GBT v BJT

[2004] FamCA 1160

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT ADELAIDE No AD 1694 of 2001

IN THE MATTER OF: G B T
(Husband)

B J T

(Wife)

CORAM: THE HONOURABLE JUSTICE STRICKLAND

DATE/S OF HEARING: 28^th June 2004 – 1^st July 2004, 23^rd July 2004,

13^th September 2004, 13^th December 2004,
15^th December 2004

DATE OF REASONS: 16^th December 2004

JUDGMENT

APPEARANCES: Mr Jordan appeared as counsel (instructed by David Burrell & Co) on behalf of the husband

Mr Richards appeared as counsel (instructed by Howe Martin & Associates) on behalf of the wife

CATCHWORDS

PROPERTY SETTLEMENT – issue as to value of the husband’s interest in the accounting practice, vineyard and wine industry ventures; contributions; Section 75(2) factors and how the wife should receive her entitlement – the value to the owner is the objective of the exercise and not a valuation methodology in itself – the value to the husband of his interest in the practice is the value that has been agreed upon by the partners in the event that a partner retires – husband has minority interest in the vineyard, issue as to whether a discount should apply – 15% discount applied – whether to take account of capital gains tax – wife to reimburse the husband in regard to certain capital gains tax – contributions of the husband far outweigh the contributions of the wife – contributions assessed at 87.5% to the husband, 12.5% to the wife – significant disparity between the parties’ income and earning capacities, and their property – adjustment of 5% to the wife to account for 75(2) factors – husband to pay the wife the sum of $477,281.

Ramsay and Ramsay (1997) FLC 92-742
AJW v JMW (2002) FLC 93-103
Turnbull and Turnbull (1991) FLC 92-258
Harrison and Harrison (1996) FLC 92-982
Ramsay and Ramsay (1999) FLC 92-742
Chorn and Hopkins [2004] FamCA 633
Townsend and Townsend (1995) FLC 92-569
Marker and Marker (1998) FamCA 42
Cerini and Cerini (1998) FamCA 143
Rosati and Rosati (1998) FLC 92-804
SPG and BAG (2001) FamCA 1453
Pierce and Pierce (1999) FLC 92-844
Robb and Robb (1995) FLC 92-555
Beil and Beil (2003) FamCA 472
Clauson and Clauson (1995) FLC 92-595

Waters and Jurek (1995) FLC 92-635

JEL and DDF (211) FLC 93-075

Phillips and Phillips (2002) FLC 93-184

Family Law Act 1975 (Cth) s79, s75(2), s72, s74

Introduction

I have before me for determination competing applications for property settlement.
The formal applications of the parties are the wife’s amended Form 3 application filed on the 6^th February 2004 in which she sought final orders for settlement of property, and the husband’s Form 3A response filed on the 30^th May 2001 in which he also sought final orders for settlement of property.
At trial the wife sought orders that the husband pay to her the sum of $1,003,879.00 and that otherwise the parties retain all items of furniture, household effects, shares, savings, superannuation entitlements and any other investments held in their respective names.
At trial, although the husband’s calculations resulted in the wife having to pay him $40,970.00, he sought an order that each party retain free from further claim or demand or right or entitlement of the other all assets, and/or financial resources in their name, possession or control.

