DE LUCA and RICCI - [2021] FCWA 4

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: DE LUCA and RICCI [2021] FCWA 4
CORAM: O'BRIEN J
HEARD: 16, 17, 18 & 19 NOVEMBER 2020,
WRITTEN SUBMISSIONS ON 8 JANUARY 2021
DELIVERED : 21 JANUARY 2021
FILE NO/S: PTW 2989 of 2018
BETWEEN: MS DE LUCA
Applicant
AND
MR RICCI
Respondent

Catchwords:

PROPERTY – Where a central issue is the proper characterisation of the wife’s interest in a trust as property or as a financial resource – Where the wife and her sister are the joint trustees of the relevant trust – Where the wife’s interest is properly characterised as a financial resource – Assessment of contributions and prospective factors – Turns on its own facts.

Legislation:

Family Law Act 1975 (Cth)

Category: Reportable

Representation:

Counsel:

Applicant	:	Mr Bannerman
Respondent	:	Mrs Oakeley

Solicitors:

Applicant	:	Bannerman Solicitors
Respondent	:	Gibson Lyon Lawyers

Case(s) referred to in decision(s):

AIK Corporation Pty Ltd v 119 Nicholson Road Pty Ltd [2015] WASC 391
Barnell & Barnell (2020) FLC 93-961
C & C [1998] FamCA 143
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136
Chorn and Hopkins (2004) FLC 93-204
Dulton & Dulton (2020) FLC 93-984
Goodwin and Goodwin Alpe (1991) FLC 92-192
Hall v Hall (2016) FLC 93-709
Harris & Dewell and Anor (2018) FLC 93-839
Jabour & Jabour (2019) FLC 93-898
Jones v Dunkel (1959) 101 CLR 298
K & K [2004] FamCA 186
Karger v Paul [1984] VR 161
Kelly and Kelly (No 2) (1981) FLC 91-108
Kennon v Spry (2008) 238 CLR 366
Kowaliw and Kowaliw (1981) FLC 91-092
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361
Luke v South Kensington Hotel Co. (1879) 11 Ch. D. 121
Payne v Parker [1976] 1 NSWLR 191
Pittman & Pittman (2010) FLC 93-430
Re Consiglio Trusts (No.1) (1973) 36 DLR (3d) 658
Trevi & Trevi (2018) FLC 93-858

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

IT IS NOTED that publication of this judgment by this Court under the pseudonym De Luca & Ricci has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

1[Ms De Luca] (“the wife”) and [Mr Ricci] (“the husband”) have been unable to reach agreement in relation to the alteration of their property interests following their separation and divorce.
2Among the most significant of the issues requiring determination is a dispute as to the appropriate characterisation of the wife’s interests in the [Mario De Luca] Family Trust, and the impact of those interests on the consideration of what is a just and equitable division of the parties’ property. The husband’s case is based to a significant degree on the premise that the wife’s interest in that trust is property; the wife’s case is based to a significant degree on the premise that her interest in that trust is a financial resource only.
3The trial proceeded over four days, concluding on 19 November 2020. As will be seen, the husband’s position as to the characterisation of the wife’s interests in the trust was somewhat fluid over the course of the proceedings. Counsel for the parties could not clearly agree the point at which the husband “pinned his colours to the mast” to contend that those interests should be characterised as property. That timing issue was perceived to have potential significance to a contention by the husband that inferences should be drawn from the failure of the wife to adduce evidence from her sister [Mrs A], as detailed later in these reasons.
4Orders were accordingly made by consent at the conclusion of the trial requiring the solicitors for the parties to confer in relation to that issue, and giving them leave to file further submissions by no later than 11 December 2020, strictly limited to the issue of the timing and notice to the wife of the husband’s contention that her interests in the trust may be characterised as property, and the issue of any inference which he would contend should be drawn. A further order was made to the effect that if neither party filed such submissions by 11 December 2020, the submissions of both would be deemed closed.
5On 11 December 2020, the solicitors for the parties executed a Minute of consent orders jointly proposing that the date by which submissions should be filed be extended to the close of registry on 8 January 2021. Orders were made in terms of that Minute on my return to chambers from annual leave on 29 December 2020.
6Both parties filed submissions in accordance with that order. The common ground within those submissions confirmed the observation already made as to the unclear nature of the husband’s position as to the characterisation of the wife’s interest in the trust over the course of the proceedings. While it was never in dispute that the value of that interest was relevant to the just and equitable determination of the proceedings, as will be seen below at a very late stage prior to trial the husband’s position was expressed to be that the “family trust is a financial resource to [the wife]”.
7The common ground within the submissions confirmed that, after exchanges at the status hearing prior to trial, clear notice was given by the husband’s counsel on Wednesday, 11 November 2020 that the husband’s position was that the interest of the wife in the trust should be characterised as property. On Thursday, 12 November 2020, the husband’s solicitors advised the wife’s solicitors of their intention to write to Mrs A, and foreshadowed the terms of that letter. The letter said that the husband’s lawyers “had expected” that Mrs A would be called as a witness for the wife, and for reasons that are not entirely clear advised Mrs A that her non-attendance at trial would be a matter about which they would invite me to draw an inference. The letter to the wife’s solicitors expressly put them, and thus the wife, on notice to that effect. The trial commenced on Monday, 16 November 2021.

Factual Background

8The wife was born in 1955. She works part-time as a [manager]. The husband was born in 1957 and is a retired [tradesman].
9The parties began their relationship in 1993. They had both been previously married and divorced; both had children by their previous marriages. They married in 1995 and began living together. They separated in 2015, and were divorced in 2017.
10As outlined in more detail later in these reasons, the husband received various payments both before and during the marriage by way of compensation for workplace injuries.
11In 2008, the wife’s father Mario De Luca died. By the terms of his will, the Mario De Luca Family Trust (“the Trust”) was established as a testamentary trust. The wife and Mrs A are the joint trustees and appointors of the Trust, which will vest in 2092.
12The Trust owns a property which fronts [Street A] and [Street B], [City A] (“[Property A]”), and a home at [Suburb A]. At the time the trust was established, it also owned a property at [C Street], [Suburb B] (“the [Suburb B] property”). At the time of the death of the wife’s father the properties were unencumbered. Subsequently, as detailed below, the Suburb B property was transferred to the wife, and borrowings were secured against both Property A and the Suburb A property. The wife lives in the Suburb A property, and seeks to retain the Suburb B.
13In 2012, the husband established [Company A] with the wife’s cousin [Mr J], and [Mr J’s son]. The husband and Mr J’s son were at that time the directors and equal shareholders in Company A. Shortly after its establishment, Company A purchased a block of land at [D Street], [Suburb C], upon which seven units were then built (“the [D Street] development”).
14In the following years, there were various transactions relating to funds from the trust, and other transactions involving Company A, which were the subject of detailed evidence referred to later in these reasons. The extent of those transactions, and the use to which various funds were put, were matters of dispute.
15In December 2016, the husband became the sole director and shareholder of Company A. The company retains ownership of one of the units constructed during the D Street development (“the [D Street] unit”).
16The parties jointly own the former matrimonial home at [E Street], [Suburb D] (“the [E Street] property”). The husband lives in that property and seeks to retain it.
17The husband has significant deficits in both literacy and numeracy, which are acknowledged by the wife. Against that background, there is a dispute between the parties as to the level of the husband’s knowledge of various transactions and investments undertaken during the marriage. The wife asserts that the parties made joint decisions in relation to their finances throughout the marriage, and that she read relevant documents to the husband and he understood them. The husband acknowledges that to a degree, while asserting that he had no knowledge of some transactions. He expressed the belief that the wife has likely “squirrelled away” funds which have not been disclosed.
18Similar issues arose in relation to various financial dealings by the husband after separation, in the sense that the husband professed little recall or understanding of them and the wife’s suspicions were raised. That in turn was further complicated by the somewhat “loose” financial arrangements between the husband and the other investors in the D Street development.

Matters Not in Issue

19Both parties sought orders for the alteration of their property interests. It was common ground that it is just and equitable for orders to be made.
20To a certain degree, the retention by each party of particular items of property was agreed. Each is to retain their chattels and personal property, and personal bank accounts. The husband agrees that the wife should retain the Suburb B property, and the wife agrees that the husband should retain his ownership and control of Company A, thereby retaining the D Street unit. While the wife does not seek to retain the E Street property in which the husband lives, on her case the sale of that property is necessary to effect an overall settlement.
21The wife proposes that she retain the whole of her superannuation entitlements. While the husband sought a superannuation splitting order, in closing submissions his counsel confirmed that if his overall entitlements are not assessed to be as high as that which he seeks, the proposed splitting order is the element of his claim he would first forego.

