who lived with the parties for a period;

   ·Her inheritances of $38,000 in 2002 and $40,000 in 2011.

6. As already noted, the husband contends on appeal that the proper assessment of contributions results in an equal division with there being no adjustment to that outcome for s 75(2) factors. For her part, the wife essentially agrees with a 50 per cent/50 per cent assessment of the parties’ contributions but contends that the husband’s failure to fully account for livestock sales should see an adjustment under s 75(2)(o) of the Act in the wife’s favour with the overall result of a 53 per cent/47 per cent division in her favour. However, for the reasons already given in discussing the topic of livestock sales and notional addbacks, I am not persuaded that there exists any proper basis to make any adjustment in the wife’s favour for this factor.

7. In my judgment, the appropriate assessment of contributions in this case is that the parties’ respective contributions over the entire period of the relationship until now are properly assessed as equal.

8. With respect to s 75(2) factors, other than the livestock sales issue, neither party contended for the proposition that any relevant s 75(2) factors produce the need for any adjustment in favour of the party.

9. Obviously both parties are of an age where they are approaching retirement. Each of the parties have health issues albeit that, as the trial judge found, each remain capable of undertaking work.

10. Both parties are in the position of having limited income and their property and financial resources have already been outlined.

11. The husband has no superannuation and the wife has very limited superannuation.

12. The overall period of the parties’ cohabitation is lengthy. There is no evidence before me of either party having re-partnered permanently.

13. In my judgment, any access the husband has had to post-separation livestock sale proceeds, which in fact amounts to about $70,000 over the approximate four year period since the parties finally separated in August 2015, is offset by his continuing contribution to maintaining the livestock operation and the C Town property. Reference has already been made to the sale of the remaining livestock in October 2018. Conversely, any credit the husband might otherwise receive for his continuing work in maintaining the livestock operation alone without assistance from the wife is readily offset by the benefit to him of continued occupation of the C Town property that he has enjoyed over an extensive period since separation and his use of the livestock operation to sustain his livelihood.

14. In my judgment, taking into account all relevant s 75(2) factors, no adjustment in favour of either party is called for.

15. It follows that there ought be an equal division between the parties of their property interests.

What orders are just and equitable?

1. Neither party sought to revisit, on appeal, the manner in which the trial judge determined the distribution of the miscellaneous items of property each party already holds or each should receive. Taken from [112] and [113] of the reasons for judgment, it is not in dispute that each party will receive or retain the following items:

   Wife

Motor vehicle 3	3,000
On line saver account	293
Progress Saver account	20
Savings account	188
N Group account	113
204 O Group shares	692
Jewellery	500
Contents shipping container	1,000
Super Fund 1	1,834
Super Fund 2	1,915
$9,555

Husband

Static bandsaw	3,500
Motor vehicle 1	2,700
Motor vehicle 2	2,500
Motor vehicle 3	15,500
Tractor	15,000
Business Advantage account	15
GST account	1
Livestock pursuant to order 17 August 2018	11,890
Plant, equipment and tools	10,360
Contents	2,000
$63,466

1. The adjustment amount necessary to equalise the parties’ position with respect to the above on a 50 per cent/50 per cent outcome is for the wife to receive $26,955.50.

2. Taken from his Notice of Appeal, the husband seeks orders, broadly stated, that would afford him six months in which to pay the wife her entitlement, taking into account property she already holds. In default of such payment the proposed orders include that the C Town property be sold. The orders are predicated upon there being an equal division of the parties’ property interests.

3. However, as already noted, on the hearing of the appeal, the husband reverted to the contention he advanced at trial. That is, that Lot 2 only ought be sold with the proceeds of sale being used to extinguish the parties’ joint debt owing to the ANZ Bank in the amount of $203,425 with the balance to be received by the wife to satisfy her property entitlement whilst the husband retains Lot 1. The husband proposed that he would indemnify the wife with respect to the guarantee also secured by mortgage on Lot 1. This was on the basis, as earlier set out by reference to the orders sought in the Notice of Appeal, that is, that the amount of the guarantee debt be taken into account as a liability of the parties for the purpose of assessment.

4. In my judgment, the husband’s contention should be rejected for the following reasons. I need not repeat what has already been set out in some detail concerning the C Town property and the valuation evidence but that discussion is relevant here.

