Cambridge and Cambridge

FAMILY COURT OF AUSTRALIA

CAMBRIDGE & CAMBRIDGE

[2010] FamCA 976

FAMILY LAW – PROPERTY – Proceedings primarily for settlement of property – Husband failed to disclose material which was relevant to an issue in the property proceedings – Significant add backs to property pool – Court not persuaded that husband’s interests should be considered without undue caution – Husband made significant initial capital contribution to marriage – Wife’s contributions result in significant erosion of the husband’s initial capital contribution– Court of the opinion that the wife should receive 36 per cent and the husband 64 per cent of the net asset pool – Norbis v Norbis (1986) 161 CLR 513 – Kardos v Sarbutt [2006] NSWCA 11

Family Law Act 1975 (Cth) s 75(2)

Norbis v Norbis (1986) 161 CLR 513
Kardos v Sarbutt [2006] NSWCA 11

APPLICANT:

Ms Cambridge

RESPONDENT:

Mr Cambridge

FILE NUMBER:

DUC

420

2008

DATE DELIVERED:

9 September 2010

PLACE DELIVERED:

Dubbo

PLACE HEARD:

Dubbo

JUDGMENT OF:

Coleman J

HEARING DATES:

6-8 September 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Hodgson

SOLICITOR FOR THE APPLICANT:

Booth Brown Samuels & Olney

COUNSEL FOR THE RESPONDENT:

Mr Berry

SOLICITOR FOR THE RESPONDENT:

Peacockes

Orders

That the husband and/or W Partnership cause to be transferred to the wife any right title or interest he or they may have in the Commodore vehicle possessed by the wife.
That the wife retain absolutely and beneficially all property real or personal possessed by her.
That the husband pay to the wife the sum of $478,000.00 which sum shall be payable upon the terms and conditions set out hereunder:
(i) The sum of $200,000.00 shall be payable on or before 1 March 2011;
(ii) The sum of $200,000.00 shall be payable on or before 1 March 2012;
(iii)The sum of $78,000.00 shall be payable on or before 1 March 2013;
(iv)Interest shall be payable on the outstanding balance of the wife's entitlement as and from 1 November 2010 until the whole of such entitlement has been paid, such interest to be calculated and payable quarterly in arrears at a rate 1 percentage point in excess of the rate applied to the husband and W Partnership’s credit facilities with Suncorp Metway (currently 7.39%);
(v)The balance outstanding of the wife's entitlement shall be adjusted on 1 January 2012 in accordance with the percentage movement of the CPI for the preceding calendar year as published by the Australian Bureau of Statistics;
(vi)Default in payment of any instalment of principal or interest pursuant to these orders which continues for 30 days shall entitle the wife to require the whole of the balance of principal and interest then outstanding to be paid;
(vii)Payment of the wife's entitlements pursuant to these orders shall be and remain a charge upon the husband's interest in A, B, C, D, E, F, G, H properties, W Partnership, W Pty Ltd and the Cambridge Farming Trust, and be charged over the livestock plant and equipment of the husband depastured, installed or located upon the properties herein referred to;
(viii)The charge hereby created shall rank second in priority only to the secured indebtedness of the husband with respect to such assets; and
(ix)That the wife be entitled to apply for further orders by way of enforcement in the event of a default within the terms of Order 3(vi) hereof.
That the husband indemnify the wife with respect to any liability of the wife arising from or in relation to W Partnership, W Pty Ltd and the Cambridge Farming Trust and the wife assign to the husband such entitlement if any as she may have against or in relation to any such entities howsoever arising.
That the parenting orders of Dubbo Local Court made on 6 February 2009 be confirmed as final orders.
That costs be reserved.

