CASEY & CASEY - [2012] FamCA 736

FAMILY COURT OF AUSTRALIA

CASEY & CASEY

[2012] FamCA 736

FAMILY LAW – PROPERTY – Contributions – where the husband’s contributions were 52.5 per cent and the wife’s 47.5 per cent – where the death of one of the parties’ children caused deterioration in the wife’s mental health – where the husband’s post-separation contributions exceeded the wife’s – where the wife initially contended that her contributions were qualitatively greater pursuant to principles set out in Marriage of Kennon (1997) 22 Fam LR 1, but the contention was abandoned

FAMILY LAW – PROPERTY – Adjustment – where the Court ordered a 25 per cent adjustment in favour of the wife – where the husband earned a substantial salary and also received large personal distributions from a family trust – where the wife had no present employment and currently received no distributions from the family trust – where the wife had the capacity to find employment in the future – where the parties’ adult children were financially independent

FAMILY LAW – PROPERTY – Matrimonial pool of property – where the wife contested the inclusion of several liabilities in the pool of assets – where the wife made submissions for a notional add-back – where the Court found the husband’s discharge of a family debt with use of proceeds realised on sale of a family asset could not found an add-back – where the husband’s liability under guarantees remained contingent

FAMILY LAW – SPOUSAL MAINTENANCE – where payment of maintenance was ordered for a period of three (3) months – where the Court was obliged to take into account the substantial property adjustment made in favour of the wife – where the wife’s share of the matrimonial pool of property would adequately address her needs – where the payment of maintenance was ordered for the limited time until the wife received a lump sum in satisfaction of the property adjustment - where the husband had the capacity to pay the weekly maintenance – where the wife was in a new relationship and there were prospects of her re-marriage

FAMILY LAW – TRUSTS –where the parties agreed to treat the husband’s interest in a discretionary family trust as a financial resource and not as property – where the husband was a director of the corporate trustee and a beneficiary of the trust – where the husband’s father was the appointor of the trust – where the probability of future distributions to the husband from the trust was a factor be taken into account in the adjustment of property between the parties

FAMILY LAW – EVIDENCE – s 191 of the Evidence Act 1995 (Cth) – where it was an agreed fact that a debt owed to a unit trust formed part of the matrimonial pool of property - where the wife sought to resile from the agreed fact during final submissions – where the Court did not grant leave to depart from the agreed fact – where departure from the agreed fact would have deprived the husband of procedural fairness – where allowing the wife to resile from the agreed fact would mean re-opening the evidence and adjournment of the trial on a part-heard basis

Evidence Act 1995 (Cth) s 191 and s 192
Family Law Act 1975 (Cth) ss 79, 75 and 106A

Brodie v Brodie (2009) 41 Fam LR 18
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Jones v Dunkel (1959) 101 CLR 298
Kennon v Spry (2008) 238 CLR 366
Marriage of Coghlan (2005) 33 Fam LR 414
Marriage of Kennon (1997) 22 Fam LR 1
Omacini v Omacini (2005) 33 Fam LR 134

APPLICANT:

Mr Casey

RESPONDENT:

Ms Casey

FILE NUMBER:

SYC

2113

2010

DATE DELIVERED:

30 August 2012

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Sydney

JUDGMENT OF:

Austin J

HEARING DATE:

15, 16 & 17 August 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr D. Dura

SOLICITOR FOR THE APPLICANT:

Barkus Doolan Kelly

COUNSEL FOR THE RESPONDENT:

Mr R.Sweet

SOLICITOR FOR THE RESPONDENT:

Stojanovic Solicitors

Orders

Orders 2-5 inclusive made on 6 December 2011 are discharged.
Order 2 made on 15 February 2012 is discharged.
The husband shall pay to the wife the sum of $520,019 within 3 months of the date of these orders.
Subject to compliance with Order 3 hereof, and in consideration of that payment:
(a)The husband is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …45, being the property more commonly known as Property C, NSW (“the property”) and the wife shall do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in the property to the husband contemporaneously with her receipt of payment.
(b)The husband shall indemnify, and keep indemnified, the wife against any and all liability arising out of her legal or beneficial ownership of the property.
Subject to compliance with Order 3 hereof (or alternatively Orders 7(c) hereof), and in consideration of that payment:
(a)The husband is declared the sole legal and beneficial owner (as between the parties) of, and the wife shall do all such things and sign all such documents as may be necessary to transfer all her right, title and interest to the husband in, the following corporations and trusts:
(i)E Pty Ltd;
(ii)The Casey Trust;
(iii)O Pty Ltd;
(iv)The Casey Family Trust;
(v)L Pty Ltd
(vi)The LA Unit Trust
(vii)A Pty Ltd
(b)The wife shall do all such things and sign all such documents as may be necessary to resign any office she holds in the corporations referred to in Order 5(a) contemporaneously with her receipt of payment.
(c)The husband shall indemnify, and keep indemnified, the wife against any and all liability arising out of:
(i)Any debit loan account conducted by the wife with any of the corporations referred to in Order 5(a);
(ii)Any guarantee given by the wife concerning the performance of obligations by any of the corporations referred to in Order 5(a).
In default of payment pursuant to Order 3 hereof, the parties shall do all such acts and things and sign all such documents as may be necessary to list the property for sale by public auction on the following terms:
(a)The property shall be listed by the parties for auction sale within 8 weeks of the due date for compliance with Order 3 hereof;
(b)The auctioneer, in the event of disagreement between the parties, shall be the auctioneer chosen by ballot from the respective choices of the parties;
(c)The reserve price shall be as agreed between the parties, and in the event of disagreement between the parties, the reserve price nominated by the auctioneer;
(d)In the event the property is not sold by auction, or private negotiation within a further 7 days, then the property shall be submitted to successive auctions within further 6 weeks periods until sold, otherwise on the same terms and conditions as applied to the first auction;
(e)The parties are restrained from further charging, mortgaging, or encumbering the property; and
(f)The husband may occupy the property pending its sale pursuant to these orders, provided that he meets all expenses incurred in respect of the property as and when those expenses fall due (including loan repayments, Council rates, water rates, and insurances), maintains the property in a reasonable state of repair, and facilitates inspection of the property by prospective purchasers.
Upon completion of the sale of the property pursuant to Order 6 hereof, the proceeds of sale shall be applied as follows:
(a)Firstly, to pay all costs, commissions, and expenses of the sale, and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)Secondly, to discharge any encumbrance registered over or affecting the property;
(c)Thirdly, to pay to the wife the sum of $520,019 together with any interest accrued on that amount pursuant to the Family Law Act and/or Family Law Rules;
(d)Fourthly, to pay the balance then remaining to the husband.
The husband is declared the sole legal and beneficial owner (as between the parties) of, and the wife shall forthwith transfer to the husband all her right, title and interest in, the parties’ shareholdings in Telstra and Company G.
The wife is declared the sole legal and beneficial owner (as between the parties) of, and the husband shall forthwith transfer to the wife all his right, title and interest in, the parties’ interest in Business H.
The husband shall indemnify, and keep indemnified, the wife against the debt due by the parties to BB Pty Ltd.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder, investment accounts are deemed in the possession of the named investor, and superannuation entitlements are deemed in the possession of the superannuant;
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession, and any debts in their respective sole names, including any individual liability for capital gains tax arising out of the sale by the parties of property pursuant to these orders.
The husband shall pay to the wife the sum of $390 per week by way of spousal maintenance upon the following conditions:
(a)The first payment is due 7 days from the date of these orders;
(b)This order terminates upon payment made to the wife pursuant to either Order 3 or Order 7(c), whichever first occurs.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act.
Costs are reserved for 28 days
Any and all outstanding applications are dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2113 of 2010