Relief sought by the parties

22Both parties filed Minutes of orders sought prior to trial. There was some lack of clarity in the husband’s position as to the characterisation of the wife’s interest in the Trust, which in turn contributed to a lack of clarity as to the relief sought by him.
23That was compounded by a seeming inconsistency between the wife’s position and the financial statements of the Trust. On the wife’s case, her interest in the Trust is a financial resource. Her Financial Statement, and the joint schedule of assets and liabilities prepared by the parties for trial, made no reference to any debt owed to her by the Trust. During preliminary exchanges with counsel, it was pointed out that the financial statements of the Trust record as a liability a significant amount owed to the wife and described as a “beneficiary loan account”. Clearly, any amount owed to the wife by the Trust would properly be characterised as her property. Some time was spent on the first morning of trial addressing those matters, and the matter was stood down to enable both counsel and their instructors to jointly speak with the accountant for the trust to seek some clarity.
24From that conversation it emerged, and was accepted by both parties, that the amounts recorded in the financial statements of the Trust as being “beneficiary loan accounts” did not in fact reflect ‘debts’ to each of the wife and her sister. Rather, they simply represented the accountant’s own calculation at the time the trust was established of the value of the trust assets at that time, equally apportioned by him between the wife and Mrs A, with subsequent adjustments reflecting distributions to each over time. The accountant subsequently confirmed that position in his evidence.
25Against that background, counsel for the wife confirmed that the wife still sought the orders set out in her Minute filed for the purposes of trial. On her case, her interest in the Trust is not property; she proposed an equal division by value of the property of the parties, to be achieved by the sale of the E Street property and distribution of the proceeds. On her case, the contributions of the parties to the date of trial are appropriately assessed as equal, and there is no basis for any adjustment in favour of either party to what would otherwise be the contributions based outcome.
26The husband’s case, with no disrespect to him, started from the position of his strong desire to retain the E Street property unencumbered. The basis upon which he asserted that entitlement was somewhat fluid.
27In his initial Response filed on 16 April 2018, the husband sought the transfer to him of the E Street property, on the basis that he refinance the joint debt secured against it into his sole name. He otherwise sought to be excused from further particularising the final orders he sought “pending the completion of disclosure and valuations”.
28In his amended Response filed on 9 September 2020, the husband additionally sought orders that the wife make payments “by way of lump sum spousal maintenance pursuant to section 77A” firstly sufficient to clear the debts secured against the E Street property at the date of transfer, and secondly by three annual payments of $25,000 “representing 50% of [her] distributions from [the trust]… so as to effect an overall split (sic) to [him] of 45% of the value of the net assets and financial resources (sic)”. In addition, he sought orders for a superannuation split whereby 50 per cent of the wife’s superannuation interests would be transferred to him. The Minute of orders filed with his Papers for the Judge on 27 October 2020 sought orders in the same terms.
29Leaving aside the obvious issues as to the drafting of the orders sought by the husband, and in particular the reference to s 77A, the asserted basis for the relief sought by the husband was not immediately clear.
30The Papers for the Judge filed on behalf of the husband shortly prior to trial included the following statement:
“While the husband concedes that the wife’s family trust is a financial resource to her, it is one over which she has significant (not exclusive, equal) control and a resource from which she has and will continue to derive very significant financial benefit”.

31Notwithstanding that statement, at the commencement of the trial, counsel for the husband confirmed that a finding would be sought that in fact the wife’s interest in the family trust is properly characterised as property.
32At that point counsel explained that the husband’s position in relation to alteration of property interests was:
(a)that if the court concluded that the wife’s interest in the Trust is property, contributions should be assessed globally in the proportions of 70 per cent to the wife and 30 per cent to the husband, with that result then being adjusted for prospective factors to an outcome of 60 per cent - 40 per cent in favour of the wife; or
(b)that if the court concluded that the wife’s interest in the Trust is not property, contributions should be assessed in the husband’s favour, at 55 per cent - 60 per cent to him and the balance to the wife, with that result then being adjusted for prospective factors to an outcome of 70 per cent - 30 per cent in favour of the husband.

33An order for lump-sum maintenance is not made “pursuant to s 77A” of the Family Law Act 1975 (Cth) (“the Act”). The power of the court to make an order for spousal maintenance derives from s 74, and permits the making of an order in proceedings with respect to maintenance. An application for maintenance must be on foot.
34When it was pointed out by counsel for the wife that the purported amendment of the husband’s response so as to include a claim for lump‑sum spousal maintenance occurred more than 12 months after the date on which the parties were divorced, counsel for the husband on instructions abandoned that aspect of the claim.
35Counsel then summarised the husband’s case as being that contributions should be assessed as previously outlined, but the adjustment for prospective factors should be sufficient to result in an overall division of the property outside the trust in the proportions of 90 per cent to the husband and 10 per cent to the wife.
36Counsel for the husband properly acknowledged the difficulty inherent in the proposition that the wife should immediately pay the amount required to discharge the mortgage on the E Street property, in circumstances where the husband could not point to any immediately available source for that payment.

Evidence relied upon at trial

37The wife relied on the following affidavits:
(a)her trial affidavit filed on 20 September 2019;
(b)her updating affidavit filed on 29 October 2020;
(c)her financial statement filed on 29 October 2020;
(d)affidavit of her accountant [Mr K] (who is also the accountant for the trust) filed 2 November 2020; and
(e)affidavit of [Mr L], the property manager for Property A, filed 30 October 2020.

38The husband relied on the following affidavits:
(a)his trial affidavit filed on 20 September 2019;
(b)his updating affidavit filed on 2 November 2020;
(c)his financial statement filed on 2 November 2020;
(d)affidavit of his accountant [Ms D] filed 20 September 2019;
(e)further affidavit of Ms D filed 2 November 2020;
(f)affidavit of [Mr J] filed 25 September 2019; and
(g)affidavit of [Mr Ricci’s son] (from his first marriage) filed 20 September 2019.

39All witnesses were required to present for cross-examination.
40The wife gave her evidence cautiously, but to my perception directly. She was criticised at times by counsel for the husband for her inability to recall certain specifics, while being able to recall others; I did not regard that as any indication of evasion or dishonesty on her part. She was unable to answer various questions about matters recorded in financial statements by the accountant, but gave clear answers about notations made by her on bank statements and the like. When presented with relevant records to assist her recollection of various transactions, her evidence was clear and unequivocal.
41The husband is, as he acknowledged, a very poor historian. By way of one example only, when he was asked how old the children were when he suffered a particular injury he responded by saying that he is unable to even remember his children’s dates of birth. Compounding that, it was also clear that his significant deficits in literacy and numeracy have made him consistently reliant on others for explanations of most matters relevant to the financial affairs of the parties.
42He professed almost complete ignorance of the workings of the Company A investment in the D Street development. While I accept that he has poor recall, I am not persuaded that his ignorance of transactions at the times at which they were undertaken was as pervasive as he would suggest.

43In some respects, his evidence was also self-serving. He made no secret of the fact that he is determined to retain the home as part of his overall settlement. In his most recent trial affidavit, he said that the home has been “specially modified to accommodate [his] health needs, specifically [his] knees and mobility requirements”. In fact, the only “modifications” to the home which he identified were the installation of a swimming pool and spa. He acknowledged, sensibly, that those improvements to the home were not solely to address his physical needs, and were to the benefit of the whole family. When asked how often he had used the swimming pool in the previous year, he responded that to the best of his recollection he had used it once only.
44The accountant Mr K and the property manager Mr L both gave their evidence in an open and direct manner. I found them both to be credible witnesses, albeit their evidence was not of great assistance.
45Mr J was an unimpressive witness. He was inclined to be evasive, and his professed inability to recollect matters potentially of some significance was unpersuasive. By way of example, he admitted having been suspended by ASIC from holding any role as a director of a company, but was vague when questioned as to the reason for the suspension. He professed to be unsure whether he was under that suspension at the time of the establishment of Company A, although he thought he had been suspended for three years at or about the relevant time. He acknowledged that at the time Company A was established he was involved in Supreme Court proceedings commenced by the Bank A to recover significant debts from a company under his control, but was vague about the details, beyond confirming that at the relevant time it “wasn’t a good idea for [him] to be involved in [Company A] as a director or a shareholder”. He claimed to be unable to remember whether he had been suspended or banned by ASIC from acting as a director only once, or on multiple occasions. I was not inclined to accept his evidence unless it was uncontested, or corroborated.
46Ms D gave her evidence in a straightforward and professional manner. I had no reason to doubt her honesty.
47Mr Ricci’s son also answered questions directly, albeit he was argumentative in his demeanour at times. He readily volunteered an acknowledgement that the wife had made a significant and valuable contribution as a homemaker and parent, including in caring for him and his siblings. Again, I had no reason to doubt his honesty.