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

FAMILY COURT OF AUSTRALIA AT DUBBO

FILE NUMBER: DUC 420 of 2008

MS CAMBRIDGE

Applicant

And

MR CAMBRIDGE

Respondent

EX TEMPORE REASONS FOR JUDGMENT

The proceedings which the Court has heard relate to settlement of property, and at least in a formal sense to a very limited parenting issue. Without wishing to be unfairly dismissive of the latter issue, the Court is quite simply not seized of sufficient evidence to make any determination of any disputed parenting issue. That is not said critically of the parties or those representing them. The reality in this case, as sensibly generally occurs, where there is a contentious property settlement dispute, as that the focus of forensic endeavours at trial has been on that aspect of the proceedings.
That is not to suggest that the property settlement proceedings are seen as more important than the parenting proceedings, either by the parties, the legal representatives, or the Court, but simply to reflect the reality that, to use the colloquial, sometimes these matters are lost in the hunt. That said, such evidence as the Court has with respect to parenting matters, and that evidence emerges in the context of the property settlement proceedings, suggests that once this property settlement is over the parties each of whom, despite their very considerable interpersonal differences, present as caring and capable and sensitive people, should be able to resolve what appears to be a parenting disagreement within a minute compass.
So far as the property settlement proceedings are concerned, it might be helpful to provide an oversight of the competing positions. Albeit by reference to somewhat different asset pools, the positions of each party can be briefly outlined. In saying with respect to somewhat different asset pools, the Court is alluding to the contention of counsel for the wife that in addition to what are now known to be the assets of the parties, which have been included and quantified, there should also be included notionally or otherwise in the property pool, or taken into account pursuant to section 75(2) of the Family Law Act 1975 (Cth) (“the Act”), the sum of approximately $3,150,477.00 which can, for convenience, be referred to and has been referred to in the document which gives rise to the issue, as “other farm assets.”
As will be seen, including such a sum either in the balance sheet or pursuant to section 75(2) would have the potential to very significantly change the likely outcome of the dispute. The most obvious difference in relation to the balance sheet relates to a liability asserted by the husband and disputed by the wife. That liability relates to what have historically been described in accounting records as “family loans” and at present can be quantified in the sum of $160,295.00 or, more correctly, the husband’s one half share of those is $160,295.00.
As will be seen, including or not including that sum, whilst not having the same likely impact on the balance sheet as would inclusion or exclusion of a sum exceeding $3 million does potentially impact upon the balance sheet.
Counsel for the wife submitted in his concluding address that the wife should be awarded $900,000.00. It is not entirely clear whether that is asserted to be inclusive or exclusive of the modest assets which she currently has. The quantum of the wife’s assets at the present time would not materially impact upon that sum. If it was intended to be included it would mean a payment by the husband to the wife of $878,000.00.
Counsel for the husband submitted that the upper limit of the permissible ambit of the Court’s discretion should be found to be $410,000.00, which is to say that the husband should be ordered to pay that sum. Appreciating that the percentages which follow are only revealing to the limited extent previously indicated, given the dispute with respect to the balance sheet, counsel for the husband contended that the parties contributions would be assessed to the date of separation, 80 per cent to the husband and 20 per cent to the wife.
Counsel for the wife submitted that to that time contributions should be found to favour the husband by 65 per cent to the wife’s 35 per cent. Albeit it must be noted by reference to different asset pools, both counsel submitted that the post-separation period could properly result in a five per cent enhancement of the wife’s contributions. It was in respect of section 75(2) however that the parties, through their counsel, can be seen to be at greatest odds.
Counsel for the husband conceded that a five per cent section 75(2) adjustment would, in the circumstances, be appropriate. Counsel for the wife submitted that a 20 per cent adjustment, the effect of which would be to generate a disparity of 40 per cent of the total asset pool, should be made in the wife’s favour. The parties accordingly disagree substantially as to what their entitlements should be held to be. They disagree as to the balance sheet with respect to which those entitlements should be determined.
Whilst there is not great disagreement in relation to the manner in which the wife’s entitlement should be payable to her, as a reading of the transcript of counsel’s concluding addresses would confirm, the parties disagree as to the timing of the payments and their quantum. Broadly speaking, it can be said that, not surprisingly in the circumstances, the husband seeks the longest possible time on the least onerous terms in order to discharge whatever his obligations are held to be.
For her part, the wife fairly, through her counsel, has not pressed the Court for an immediate realisation of her interest, the consequences of which would almost certainly, on the evidence, be to cause rural properties long held by the husband and his brother and others acquired in more recent times to be put on the market, together with a very substantial inventory of plant and equipment which is used on those properties and elsewhere in the course of the husband and his brother’s contracting operations.
Before proceeding further, it is appropriate to refer to credit. The evidence of the wife can be accepted. The Court is unable to recall any topic in respect of which the cross-examination of the wife would cause disquiet in terms of its acceptance. In fairness, on instructions from the husband, his learned counsel did not cross-examine the wife in relation to the kind of minutiae which less experienced counsel or more determined litigants sometimes require parties such as the wife to endure.
The expression used by the Court, from memory, on Monday was that the wife’s evidence was in the nature of an open book. That was not said in any cynical or patronising way, but to reflect the reality that, in terms of disputed issues of fact, the focus is the evidence of the husband. Accepting the wife’s evidence does not ultimately give rise to a situation where the Court must either reconcile incompatible evidence from the husband or reject it. That is essentially because and particularly in the light of the cross-examination of the husband in relation to these topics, the evidence of the husband and wife is not seriously in contest.
That is particularly so with respect to contributions.
The husband, regrettably and for reasons which elude the Court, although otherwise impressing as a witness whose evidence could be relied upon, did in two areas significantly blot his escutcheon.
The first and less significant of those relates to his nondisclosure of valuations the existence of which he was aware of and relied upon in concluding refinancing arrangements with Suncorp in April/May 2010. The Court accepts that until yesterday the husband may never have actually seen the valuations which were obtained by Suncorp through its representative, Mr TH, acting as agent for the husband. He knew the substance of them. He knew, the evidence leaves no room for doubt, that they were both later in time than those previously obtained by the parties and were significantly higher than those obtained by the parties. He elected not to disclose them.
But for the diligence of counsel for the wife and those instructing him, the probabilities are that the Court would not have become aware of their contents. There is a fine line between on the one hand maintaining a legitimate forensic advantage in adversarial proceedings by not revealing evidence which would be unhelpful or perhaps harmful to one’s case and, in the circumstances of this case, failing to disclose material which was relevant to an issue in the proceedings.