Mr Casey

Applicant

And

Mr Casey

Respondent

REASONS FOR JUDGMENT

Introduction

These reasons explain the determination of the parties’ competing property adjustment applications and the wife’s additional application for spousal maintenance following a long marriage.
It is notoriously easier, with the benefit of retrospectivity, to bring clarity to bear on contentious facts and issues, but even so it is difficult to discern why the debate in this case was so vociferous.
Some of the issues at stake between the parties fell away before the trial and others were eliminated during the course of the trial, but by its completion the parties still adopted surprisingly divergent views about their respective entitlements.
After commencement of the proceedings the wife joined the husband’s father to the proceedings as the second respondent, seeking declaratory and injunctive orders against him, but he was later discharged as a party with the consent of the wife.[1]
[1] Order 1 made on 17 May 2012
The wife also named a family corporation as the third respondent to the proceedings, even though no remedy concerning it was sought, but she later acknowledged the corporation should not be a party.[2] So much was evident from the failure of the corporation to appear in the proceedings from the time of its joinder until the wife’s acknowledgment of the futility of its involvement.
[2] Notation A made on 17 May 2012

Background

The historical factual disputes between the parties fell within a relatively narrow compass.
The parties married in 1986 and had four children together.
They separated under the one roof in September 2008 and the wife finally departed the former matrimonial home in May 2009.
The parties’ youngest child unfortunately died in July 2008. The eldest three children are all now adults and they continue to live with the father, as they have done since separation.
The husband’s father was a successful businessman, establishing a thriving business, the fruits of which have been enjoyed by the husband and his brother. The husband and his brother did sub-contract work for their father, which afforded them significant income. During the marriage the parties established E Pty Ltd and the Casey Trust, through which the husband acquired and performed the sub-contract work for his father’s business and distributed the profit they thereby derived.[3]
[3] Husband’s affidavit, paras 102-104
With a view to inter-generational transfer of the family business, in February 2007 the business affairs of the husband’s father were restructured and the husband and his brother became involved in their father’s business as directors and employees of the corporate vehicle through which the business was conducted.
The husband became a director of O Pty Ltd, which corporation was the trustee of the Casey Family Trust. The business established by the husband’s father was owned and conducted by O Pty Ltd on behalf of the Casey Family Trust. The husband was also granted half of the shares in O Pty Ltd for only nominal consideration.[4]
[4] Husband’s affidavit, paras 86-93
The husband’s interests in those corporate and trust affairs were the focal point of these proceedings.

Proposal and primary evidence of the husband

The husband did not pursue the orders set out within his Initiating Application filed on 14 July 2010 and instead pressed for the orders set out in the minute of orders he tendered.[5]
[5] Exhibit H1
The husband’s proposal, in summary, was that:
a)The wife transfer to him her interests in the former matrimonial home, E Pty Ltd, The Casey Trust, the Casey Family Trust, and her shares in a public corporation (Orders 1.1- 1.7, 1.9);
b)The wife assign to him her interest in funds paid to the parties jointly by a third party (Order 1.8);
c)He cause the wife’s release from, or her indemnity against, any liability associated with the former matrimonial home, the various family corporations and trusts, and also any tax liability (Orders 2, 4); and
d)He pay to the wife the sum of $300,000 (Order 5).
The husband relied upon his affidavit and financial statement, both of which were filed on 13 July 2012.
With the consent of the wife, the husband was also permitted to rely upon the evidence of Mr C, who gave evidence as an adversarial expert through his affidavit filed on 13 July 2012.