The legal principles – alteration of property interests

48The Court has a wide discretion conferred by s 79(1) of the Act. That discretion must be exercised in accordance with legal principle, and without assuming that the parties’ interests in assets are or should be different from those determined by common law and equity.
49The Court must be satisfied that it is just and equitable to make an order adjusting existing property interests. That requirement is readily satisfied in most cases, including this one. The parties are long separated, they are divorced, and both seek to discontinue their joint ownership of property.
50In determining what orders will be just and equitable, the Court’s power is not confined by any “steps” or “stages”. Having said that, a court will satisfy the legislative requirements if it identifies and values the property and liabilities of the parties (to the extent the evidence permits), takes into account their respective contributions (including contributions to any assets which have ceased to be owned by them), assesses the factors in s 79(4)(d) to (g) of the Act (to the extent they are relevant), and considers whether the proposed orders are just and equitable.
51The Court is required to consider the respective contributions of the parties, both financial and non-financial, holistically over the whole period to trial. That does not lend itself (other than in an atypical case) to a strictly mathematical approach. The holistic approach to the assessment of contributions accommodates the wide range of factual scenarios dealt with by the Court.
52There is no presumption that, even over the course of a long marriage, the contributions of the parties are to be regarded as having been equal. There is no requirement for an entirely discrete consideration of the impact of initial or other specific financial contributions, nor that the contributions of the parties be quantified at a particular past moment in time, whether by reference to the date of commencement of cohabitation or, for that matter, the date of separation. Indeed, such a discrete consideration itself may raise the risk of error of the nature identified in Jabour,[1] and in Barnell.[2]
[1] Jabour & Jabour (2019) FLC 93-898.
[2] Barnell & Barnell (2020) FLC 93-961.
53Nothing in the Act requires the Court to express in percentage terms its assessment of contributions, or its assessment of the factors in s 79(4) (d) to (g), although that is often convenient and practical. Similarly, nothing in the Act requires the Court to allocate a percentage entitlement of the property to each party.

Add Backs

54In this case, as in many others, issues arose as to the appropriate treatment of property no longer owned by the parties, but which was owned by them prior to separation. While the court’s power is only to adjust existing interests in existing property, circumstances often arise where the disposal of property post separation must be taken into account if a just and equitable order is to be made.
55Broadly, there are two approaches which may be taken. The court may notionally “add back” the value of disposed property, merely as an aid to calculation in determining the appropriate division of existing property. Alternatively, and without notionally adding back, the court may take the disposal of property into account pursuant to s 75(2)(o). The latter approach has been recently described by at least one senior judge of the Appeal Division as “the more appropriate course”.[3]
[3] Dulton & Dulton (2020) FLC 93-984 per Strickland J, at [32].
56Adding back is the “exception rather than the rule”.[4] Reasonably incurred expenditure does not usually come within accepted categories of add backs.[5]
[4] C & C [1998] FamCA 143, at [46].
[5] Trevi & Trevi (2018) FLC 93-858, 78,454 at [29].
57As the Full Court observed in Trevi:
“Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property”.[6]
[6] Ibid, 78,454 at [30].

58Paid legal fees “occupy a particular position in the consideration of add backs by reason of s 117(1) of the Act”.[7] Against the background of s 117(1) the court is alert to consider notionally adding back legal fees paid from monies which would otherwise have been properly available for division between the parties, and were not generated by one party post separation from his or her own endeavours, so as to avoid a contribution by one party to the legal fees of the other, other than by a proper application of s 117(2).[8]

The existing interests of the parties in property

[7] Ibid, 78,455 at [36].

[8] Chorn and Hopkins (2004) FLC 93-204.

59To their credit, the parties had appropriately conferred prior to trial and reached agreement as to the nature and value of most of their existing interests in property, and the extent of their liabilities, apart from the significant issue as to whether the wife’s interest in the Trust formed part of that property.
60It is convenient, therefore, to deal with that issue at this point.

Characterisation of the wife’s interest in the Trust – legal principles

61The question of whether the property of a trust is, in reality, the property of the parties or one of them, or a financial resource, depends on the facts of the individual case including the terms of the relevant Trust Deed.[9] As the High Court has observed:
“The word “property” in s 79 is to be read as part of the collocation “property of the parties to the marriage”. It is to be read widely and conformably with the purposes of the Family Law Act. In the case of a non-exhaustive discretionary trust with an open class of beneficiaries, there is no obligation to apply the assets or income of the trust to anyone. Their application may serve a wide range of purposes”.[10]
[9] Goodwin and Goodwin Alpe (1991) FLC 92-192, at 78,273.
[10] Kennon v Spry (2008) 238 CLR 366, 390-391 at [64], per French CJ.

62The question of control of the Trust will be central to the determination. That said, control is not sufficient of itself. What is required is control whereby the relevant person can “obtain, or effect the obtaining of, a beneficial interest in the property of the trust”.[11]
[11] Harris & Dewell and Anor (2018) FLC 93-839, at [68].
63The reference to “financial resources of a party” in s 75(2)(b) “must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support”.[12] It refers to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”.[13]

The establishment and initial terms of the Trust

[12] Hall v Hall (2016) FLC 93-709, 81,455 at [54].

[13] Kelly and Kelly (No 2) (1981) FLC 91-108, at 76,803.

64The Trust was established by the terms of a will executed by the wife’s late father on 20 March 2008. The wife and Mrs A were, by definition, the joint appointors and trustees.
65“Beneficiary” was defined in the following terms:
‘“beneficiary” means the primary beneficiaries, their spouse, issue or remoter issue, parents, grandparents, brothers, sisters, brothers-in-law, sisters-in-law, nieces, nephews, cousins, second cousins, uncles and aunts, any trust under which any beneficiary has an interest whether absolute or contingent (called an eligible trust), any corporation where at least one share in which is owned by any beneficiary or by an eligible trust, any association established for charitable, religious, educational purposes and “beneficiaries” has a corresponding meaning”.

66By definition, the wife and Mrs A were the primary beneficiaries.
67The terms of the trust provided for a termination date of the earlier of “the date of expiration of the period not exceeding 80 years commencing on the date of [the wife’s father’s] death and such earlier date “as the trustee may appoint that is consented to in writing by the appointor”.
68Pending the termination date, the trustee was to hold the trust fund upon trust to pay or apply trust income and capital in its absolute discretion “to or for the beneficiary for the maintenance, education (including travel), advancement or benefit in such shares or proportions as the trustee determine[d]”, accumulate trust income, hold the trust capital or any part of it for the living beneficiaries “in such shares or proportions and of such category or categories as the trustee with the consent of the appointor may determine”, and pay the capital of the trust fund or any part thereof “to a beneficiary at any time as the trustee with the consent of the appointor may determine”.
69Other provisions enabled the trustee to make loans to beneficiaries, permit a beneficiary to reside in a trust property, and take various other steps.
70Relevantly, the terms of the trust as established by the will required that as and from the termination date, the trustee was to pay “the balance of capital and income” to the wife and Mrs A “as tenants-in-common in equal shares without regard to payments already made to them”.
71The terms of the trust also empowered the trustee to revoke, add to or alter all or any of the provisions of the trust provided the amendment was “not made in favour of, or for the benefit of or so as to result in any benefit to the trustee”, did not affect the beneficial entitlement to any amount allocated or otherwise absolutely vested in any beneficiary prior to the amendment, and did not expand the class of beneficiaries.

The amendment of the initial terms of the Trust

72The wife and Mrs A executed a deed of variation of the Trust on 13 September 2012 (“The 2012 Deed”). The 2012 Deed was expressed to have been executed to substitute the more general clauses set out in the will with more specific clauses as to the terms and conditions governing the operation of the Trust. The new clauses:
(a)empowered the trustee to declare persons or classes of persons to be excluded as beneficiaries;
(b)defined the Vesting Day as the earliest of the 80th anniversary of the date of the deed of variation, the date calculated by reference to the law relating to perpetuities applicable at any relevant time, or any other date the Trustee may determine at its absolute discretion;
(c)provided at clause 3.3(b) that on and from the Vesting Day the Trustee would stand possessed of the remaining trust fund “in trust for the beneficiaries then living or such one or more of them exclusive of the other or others of them” in such shares and proportions as the Trustee determined in its absolute discretion;
(d)permitted the further amendment of the deed by the trustee, provided that the variation did not purport to remove or replace the appointor or add another appointor without the consent of the existing appointor;
(e)permitted the appointment by the trustee of additional beneficiaries;
(f)included provisions whereby any amount of trust income set aside for a beneficiary but not paid would be held on a sub trust;
(g)maintained the wife and Mrs A as joint trustees and as appointors; and
(h)altered the definition of “beneficiaries” to remove any reference to “primary beneficiaries”, while then naming the wife and Mrs A and a wide class of their relatives, in similar terms to the original provisions in the Trust when established by the will, as beneficiaries.