This is particularly so in the circumstances of a case such as this where the husband necessarily was and has been seeking the favourable exercise of the Court’s discretion, by avoiding a sale of the assets in which he has an interest in order to satisfy whatever is held to be the wife’s entitlement. His position in that sense was not dissimilar to a plaintiff seeking equitable relief. Quite apart from that, as the authorities of this Court extending back over many years now clearly demonstrate, parties to proceedings have an obligation to make a full and frank disclosure of their finances.
Lest it be thought that the nondisclosure was inadvertent, the evidence precludes such a charitable explanation. It was clearly material to the proceedings before the Court given the extent to which the valuations, obtained from Herron Todd White in May of this year, exceeded those upon which the husband was previously relying and has continued to rely. It was a deliberate and material nondisclosure. Ultimately the Court apprehends, having accepted the wisdom of his learned counsel, save in one respect to which reference will in due course be made, the husband has not sought to rely exclusively on the valuations upon which he previously relied.
The balance sheet presented by his counsel in concluding submissions yesterday reflected reality in that it recognised the probability, one could with respect say, having regard to what follows, the inevitability that the Herron Todd White valuations would be accepted. To that extent it can and has been said by counsel for the husband, expressly and impliedly, that the mischief the husband, for whatever reason, sought to perpetrate has failed. It has been addressed. There is substance in such a contention.
The second area, the evidence reveals, has even less potential for a benign or charitable interpretation. That relates to what can be described as the NS arrangement. The husband and his brother lease country called, Z Land, which is owned by an entity which has been referred to throughout the proceedings, by an entity controlled by a Mr KE, sometimes referred to by learned counsel for the wife as “the Dutchman.”
Mr KE, the evidence leaves little scope for doubt, wrote a letter on

1 August 2010, which is a little over a month ago, to the husband and his brother setting out what he described as, “Outstanding lease payments for [Z land]”. The effect of the document was that the brothers, as at 1 August 2010, owed to Mr KE or his corporate embodiment the sum of $1,275,155.25. As the transcript would reveal, the letter from Mr KE was introduced into evidence in chief by the husband’s counsel.
If the evidence stopped there, it would have confirmed, as counsel for the husband’s balance sheet presented in his case outline document suggested, that the husband and his brother were indebted to NS Pty Ltd in the sum of, as it there appears, approximately $620,000.00 or thereabouts, or having regard to Exhibit R3 $1,275,000.00. The balance sheet prepared by counsel for the husband, on instructions and clearly in the absence of any hint of the true nature of the current arrangement with NS, revealed a surplus of liabilities over assets or a deficit in net assets of $273,167.91.
Acceptance of Exhibit RX3 without more would have increased that deficit by approximately $500,000.00. There can be little doubt, with respect to the husband, that, as the term came to be used during the trial by Exhibit R3, he sought to pull the wool over the Court’s eyes. As a result of the diligence of counsel for the wife and those instructing him, during the course of the husband’s cross-examination another document relevant to this topic materialised. That document became Exhibit A4. It conveyed Mr KE’s desire to “work out a deal that is better for you in a good year and about the same if it is a bad year”.
The evidence of the husband in relation to the topic was ultimately and unequivocally to accept that the true position in relation to Mr KE’s interest was that revealed by Exhibit A4. His learned counsel, on instructions, in the final balance sheet presented in submissions yesterday deleted any asserted indebtedness to NS from the liabilities of the husband. The husband’s evidence in relation to the NS arrangements was somewhat curious in that, as previously recorded, he advanced Exhibit R3 in an endeavour to convey a quite inaccurate position of the true nature, at the present, of the NS arrangements.
In the course of his cross-examination, there was a noticeable absence of the kind of culpability which is generally associated with attempts, amateurish or otherwise, to conceal the true financial position of a party to proceedings. Once, to use the colloquial, the game was up, the husband was quick to confess in relation to the NS arrangements. However, he cannot avoid, to the extent that it is relevant, the damage to his credibility which flows from how he elected to reveal the NS arrangements to the Court.
It is regrettable that the husband did that, because, as has just been noted, in other respects he impressed as a reliable and honest witness. To his credit, and credit is a relative concept in a case such as this, in the course of cross-examination, save to the extent that the husband adhered to his perception that the frequency of the wife’s contributions to farming and grazing activities was less than she appeared to assert in her affidavit, the husband made no attempt to criticise or denigrate the wife’s contributions.
It perhaps should finally be recorded in relation to the NS arrangements that whilst Exhibit A4, and the husband’s admissions in response to and following its production, eliminate the debt or any suggestion of a debt to NS in the balance sheet, the fact remains, as the husband’s counsel submitted in concluding addresses yesterday, that one cannot have it both ways. There is the proverbial pound of flesh, or bushel of wheat perhaps might be more appropriate in this case. Mr KE will be a significant beneficiary of the crop hopefully to be harvested from the Z land later this year.
The question which remains arising from the topic of credibility is whether, as counsel for the wife urged the Court, undue caution in dealing with the husband is not required, or whether, as counsel for the husband submitted, having written back into the balance sheet, or at least reflected in the balance sheet, the implications of the two topics to which reference has just been made, there remains any scope for the adverse finding with respect to the husband’s credibility continuing to haunt him in these proceedings.
The Court ultimately concludes that there is not and will, in the context of the balance sheet, when dealing with the asserted $3.15 million add-back and the contention of counsel for the wife that $160,295 referable to family loans should be rejected, provide further reasons why it so concludes. There are cases where undue caution is thoroughly called for, having regard to the nature and extent of a party’s failure to frankly and fully disclose his or her financial circumstances. The Court does not understand the authorities to qualify the operation of section 79(2) of the Act. An adverse credit finding without more does not disentitle a person, the subject of an adverse credit finding, to a just and equitable determination of his or her entitlement. Moreover, it does not provide, without more, and in this case the Court does not believe that there is more, a mandate for punishing a litigant. It can be said that to some extent, albeit justifiably, in increasing the balance sheet materially with respect to the value of real estate, and even more materially increasing the net bottom line by deleting a $1.25 million liability, some punishment can be seen to have been meted out. A litigant in the position of the husband would be left in no doubt that attempting to pull the wool over the Court’s eyes does not pay off. It is necessary in terms of the implication, adverse implications, if any, which might flow from adverse credibility findings to have regard to the totality of the evidence, including circumstantial evidence, as will be seen so doing in this case assumes significance.