Proposal and primary evidence of the wife

The wife did not pursue the orders set out in her Amended Response filed on 30 November 2010 and instead pressed for the orders set out in the latest revision of the minute of orders she tendered during the trial.[6]
[6] Exhibit W2
The effect of the wife’s proposal was generally that:
a)The husband pay to her the sum of $800,000 in return for which the husband would retain the former matrimonial home, and in default of which payment the home would be sold to ensure the wife’s payment of that sum (Orders 1-6);
b)The chattels within the former matrimonial home be divided equally between the parties (Order 7);
c)She resign any office she holds in corporations in which the husband holds an interest and the husband indemnify her against any liability accrued by her as a consequence of her involvement in such corporations (Orders 8-10);
d)The proceeds realised on the sale of some publicly listed shares be equally divided between the parties (Order 11); and
e)The husband pay to her spousal maintenance of $1,000 per week on an indefinite basis (Order 16).
The wife relied upon her affidavit and financial statement, both of which were filed on 13 July 2012.
With the consent of the husband, the wife additionally relied upon the evidence of Mr S who was engaged as a single expert witness to report upon the value of the husband’s interests in the Casey Family Trust and various family corporations. That evidence was contained within his affidavit filed on 10 August 2012, which evidence was adopted by the parties for the purposes of constituting the joint balance sheet. The valuation evidence was apparently uncontroversial and the single expert was not required for cross-examination by either party, but there was extensive reference to the evidence in final submissions by the wife’s counsel.
The wife did not avail herself of procedural orders permitting her to file affidavit evidence by her treating psychiatrist and general practitioner. Rather, she made, but then abandoned, an application for leave to rely upon a medical report prepared by her treating psychiatrist, which was belatedly served on the husband. Instead, with the consent of the husband, the wife tendered in evidence a series of records produced on subpoena by the psychiatrist and her treating general practitioners.[7]
[7] Exhibits W3 and W8

Process of property adjustment

In determining the property adjustment orders that should be made between spouses the Court follows a recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]).
Firstly, the Court should identify and value the matrimonial pool of property, comprised of assets, liabilities and financial resources at the date of the hearing.
Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) of the Family Law Act 1975 (Cth) (“the Act”), and determine the contribution-based entitlements of each party as a percentage of the matrimonial pool of assets.
Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) ,(g), and s 75(2) of the Act and determine the adjustment, if any, that should be made to the contribution based entitlements of the parties.
Finally, the Court should consider the effect of those findings and resolve what order is just and equitable in all the circumstances of the case.

Matrimonial pool of property

During the course of the trial the parties tendered a joint balance sheet setting out their assets, liabilities, and superannuation interests.[8] Using that template I find the matrimonial pool of property is constituted as follows (to the nearest dollar):
[8] Exhibit A

No	Assets	Party	Value	Total
1	The former matrimonial home	Joint	1,300,000
2	Telstra shares sale proceeds	H	2,055
3	Business H	W	5,000
4	Company G shares	Joint	56
5	Bank accounts	H	nil
6	Motorcycle	H	15,550
7	Home contents	H	10,000
8	Home contents	W	nil
9	Bank accounts	W	nil
10	Jewellery	W	20,000
11	Interest in “Casey Family Trust”	H	nil
12	Interest in “LA Unit Trust”	H	(-32,531)
13	Interest in “Casey Trust”	Joint	nil
14	Shares in “E Pty Ltd”	Joint	5,650
15	Shares in “O Pty Ltd”	H	1
16	Jewellery	H	1,000
Sub-total	1,326,781	1,326,781
Add-backs
17	Westpac credit card payment	H	nil
Sub-total	nil	1,326,781
Liabilities
18	The former matrimonial home loan #289	Joint	376,344
19	The former matrimonial home loan #358	Joint	nil
20	The former matrimonial home loan #798	Joint	78,401
21	Debt to “E Pty Ltd”	H	147, 848
22	Tax payable on 2012 distribution from the “Casey Family Trust”	H	120,600
23	Mastercard liability	H	1,000
24	Visacard liability	H	174
25	Debt to BB Pty Ltd	Joint	15,400
26	Credit card liabilities	W	943
27	Liabilities under guarantees	H	nil
Sub-total	740,710	586,071
Superannuation
28	BT Super #843	H	188,122
29	BT Super #851	W	26,233
Sub-total	214,355	800,426
Net matrimonial pool	800,426

Few areas of disagreement between the parties were apparent from the joint balance sheet, but their disagreement widened substantially during final submissions when the wife’s counsel sought to depart from agreed facts. Elaboration of the findings is therefore necessary in some respects.

Item 11 (Casey Family Trust)

The parties mutually conducted the case on the basis that the husband’s interest in the Casey Family Trust was worth nothing, even though the single expert they engaged notionally valued the husband’s beneficial interest in the Casey Family Trust at $503,684.[9]
[9] Affidavit of Mr S, Annexure C, paras 114-121
It was common ground the Casey Family Trust is a discretionary trust, of which the husband is a beneficiary within one particular class, and from which the husband has received handsome distributions in recent financial years.
It was also common ground that O Pty Ltd, of which the husband is one of the directors, is currently the trustee of the Casey Family Trust, but that the husband’s father has unfettered discretion to discharge O Pty Ltd and appoint a substitute trustee.[10]
[10] Husband’s affidavit, para 95
It was baldly submitted for the wife that the husband’s interest in the Casey Family Trust was not property, but merely a financial resource. The wife’s counsel, in making such a submission, made no reference to the principles recently espoused by the High Court about the nature of beneficial interests in discretionary trusts (see Kennon v Spry (2008) 238 CLR 366), but he asserted familiarity with the decision when directly asked.
Nevertheless, the wife sought to conduct the case on the basis that the husband’s interest in the Casey Family Trust was a financial resource of some magnitude which would be relevant to the Court’s deliberation of any necessary adjustment at the third stage of the property adjustment process. The husband agreed the case should be argued and determined on the basis that the husband’s interest in the Casey Family Trust was only a financial resource and, in the absence of the issue being agitated with the single expert who proffered evidence about the nature and extent of the husband’s interest in the Casey Family Trust, I propose to adopt the course mutually proposed by the parties.