73Clause 3.3(b) of the 2012 Deed is noteworthy in the context of the present dispute. The terms of the Trust as originally established by the will expressly provided for the equal division between the wife and Mrs A of the residual trust fund at the termination date, in circumstances where as joint trustees and appointors they could bring forward that termination date at their discretion. The terms of the Trust as amended by the 2012 Deed still permit the wife and Mrs A jointly to bring forward the termination (or vesting) date at their discretion, but provide for the residual trust fund to be held on trust for the beneficiaries, in such shares and proportions as they might determine in their discretion as trustees.
74Accordingly, under the terms of the Trust as originally established, the wife had an absolute entitlement to one half of the residual trust fund on termination, and could access that entitlement if Mrs A agreed to bring the termination date forward. Under the terms of the Trust as amended by the 2012 Deed, she had no such absolute entitlement. Rather, Mrs A’s agreement not only to the acceleration of the vesting date, but also (critically) as to the treatment of the various beneficiaries including the wife in the distribution of the residual trust fund was required.
75Where there is more than one trustee, the trustees’ decisions must be unanimous.[14] Counsel for the husband conceded in closing submissions that the requirement of unanimity in decision-making applies to the trust in the present case. Where trustees cannot agree, the status quo prevails; the courts will not intervene unless the inactivity that follows constitutes a breach of trust, or disagreement is so frequent as to impede the efficient administration of the trust.[15]
[14] Luke v South Kensington Hotel Co. (1879) 11 Ch. D. 121 at 125 per Jessel MR.
[15] Re Consiglio Trusts (No.1) (1973) 36 DLR (3d) 658.
76More broadly, a court will not generally review the exercise of a discretion by a trustee who has acted in good faith and upon real and genuine consideration, and in accordance with the purposes for which the trust was conferred.[16]

The further amendment of the terms of the Trust

[16] Karger v Paul [1984] VR 161, at 164; AIK Corporation Pty Ltd v 119 Nicholson Road Pty Ltd [2015] WASC 391, at [40] per Tottle J.

77The 2012 Deed was itself amended by a further deed executed by the wife and Mrs A on 28 March 2018 (“the 2018 Deed”). The 2018 Deed amended the 2012 Deed by altering the definition of beneficiaries to mean:
(a)the primary beneficiaries, in turn defined to mean the wife and Mrs A; and
(b)the primary beneficiaries and their “spouse, issue or remoter issue, parents, grandparents, brothers, sisters, bothers-in-law (sic), sisters-in-law, nieces, nephews, cousins, second cousins, uncles and aunts, any trust under which any beneficiary has any interest whether absolute or contingent (called an eligible trust), any corporation where at least one share in which is owned by any beneficiary or by an eligible trust, any association established for charitable, religious, educational purposes”.

78The 2018 Deed also deleted from the 2012 Deed clause 5.3, which permitted the trustees to appoint additional beneficiaries.
79The 2018 Deed did not in any way alter the discretion of the trustee, the ability of the trustee with the consent of the appointor to bring forward the Vesting Day, or the provisions for the distribution of the remaining trust property at the Vesting Day.

The operation of theTrust by the wife and Mrs A

80Since the death of their father, the wife and Mrs A (for ease of expression, “the sisters”) have undertaken various transactions utilising the property held in trust. The more significant of those transactions are briefly described below.
81At an early stage after the establishment of the trust following the death of their father, the sisters agreed that Mrs A could secure personal borrowings of $350,000 against the Suburb A property, which is owned by the trust. As earlier noted, the wife lives in that property. On the wife’s unchallenged evidence, Mrs A has applied those borrowings to her own purposes and has continued to service the relevant loan from her personal resources.
82In 2010, in their capacities as trustees, the sisters obtained borrowings from Bank A in the form of a Business Line of Credit, for improvements and repairs at the Property A property. Drawings were made against that line of credit by agreement. Mrs A received a payment of $35,000 from it which she applied for personal purposes, again with the wife’s agreement.
83In October 2012, the sisters, again in their capacities as trustees, borrowed $1 million from [Bank B] secured against trust property. The sum of $200,000 was placed into a term deposit and remained trust property. A further $100,000 was placed into a cheque account operated by the Trust, to meet ongoing expenses in relation to the Property A property. The sisters agreed that of the balance they would receive $350,000 each, and that agreement was implemented.

84The wife then paid Mrs A $150,000 to “buy out her one-half share” of the Suburb B property, which at that point was owned by the trust. The 2012 Deed having empowered the trustees to transfer capital of the trust to a beneficiary, a Deed of Vesting was executed to facilitate the transfer, and the wife was required to indemnify the trust and trustees as to any capital gains tax payable. It was agreed between the sisters that the value of the Suburb B property at the time was $300,000.
85In May 2018, the sisters refinanced the October 2012 loan.
86The sisters have continued to receive regular income from the Trust. They have, by agreement, taken that income in equal amounts with very few (and inconsequential) variations whereby in some years the wife has received a modestly higher amount and in other years Mrs A has received more. The amounts taken have varied over different years. On the wife’s evidence, which was unchallenged, the sisters continued prior to the COVID-19 pandemic to receive regular payments of $500 per week each. They have also taken occasional individual payments by agreement as required; by way of example, they each received $5,000 in August 2019.
87The conclusion is readily drawn, and in fairness was not contested by the wife, that since the commencement of the trust the sisters have cooperatively drawn equal benefits from it in terms of distributions of capital and income.
88It is also fairly noted that, apart from the vesting of the Suburb B property to the wife and the payment which she made to Mrs A for “her half share” of that property, the sisters have since the death of their father in 2008 preserved the trust capital in the form of Property A and the Suburb A property. That position is unchanged since separation. It is consistent with the wife’s evidence that she and her sister feel a personal obligation to maintain the significant properties acquired by their father during their childhood.
89Against that factual background, and the conceded requirement for unanimity of decision-making between the sisters, the questions central to a determination on the husband’s contention that the wife has a proprietary interest in the Trust property to the extent of 50 per cent of its value are:
(a)whether that conclusion can properly be drawn by reference to the admitted treatment of the trust capital and income by the sisters since the trust was established in 2008; and
(b)whether in any event I should find that, should the wife simply ask her to, Mrs A would agree both to bring forward the vesting date of the Trust and to both realise the trust capital and distribute it equally between the sisters, to the exclusion of other beneficiaries.

90The husband contends that both questions should be answered in the affirmative.

The husband’s submissions as to the trust property

91In addressing the first of the husband’s contentions summarised above, his counsel pointed to the treatment of the trust income and property by the sisters over the long period since their father’s death. She submitted that their treatment of the Trust to date “gets us at the very least” to “a substantial financial resource”; that, of course, is not the point. The wife’s counsel readily conceded that the Trust represents a substantial financial resource to her.
92To make out the first of his contentions, the husband would have to establish that the historical exercise by the sisters of their discretion as trustees would, as a matter of law, preclude them from exercising their discretion in a contrary manner in the future. It is difficult to conceptualise how that might be established; even were it demonstrated that one sister had acted to her detriment in reliance on an induced expectation that the other would exercise her discretion consistently with the past, the duties of the trustees to give due consideration to the other potential beneficiaries would not be displaced. In any event, the evidence simply does not support any conclusion of that nature.
93Counsel for the husband referred also to the decision of the Full Court in Pittman[17] in support of the broader contention that the wife’s interest in the Trust is properly characterised as property. With respect, the decision is readily distinguished. The relevant interest referred to in that decision was considered by the Full Court to be property “because whatever the original nature of [the] trust and the husband’s interest in it, the various amending instruments have resulted in a situation where the husband has irrevocable entitlements not only to income, but also to a share of capital”.[18] While in that case any uncertainty as to when the relevant vesting day might occur, and the husband’s lack of control over capital in the meantime, did not present an obstacle to that conclusion, that is not the case here. The wife has never had an irrevocable present entitlement to income, nor to capital. Her defined absolute entitlement to an equal share of capital on what was then described as the termination date of the trust was removed by the terms of the 2012 Deed.
[17] Pittman & Pittman (2010) FLC 93-430.
[18] Ibid, 84,661 at [63].
94Counsel for the husband invited me to draw inferences adverse to the wife by reference to the failure of Mrs A to give evidence on her behalf. She asserted that Mrs A was a relevant witness who could readily have been called by the wife, and that the Court should infer from her absence that her evidence would not have assisted the wife’s case.
95The relevant legal principles in relation to that submission are most commonly traced to the decision of the High Court in Jones v Dunkel.[19] An inference favourable to one party, and grounded in the evidence, may be more confidently drawn when a person able to put a “true complexion on the facts relied on as the ground for the inference” has not been called as a witness by the other party, and the evidence provides no sufficient explanation of that absence. Similarly, evidence which might have been contradicted by such a witness can be accepted more readily if the witness is not called. The rule “permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party”.[20]
[19]Jones v Dunkel (1959) 101 CLR 298.
[20] Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361, 385 at [64].
96The rule cannot be applied to the non-calling of a witness unless that witness would be expected to be called by one party rather than another. That may occur, for example, where it would be “natural” for one party to produce the witness, where the witness would be expected to be available to one party rather than the other, or where he might be regarded as “in the camp” of one party, so as to make it unrealistic for the other party to call him.[21]
[21] Payne v Parker [1976] 1 NSWLR 191, at 201-202.
97Obvious issues arise where evidence of the relevant party is unchallenged in cross-examination, only for the other party to seek that an inference contrary to that evidence be drawn.[22]
[22] See for example Dulton & Dulton (2020) FLC 93-984.
98The rule cannot be employed to fill gaps in the evidence, or to “convert conjecture and suspicion into inference”.[23]
[23] J D Heydon, Cross on Evidence (LexisNexis Butterworths, 12^th ed, 2020), [1215]; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136, at [50].
99In the present case, issues of the nature just described clearly arise. The wife’s evidence was that Mrs A is recovering from cancer, and is currently in remission, having initially had surgery in 2014 and having had “multiple surgeries since [then]”. Mrs A also suffered potentially serious unrelated health issues as recently as June 2020. The wife said that on days when she is not working, Mrs A stays with her in her home, which provides both of them with companionship given that [Mr A] has been “stuck in [Country A]” since pandemic related travel restrictions were first imposed.
100The wife said that she “had discussions with [her sister] in relation to the prospect of her giving evidence” and that the “impact on her” of that prospect was “profound”, with Mrs A becoming very distressed and unable to sleep. It was against that background, and the fact that no specific relief was sought by the husband such as would affect Mrs A’s rights, that the wife elected not to call her to give evidence.
101That evidence on the part of the wife was unchallenged.
102In addition, a consideration of the proposition advanced by the husband that an adverse inference should be drawn by the failure of the wife to call her sister to give evidence necessarily requires a focus on the issues about which she could have given evidence, and the findings otherwise available in relation to those issues.
103Self-evidently, any evidence of Mrs A could not, of itself, affect the proper interpretation of the trust deed.
104Similarly, any evidence Mrs A might have given could not have advanced the evidence already given by the wife as to the manner in which the sisters have dealt with the trust fund since their father’s death. Whether or not the sisters regarded themselves as beneficially entitled to half the trust fund each is neither here nor there in that sense.
105It was not suggested in any way that Mrs A acted merely as the wife’s “alter ego” in the relevant sense in exercising her powers as joint trustee and appointor.
106The absence of Mrs A as a witness could have been relevant to a consideration of the second of the husband’s contentions, that if requested to do so by the wife, she would agree to bring forward the vesting date of the trust and jointly exercise the relevant discretion so as to divide the trust capital equally between the sisters, to the exclusion of all other potential beneficiaries. That proposition, however, was never put to the wife. That, frankly, is the end of the matter.
107Even were that not the case, it may also relevantly be noted that the sisters have jointly administered the trust since 2008, well prior to the breakdown of the marriage, and have consistently acted in a manner which supports a conclusion that they have not in any meaningful way considered bringing forward the vesting date even when the terms of the trust were such as to unequivocally entitle them to divide the trust fund equally between them had they done so.
108I decline to draw the inference proposed on behalf of the husband.
109The evidence does not in any sense support either relevant contention in any event, even to the extent to permit the drawing of the suggested inference even were it otherwise proper to do so.