In the course of probing and very effective cross-examination of the husband by very experienced counsel for the wife, save in the one respect to which reference will shortly be made, the prospect of there being further or other undisclosed assets or understated assets did not emerge. Where cross-examination is as extensive and thorough, and, with respect, skilful and incisive as it was in this case, the Court can gain, in terms of its findings, some comfort in concluding, as it does, that there are no further undisclosed or under-disclosed funds of significance. If one asks rhetorically, how likely is it that if there had been, the forensic energy of counsel for the wife and those instructing him would not have revealed it, or at least the prospect of it? The absence of, for example, large debits in accounts, large draw-downs on finance facilities, significant diminution in plant and equipment inventories, overseas holidays; things of that kind all militate against finding that the husband in this case has or may have other assets of significance which he has not disclosed.
It is not to be forgotten that, at least in the cohabitation period in the context of contributions, a significant aspect of counsel for the wife’s platform was that the husband historically had not achieved a taxable income for many years, due to the absence of success of the farm. How probable is it in those circumstances that there would be phantom flocks or other substantial assets which he has somehow or other secreted somewhere. The refinancing and the husband’s evidence, which the Court accepts, as to the pressure on himself and his brother from the Commonwealth Bank to do so is also supportive of such a conclusion.
Some brief dates and events ought be recorded to provide a context to the proceedings. To the extent that any of these matters is controversial, and the Court does not understand that they are in any significant sense, the material facts which follow reflect, as they must, the Court’s preference for the evidence of the wife to that of the husband where the two differ.
The wife was born in 1959. She is 50 years of age. The husband was born in 1964. He is 46 years of age.
By deed dated 3 July 1984 the husband and his brother, DW Cambridge, entered into a farming and grazing partnership under the name W Partnership, hereinafter referred to as W, or WP.
The wife had been married prior to her marriage to the husband in 1999. The wife was divorced from her former husband, Mr DU, in 1991. There were two children of the DU marriage: an older son, who was born in 1985, which would have made him 14 years of age when the parties married, a little earlier when they formed their relationship, and a younger son, who was born in 1989. He would have been, at the time of the marriage of the husband and wife in these proceedings, about 10 years of age.
Subsequent to the commencement of a relationship between the parties, at different times, the wife’s two children resided with the parties. They went away to boarding school. The wife, as between herself and the husband, paid the fees for the boys’ attendances at boarding schools. There was some support from the boys’ natural father.
When the parties commenced their relationship which the wife asserts, and to the extent that anything of significance turns upon it, the Court accepts was in March 1999, the wife had what can properly be described as modest assets. That is not said in any critical way but simply to record the reality that she had some savings, household furniture and effects, a motor car, a superannuation interest which has continued to this day with modest increase, and a property at Y. The evidence in relation to the latter is that, when realised some years after the marriage, in about 2003, the wife received about $11,000.00 net. That sum was invested and, the wife’s evidence reveals, is substantially reflected by the modest savings of about $12,000.00 which she currently has.
The wife was employed at the time of the commencement of cohabitation. She was in paid employment throughout the whole of the cohabitation of the parties and subsequent to separation, save for a period when she was confined to give birth to the child of the parties, and for a period thereafter whilst on maternity leave.
The husband, at the date or as close a date to it as one can with any confidence suggest to the commencement of cohabitation, owned a one-half interest in the net assets of WP which, depending upon whether one takes 30 June 1998 or 30 June 1999, (the former is about nine months before the relationship commenced; the latter three months after it commenced)was worth one-half of $1,938,623.00, or in round figures about a little under a million dollars, or one half of $2,564,470.00, or in round figures about 1.25 million.
The husband’s interest in WP was represented by a number of rural properties. They were A, B, C and D. A property described as “Block 30” was sold during the ‘97/98 financial year. It might be noted at this point, because it assumes relevance later, that as at either of the two dates preceding or following the commencement of cohabitation, WP owed “family loans” of $116,000 or $156,000 as at 30 June 1998, and 30 June 1999 respectively.
In reaching the calculation of the husband’s net worth at either of the two dates to which reference has been made, those sums were deducted thereby reducing by one-half of each of them, $58,000.00 or $78,000.00, the husband’s net worth.
Reality demands that a finding of fact be recorded that the husband’s assets at the date of the commencement of the relationship exceeded many times over the net value of the wife’s assets at that time.
Throughout the cohabitation, the wife worked. Her income is reflected in a summary of her taxable incomes which appears in her affidavit and is not controversial. The Court accepts those figures. The husband worked throughout the cohabitation. He volunteered, in his evidence, that he has tax losses carried forward of probably a couple of million dollars. That, it is not in doubt, arose by virtue of a series of years of losses in his tax returns, they largely being referable to the ravages of drought on farming and grazing operations, particularly over the past decade.
The husband did, however, the evidence establishes, draw through loan accounts very substantial sums, the evidence suggesting on average between 40 and $50,000.00 per annum. How that was able to be achieved is not seriously in doubt. When one looks at the profit and loss statements of WP, a very significant expense relates to depreciation, in many years in excess of half a million dollars. That is a legitimate expense, of course, in an accounting and revenue sense, but as the husband acknowledged to counsel for the wife, that is not a sum which one has to produce from one’s pocket.
Ultimately, given that the evidence does not establish that the husband’s utilisation of loan capital is brought to account in a balance sheet sense or has been shown to have increased the borrowings referable to the enterprises, thereby reducing the equity, he can be seen, in broad terms, as having provided consistently throughout the cohabitation in a financial sense. It is not in doubt that the wife worked and in later years studied to obtain a qualification and that the husband worked on the farm.
There is one child of the marriage, born in April 2000.
In the financial year ended 30 June 2002 WP acquired another rural property, E property. In 2003 there were a number of developments of potential relevance. WP acquired another rural property known as F. As noted earlier, the wife sold her pre-cohabitation property at Y, netting about $11,000.00, her evidence on Monday revealed.
By deed which is undated but which appears to bear a stamp duty’s office date stamp of September 2003, the Cambridge Family Trust was created. At about the same time, W Pty Ltd was incorporated. The shareholding in the corporation has at all material times been equally held by the husband and his brother. They have been the directors of it. The case has sensibly been conducted on the basis that, whether described as an alter-ego or otherwise, the corporate veil in relation to W Pty Ltd should be and has been lifted, and the corporation viewed for what it is.
To the extent that it matters W Pty Ltd was incorporated on what appears to have been sound commercial advice, inferentially to limit potential liability for contracting activities, and/or to provide the potential for a more efficient distribution of income from such contracting activities within the families of the husband and his brother. The Cambridge Family Trust acquired, it seems for no consideration, 75 per cent of WP, the husband and his brother each retaining 12 and a half per cent of WP.
Having regard to the way the case was conducted, the concession sensibly made and the judgments of the High Court, notably those of the majority, in relation to section 79 of the Act, and Kiefel J in relation to section 85A of the Act, the Court proceeds on the basis that the assets of the Cambridge Family Trust together with those of W Pty Ltd be subsumed into WP. The net assets of WP are divided by two to determine the property of the parties to the marriage for the purpose of determining these proceedings.
This approach does not create the potential for any injustice, nor does it involve any impermissible artificiality having regard to the legal structures involved, the time when each of them was created, the purposes for which they were created, and the origin of such funds as each of them acquired from WP.
From 2003 to 2007 the wife, as well as working, studied externally through TAFE in order to obtain, as she did, a professional licence. The wife completed that course. It enabled her to pursue the occupation which she has had since about 2005.
In September 2005, with the assistance of a loan of either 30 or $40,000.00, the evidence being not entirely clear but that not being a matter of moment in any event, the wife acquired a business, one of two, it seems, in a regional town which carried on and continues to carry on a management business. When the wife acquired her management business, it had about 55 clients on the books. That has modestly increased, the evidence suggests, to the current 70.