Item 12 (LA Unit Trust)

Somewhat surprisingly, the wife’s counsel asserted in final submissions that the LA Unit Trust was in fact a discretionary trust. It is not. It is a unit trust,[11] as its name tends to suggest.
[11] Affidavit of Mr S, Annex C, para 156; Husband’s affidavit, para 105
The wife’s counsel also contended in final submissions that the Court should expunge from the joint balance sheet the debt due to the LA Unit Trust. The submission was made allegedly in reliance upon the assumptions of the single expert when computing the value of the LA Unit Trust.[12]
[12] Affidavit of Mr S, Annex C, para 164
Such a submission was startling for a number of reasons.
Firstly, there was evidence from the single expert about the quantification of the liability due to the LA Unit Trust in the sum of $32,531.[13]
[13] Affidavit of Mr S, Annex C, para 166
Secondly, the wife came to the trial admitting the existence of the liability in reliance upon that evidence. She included it within the balance sheet contained within her own Case Outline document.[14]
[14] Wife’s Case Outline filed 13/8/12, page 43
Thirdly, the single expert’s evidence about the liability and its quantum was adduced with the consent of the parties. The wife did not seek to cross-examine the single expert about the validity of his assumptions or the efficacy of his opinion about the value of the liability based upon those assumptions. With the tender of the joint balance sheet,[15] the trial was mutually conducted on the basis of an agreed fact that the husband was indebted to the LA Unit Trust in the sum of $32,531.
[15] Exhibit A, asset item 12
It was not open to the wife to dispute the agreed fact (s 191(1) Evidence Act (Cth)) other than with the leave of the Court on such terms as the Court thought fit (s 192 Evidence Act (Cth)).
Suffice to say, for the wife to attempt departure from her agreement with the husband over the issue, and for her not to do so until after the closure of the evidence when making final submissions, was patently unfair to the husband.
Allowing the wife to resile from the agreement would have been pointless unless the wife was also then granted leave to cross-examine the single expert in an effort to demonstrate the unreliability of his opinion about the existence and quantum of the debt, for otherwise his unchallenged evidence would have remained probative of the facts. The need for procedural fairness would then also have necessitated the husband being given the opportunity to cross-examine the single expert to establish the efficacy of his opinion. Since the trial was already in its third and last allocated day, the trial would not have been completed and would thereby have been adjourned part-heard for many months. The prejudice to the husband in allowing the wife to resile from the agreed fact was therefore clearly much greater than any prejudice suffered by the wife’s adherence to the agreed fact. The wife should be bound by her agreement.
Why the liability was included in the balance sheet as a “negative asset” rather than a “liability” remains unknown, but for the sake of consistency I will adopt the same approach as the parties.

Item 17 (credit card payment)

The wife sought to contend that a sum of $21,000 should be notionally added back to the balance sheet against the husband’s interest. Curiously though, the wife adduced no evidence to support such a finding. The only relevant evidence was adduced by the husband in his attempt to refute the alleged add-back and he was not challenged about the integrity of his evidence on that issue.
At about the time the wife departed the former matrimonial home a credit card liability existed in the sum of $21,130.90.[16] There is some uncertainty as to whether the liability was the husband’s solely or the parties’ jointly, but the point is moot. The wife agreed in cross-examination that the credit card existed to meet living expenses of the family and the liability was accrued in that way.
[16] Husband’s affidavit, para 67
The credit card liability was extinguished by the husband using the proceeds realised on the sale of a car shortly after the wife’s departure from the former matrimonial home.[17]
[17] Husband’s affidavit, para 67
Whether by oversight or concession, the issue was not the subject of any final submission by the wife. I accept the submission of the husband that there is no valid basis to include the add-back in the balance sheet. By reference to established principles, the evidence of the husband’s use of the sale proceeds to discharge a debt accrued in meeting family expenses could not found any notional add-back of the expenditure (see Omacini v Omacini (2005) 33 Fam LR 134 at 144-146).

Item 21 (Debt to O Pty Ltd)

This liability represents the husband’s debit loan account with O Pty Ltd.[18]
[18] Husband’s affidavit, para 97
The wife submitted, inferentially if not expressly, that the liability should be ignored on the basis that it will shortly be paid out by distribution to the husband from the Casey Family Trust for the 2012 financial year.
The evidence does suggest that the debt will be discharged in coming months, but that is no reason to ignore a debt which certainly presently exists. As the wife argued throughout the case, the future distributions to the husband from the Casey Family Trust are a matter for consideration at the third stage of the property adjustment process.

Item 22 (Husband’s tax liability)

The wife expressly submitted this liability should be disregarded, but the basis for its proposed disregard was not clearly articulated.
It was an agreed fact that the husband has or will have a taxation liability for distributions received by him from the Casey Family Trust, although it remains unclear from the evidence whether the liability is actual or potential. The issue was not mentioned at all during the trial until the wife ultimately submitted for its erasure from the balance sheet. While the evidence supports a finding that the husband’s current debit loan account with O Pty Ltd will be discharged with the distribution he will shortly receive from the Casey Family Trust, there was simply no evidence at all that the distribution will discharge his taxation liability.