The factual background

The husband was born in 1950 and is aged 54 years.
The wife was born in 1968 and is aged 36 years.
In 1976 the husband married his first wife, Ms S and he has two adult children from that relationship, A born in 1979 and S born in 1982.
The wife was also previously married but she has no children from that relationship.
In 1977 the husband graduated from University with qualifications in Economics and Accounting. Whilst studying he supported himself as a gardener and barman.
In 1978 the husband commenced employment with T R & Co as an accountant.
In 1982 the husband left T R & Co and commenced work as an accountant for E M.
In 1983 the husband left E M and commenced worked as an accountant for P & M. In 1985 he was made a partner in this firm.
In 1983 the husband separated from his first wife.
In 1986 the wife commenced work as a secretary at P & M.
In June 1993 the parties commenced cohabitation in the husband’s rented accommodation.
From September 1983 the husband’s child A lived with the husband and the wife for six months.
In November 1993 the husband acquired a one twelfth interest in a joint venture vineyard at W Town through his family trust, the G T Family Trust.
In late March 1994 the wife resigned from P & M. She did this because the husband intended to form his own accounting firm and she was fearful that when the announcement was made that would cause difficulties for her.
In June 1994 the husband resigned from P & M and with Mr R commenced their own accounting practice, T R. The wife worked full-time in an administrative capacity in this business.
In 1995 the husband’s mother gifted the husband $26,000.00, which sum was used to fund investments.
In 1995 the wife reduced her working time to four days per week and commenced part-time study.
In August 1995 the husband through his family trust took a 6% equity involvement in a new business, B Vintners.
In January 1996 the wife reduced her working time to two days per week, eventually ceasing employment at T R in March 1996. Thereafter until January 1999 the wife was engaged in home duties asserting that she performed the vast majority of the household duties and outside work around the home.
In April 1996 the T Superannuation Fund was established.
In April 1997 the parties married.
In February 1997 the wife undertook full-time study in a Bachelor degree. However, she withdrew from studies after four weeks because she found her studies and household responsibilities too onerous. The wife resumed part-time studies but ceased studies completely at the end of 1997.
In July 1997 the husband, through his family trust, borrowed $150,000.00 from the Commonwealth Bank to purchase a one sixth interest in A Vineyards.
In December 1997 the husband purchased a 735 BMW for $37,500.00.
In May 1998 the parties travelled overseas for six weeks combining business and personal travel. The husband says that the trip was an expensive one costing the parties $41,174.00 including the purchase of jewellery for the wife.
The husband asserts that the parties in effect lived separately under the same roof from June 1998. The wife says otherwise.
In December 1998 the parties travelled to New Zealand for a holiday at a cost of $7,697.00.
The husband asserts that during 1998 the parties’ finances became strained and he obtained a bank overdraft initially for $50,000.00. He also says that their relationship was deteriorating with the wife staying away from the matrimonial home for periods ranging from a few nights to several weeks.
In January 1999 the wife commenced full-time employment with B P as a personal assistant.
On the 19^th January 1999 the wife became a member of the Australian Retirement Fund through her employment.
In 1999 the husband finally settled the dispute with P & M in relation to him leaving the partnership in 1994.
On the 6^th November 1999 the parties finally separated.
In December 1999 the husband purchased a property at Suburb W for $310,000.00 borrowing $255,000.00 from the Commonwealth Bank.
In 2000 the husband, through his family trust obtained a wine producers license and commenced G T Wine Sales.
In August 2000 the husband commenced residing in a defacto relationship with Ms S.
In September 2000 the husband sold the 735 BMW for $13,000.00.
In 2001 the husband invested in a new business venture, G Wines. He used $90,000.00 from his superannuation fund and $45,000.00 from his income. He also commenced H Wines, which he asserts is only a sales vehicle, with $26,000.00 from W and A Vineyards.
On the 2^nd March 2001 the wife filed a Form 3 application seeking final orders for property settlement. That application was amended on the 6^th February 2004
On the 30^th May 2001 the husband filed a Form 3A response seeking final orders for property settlement.
On the 9^th November 2001 the wife filed an application for divorce in the Federal Magistrates Court.
On the 18^th January 2002 a decree nisi was granted which became absolute on the 19^th February 2002.
In May 2002 the wife and Mr H commenced living together.
In July 2002 the husband and Ms S separated.
On the 26^th April 2003 the wife and her new partner Mr H were engaged.
In August 2003 the wife commenced employment at S Wines Pty Ltd as a marketing/sales manager.
In September 2003 the husband purchased a Subaru motor vehicle on lease for in excess of $50,000.00.
On the 25^th November 2003 the wife and Mr H registered a business partnership “S Business”, an on site bottle labelling service directed towards the wine industry in South Australia. Mr H conducts all on-site operations and invoicing and the wife compiles management accounts and attends to marketing matters. The set up cost of the business was $29,034.00 for the purchase of a utility and a label applicator.

The current circumstances of the parties
The wife

The wife lives in a defacto relationship with Mr H. They became engaged on the 26^th April 2003 and they plan to marry in early 2005.
They reside in a house property at Suburb B owned by the wife’s father, and they pay rent of $145.00 per week. They intend to purchase this property and they have spent $15,000.00 already on renovations. A purchase price of $400,000.00 has also been agreed.
The wife is employed as a marketing/sales manager at S Wines Pty Ltd earning approximately $65,000.00 per year, and she has her motor vehicle and mobile telephone expenses paid.
The wife and Mr H commenced a business in late 2003 called “S Business” which provides an on-site bottle labelling service to the wine industry. Mr H works in the business and the wife compiles management accounts and attends to marketing matters. The wife hopes that this business will shortly provide an income of between $650.00 and $2,000.00 per week.
There is no evidence of the financial circumstances of Mr H, and the wife said that she is not aware of what assets he has or what income he has outside of the business. He is in Australia on a temporary visa but presumably that will change when he gets married.