The parties separated in March 2008 at which time the wife ceased to live on the farm. She has lived, it seems, in rented accommodation since that time. She has continued to operate her business and generate an income of about $50,000.00 per annum. She derives, her evidence on Monday confirmed, some modest fringe benefits from the employment. They do not assume significance given that the husband’s evidence confirms that he obtains from WP, or otherwise within the family constellation of enterprises, fringe benefits somewhat in excess of those which the wife derives.
The husband has continued to run the farm since separation. The wife has been primarily responsible for the care of the child. She has received, the evidence suggests, about $20.00 a week child support for what appears to be about two-thirds of the care of the child. The husband has paid half the school fees and the medical benefits fund. It is not in doubt that in the post-separation period the wife has had the greater obligation of providing physical care for the child, as well as the greater obligation to provide for her financially.
In final submissions, counsel for the husband provided a balance sheet which he contended reflected the pool of assets to which the Court should have regard. In that balance sheet, counsel for the husband included the values for A, B, C, D, E, F, G, and H properties which emerged from the Heron Todd White valuations obtained by the husband’s agent for the purpose of the Suncorp refinancing.
For more abundant caution and in fairness to the husband, something should be said about the valuations upon which he initially relied and from which the Court does not understand that he but ultimately resiled. Mr PA, a very experienced and local property valuer, valued the properties to which reference has been made, other than H property, in a total figure of $4,820,000.00. The valuations were prepared last year, and in oral evidence, Mr PA confirmed that he had not been back to the properties since, nor done any research in relation to their current values. Those valuations totalling $4,820,000.00 were not vastly different from valuations prepared by a Mr HG on behalf of the wife at a similar time last year. Mr HG asserted a figure of $5,113,000.00. The Heron Todd White valuations for the corresponding properties total $6,435,000.00. Those valuations were done in May of this year.
In the course of brief cross-examination of Mr PA, which in fairness to him it must be said, having regard to his evidence, was clearly not expected until virtually the time that he was called, Mr PA made a number of significant concessions. They included having not seen the subject properties since July ’09, to having not looked at any comparable sales with respect to them which dated from that time, to having not had a chance to look at the HTW comparables, to conceding that he could not really assert that HTW was necessarily wrong in asserting the values which HTW did as at May this year, that he had not looked at the markets out there since July ’09. Having regard to the dramatic turnaround in conditions, that is, the rain that commenced to fall in December of last year, and which falls to this very day - a 12 per cent upwards movement in the market would have been likely in Mr PA’s view.
To the extent that Mr PA did identify a particular difference between himself and HTW, it related to the infrastructure on B property. Superficially, Mr PA’s evidence in relation to that had some attraction. It should be noted that Mr PA did pick up a $10,000.00 reduction that needed to be made to the B property valuation and that has been accepted.
The one matter of potential substance raised by Mr PA, in essence, was that if valuing the various farms on a stand-alone basis, as clearly is appropriate having regard to the valuation principle, generally known as highest and best use valuation, was appropriate it was inappropriate to not discount significantly for infrastructure which, although able to be justified if valuing the farms as an aggregation, could not be commercially justified if the farms were valued individually, as they have been.
There are difficulties in accepting Mr PA’s contention, notwithstanding its superficial attraction. They stem from the fact that he did not provide any quantification of his assertion that the improvements should have been written down to the extent he asserted. He was not able to identify what, if any, improvements had been effected since his valuation and was otherwise, not surprisingly, unable by reference to any market or other evidence to support his opinion.
Ultimately, with respect to Mr PA, and whilst perhaps had he been better legged-up, which is not said critically of counsel who called him as a witness, he may have been able to have justified his contention, the Court is not persuaded on the balance of probabilities that it should discount the B property valuation to the extent Mr PA asserted, or indeed other than to the extent that the HTW figures assert.
The plant and equipment, cattle, sheep, and GST refund appearing in counsel for the husband’s final balance sheet are not controversial. What is controversial, in terms of the asset portion of the balance sheet, is other farm assets. The evidence in relation to this topic is less than conclusive either way. The genesis of the suggestion that other farm assets should be taken into account is a document tendered during the course of cross-examination of the husband by counsel for the wife. The document became exhibit A9. It was produced on subpoena by Suncorp-Metway, the current financier of the real estate interests of the husband and his brother. It clearly is a document prepared by Suncorp-Metway, albeit in the absence of any reason for concluding otherwise, the sources of the information appearing in the document could only have been the husband or his brother, or others acting on their behalf and with their authority.
It is quite clear that under the heading Other Farm Assets for the years ended 30 June ’07, 30 June ’08, 30 June ’09 $2,522,313.00, $2,935,603.00 and $3,993,515.00 respectively appear thus producing an “historical average” of $3,150,477.00. The husband was not cross-examined on this. There is little doubt that if he had been, he would have, having regard to his other evidence, denied where the figure came from, and certainly would have denied the existence of any other farm assets possibly having that value, or anything like that, or indeed having, whether styled as other farm assets or any other title, anything like an additional $3 million; that is to say he and his brother having an additional $3 million. The figure does not appear in any other documentation which has been tendered, the Court is confident, having re-read every exhibit closely since the trial concluded.
A document which was also the subject of cross-examination, for which the husband is able to be deemed to be responsible, which became exhibit A10, was a document which was represented to Suncorp as revealing the net financial position of the husband and his brother in support of their application to obtain finance. In a perfect world, lenders would be totally ethical, and borrowers would be totally honest when seeking finance. In 20 years sitting on this bench, the Court’s experience is that that is not how it tends to work with lenders and people seeking finance. Inevitably, as the term was used in this case, the figures are puffed up by those seeking finance and sometimes by those seeking to provide them with finance so as to present the rosiest picture possible. Curiously, in a document which the evidence leaves no room for doubt, in a number of respects was designed to and did present a rosier picture than reality would have suggested, there is no reference to anything which could accommodate these other farm assets. The question arises, well, if one was prepared, for example, to almost double the asserted value of plant and equipment, as Exhibit A10, the evidence suggests occurred, why not throw in the $3 million of other farm assets. To the extent that one might say, well, perhaps if one did that, Suncorp might want security over it, that explanation would fail, because it appears in Exhibit A9. The documentation from Suncorp does not reveal that security was taken over any other farm assets.
How likely is it, one might ask, in circumstances where Suncorp, other than with respect to crops, appears to have secured itself over everything that it could. The improbability of the husband having gilded the lily to a very substantial extent in Exhibit A10, but not availing himself of the possibility of another $3 million of assets to improve the prospects of winning Suncorp over is obvious.
As noted earlier in the context of credibility, the evidence does not suggest any real prospect of the husband and his brother having acquired significant other farm assets. Indeed, the income history, the re-financing history, and the trading results and the drought history in recent years suggests that they would not have been able to have acquired any further significant assets, particularly other farm assets.
As also noted earlier, to some extent learned counsel for the wife is the victim of his own skilfulness in that in the course of probing and destructive cross-examination of the husband in relation to other matters, extensively relying upon the Suncorp records, nothing else emerged to suggest the likelihood or otherwise of there being other farm assets of significance.
The Court perceives the evidence to permit a finding either way. It would arguably be as open to find, as counsel for the wife contends, as it would be to find as counsel for the husband contends. The Court is not persuaded on the balance of probabilities, having regard to the totality of the evidence and particularly the circumstantial evidence, that there are undisclosed assets of significance. The evidence does not establish that there are undisclosed assets of in the order of $3 million.