Item 25 (Debt to third party)

In August 2008 the parties engaged a contractor to carry out concreting work at the former matrimonial home. A tax invoice was rendered to the parties by the contractor in September 2008 for the work done.[19]
[19] Husband’s affidavit, para 190
The husband said the invoice was outstanding. When challenged in cross-examination, the husband denied he had extinguished the liability by undertaking work for the contractor as a reciprocal benefit. The husband explained the contractor’s patience in enforcement of the debt by the friendship that existed between the parties and the couple who stood behind the corporate contractor. The husband said those friends felt uncomfortable pursuing the parties for payment of the debt at the moment because of the pending litigation between the parties.
When she was cross-examined, the wife could not verify whether the debt was paid or not. She simply believed the debt would no longer be outstanding because the husband and that contractor had bartered their reciprocal services in the past and she did not believe the contractor would wait some four years for payment.
Obviously, the wife’s evidence was merely a statement of her belief, whereas the husband gave evidence of facts. I accept the husband’s factual evidence. Contrary to the submissions ultimately made by the wife’s counsel, I found the husband to be a reliable witness.
Neither party sought to adduce evidence from the individuals standing behind the corporate contractor to corroborate their evidence, nor did either party seek to explain their failure to do so. It is unnecessary to decide the argument between the parties about whether, and if so against whom, any inference should be drawn (see Jones v Dunkel (1959) 101 CLR 298 at 308, 312, 320-321). Acceptance of the husband’s factual evidence in the face of the wife’s lack of actual knowledge is sufficient to decide the issue.
I find that the parties remain liable to the contractor in the sum of $15,400. Perhaps the wife accepted the reality of that outcome because no final submission was made on the point by her counsel.

Item 27 (Liability under guarantees)

There is no doubt the husband has guaranteed the payment by O Pty Ltd of benefits to the husband’s father over an indefinite period of time.[20]
[20] Husband’s affidavit, para 87, affidavit exhibit H9, clause 11
O Pty Ltd currently meets the payments to the husband’s father as and when they fall due. Consequently, the husband has no existing liability under the guarantee. It remains entirely contingent.
Similarly, although not included in the joint balance sheet, the husband has guaranteed the performance of O Pty Ltd’s substantial financial obligations to the Westpac Bank.[21] The husband has no current liability under those guarantees either, but his liability is contingent upon the continuing viability of O Pty Ltd.
[21] Exhibits W4, W5

Items 28 and 29 (Superannuation)

The parties agreed that their superannuation interests should be regarded as property and form part of the matrimonial pool rather than be treated separately as resources. That is an acceptable approach (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-429).

Assessment of contributions

At the time of commencement of cohabitation the parties each had some assets.
The husband had a car and some other chattels, which he contended were collectively worth about $13,000.[22] The husband also conceded having a small debt to his grandmother. Although the wife gave contradictory evidence about the extent of the husband’s assets and liabilities at that time,[23] the husband was not seriously challenged and I accept the accuracy of his evidence.
[22] Husband’s affidavit, para 10
[23] Wife’s affidavit, para 2.3
The wife had savings of about $17,500, which were applied towards the purchase of the parties’ first home.[24]
[24] Husband’s affidavit, paras 11, 46; Wife’s affidavit, paras 2.2, 4.2, 4.3
The husband worked continuously throughout the marriage, principally for or within the business established by his father, and generated a handsome income.
The wife was also gainfully employed during the marriage, but her work was performed around her pregnancies and her primary care for the children. Some of her work was with the family business.
The wife last worked for income in either 2004 or 2005.[25]
[25] Husband’s affidavit, paras 19-25; Wife’s affidavit, paras 3.7-3.28
I accept as accurate the evidence and submission of the husband that, throughout the parties’ cohabitation, the wife was the primary homemaker and he was the primary breadwinner.[26] The wife grudgingly conceded that to be so in cross-examination.
[26] Husband’s affidavit, para 30
The parties bought and sold numerous parcels of real estate during their relationship. Those properties were renovated and profits were derived on their resale. I accept that both parties contributed to the renovations and improvements. The parties’ evidence about their respective contributions to the renovations and improvements was irreconcilable, but the discrepancy is more likely attributable to honestly held different perceptions rather than deliberate deception.
I am satisfied that until close to the end of their relationship the parties’ contributions were relatively equal. They each undertook domestic duties, cared for the children, worked and derived income, and improved their assets. Although they worked differently at those endeavours, they each devoted an equal amount of time and effort to the financial advancement and emotional contentment of the family.
There was, however, a marked change in the parties’ roles from about August 2008, shortly after the untimely death of their youngest child. The wife had suffered from psychological ill health that necessitated her earlier referral to a psychiatrist and the prescription of medication,[27] but her condition deteriorated upon the distressing event of the death of their child.[28] From that time she was unable to function in the manner she formerly had and the husband and older children took greater responsibility for domestic duties.[29]
[27] Exhibits W3, W8; Wife’s affidavit, paras 7.1-7.3, 7.13, 7.28
[28] Wife’s affidavit, paras 7.35-7.37
[29] Husband’s affidavit, paras 45, 137
The parties’ third child had only just attained 16 years of age at the time of the parties’ separation in September 2008. She did not attain her majority until June 2010. For the period between September 2008 and June 2010 the husband was principally responsible for her care and supervision and solely responsible for her financial support.
The husband was solely responsible for the maintenance of the former matrimonial home following separation,[30] but of course, he also had the benefit of principal occupation of it after September 2008 and sole occupation of it after the wife departed in May 2009.[31]
[30] Husband’s affidavit, paras 65-66
[31] Wife’s affidavit, para 7.38
Following the wife’s departure from the former matrimonial home the husband paid money towards her support. Until November 2010 he paid to her amounts totalling over $20,000,[32] together with a medical insurance excess payment triggered by her hospitalisation.[33]
[32] Husband’s affidavit, para 70, affidavit exhibit H2
[33] Husband’s affidavit, para 69
An interim application for spousal maintenance was subsequently made by the wife in August 2011, which resulted in orders being made in December 2011 for the payment of spousal maintenance by the husband to the wife on certain conditions, but the conditions were not subsequently met and so no payments were made.[34]
[34] Husband’s affidavit, paras 71-78; Wife’s affidavit, paras 9.9-9.11
The wife’s counsel contended her contributions were greater and merited her entitlement to 55 per cent of the matrimonial pool.
Conversely, the husband’s counsel contended his contributions were greater and merited his entitlement to 55 per cent of the matrimonial pool.
I am satisfied the husband’s overall contributions were greater. The parties’ initial contributions were equivalent and their efforts throughout the marriage until August 2008 were relatively equal. The disparity arises from the post-separation contributions. Following the death of the parties’ youngest child and the wife experiencing deteriorated mental ill health, the husband maintained his breadwinning role and additionally provided the domestic support to the family necessitated by the wife’s emotional withdrawal. He continued to maintain one of the children until the attainment of her majority and he voluntarily helped maintain the wife for well over two years after separation.
In weighing those considerations I conclude that the husband has established his entitlement to 52.5 per cent of the matrimonial pool. Axiomatically, the wife’s entitlement is 47.5 per cent. A differential of 5 per cent is an appropriate measure of the disparity in their overall contributions.
The wife began the trial advocating for the attribution of greater weight to her non-financial contributions by reason of the application of principles espoused by the Full Court in Marriage of Kennon (1997) 22 Fam LR 1. However, during legal debate about the meaning of those principles, the wife’s counsel eventually conceded the available evidence would not support any finding in the wife’s favour and the argument was abandoned.
Although the wife began the trial pressing for the application of Kennon principles in her favour, thereby asserting belief in her entitlement to 55 per cent of the pool, she held fast to her submission about entitlement to 55 per cent of the pool despite abandonment of the Kennon argument. Clearly, that was not a logical position to adopt and it necessarily follows the wife must accept her estimated entitlement was thereby diminished.