The wife’s submissions as to the trust property

110Put simply, the wife submits that her interest in the trust property is properly characterised as a financial resource rather than property. She points in that regard to the terms of the trust deed as explained above, and contends that there is nothing in the history of the administration of the Trust by the sisters which would support the contention that, notwithstanding those terms, she should be found to have a clear proprietary right to half of the trust property.

Conclusion as to the trust property

111As may be inferred from what is set out above, I conclude that the wife’s interest in the trust property cannot itself be characterised as property. It is appropriately taken into account as a significant financial resource.

Other issues as to existing interests in property

112The wife asserted that the Suburb B property has a value of $200,000 while the husband said it is worth $209,000. Neither party adduced any admissible evidence as to the value.
113The wife estimated the value of her jewellery at $2,000. The husband said he did not know what the jewellery was worth; based on the purchase price and the wife’s evidence that she had obtained valuation certificates at a higher value albeit she did not agree with them, the husband asserted that the value must be higher than her estimate. Again, there was no admissible evidence as to the value.
114In relation to the Suburb B property, it is for the party asserting the higher value to adduce evidence to support it.[24] Similarly, I have nothing to establish the value of the jewellery other than the wife’s admission.
[24] K & K [2004] FamCA 186.
115I find that the value of the Suburb B property is $200,000 and that the value of the wife’s jewellery is $2,000.
116Self-evidently, the disputes in that regard are of such narrow compass that they do not in any meaningful sense affect the proper consideration of what orders are just and equitable.
117While the joint table of assets and liabilities submitted by the parties initially included line items for unpaid legal fees and work in progress, counsel properly agreed that those were matters able to be taken into account in a consideration of each party’s individual financial circumstances, rather than included in figures to be used for the purposes of calculation of their respective entitlements.
118Accordingly, I find that the existing interests of the parties in property, and their liabilities, are as set out in the table below. Where an item was included in the joint table but at a nil value, it has been omitted.

Description	Value ($)
Joint Assets
[E Street], [Suburb D]	715,000.00
Subtotal Joint Assets	715,000.00
Joint Liabilities
[Bank A] Home Loan	38,902.72
[Bank A] Reverse Charges	204,513.44
Subtotal Joint Liabilities	243,416.16
Net Joint Assets	471,583.84
Wife’s Assets
[C Street], [Suburb B]	200,000.00
[Bank B] Classic Banking a/c	1,608.20
Household contents	5,000.00
[Motor Vehicle A]	4,050.00
Jewellery	2,000.00
Subtotal Wife’s Assets	212,658.20
Wife’s Superannuation
[Fund A] Superannuation	145,588.00
Subtotal Wife’s Superannuation	145,588.00
Wife’s Liabilities
[Bank C] MasterCard	1,597.00
Subtotal Wife’s Liabilities	1,597.00
Net Wife’s Assets and Superannuation	356,649.20
Husband’s Assets
[Bank A] Cash Management a/c	59.25
[Bank A] a/c	799.38
[Bank A] Bonus Interest Savings a/c	2,935.39
Household contents	5,000.00
Jewellery	2,000.00
[Motor Vehicle B]	46,950.00
Boat/Motor/Trailer	28,000.00
shares	4,218.20
[D Street], [Suburb C]	400,000.00
[Bank C] Business a/c	0.71
Gibson Lyons Trust Account	35,000.00
Subtotal Husband’s Assets	524,962.93
Husband’s Liabilities
[Bank C] MasterCard	8,917.99
Subtotal Husband’s Liabilities	8,917.99
Net Husband’s Assets	516,044.94
Net property and superannuation less liabilities	1,344,277.90

Contributions

119As earlier noted, the wife’s position maintained throughout the proceedings was that the contributions of the parties should appropriately be assessed as being equal. The husband’s position as to the assessment of contributions was in two parts. If the wife’s interest in the trust was found by me to be property, then on his case contributions should be assessed in the proportions of 70 per cent to the wife and 30 per cent to him. If the wife’s interest in the trust was found by me to be a financial resource, contributions should be assessed in the proportions of 55 per cent - 60 per cent to him and 40 per cent - 45 per cent to the wife. On either scenario, both parties asserted that contributions should be assessed globally.
120The distinction between the alternative positions adopted by the husband can only be referable to ss 79(4)(a) and (b), which require the consideration of direct and indirect contributions, financial or otherwise, to the “acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last mentioned property”. The characterisation of the wife’s interest in the trust can make no difference to an assessment of contributions of the nature described in s 79(4)(c).

Financial contributions and acquisition of real property

121At the commencement of the relationship both parties were shortly to receive settlements following the division of property after their previous marriages. The amounts received were modest; the factual dispute between the parties as to the precise amounts received by each does not, in the context of this long marriage, impact on the required assessment of their respective contributions over the whole of the relationship.
122At the commencement of the relationship, the husband was not working. He had suffered [an] injury in 1991, and was in receipt of workers compensation payments. In 1994, prior to the purchase by the parties of the E Street property, he received a lump sum compensation payment which on his evidence was approximately $75,000. While the wife did not recall the precise amount, if anything she had understood the payment to be slightly higher.
123The parties purchased the E Street property in January 1995 for $205,000. It is common ground that they borrowed $105,000 from Bank C to partially fund the purchase and associated costs. On the husband’s evidence the balance was made up of $75,000 from his workers compensation payment, and $30,000 contributed by the wife from her settlement with her first husband. On the wife’s evidence, she contributed approximately $50,000 from her settlement with her first husband, and the husband contributed approximately $100,000 from his workers compensation payment. Her expressed understanding was that while the purchase price of the property was $205,000, stamp duty and other expenses accounted for the balance.
124Nothing turns on the discrepancy. On either case, both parties contributed to the initial acquisition of the property, with the husband’s contribution exceeding that of the wife.
125In early 2006, the parties bought an investment property [on E Street], next door to the home. The purchase price was $360,000. It appears to be common ground that the entire purchase price, other than perhaps a modest deposit of $2,000, was borrowed. The borrowing was secured both against the investment property, and against the home. The property was initially rented out to third parties, later rented out to the husband’s son, and eventually sold to the wife’s daughter in 2014 for $550,000. After discharge of the mortgage, the net proceeds of just under $177,000 were deposited into the parties’ joint account.
126Prior to that purchase, the parties had jointly invested with Mrs A and her husband Mr A, and another couple [Mr and Mrs P] in the acquisition of a property at [Suburb E], units at [F Street], Suburb B, another unit in Suburb B, and a property at [G Street] in [Suburb F]. On the husband’s evidence, Mr and Mrs P had a 20 per cent interest in the investments, while Mr and Mrs A and the parties each had a 40 per cent interest. The wife did not cavil with that evidence.
127There was an almost complete paucity of evidence as to the details of those investments, the amount of the contributions made by each of the investors, and the disbursement of the proceeds of sale if any. Searches undertaken on the husband’s behalf confirm his recollection that the F Street units were sold in late 2005. Further searches undertaken on his behalf showed that the Suburb F property was sold in late 2009. To the best of his understanding, relevant loans were paid out and any surplus was divided between the investors.