It is perhaps convenient at this point to deal with the submission of counsel for the wife in relation to this topic in the event of the Court finding as it has. It was submitted on behalf of the wife by her learned counsel that if the Court, at the balance sheet stage, declined to make a finding in the terms urged on behalf of the wife, it would nevertheless, under section 75(2)(o) revisit this topic and in so doing increase the wife’s entitlement to a section 75(2) adjustment from whatever it otherwise might have been. With respect to counsel, the Court does not propose doing that.
The Court struggles to accept that having failed to make a finding of fact in civil adversarial proceedings, it is then legitimately open in reliance upon suspicion, and it might be noted that the Court does not entertain a suspicion in this regard, to make an adjustment under section 75(2)(o). If, notwithstanding the Court’s conclusions, there had been a finding in the terms sought, that would be reflected in the balance sheet, albeit how it was considered for contribution purposes would perhaps be a little different to how other assets would be considered. Having declined to make the finding urged on behalf of the wife, and being satisfied having regard to the totality of the evidence that whilst no one can explain how the entry appeared in 2009, the Court is not persuaded that the husband and his brother have other undisclosed assets. There will be no revisiting of the topic within the context of section 75(2)(o).
The one contentious liability emerging from the balance sheet presented by counsel for the husband relates to the family loans. The figure there appearing is $163,366.00. That was qualified in submissions the Court has a note to $160,295.00. The evidence in relation to this topic is less than conclusive. It was submitted by counsel for the wife that the Court would not find this liability proved. That submission was in part made in reliance upon the reality that the mother of the husband and his brother, Mrs Cambridge senior, had not given evidence in the proceedings, nor had her failure to give evidence been adequately explained.
As counsel for the husband correctly, in the Court’s understanding of the decision, submitted, Jones & Dunkel, upon which counsel for the wife was no doubt reliant, simply enables the Court to draw an inference that in this case, Mrs Cambridge senior’s evidence would not have assisted the husband’s case. That is as high, and that is not actually what the report says. What the head note says it says and what the High Court judges actually said are not entirely one and the same, but that is putting it at its highest.
It does not follow that the failure to call Mrs Cambridge senior of itself gives rise to adverse inferences. It simply means that there is no evidence from her that she contends she is owed the money or that she wants it repaid. So far as the latter is concerned, if the Court is satisfied that the liability exists, the absence of the creditor coming to Court and saying “I want my money,” does not lead to, in the circumstances of this case, the inference being drawn that Mrs Cambridge senior does not want her money. In the absence of any creditor abandoning or relinquishing an entitlement, it can safely be assumed that the entitlement is expected to be met.
Evidence was given by Ms CS, a qualified accountant who impressed as a witness of truth. Notwithstanding that she is the sister of the husband and his brother, nothing emerging from Ms CS’s cross-examination provides a rational basis for concluding that her evidence was coloured or influenced or unreliable in any way by virtue of her understandable desire to help her brothers – or brother in this case. It does not follow that a natural filial sense of loyalty by a sibling automatically or necessarily renders his or her evidence unreliable, and nothing emerging from Ms CS’s evidence provides a rational basis for finding that it has here.
Annexures G, H, I, and J, which presented a series of scenarios, ought not to be seen in the way asserted by counsel for the wife. Ms CS was to some extent, one could say on his approach, dammed if she did and dammed if she did not. But what emerges from Ms CS’s evidence and the husband’s evidence is the documentation which is to be found in annexure C to the husband’s 27 August ’10 affidavit. And annexure C is headed “Working Paper of [OY] Chartered Accountants” by whom Ms CS is employed as an accountant.
The two pages of the document are to be taken in conjunction with the 41-page computer printout recording movements in family loans. Of significance for present purposes is that if one has regard to page 2 of the document, the working papers, some greater insight into the debit balance of the brothers’ loan account to Mrs Cambridge senior can be gleaned. It will be remembered that the Court previously referred, when identifying the husband’s property at the date of commencement of cohabitation, to the figures appearing for family loans as at 30 June 1998 and 39 June 1999.
Without suggesting that the figures appearing on page 2 of the working papers, at least to the Court’s untrained eye, correspond exactly with those appearing in the schedule previously referred to, it is clear that historically, and from well prior to the parties to this marriage forming a relationship and cohabiting and marrying, there was an established practice of provision of funds by Mrs Cambridge senior to the brothers. The figures are reflected historically in the years that follow in the accounts prepared by chartered accountants retained for that purpose on behalf of WP. They appear in the document to which reference was earlier made, which is Annexure C of the working papers to his September affidavit; annexure D to his August affidavit is the position summary to which reference was previously made. Historically, as page 4 of annexure D to the husband’s August affidavit reveals, in the accounts of WP the family loans appear. Not insignificantly, as at 30 June 2007, the family loans were $326,732. On balance, and notwithstanding that Mrs Cambridge senior did not give evidence, the Court is satisfied in accordance with the civil standard that $160,295 is owed by the husband.
The other liabilities which are asserted are not in contest. The Suncorp facilities have been established by the evidence. There is no dispute about what is currently owed to Suncorp pursuant to the term loan and the trading account partnership. The figures accurately reflect one third of the liability relating to H property; the asset column reflects one third of the value. Counsel for the parties are satisfied in that regard.
The effect of the Court’s rejection of any add back of $3,150,000.00 or anything remotely approaching that sum and its acceptance of the husband’s one half share of the family loans of $160,295.00 is to produce a net balance sheet for the assets of the husband of approximately $1,370,000.00. The wife’s assets are not in doubt, nor are their value. The wife, in round figures, has $12,000.00 in bank accounts. She has a motor vehicle in her possession which it is agreed will be transferred to her worth $10,000.00, total $22,000.00.
The wife’s business has not been included or sought to be included at any value, and that it sensible. In an affidavit sworn by him on 2 September this year, Mr BG, accountant, of Dubbo, adopted a valuation of the wife’s business, prepared by him on 1 November 2008, in which ultimately it seems clear that Mr BG regarded the business as having no value. Essentially, that is, because there are no super profits, that is to say after the reasonable remuneration of the proprietor is received, there remains no other profit. An investor contemplating purchasing a business would accordingly, having paid either him or herself to run it, because it does not run itself, or paying somebody else qualified to do so to run it, thus receiving nothing for his or her investment as opposed to, for example, placing the investment in gilt-edged government bonds or some other passive investment. The Court does not include any sum for the value of the wife’s business.
The wife’s assets are accordingly worth $22,000.00 and when added to the husband’s assets, the net asset pool approximates $1.39 million.
It is necessary to consider the contributions of the parties and the evidence in that regard is not ultimately significantly controversial. In the case of Norbis v Norbis (1986) 161 CLR 513 in the High Court, Brennan J said by reference to an English authority that:
…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.
Brennan J added his own words:
The generous ambit within which reasonable disagreement is possible is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.
The Court acknowledges that the conclusions it has reached would not necessarily be those reached by other judges. Others may be more favourably disposed to the husband, others more favourably disposed to the wife. The contributions of the parties can be seen in two different broad categories. The first can be described as their periodic contributions, that is to say the things that each did on a day-to-day, week in, week out, year in, year out basis. These contributions are not in doubt, nor is their quality. The evidence reveals that each party, in the areas of contribution undertaken by each of them, performed to the best of his or her ability, and that neither party can be criticised for the way in which their contributions were rendered or performed.