Adjustment of entitlements

The wife’s counsel ultimately described the third stage adjustment of the parties’ entitlements as “the big issue”, as indeed it was.
The husband is currently 46 years of age.[35] He is healthy and still has many years of gainful employment ahead of him.
[35] Husband’s affidavit, para 3
For the last 10 years or so the husband has received income in excess of $100,000 per annum, and in recent years there has been a significant upward trend.[36]
[36] Husband’s affidavit, paras 16-17
The husband’s annual income is a composite of wages he earns from O Pty Ltd and distributions he receives from the Casey Family Trust.
The husband’s salary is presently not less than about $133,000 gross per annum[37] and perhaps as much as $150,000 gross per annum, together with superannuation and a company car.[38] It is improbable that the husband’s wages will decrease.
[37] Husband’s financial statement, para 9; Exhibit W6
[38] Affidavit of Mr S, Annexure C, paras 74, 78
Unlike salary, annual distributions from the Casey Family Trust are liable to fluctuate. Historically, the annual distributions received from the Casey Family Trust have been substantial. The distributions in the past have variously been made by the trustee to the husband, the wife,[39] and/or E Pty Ltd.[40] Since separation, no distributions have been made to the wife.
[39] Husband’s affidavit, para 100
[40] Husband’s affidavit, para 101
Mr C, the accountant for O Pty Ltd and the Casey Family Trust, was cross-examined. His evidence revealed that the husband received no distribution from the Casey Family Trust in the 2009 financial year, a distribution of $176,489 in the 2010 financial year, and a distribution of $199,661 in the 2011 financial year.