128The wife’s evidence was that she “heard talk” about the Suburb E property but never saw it; that said, she readily accepted the possibility that some of the money borrowed by the parties in 2003 might have gone to its acquisition. Similarly, she recalled being told about the purchase of a Suburb B unit, and did not dispute the husband’s evidence, such as it was.
129While the husband suggested that the wife must have retained various documents relating to those investments when she left the home, she denied that emphatically.
130Neither party’s recollection about the acquisition or disposal of those properties was even remotely detailed. Neither seemed to dispute the proposition that any proceeds of those investments, in whatever amount, were applied to their joint benefit. Nothing, accordingly, turns on the paucity of evidence or on any criticism by either party of the poor recollection of the other.
131The parties were involved in another property investment. In early 2008 together with Mr and Mrs A, Mr and Mrs P, Mr J and his wife [Mrs J], and two other couples they invested approximately $20,000 into a property in Country A. The intention of all concerned was expressed as being that they would each have the benefit of regular (and relatively equal) use of the property, which was to be held in the name of [a] Country A national for reasons to do with local land ownership law.
132Tensions arose within the investment group, primarily because Mr A became particularly involved in the use and maintenance of the property, to the extent that the other investors felt that he was enjoying disproportionate benefit from it to their exclusion. That caused difficulty in the relationship between the wife and her sister. The parties were paid out for their interest in the Country A property, at a slight loss.
133In February 2006, the husband suffered a significant injury at work. While he continued to work for a period, he ceased working in June 2006. He then continued to receive his usual income, based on an income protection insurance policy, for a period of two years. After that point, he had no income other than workers compensation payments; his compensation claim was not finalised until 27 January 2012 when he received a lump sum payment of $743,830.
134The husband had particularised his compensation claim to seek the sum of $1,522,291. That amount was comprised of just over $513,000 for past economic loss, just under $899,000 for future economic loss, just over $32,000 special damages, $21,443 for past gratuitous assistance provided by the wife, $51,517 for future gratuitous assistance to be provided by the wife, and $5,000 for anticipated future medical costs.
135The compensation claim was settled on the basis of the lump sum payment referred to above. The composition of that payment was not particularised, and it is not accordingly possible to make any finding as to its component parts.
136The use to which those settlement funds were put was the subject of some dispute.
137Eventually, it was common ground that approximately $100,000 from the lump sum payment was applied towards renovations on the E Street property. The husband had withdrawn the sum of $467,000 from the account into which the lump sum payment was initially deposited, without any clear notations as to that withdrawal; in cross-examination, when presented with relevant statements the wife accepted the proposition that approximately $96,000 from that withdrawal was paid into the joint Reverse Charges account and then applied to the renovations, with the balance being applied by the husband to the Company A investment in the D Street development.
138The husband spent just over $55,000 on a new truck. On his evidence, about $22,000 was spent on buying jewellery for the wife; her recollection was that the figure was more like $12,000. Some monies were also spent on a joint holiday to [Country B]. The husband made a payment of just over $6,000 to Mr J, which on his evidence was in repayment of a loan.
139On the wife’s evidence, the husband also invested just over $39,000 in the purchase of shares; that issue was not explored at trial. The husband’s affidavit evidence that he sold the shares and paid the proceeds into a joint account was not challenged. The husband’s evidence was that otherwise, the proceeds of his compensation payment were spent by the parties on general living expenses.
140The husband accepted the proposition that the lump sum payment received by him, and the compensation and income protection insurance payments which he received previously, represented the entirety of his financial contribution in the last nine years of the relationship. The particulars of claim filed by the husband in [another jurisdiction] and dated 1 June 2011 quantified his income from the date of the accident on 2 February 2006 to that date as $46,507 excluding income protection benefits.
141In or about 2013, the husband bought a boat for $40,000. He sold the boat fairly shortly thereafter, saying it was too big for his needs, and bought his current smaller boat for $30,000. At about the time of the purchase of the second boat, he provided the sum of $40,000 to the business from which it was acquired, which is part-owned by his son-in-law, describing that as a loan. On his evidence, the sum of only $15,000 was repaid, albeit he would say that his son-in-law subsequently undertook service and maintenance work for him without charge. In cross-examination, the husband acknowledged that as at the date of separation his son-in-law’s business still owed him $25,000. He said that he has received no further payment as the business has “gone broke”. I accept the wife’s evidence that the loan was advanced without her express agreement.
142In March 2015, the husband withdrew $15,000 from the reverse charges account and gave the money to his niece [Ms O]. On his evidence, that was a loan which was subsequently repaid to him in cash. In cross-examination, he acknowledged that money had never been deposited into any account.
143In August 2015, the husband traded in the truck he had purchased shortly after receipt of his lump sum compensation payment, receiving $40,000. He applied that towards the purchase of Motor Vehicle B for just over $73,000.
144In July 2015, the husband withdrew $56,000 from the parties’ joint account and paid that sum to his daughter [Ms Q], who was purchasing a house. The sum of $40,000 was repaid relatively quickly, and deposited into the joint account; the balance of $16,000 remained as a gift to Ms Q.
145Prior to the parties separating, the husband provided the sum of $20,000 from joint funds to his son towards the purchase of a vehicle, which was bought from Mr J. On the husband’s evidence, his son repaid the loan in cash over time; his evidence in that regard was less than convincing, and it was not suggested that the repayment could be identified as being deposited in any joint account.
146In or about February 2016, the husband received an inheritance of $175,000 from his mother’s estate. Some months later, on his evidence, he gave his son $50,000 to help him buy a house, and still later gave his other son $31,000 to meet his own legal fees. The husband says that he used the balance of his inheritance for “living expenses and legal fees”.
147Those matters fall to be considered not only in relation to the direct financial contributions made by the husband, but also his conduct post separation and in particular his dealings with the Reverse Charges account.
148On the wife’s evidence, which was unchallenged, the debit balance on the Reverse Charges account at the date of separation was $68,000.
149On 10 November 2016, the husband drew down $53,657 from that account and applied those funds to paying a tax bill for Company A. In addition, on the husband’s evidence he has since the date of separation used the Reverse Charges account for his living expenses, to pay for legal fees, and to fund the purchase of Motor Vehicle B referred to above. Quite why that was purportedly necessary given the other funds available to the husband, and the use to which they were put, is not clear. Notwithstanding his difficulties with literacy and numeracy, on the totality of the evidence including his own evidence as to the assistance he received from his daughter and from Mrs J in relation to financial matters, I do not accept the husband’s explanation that he only drew down on the Reverse Charges account because of a mistaken understanding that the account was in fact in credit.
150As a result of the husband’s actions, and a failure on his part to meet various repayments on the loans secured against the property in which he was living, the amount owing to the bank by 1 May 2019 was $203,446. On the wife’s application, orders were made by a magistrate on 22 July 2019 for the amount required to discharge the arrears on the Reverse Charges account to be drawn down from the home loan account, and for further funds necessary to prevent the home loan account from falling into arrears also to be drawn down and periodically repaid, with the amounts drawn down to be “characterised as partial property settlement to the [husband]”. It is common ground that the amounts drawn down totalled $22,994.
151Considerable time and energy was spent both prior to and during the trial in exploring the nature of the husband’s investment in Company A, the benefits he had received from that investment, and the possibility that those benefits were less than those received by Mr J [and his son]. The very fluid and largely undocumented nature of the transactions between the husband and the Mr J and his son, coupled with his own loose approach to financial matters, raised in the minds of the wife and those advising her the possibilities that either monies were being retained on his behalf by one or both of the Mr J and his son without disclosure, or that Mr J and his son had taken advantage of the husband such that his return on the investment might properly be characterised as negligent wastage on his part.[25]
[25] Kowaliw and Kowaliw (1981) FLC 91-092.
152I am not prepared to conclude that either of Mr J or his son hold money on behalf of the husband. The evidence, while occasionally raising more questions than answers, falls short of supporting that conclusion being drawn.
153While it is clear that Mr J and his son invested significantly less than did the husband in the project, and that the project could not have been contemplated let alone completed without the significant cash injection from his compensation payment, again the evidence does not support a conclusion that the return received by the husband was so disproportionately low as to attract criticism as between the parties. Certainly, Mr J and his son received their “share of the profit” in the simple form of cash payments while the husband has received his share by receiving some cash, and retaining ownership of one unit. That of itself does not properly attract criticism. The circumstances surrounding the assumption by the husband of sole responsibility for the payment of the Company A tax bill, which fell to be paid after he had taken over ownership of the company but which had accrued much earlier, are potentially indicative of some commercial naïveté on the part of the husband but no more. While I am not convinced that the benefits he received in terms of franking credits and the like are sufficient to address any imbalance between him and Mr J and his son, nor frankly that he understands them, the possible discrepancies are not sufficient in my view to support a conclusion of wastage (in the relevant sense) on his part.
154In November 2018, the husband cashed in his superannuation entitlements in the sum of $31,385. On his evidence, he gave that money to his brother who was meeting his legal fees in the proceedings.
155The wife’s direct financial contributions during the relationship are more readily summarised. She was employed consistently throughout the relationship, and applied her income to the benefit of the parties and the various children living with them. Prior to her father’s death, she regularly received $10,000 per annum from him; the net amount received in each case was applied towards school fees for the children of her first marriage. Of the monies she received from the borrowings within the trust jointly undertaken by the sisters as earlier described, $150,000 was applied towards renovations on the E Street property, and a further $150,000 was applied to the acquisition of sole ownership of the Suburb B property. Both the E Street property and the Suburb B property remain available for division between the parties.
156In addition, the parties and the various children benefited from the application of income received by the wife from the trust during cohabitation.
157The wife made indirect financial contributions in the maintenance and conservation of the property. She also played a significant role in the steps required to be taken to initiate, manage and complete the process by which the husband eventually obtained his lump sum compensation payment, and services provided by her gratuitously formed part of his claim as particularised.