5. In the absence of any expert evidence as to the value of Lot 2 as a stand-alone sale, there cannot be any confidence that the sale proceeds from the sale of Lot 2 alone would be sufficient to discharge the joint mortgage debt of $203,425 and see the wife receive her proper entitlement. Taken from the above schedule of assets (including the C Town property as a whole at a notional sale value of $900,000) 50 per cent equates to $316,451.31. The wife already has, or is to receive, miscellaneous items worth $9,555 so the balance amount is $306,896.31. There is nothing to suggest that a sale of Lot 2 alone can achieve net proceeds in excess of $500,000 as would be necessary on these figures. Nothing in the expert valuation report suggests that Lot 2 is more valuable, in the sense of contributing the greater proportion of the overall $900,000 value ascribed, than Lot 1. Indeed, to the extent there are references to the nature of the land comprised in both lots, and having regard to the improvements, the opposite would appear to be true.

6. Next and related to the foregoing, without expert evidence on the issue, it is impossible to know what is the true value of the husband’s retention of Lot 1. That is, would the intended outcome of a 50 per cent/50 per cent division actually be achieved even if the husband’s proposal were possible?

7. Next, the husband offers no evidence that he has any borrowing capacity and indeed the evidence is replete with examples suggesting that the husband’s income would be insufficient to support a loan, sufficient to conclude that the husband has no borrowing capacity.

8. Further, the trial judge’s finding on the evidence is that Lot 2 on its own will not be easy to sell. That finding is not challenged by evidence (the husband’s assertion earlier referred to about a neighbour being willing to buy Lot 2 is not evidence) and there is a body of evidence provided on the wife’s case which went unchallenged at trial and is unchallenged on appeal, to support that finding. In circumstances where the parties’ final separation occurred in August 2015, now more than four years ago, during which the wife has endured limited means and the inability to accommodate herself at times without the goodwill of others, it would be unjust and inequitable to the wife for there to be any avoidable delay in achieving property settlement.

9. Whilst the husband sought to emphasise, in support of his contention, that retention of Lot 1 is a means by which the husband can derive some income, that can hardly be seen as a factor of overwhelming significance. I have earlier discussed, in some detail, the limited viability of the grazing operation historically conducted on the C Town property as a whole. It is obvious that without the wife’s off-farm income during the period the parties were together, the grazing operation did not sustain the parties and that is equally true in the period post-separation. Indeed, the evidence is that at one point in the

   
   

   post-separation period the husband negotiated with the ANZ Bank under the hardship provisions in the mortgage to obtain a moratorium on repayments. Further, interim orders made on 17 August 2018 for dispersal by sale of the remaining livestock (other than those few retained by the husband) have been effected.

10. The husband would also seek to emphasise that sale of Lot 2 alone does not trigger the guarantee. In other words, that what is currently a contingent liability remains contingent whereas sale of the C Town property as a whole, including Lot 1 over which security is held, will crystallise the parties’ liability under the guarantee.

11. The answer to this contention is that the parties have rights of subrogation to recover the debt from their son and his partner. The parties’ son and his partner have a track record of maintaining repayments to the ANZ Bank with respect to the subject loan.

12. In my judgment, it is necessary to achieve justice and equity to both parties for the C Town property to be sold.

13. As a consequence, to allow for either party so electing, I will also make orders having the effect of obliging either party to cooperate with the other party, upon reasonable request, and to do all acts and things reasonably necessary to give effect to the parties’ rights of subrogation with respect to the debt owing by the parties’ son and his partner. It will also be necessary to make orders with respect to the receipt by either party of any repayments of that debt such as to oblige the party receiving any repayment to share such repayment equally with the other party to maintain a 50 per cent/50 per cent distribution between the parties of the assets.

Orders

1. As neither party directed any specific submissions concerning their rights to subrogation or their intention one way or the other to recover the debt from their son and his partner in the event that the debt to the Bank is paid by them in full, I will make provision in the orders for that election.

2. Save and except for Orders (7) and (8) of the orders made on 12 October 2018 in the Federal Circuit Court the balance of the orders are set aside and substituted with the orders that appear at the commencement of these reasons.:

I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 11 October 2019.

Associate: 

Date:  15 October 2019