Although the distribution to the husband for the 2012 financial year has not yet been finalised, the accountant said it is presently estimated the sum of $148,447.97 will be distributed to the husband,[41] the purpose of which is to cover and discharge the husband’s loan account with O Pty Ltd (being item 21 on the balance sheet).
[41] Affidavit of Mr C, Annexure C (second page)
In such circumstances the husband will have received annual trust distributions in the range of approximately $150,000 to $200,000 in the last three complete financial years. That is a trend from which to reasonably infer the probability of continuing substantial annual distributions from the Casey Family Trust to the husband.
Such inference must be tempered to some degree by evidence about recent probable losses sustained by the business conducted for the Casey Family Trust by O Pty Ltd. Two major customers of the business have fallen into liquidation and will likely cost the Casey Family Trust gross income of around $150,000,[42] but of course such a loss must be viewed in context. Although there has been a trend of decreasing gross profit and total income, the Casey Family Trust has still generated gross income of between $3 and $4 million dollars in the financial years from 2007 to 2010 inclusive,[43] so losses of around $150,000 are less than 5 per cent of gross annual profit.
[42] Husband’s affidavit, para 125
[43] Affidavit of Mr S, Annexure C, paras 63-68, Schedule 2, page 54
The financial statements for O Pty Ltd and the Casey Family Trust for the 2011 and 2012 financial years are not in evidence, but the distributions to the husband from the Casey Family Trust since 2010 have been substantial.
The wife is currently 44 years of age,[44] but unlike the husband she has not kept good health. She initially developed depression in 1992,[45] although she did not begin consulting a psychiatrist until August 2007.[46] The wife’s condition worsened after the death of the parties’ youngest child in 2008.[47]
[44] Wife’s affidavit, para 1.1
[45] Wife’s affidavit, para 5.6
[46] Wife’s affidavit, para 7.28; Exhibit W3
[47] Wife’s affidavit, paras 7.35 - 7.37
The wife commenced to receive a disability pension in June 2009,[48] shortly after she vacated the former matrimonial home. She still receives that pension and it is her only current source of income.
[48] Wife’s affidavit, paras 3.29, 9.1
The wife terminated her consultations with the psychiatrist in June 2009, but within a month was admitted to hospital with major depression under the care of that psychiatrist.[49] In October 2010 the wife was again hospitalised,[50] at which time the psychiatrist certified she was “significantly capacitated (sic) by her psychiatric illness” and “unfit to return to any form of remunerative employment for the foreseeable future”.[51]
[49] Exhibit W3
[50] Exhibits H2, W8
[51] Exhibit W3
The wife enrolled in an educational course at a technical college in June 2010, but she discontinued the course approximately four months later, contemporaneously with her hospitalisation in October 2010. The wife said in cross-examination she has no intention to return to it. She has not sought out any employment since separation from the husband.
The wife contended that her fragile state of mental health precludes her from holding employment or returning to the technical college course, but her opinion is uncorroborated.
The wife’s treating psychiatrist issued two certificates in December 2010 – one stating that she would be unable to return to the technical college course until late January 2011 at the earliest[52] and the other stating that she was unfit for work until 31 January 2011.[53]
[52] Exhibit H2
[53] Exhibit W3
The tendered notes of the wife’s psychiatrist disclose that the wife consulted further with the psychiatrist in February, March, April, May, and July 2011, but the notes do not update the wife’s fitness for employment after January 2011.[54] There are no psychiatric notes in evidence beyond July 2011, implying that the wife has not sought psychiatric therapy for more than a year.
[54] Exhibit W3
Although the wife still receives a disability pension, it is unknown when her entitlement to that pension was last reviewed, there is no medical evidence before the Court proving her unfitness for work or study after January 2011, and she no longer seems to receive psychiatric treatment.
The wife has a proven capacity for gainful employment because, notwithstanding her fragile mental health since 1992, it is common ground she worked regularly and capably in the family business between 1997 and 2004. Moreover, the wife ably participated in the trial over three continuous days, enduring cross-examination one afternoon at a time when she said she was ordinarily exhausted, and providing continuous instructions to her lawyers.
Consequently, I reject the submission of the wife’s counsel that she has no capacity at all for gainful employment on account of her mental ill health. The evidence does not properly permit such an inference to be drawn.
That is not to say though that the wife has robust mental health and an unfettered income earning capacity. She likely has some prospect of employment in an administrative capacity, given her experience in that form of work with O Pty Ltd over many years, but her skills are stale and she is low on confidence. Her income earning capacity is still far inferior to that of the husband.
The wife is currently in a relationship with a man she has known for some months and they spend several nights each week together.[55] The wife denied receiving any financial support from her current partner. There was no evidence to contradict her and no proper basis to reject her evidence on that issue.
[55] Wife’s affidavit, para 9.4
The parties’ three surviving children are all now adults. Two of them are in full-time employment and the third is in permanent part-time employment. Each of them earns income of about $500 per week.[56] Neither party has any duty to maintain any of them.
[56] Husband’s financial statement, para 17; Wife’s affidavit, para 9.12
No other aspects of the evidence were addressed by the parties as being influential in the determination of any third stage adjustment.
The husband’s counsel submitted that no adjustment was properly warranted in favour of either party on the evidence, but I reject that submission. In combination, the factors discussed necessarily demand an adjustment in the wife’s favour.
The wife’s counsel at various times submitted that the adjustment in favour of the wife should be assessed at “20 percent”, “25 per cent”, “at least 25 per cent”, and “at the upper end of the range”. Finally he admitted difficulty quantifying the adjustment, as was apparent from the vacillating submissions.
The husband’s superior income earning capacity and the likelihood of his continuing substantial distributions from the Casey Family Trust are the factors of significance which lead me to quantify the adjustment at 25 per cent.
An adjustment of 25 per cent represents approximately $200,000. That is a substantial sum of money, but it must be remembered the husband will soon probably receive some $148,447.97 by way of distribution from the Casey Family Trust for the 2012 financial year, which will enable him to extinguish his debt to O Pty Ltd of that magnitude. Thereafter, the husband has a reasonable expectation of more annual distributions from the Casey Family Trust, which payments will be additional to his handsome salary package.

Just and equitable orders

As a consequence of those findings the wife’s entitlement to the pool is measured at 72.5 per cent and the husband’s share is 27.5 per cent.
The wife’s 72.5 per cent share of the matrimonial pool equates to a value of $580,309 (to the nearest dollar).
It is uncontroversial that the wife will retain assets (items 3, 8, 9, 10), liabilities (item 26) and superannuation interests (item 29) with a combined net value of $50,290. The wife therefore needs to receive a cash adjustment of $530,019 to fulfil her entitlement (50,290 + 530,019 = 580,309).
The husband will retain assets (items 1, 2, 4, 5, 6, 7, 11, 12, 13, 14, 15, 16), add-backs (item 17), liabilities (items 18, 19, 20, 21, 22, 23, 24, 25, 27) and superannuation interests (item 28) with a combined net value of $750,136. His 27.5 per cent share of the matrimonial pool equates to a value of $220,117, so his payment to the wife of $530,019 would leave him with his correct entitlement (750,136 – 530,019 = 220,117).
Interim orders were made on 15 February 2012, with the consent of the parties, requiring the wife to pay to the husband the sum of $10,000 from her final share of the matrimonial pool as her contribution towards legal costs incurred by the parties through their joint representation in the coronial inquest concerning the death of their child.[57] To achieve that objective, Order 2 made on 15 February 2012 is discharged and the sum of $10,000 will be deducted from the lump sum payable by the husband to the wife under these orders. The wife will therefore receive a cash payment of $520,019.
[57] Order 2 and Notation D made on 15 February 2012
The husband proposed that he pay to the wife only $300,000,[58] whereas the wife proposed the husband pay to her $800,000.[59] The husband’s proposal was insufficient and the wife’s was absurdly inflated because, in conjunction with the assets and resources she will retain, it amounted to more than the value of the entire pool.
[58] Exhibit H1, Order 5
[59] Exhibit W2, Order 1
The husband will have three months within which to pay the lump sum to the wife. The wife was prepared to allow him that long to marshal his financial affairs even though the husband only sought 56 days.
In default of payment of the lump sum the former matrimonial home will be sold and the proceeds of sale distributed in a manner to achieve the intended outcome.
Upon payment to the wife the husband will retain his interests in the family corporations and trusts and shall indemnify the wife against any liability to those entities.
Otherwise, the parties retain their own superannuation interests and the chattels in their respective possession.