Non-financial contributions, and other contributions as homemaker and parent

158The husband was actively involved in the renovations to the E Street property. For the purpose of considering the contributions of the parties, it is largely irrelevant whether he undertook a significant amount of physical work (as the wife would say) or simply supervised the work (as he would say). The husband also undertook various maintenance works and the like at Property A over the course of the relationship, and in particular before the wife’s father died.
159It is common ground that following his 2006 injury the husband was significantly disabled, and required care and assistance from the wife at various levels. He was largely unable to contribute to domestic and household tasks, although he did undertake some limited gardening and maintenance work. It was common ground that throughout this period, in addition to working four days per week, the wife was almost exclusively responsible for domestic tasks and for meeting the needs of the various children.
160At the commencement of the relationship, the wife’s two children [Ms N] and [Mr T] were living with her, and she did not receive child support from their father. Ms N was attending [School A] and Mr T was attending [School B]. The husband’s two oldest children lived with the parties; his son was attending [School C], and his daughter Ms Q was attending [School D]. It was common ground that the wife took on the role of primary carer for all four children, and that she took all four to their separate schools each morning.
161In 1998, after the husband’s son had left home, the husband’s first wife left his two youngest children, [Ms Y] and his other son, in the care of the parties. From that point until the various children left home, the wife was primarily responsible for their care. The husband’s first wife had little to do with her children, and provided no financial support for them. The husband readily acknowledged that the wife was a fully involved stepmother, and cared for his children as well as he could have hoped.
162The care of the children, and the parties’ involvement with them after they reached adulthood, was not without challenge. One of Mr Ricci’s sons had various health issues, including [a skin condition], which caused him considerable anxiety. The wife was primarily responsible for taking him to all medical appointments, as she was with the other children. Mr Ricci’s other son had significant drug issues, and was imprisoned at various times. During one period of incarceration, the parties to their great credit paid child support for his children from their joint funds. They also paid for Ms Q’s wedding from joint funds.
163Having considered all the matters set out above, and the other evidence of the parties which has not required recital, I conclude that the respective contributions of the parties of all forms up to the date of trial are appropriately assessed as having been equal.

Add backs proposed by the parties for the purposes of calculation

164Given the nature of some of the contentions for add backs, and the possibility that some proposed add backs might more appropriately be matters considered pursuant to s 75(2)(o), it is convenient to deal with those contentions at this point.
165It was common ground that an amount of $22,994 characterised pursuant to an order made by a magistrate earlier in the proceedings as a “partial property settlement” to the husband, and referred to in more detail above, should be added back for the purposes of calculations as if retained by him.
166The wife contended that amounts totalling approximately $120,000 withdrawn by the husband from the Reverse Charges account since separation and applied to his own purposes should be notionally added back, after allowing for the fact that part of the sums so withdrawn were applied to the acquisition of the Motor Vehicle B which remains in his possession at the value shown in the table. Given the confused nature of the evidence, summarised above, and the exceptional nature of add backs, I consider the more appropriate course to be to take the husband’s actions in that regard into account pursuant to s 75(2)(o).
167The wife contended further that the husband’s inheritance of $175,746, none of which he retains, should be added back. I disagree. While the mere fact that the husband received his inheritance after separation is neither here nor there, it was nevertheless within his gift to assist his children in the way he chose thereafter. More to the point, there would be a degree of “double dipping” in the approach proposed by the wife, given that the amounts withdrawn by the husband from the Reverse Charges account must be considered in the context of the other funds he had available to him; his actions in increasing the indebtedness of the parties on the Reverse Charges account might be unobjectionable in circumstances where he had no financial alternative, but they are properly to be viewed in a different light, adverse to him, in circumstances where he had other funds which he chose to give away.
168A similar observation applies to the proposition by the wife that the funds drawn down by the husband from his superannuation post separation should be added back. To the extent those funds were applied to self-support, that is unobjectionable. To the extent they might have been applied to legal fees, that is dealt with separately. To the extent they might have been otherwise applied, the observations above regarding the Reverse Charges account remain apposite.
169The issue of legal fees paid to date by the parties requires more scrutiny.
170To the date of trial, the husband had paid legal fees in the sum of $176,100. Unhelpfully, the costs notification letter produced by his solicitors at trial as required by rule 19.04 failed to adequately meet the requirement of rule 19.04 (5) to “specify the source of the funds for the costs paid”, simply recording that “on [the husband’s] instructions, [he] will continue to meet [his] fees from funds borrowed from family members”.
171A schedule purportedly prepared by the husband’s brother (who did not give evidence) but tendered through the husband was said to record the amounts received by the brother from the husband, and the amounts paid out on his behalf. The schedule recorded the husband as having deposited with his brother three separate sums totalling $54,250, and the brother in turn having made payments noted as being to the husband’s lawyer in a total sum of $96,516.62. Various other payments said to have been made by the brother on the husband’s behalf and listed on the schedule do not have any annotation to suggest that they were paid to the husband’s lawyers, and indeed in one instance refer specifically to a valuation expense, and in another simply to cash.

172The husband says that he owes his brother $74,406. He would assert that liability relates solely to the payment of legal fees.
173Of course, the total amount shown on the schedule as being disbursed by the brother on the husband’s behalf is only $128,657, even before deduction of any amounts not specifically noted as having been paid to his lawyers. Given that the husband has had little or no income since separation, apart from rent from the D Street unit which on his case is insufficient to meet his periodic expenses, it is reasonable to conclude that at the very least the difference between that figure and the amount paid to the husband’s lawyers for fees billed up to the time of trial was met by the husband from capital. On the state of the evidence, it is not possible to more accurately identify the sources of payment, although I note that apart from the matters already outlined earlier in these reasons the husband gave an entirely unsatisfactory explanation as to a withdrawal of $35,000 from a term deposit, both as to how the money was withdrawn and where it went, and as to monies apparently paid to him by Mr J and his son as interest on his initial investment in the D Street project.
174Doing the best that I can, I propose to approach the matter by adding back for the purposes of calculation an amount reflecting the whole of the legal fees paid to date by the husband, less the amount identified in the tendered schedule as being the difference between the amount “deposited” by him with his brother, and the amounts clearly noted by his brother as having been paid to his solicitors. That calculation would see the amount of $133,834 notionally added back; acknowledging the difficulties just articulated, I nevertheless regard that as being just as between the parties.
175Neither party suggested that any amount genuinely owed by the husband to his brother for legal fees should be included in the figures used to calculate a division between the parties.
176The wife had paid legal fees totalling $76,033 to the date of trial. Again, the costs notification letter prepared on her behalf was less than precise in addressing the requirement of rule 19.04(5), simply saying that the solicitors understood that the source of funds for payment of the accounts was “primarily from [the wife’s] income and personal savings”. In closing submissions, the wife’s counsel submitted that all payments for her legal fees had derived from the wife’s efforts post separation, while all payments for the husband’s legal fees had derived either from funds existing at the date of separation which should have been available for distribution between the parties, or from his inheritance. With respect, the evidence did not support as clear a conclusion as that.
177It would, in my view, potentially work an injustice to the wife to decline to add back the amount which I have already referred in relation to the husband’s legal fees. Similarly, it would potentially work an injustice to the husband to decline to add back the wife’s paid legal fees, in circumstances where the evidence as to the source of payment for those fees is as described. That conclusion is reinforced by the proper observation that it is entirely understandable that the husband’s legal fees exceed those incurred by the wife, given his difficulties with literacy and numeracy.
178I propose to add back for the purposes of calculations the following sums:
(a)the amount of $22,994 representing the “partial property settlement” referred to in the magistrate’s orders of 22 July 2019;
(b)the amount of $133,834 reflecting the husband’s paid legal fees; and
(c)the amount of $76,033 reflecting the wife’s paid legal fees.