The wife made by far the greater contribution as homemaker, and after the birth of the child, parent in the period between the commencement of cohabitation and separation. She contributed materially from her income. She contributed to the farming and grazing partnership activities. The husband worked very hard, long hours for which he must receive credit. The evidence reveals, quite clearly, that the overwhelming effort on the farm was, as between the parties, contributed by the husband, and that it was a huge burden that he discharged.
But, as counsel for the wife correctly submitted, that imposed a correspondingly great burden upon the wife in terms of homemaking and parenting. The financial strictures, the husband’s evidence being that from 2000 on things were pretty tough, meant that the wife’s income was invaluable. So too, on balance, was the husband’s ability to draw against partnership funds.
The husband contributed indirectly to the support of the wife’s two children of her previous marriage. For that he is entitled to some credit having regard to the authorities, notwithstanding that the wife made a far greater contribution. Reality suggests that the funds which were utilised for the support of the wife’s sons, and thus not available for use and enjoyment by these parties, as well as such provision of accommodation, food and the like as the husband provided, requires recognition. But for the matter to which reference will shortly be made, the evidence does not provide a rational basis for suggesting that the nature and quality of the parties’ periodic contributions should be seen as other than equal. It would be quite artificial and unfair to either of them to so conclude.
Probably the major reason the case ran, apart from true disclosure of the assets, relates to the impact of the husband’s initial capital contribution. Before considering that, it might perhaps be reiterated that without criticising the wife, the modest or tangible asset she introduced to the marriage, when liquidated, was retained. That is not a criticism, but it is a reality, albeit it has, given the difference between about $1 million or $1.25 million and $10,000 or $11,000, minimal impact on the Court’s conclusions.
Consistent with cases such as Pearce in this Court and Kardos v Sarbutt [2006] NSWCA 11 in the Court of Appeal of the Supreme Court of New South Wales. The Court has to look at the impact of an initial contribution of assets worth between one and $1.25 million net by the husband. On any view of it, the sum is substantial. But as the authorities make clear, one must look at two other things. The first is being what effect that had. In this case, a provision of equity in real estate, plant and equipment, and infrastructure provided a residence for the parties during the period of their cohabitation. It provided a source of funds. The Court uses the terms funds rather than income advisedly.
It provided the springboard, as it were, for the acquisition of further properties which are reflected in the balance sheet today. It is also necessary, as the authorities make clear, to consider to what extent intervening contributions have eroded, and that is the word appearing particularly in Kardos, in the judgment of Brereton J, the impact of the initial contribution. The judgment of Brereton J in Kardos provides a very helpful reminder that one must not just on the one hand see an initial contribution as being carried forward in a vacuum removed from a consideration of other contributions, but by the same token not automatically or necessarily see that contribution as eroded on any mathematical or other basis.
The facts of this case reveal that the wife’s contributions, as recorded earlier, should result in significant erosion of the husband’s initial capital contribution. By the same token, the nature of the assets the husband contributed, the equity, the nexus between his equity then and the net asset pool now, the utilisation of those assets and what they provided suggests that there should remain a substantial disparity of contribution entitlements as at the date of separation.
As the passages referred to in Norbis v Norbis (1986) 161 CLR 513 make clear, the facts of this case if presented to 20 different judges may well produce 20 different conclusions. That is what judicial discretion is all about. In the circumstances of this case, however, the Court concludes that as at the date of separation, the contribution based entitlements of the parties should be seen as favouring the husband by 74 per cent to the wife’s 26 per cent. The difference between their respective entitlements at that time, on that basis, is in the order of $700,000.00 in favour of the husband.
Thus, an initial disparity of capital contributions favouring the husband by $1 million is reduced by the date of separation, about roughly a decade after cohabitation commenced, to $700,000.00 in a pool which is today worth just under $1.4 million. That is a discretionary conclusion. Others would no doubt be more or less generous to either of the parties, but the Court is comfortable that this on the one hand fairly reflects the contributions of the wife, and particularly those as homemaker and parent, it recognises the multiplicity of her contributions, homemaker and parent, contributor to the workings of the partnership, and contributor of regular, reliable and significant income. On the other hand, it recognises the reality that, as counsel for the wife repeatedly suggested to the husband, maintaining these assets involved him working 18 hours a day, seven days a week. It also, the Court considers, recognises the quantum of the initial contribution, the nature of the assets which comprised it, and the use which was made of them subsequently including, as noted earlier, the capacity to acquire further assets.
The post-separation period requires consideration. Counsel for both parties, albeit as noted earlier with reference to different asset pools, suggested that five per cent in the wife’s favour was not inappropriate or, in the case of counsel for the wife, was appropriate. The Court concludes that a five per cent adjustment would be appropriate with respect to the post-separation period. The focus in the submissions of counsel for the wife was not surprisingly on the fact that the wife has not had the use or enjoyment of the matrimonial assets to any great extent in the post-separation period, that she has had the primary care of the child, and has had modest child support, although counsel for the wife put it somewhat stronger than that.
On the other hand, the evidence leaves little room for doubt that whatever other failings have been asserted with respect to the husband, no criticism of any aspect of his stewardship of the farming assets has been sustained, to the extent that any has been urged. As is not in doubt, these assets do not run themselves. They require commitment of skill and hard work 18 hours a day, seven days a week. It is not unusual in these cases to refer to enjoyment of the matrimonial assets in the post-separation period. The evidence in this case with respect to drought for much, if not all of the post-separation period until earlier this year suggests that there would have been much hard work and little enjoyment associated with preserving the farming assets in this case.
The wife has had, albeit she has worked hard in and for it, sole use of the income from the business which she acquired during cohabitation with qualifications which she acquired between 2003 and 2007. The child has been, the evidence suggests, with the husband for about a third of the time.
The husband has paid the medical benefits referable to the child. He has paid half the school fees, although, as counsel for the wife reminded the Court, that does not put food on the table.
On balance, the Court concludes that a five per cent adjustment would in the circumstances be appropriate. The asset pool as determined means that a five per cent adjustment is the sum of $70,000.00 or a disparity of $140,000.00. That, in the Court’s view, is an appropriate or perhaps generous reflection of the post-separation period.
Section 75(2) requires consideration. As noted earlier, counsel for the wife asserted a 20 per cent adjustment should be made. That is a very substantial adjustment. Part of that was in reliance upon the husband’s asserted failure to fully and frankly disclose his financial position and the likelihood of his having very substantial undisclosed assets or resources. For reasons which the Court has previously given, the Court does not accept that, despite his efforts to pull the wool over the Court’s eyes earlier in the week and prior to that time, there remain any significant undisclosed assets of the husband.
The income of the parties requires consideration. That is a difficult issue. The wife’s income, provided that she continues to work in her business, is reasonably secure. Mr BG’s evidence, with respect to him, could be said to cut two ways. Part of his reason for suggesting that a purchaser for the wife’s business would not readily be found was that there were a limited number of clients in the region. It should be noted that the wife has not suggested that she wishes to sell the business in any event. But given that there are only two such businesses in Dubbo, and that the wife owns one of them, Mr BG’s evidence suggests that somebody muscling in, to use the colloquial, would be unlikely to succeed.
Provided that the wife’s health holds, and there is no evidence that suggests that health issues will adversely impact her ability to continue to do so, the wife ought to be able to continue to derive income from her business of about $50,000.00 a year. Without suggesting that the wife’s income and business are risk-free because there are obviously financial and business risks associated with that enterprise, those risks fall far short of the risks associated with the husband’s profession as a farmer.