Spousal maintenance

At the outset it should be noted that the wife’s claim for spousal maintenance must be considered in light of the adjustment of property interests accomplished pursuant to s 79 of the Act (see Brodie v Brodie (2009) 41 Fam LR 18 at 37-38).
The wife sought an order that the husband pay her spousal maintenance in the sum of $1,000 per week indefinitely.
The husband staunchly opposed any such order, contending the wife had no need for it and he had no capacity to pay it.[60]
[60] Husband’s affidavit, paras 121-124, 149
The wife currently has no income, given that her current receipt of a disability pension must be ignored (s 75(3)), and she has current weekly expenses of $390.[61] The wife’s need for maintenance is therefore quantified at $390 per week.
[61] Wife’s financial statement, paras 9-16, 60
I observe in passing that the Court previously made interim orders for the husband to pay spousal maintenance to the wife in the sum of $450 per week, conditional upon the wife securing rental accommodation.[62] As the husband’s counsel correctly pointed out, quantification of the wife’s need at $1,000 per week is artificial and unfounded on the wife’s own evidence.
[62] Orders 4-5 made on 6 December 2011
The husband contended the wife had no need of any maintenance in light of her imminent receipt of a substantial cash lump sum as part of her share of the matrimonial pool of assets. I accept that is so, as the wife will then have cash in excess of $500,000 to invest and spend as she sees fit.
It could not be the case, as the wife sought to inferentially suggest, that the husband should pay to her a lump sum of sufficient magnitude to enable her acquisition of an unencumbered home of the standard she desires and to pay her a stipend in the sum she considers reasonable. The standard of living the wife wishes to enjoy is not the measure of either the division of property interests between them or her spousal maintenance entitlement.
However, the wife does have a need to be maintained for a limited period of time. There will be some delay in the wife’s receipt of the lump sum in satisfaction of her property interest, as the husband has three months within which to make the payment. Although the wife has the capacity to obtain some form of employment and earn a modest income, she presently has no employment and it will likely take some little while for her to seek it out.
The question then arises as to the husband’s capacity to pay spousal maintenance to the wife. The husband deposed he had no capacity to pay, but the evidence reveals otherwise.
His own weekly living expenses are calculated at $712,[63] which are additional to his other financial commitments of $2,913,[64] making a weekly total of $3,625. The monies voluntarily paid by the husband to or for his adult children are disregarded as he has no legal obligation to make those payments.
[63] Husband’s financial statement, para 60
[64] Husband’s financial statement, paras 19-31
Although the husband deposed to gross weekly income of $3,596,[65] that figure incorporates estimated weekly draw-downs on his debit loan account with O Pty Ltd of about $1,032 per week.[66]
[65] Husband’s financial statement, para 16
[66] Husband’s financial statement, para 11
However, the husband’s weekly income may be greater for two reasons.
Firstly, there is some unchallenged evidence that his current salary from O Pty Ltd is greater than the historical estimate included in his financial statement, meaning that his weekly income is more like $3,000 gross than $2,500 gross.[67]
[67] Affidavit of Mr S, Annexure C, paras 74, 78
Secondly, it is known that for the 2012 financial year the husband’s distribution from the Casey Family Trust will approximate $148,447.97, in order to cover his regular withdrawals on the debit loan account. Averaged across a year the draw-downs from the loan account are therefore closer to $3,000 than $1,000 each week.
On that analysis, the husband’s total weekly gross income is more accurately estimated at about $6,000. When income of that magnitude is compared to the husband’s weekly living expenses it is clear he has the capacity to pay spousal maintenance.
An order is therefore made requiring the husband’s payment of spousal maintenance to the wife until such time as she is paid the lump sum in satisfaction of her entitlement to the matrimonial pool of property. The Court could have no real confidence the wife will obtain employment and generate sufficient income to maintain herself before that occurs within the next few months.
The husband alleged having a conversation with the wife in June 2012, which was stimulated by his observation of her wearing a ring on her wedding-ring finger. The husband alleged the wife admitted being engaged to her new partner.[68] The husband was not cross-examined about that evidence, but the wife was. She admitted wearing a ring on her wedding-ring finger at the time, but denied the conversation alleged by the husband. When asked why she was then wearing the ring on her wedding-ring finger the wife simply said “I decided to put it there”. It was therefore a calculated decision on her part.
[68] Husband’s affidavit, para 147
I do not accept the wife’s denial of the conversation alleged by the husband. I find that she was wearing a ring on her wedding-ring finger, as she admitted, and that she at least inferred to the husband that she was engaged to her new partner with a view to their marriage. Of course, that does not necessarily mean the wife was speaking truthfully when she told, or at least inferred to, the husband that she was engaged to her new partner, but that is the most probable explanation. She had no obvious reason to deceive the husband.
Although the wife may not presently be financially supported by her partner and they may not presently be living together on a full-time basis, I am satisfied on the evidence that the relationship between the wife and her partner is currently sufficiently developed that they are contemplating marriage in the foreseeable future. That is an additional reason why no order should be made for the payment of spousal maintenance on an indefinite basis.
The conditional interim spousal maintenance orders made on 6 December 2011 are discharged.

I certify that the preceding one hundred and forty-two (142) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 30 August 2012.

Associate:

Date: 30 August 2012