179I do not propose to add back any further sums.

Matters requiring consideration pursuant to s 79(4)(d) to (g) inclusive

180The husband is 64 years old. While some time was spent at trial exploring the possibility that he might still be undertaking some paid employment, that was not established. While it was suggested that his investment in a boat might indicate a lesser degree of physical disability than that which he would claim, nothing turns on that. I accept that he has little, if any, earning capacity given his age, health, and the physical nature of the work for which he has the requisite skills.
181The wife continues to work in what appears to be secure employment, earning a modest income from it. That said, she is 65 years old and it is not unreasonable for her to contemplate retirement should she choose to do so. While she has an ongoing earning capacity from employment, she cannot reasonably be expected to continue to exercise it long-term.
182Neither party suggested that the orders proposed for alteration of property interests would have any effect upon their earning capacity. Neither party has any obligation to maintain children nor anyone else. Apart from the interim property settlement order referred to earlier in these reasons there is no other relevant order affecting them.
183Both parties have moderate commitments necessary to enable them to support themselves. Neither is eligible for any relevant pension, allowance or benefit. They enjoyed a moderate standard of living prior to separation, and it is reasonable that, to the extent possible, they continue to do so. The duration of the marriage has not affected the earning capacity of either party. Neither is presently cohabiting with any other person, and there is no relevant financial agreement between them.
184The uncertainty attending some of the husband’s financial transactions, and the use to which he put funds under his control since fairly shortly prior to separation including payments to his children and the like, are in my view appropriately taken into account pursuant to s 75(2)(o).
185The very significant financial resource of the wife represented by her interest in the Trust self-evidently weighs heavily in the consideration of the prospective circumstances of the parties. It is common ground that the net assets of the Trust amount to something over $3.2 million. While I have rejected as simplistic the proposition that the wife will be at some stage beneficially entitled to $1.6 million, nevertheless the established history of the management of the Trust by the sisters leads to a high degree of confidence that they will likely continue to manage it primarily for their mutual benefit. The wife will continue to derive income from the Trust, and the track record suggests a likelihood that she and Mrs A would work together cooperatively and even-handedly should either of them have a pressing need in the future. That is not to say, however, that it can safely be concluded either that they will bring forward the Vesting Date for the Trust, or that they would divide the Trust capital between them to the exclusion of other beneficiaries. Nevertheless, the possibility of future capital distributions and the near certainty of ongoing income represent a significant distinction between the wife’s future financial circumstances and those of the husband, warranting an adjustment in his favour to what would otherwise be the contributions based division of their property.
186Taking all those matters into account, and bearing in mind the value of the property and superannuation available for division, I conclude that an adjustment of 10 per cent in favour of the husband to what would otherwise be the contributions based outcome is appropriate.
187I acknowledge the importance at a personal level to the husband of an outcome which will see him able to retain the home unencumbered. I acknowledge also that the rent from the D Street property is his primary source of income, and that he would accordingly prefer not to sell that property. The proper analysis of the contributions of the parties, and the other factors referred to above, simply does not lead to the conclusion which the husband would prefer.

Conclusion and proposed orders

188Adopting the conclusions reached above, the husband should retain property and add backs to a net value of $946,283. The wife should retain property and add backs to a net value of $630,856. I am satisfied that the overall outcome of the proposed division is just and equitable in all the circumstances.
189It is common ground that the husband should retain the D Street property, the chattels in his possession, and his own bank accounts and shares. It is also common ground that he should retain responsibility for his personal liabilities properly brought to account. The net value of the property agreed to be retained by him, plus add backs, totals $672,873. It is necessary for him to receive a further $273,410.
190It is common ground that the wife should retain the Suburb B property, her superannuation, the chattels in her possession and her own bank accounts as well as responsibility for her personal liabilities properly brought to account. The net value of the property agreed to be retained by her, plus add backs, totals $432,682. It is necessary for her to receive a further $198,174.
191The E Street property has equity of $471,584 – which in turn represents the total of the further amounts required to be received by the parties to effect the overall alteration of their property interests which I have determined to be just and equitable.
192It follows that the overall outcome proposed can be achieved by orders for the sale of that property, and division of the net proceeds in the amounts referred to above with a “rise and fall” clause to reflect both the possibility of the property selling for a price other than the value agreed for the purposes of trial, and sale costs and the like.
193I acknowledge that the husband may wish to make good on his stated preference to sell the D Street property rather than the E Street property; he should, within reason, be given that opportunity but only to an extent which would not unduly delay the final determination of the financial relationship between the parties. As I do not propose to compel the sale of the D Street property, and the sale is not necessary to effect the overall division, it is unnecessary to give any consideration to the costs which would likely be associated with that sale, or any taxation effect.
194I propose, therefore, to make orders in the terms set out below to achieve that outcome.

Proposed orders

195Subject to any submissions as to form, and the outcome of any discussions between the parties, I propose to make the following orders:
1.Within 60 days, the husband pay to the wife the sum of $198,174.
2.Contemporaneously with that payment:
(a)the husband do all things necessary to discharge all liabilities secured against the jointly owned property at [E Street], [Suburb D], (“the home”) including if necessary refinancing the said liabilities into his sole name; and
(b)the wife transfer to the husband, at his expense, all her right title and interest in the home.

3.In the event that the husband does not comply with the order contained in paragraph 1, the parties thereafter do all things necessary to place on the market for sale by private treaty, and sell, the home, and to disburse the proceeds of sale as follows:
(a)in payment of agents fees, commissions and other expenses associated with sale;
(b)in payment of the amount required to pay in full the debt of the parties to the [Bank A] in relation to loan account numbered [xxxx xxxx] and Reverse Charges account numbered [xxxxxxx], such as to secure the discharge of the relevant mortgage;
(c)in payment of any outstanding rates and taxes;
(d)in payment to the husband of the sum of $273,410, subject to any adjustments pursuant to the order contained in paragraph 4 below; and
(e)in payment to the wife of the sum of $198,174, subject to any adjustments pursuant to the order contained in paragraph 4 below.

4.The payments to the parties pursuant to the immediately preceding order be adjusted as necessary as follows:
(a)by increasing the payment to the husband by 60 per cent of any amount by which the remaining proceeds of sale after completion of the payments required pursuant to paragraphs 3(a), (b) and (c) of these orders exceeds $471,584;
(b)by increasing the payment to the wife by 40 per cent of any amount by which the remaining proceeds of sale after completion of the payments required pursuant to paragraphs 3(a), (b) and (c) of these orders exceeds $471,584;
(c)by reducing the payment to the husband by 40 per cent of any amount by which the remaining proceeds of sale after completion of the payments required pursuant to paragraphs 3(a), (b) and (c) of these orders falls short of $471,584; and
(d)by reducing the payment to the wife by 60 per cent of any amount by which the remaining proceeds of sale after completion of the payments required pursuant to paragraphs 3(a), (b) and (c) of these orders falls short of $471,584.

5.The parties have liberty to apply in relation to the terms and conditions of sale of the home, and in the event of dispute as to the disbursement of the proceeds of sale.
6.The husband’s interest, if any, in the following vest in the wife:
(a)the property at [C Street], [Suburb B];
(b)the wife’s superannuation;
(c)all chattels in the possession of the wife; and
(d)all monies standing to the credit of the wife in any account in a bank or other financial institution.

7.The wife’s interest, if any, in the following vest in the husband:
(a)[Company A];
(b)all chattels in the possession of the husband;
(c)monies presently held by the husband’s solicitors on trust for him; and
(d)all money standing to the credit of the husband in any account in a bank or other financial institution.

8.The husband indemnify the wife and keep her indemnified in relation to any liabilities of [Company A], and any liabilities in his sole name.
9.The wife indemnify the husband and keep him indemnified in relation to any liabilities in her sole name.
10.Both parties must do all things reasonably necessary, and execute all documents required, to give effect to these orders.
11.All outstanding applications and responses otherwise be and are hereby dismissed.
12.All subpoena documents be returned to source or destroyed.
13.In relation to material tendered as an exhibit into evidence in these proceedings:
(a)all parties must collect the exhibits tendered by them (“their exhibits”), from the Chambers of Justice O’Brien, at least 28 days, and no later than 42 days, from the date hereof;
(b)all parties must contact the Chambers of Justice O’Brien to arrange the collection of their exhibits; and
(c)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the Court without notice to the parties.

14.In the event of an appeal being lodged prior to the expiration period of 42 days, paragraphs 12 and 13 above do not apply.
15.In the event that either party seeks an order for costs:
(a)that party must file and serve written submissions within 28 days;
(b)the party responding to such application for costs must file and serve responsive written submissions within 28 days thereafter;
(c)the parties have liberty to seek a relisting for oral submissions; and
(d)if no such request for a relisting is received by the court within 14 days after the date of filing of the responsive costs submissions, any application for costs be determined on the papers, and judgment and orders be published from chambers without the need for further appearance.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
KM
Associate
21 JANUARY 2021