The evidence is replete with indications of how risky a farming enterprise, and particularly what appears to be an enterprise significantly reliant upon cropping, can be and has been. The husband has, the evidence suggests, been farming virtually since the time he left school. The evidence does not reveal that he has other skills which could be readily utilised, other than perhaps in managing a farm for wages, or something of that nature. There was no suggestion that it is other than reasonable for the husband to wish to continue to be a self-employed farmer.
The submission of counsel for the husband, with respect, sensibly recognises, at least inferentially, that to the extent that the husband has a risky income which in many years will be zero, there is the prospect of his income being substantial in some years. The effect of his carried forward tax losses is that he is unlikely to pay tax on any assessable income he derives for some years to come.
On balance, it would be artificial to suggest that an adjustment either way should be made for disparity of earning ability. Counsel for the wife appeared to make a submission in reliance upon section 75(2) either (b) in terms of financial resources and property, or section 75(2)(n)(i). This is sometimes, perhaps unfairly, described as the Robin Hood submission. That is to say that having determined as the Court has that the contributions of the parties significantly favour the husband, the Court should under section 75(2) revisit that division and adjust in favour of, in this case, the wife in reliance upon it.
There may be cases where that is appropriate but the Court does not perceive that this in one of them. That is so for a variety of reasons, not the least of which is that any order made in favour of the wife, provided that she receives it, will be risk-free cash in the hand. No order this Court makes will change the risky nature of the assets which the husband will strive to retain in the course of satisfying an order made in favour of the wife. In the circumstances of this case to make any adjustment, having regard to the consequences of the Court’s contribution finding would be no more and no less than to double count and the Court declines to do that.
Another aspect of the evidence, albeit one which ultimately, in the Court’s view, does not necessarily have great significance, is section 75(2)(k). That refers when read in context to the wife’s capacity. As is not in doubt, the wife acquired the qualifications which she currently utilises during the course of the parties’ cohabitation. She undertook a course of study. The husband indirectly contributed to the acquisition of those qualifications. He is entitled to recognition of that pursuant to section 75(2)(k) of the Act.
It does not advance any assertion on his behalf for a 75(2) adjustment in his favour, for none is made, and sensibly is that so, but it is a matter to be weighed in the balance when assessing the magnitude of a section 75(2) adjustment to be made in the wife’s favour.
The matters which enliven the section 75(2) adjustment which should be made in the wife’s favour are all referable to the parties’ child, and they fall into two broad areas. The first is the reality that the wife will, for the next eight years until the child attains 18 years of age, have the greater obligation to house and accommodate and care for the child. That is not to suggest that the husband will not be playing a part, the evidence suggesting that the child spends 30 per cent or thereabouts of the time with the husband. But that does not change the ongoing obligation of the wife to provide permanent accommodation and to supervise, transport, care for the child, particularly as she becomes a teenager. That obligation ought not be lightly regarded.
It has a financial consequence and the financial consequence in this case is essentially this: given the way the child support legislation operates, other than by bringing complicated and potentially expensive, inevitably drawn out and generally inconclusive and unsatisfactory proceedings under the Child Support legislation in order to obtain a departure order, the wife is unlikely to secure anything significantly in excess of the $20.00 a week child support which she currently receives for the child.
There is no guesswork in that, the point being that by virtue of his carried forward losses, the husband is unlikely to have a significant taxable income for some time into the future assuming that he ever does. The Child Support Agency, at least for the purposes of issuing assessments base their calculations on taxable income. The wife has two choices: accept $20.00 per week or thereabouts, or such greater sum as the husband is minded to provide, or, as noted a minute ago, subject herself to the incredibly complicated, expensive, drawn out and generally unsatisfactory procedures available under the Child Support legislation. She ought not to have to do that. It would be far preferable for both parties to reflect in the property settlement award the reality that the husband’s position, particularly once he complies with the orders the Court will shortly make in relation to property settlement, is unlikely to enable him to contribute other than to the extent that he currently does. In fairness to him, he also pays half the school fees and the medical benefits cover for the child.
The foregoing factors enliven a section 75(2) adjustment which ought not to be insignificant. Obviously, having regard to the observations the Court has made with respect to section 75(2)(k), that ought to be reduced somewhat from what it otherwise would be. The Court concludes that a five per cent adjustment is, in the circumstances, appropriate. That translates as $70,000.00 or a disparity of $140,000.00. If one were to take the lesser figure, it represents, over a period of eight years, a capitalised annualised payment of a little under $9,000.00 a year or about $180.00 a week.
If one has regard to the disparity, and that figure is really the more relevant, one because the husband, in giving up the $70,000.00 under section 75(2) and the wife acquiring it, it is effectively $140,000.00 over an eight-year period provides a capitalised sum of, obviously, about $360.00 a week. On balance, and without suggesting that a monetary value can or should be ascribed to the non-financial obligation and burden of raising a teenage child, there has to be in circumstances where the Court is determining a property settlement case, it has to end up in dollars, and things must ultimately be reflected in dollar terms.
On balance, the Court is satisfied that such an adjustment is in all the circumstances appropriate to be made. The effect of these preliminary conclusions is that the wife should receive 36 per cent of the net asset pool. So doing gives rise to, in round figures, and the Court is working in round figures, an entitlement to receive approximately $500,000.00 in total property. The wife holds $22,000.00 in assets, in round figures, if she were to receive an additional $478,000.00, the Court’s preliminary conclusion is that such an order would be appropriate.
It is necessary, however, before concluding that to be the case to have regard to a number of other matters. In this case, there is an overlap between a number of factual realities and the determination which the Court must make under section 79(2). Is the preliminary conclusion just and equitable? As the record would reveal, the Court raised with counsel for the parties yesterday the prospect of any award being made in the wife’s favour being on terms. The Court provided counsel with a copy of a decision in Cunningham, an unexceptional decision, but one which typifies the approach which can and sometimes, or often perhaps is taken in farming cases.
The reason the Court did that is not in doubt. Whatever award the wife receives, it is important, particularly for her, that she ultimately does receive it. It is not in contest that to award the wife $478,000.00 or anything remotely approaching that sum, if it had to be paid in a lump sum now, could only be paid by liquidating WP, unless the husband’s brother has the capacity to do so, and the financial position of WP suggests that is unlikely, bringing about the sale of the real estate holdings, or at least a substantial proportion of them together with liquidation of plant and equipment.
It is to be remembered that Suncorp holds security over all but the growing crop on the Z land. That is to say it holds security over the real estate and the livestock. The plant and equipment is the subject of hire purchase commitments which are substantial and almost eliminate any equity in the plant and equipment, assuming that all the plant and equipment was sold for the values determined and ignoring selling expenses and, to the extent that sale prices might exceed written down values, any revenue implications.
Similarly, with the real property, it is not in doubt that Suncorp would take from the proceeds of sale of real estate, as it is entitled to under its securities, all such proceeds as were generated until its $4.875 million exposure was extinguished. It is improbable, having regard to selling expenses in particular and possibly the impact of CGT, that liquidation of the husband’s property would leave any money whatsoever out of which the wife could expect to be paid.
If one looks at the $1.4 million net surplus, it is not difficult to see how the combination of selling expenses, assuming everything did in fact sell, together with the inability to keep farming and servicing Suncorp’s debt would not within a relatively short time exhaust the modest equity which currently exists. That is relevant in another sense in terms of section 79(2). Without suggesting that a dollar is not a dollar, reality suggests the need for recognition of the fact that if the husband is able to retain his interests in the farming enterprises, they continue to be risky assets, whilst when the wife receives her entitlement, it will be money in her hand, risk-free at that point.
Whether she converts that to a risky asset or preserves it in a risk-free form will entirely be her choice, but she will have that choice. The husband will not. His assets will remain risky. A good indication of the nature of the risk emerges from the evidence with respect to NS. Without recounting it in detail, before any of the possible $3.6 million which may be generated by growing crops is realised, there are further and significant expenses of maintaining the crop, harvesting it, and transporting it to the silos.
There is uncertainty in relation to whether there will be a crop having regard to the exceptional rainfall pattern of this year, and ultimately, as noted earlier and not in doubt having regard to the evidence, Mr KE' will, if there is a good crop, quite properly have his hand out for a healthy share of it if it exceeds 2.4 million.
All of these things are relevant to the justice and equity of the preliminary conclusion. They are also relevant to the timing over which the wife should receive her entitlement. The Court is satisfied that for the wife to receive $478,000.00 would in all the circumstances be just and equitable. Importantly, though, and an integral part of her actually receiving that sum, are the terms and conditions upon which that should occur. The husband sought that he pay about $40,000.00 next March. With respect to him, and whilst the Court understands why he would seek that, it is not, regrettably, for him a case of being able to pay the wife what he would feel he might comfortably be able to within a timeframe of his choosing.
The wife is not obliged to be and will not be the husband’s financier. The wife could, had she been minded to, have pressed the Court to order the sale of the assets in order that she might receive her entitlement. Indeed, the evidence of the husband in terms of the hardship which WP has experienced in recent years could, in those circumstances, have been relied upon by the wife’s learned counsel in support of such a stance. To her credit, but sensibly having regard to the likely outcome of liquidation, the wife has not done that.
Necessarily, any order for time payment will place greater pressure on the husband than he would hope for on the one hand, but require greater restraint from the wife than she would desire on the other. It is never easy in these circumstances to strike the balance between the legitimate competing interests. In the circumstances of this case, however, the Court is persuaded that if the husband were obliged to pay the first $200,000.00 by 1 March 2011, the second $200,000.00 by 1 March 2012, and the remaining $78,000.00 by 1 March 2013, that would represent, subject to what follows, a timeframe which is not unfair to the wife whilst providing the husband with the fairest reasonable opportunity, to come up with the money. Objectively, if the husband cannot, whether it is due to crop failure or otherwise, come up with $200,000.00 by 1 March 2011, one has to wonder how likely it is that he would be able to otherwise fund the buy-out of the wife.
There was discussion with counsel yesterday about two further matters in relation to the terms and conditions of payment. One related to what was described as an incentive interest rate. The Court is conscious of the fact that the husband has a facility with Suncorp, the interest rate with respect to which appears to currently be 7.39 per cent. For the wife’s entitlement to accrue interest at a rate one per cent in excess of the 7.39 per cent, having regard to the amount of her entitlement, would provide a real and significant incentive for the husband to pay her out sooner rather than later. Any situation where the wife was paid an interest rate less than or not greater than that which Suncorp charges would provide a positive disincentive or lack of incentive to the husband to meet his obligations to the wife. The Court accordingly will order a rate one per cent above the rate charged by Suncorp from time to time.
The second issue relates to what can be described as preserving the real value of the wife’s entitlement. With respect to counsel for the husband, the Court perceives there to be a difference between what could be described perhaps as a usage fee, that is to say the fee for having the use of the wife’s money until March, or part of it at least until March 2013, and an order which endeavours to preserve the real value of the capital sum or sums which constitute the wife’s entitlement. The Court is persuaded that to fail to provide some CPI adjustment to the underlying capital sums to which the wife is entitled would, with respect to the submissions of counsel for the husband, be unfair to the wife. One only has to think of any commodity in society, what it cost today compared with what it cost two to three years ago to realise why that is so. Given the time period, however, the Court proposes one CPI adjustment to the outstanding balance, that being on 1 January 2012. Given that there are from the time interests commences to run, 60 days hence, until the end of the year, only a matter of weeks, and that from the time the 1 January 2012 adjustment operates, there would only be the first two months of 2013. The wife is losing little by making one CPI adjustment.
In the circumstances as the Court has endeavoured to explain them, and for the reasons which the Court has endeavoured to give, the orders of the Court will be engrossed later today.

I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 9 September 2010.

Associate:

Date: 27 October 2010

[2010] FamCA 976

9 September 2010

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Charge

Costs

Remedies

Constructive Trust