The husband

The husband lives alone in his house property at Suburb W.
The husband is a partner in the accounting firm of T R, and according to his oral evidence his income is $15,000.00 per month.
The husband maintains a number of investments in wineries and vineyards primarily through his family trust, the G T Family Trust. The husband has a superannuation entitlement as the only member of the T Superannuation Fund.

The company, trust and business structure
The husband’s accounting practice.

The husband is one of four partners in the chartered accounting firm of T R.
The business is conducted through a unit trust known as T R Unit Trust, a service trust known as T R Service Trust and a partnership known as T R.
The husband is a director and shareholder of the trustee companies T R Pty Ltd and T R Services Pty Ltd.
The husband’s interest in the unit trust is held through his family trust, the G T Family Trust.
There is an unsigned partnership agreement which has been tendered by consent and marked Exhibit H9. It is agreed by the parties and accepted by the investigating accountants Mr B and Mr M that this agreement is valid and binding on the partners. This agreement provides the method by which the value of each partner’s interest is calculated upon leaving the partnership.

The husband’s vineyard and wine industry investments as at the 30^th June 2002

The husband held the majority of these interests through his family trust, the G T Family Trust. The trustee of that trust is H Pty Ltd, and the husband is the sole director and shareholder of that company. There is no issue that the assets and liabilities of the trust can be treated as the assets and liabilities of the husband.
The reference to the investments of the husband as at the 30^th June 2002 is because the parties have agreed that that is the date at which all the husband’s business interests will be valued for the purposes of this case.
The husband has a 16.67% equity in the G Vineyard Joint Venture, and through M Nominees Pty Ltd as trustee of the A Trust an 8.33% interest in the A Vineyards Joint Venture. The G T Family Trust had 6.388% of the units of B Vintners Unit Trust, an 8.33% equity in A Vineyards Joint Venture, an 8.33% equity in W Vineyards Trust (including an interest in W Vineyard Joint Venture through G Pty Ltd), 10% of the shares in B Business Pty Ltd (which in turn has an investment in G Vineyards Joint Venture), and shares in H Pty Ltd.

The issues in dispute

The parties have been able to agree much of the asset pool but there are still some outstanding issues as follows:
68.1The value of the husband’s interest in the accounting practice of T R. Mr B, the valuer instructed by the wife says that the value is $464,000.00 and Mr M, the valuer instructed by the husband say that it is $367,000.00. It is common ground though that in addition to this the husband through his family trust has a current account of $265,000.00 in the practice.
68.2The value of the husband’s interest in the vineyard and wine industry ventures. Mr B valued the interests at $2,887,000.00 and Mr M valued the same at $2,194,000.00. However, I make two comments about these figures, namely:
68.2.1In the joint statement of the valuers a difference of $21,000.00 was identified between their overall valuations, but they did not explain precisely where or how this difference arose. Accordingly, I have assumed that it is a difference that relates to the respective valuations of the husband’s interests in wineries and vineyards.
68.2.2In his final address the wife’s counsel indicated that the wife conceded that beneficiaries loans of $249,000.00 should not be included in the assets. The effect of this is to reduce Mr B’s value to $2,638,000.00. There is no adjustment required to the valuation of Mr M because it was his position all along that these loans should not be included.
68.3The wife seeks to include in the asset pool amounts totalling $407,000.00 comprising contributions that the husband has made to his winery and vineyard interests and loan reductions since the 30^th June 2002 being the agreed date of valuation of the husband’s business interests. The husband opposes this.
68.4The wife seeks to include in the asset pool advances of $20,650.00 that the husband has made to his adult children through the family trust in the 2004 financial year. The husband opposes this.
68.5The husband seeks to include the value of his Subaru motor vehicle in the asset pool and to include in the liabilities the amount owing pursuant to the lease. The wife opposes this saying that when the Subaru motor vehicle was purchased it was fully financed and thus it should be ignored.
68.6The husband seeks to include the wife’s savings and shares at separation in the asset pool, as well as her credit card liability on the basis that he paid the same. The wife opposes this and only seeks to include her current shares.
68.7The husband seeks to include in the asset pool the wife’s interest in the partnership business that she and Mr H operate, and their interest in the house property that they rent from the wife’s father. However, there is no amount that the husband suggests for these interests. The wife says that there is no equity in the business and she has no interest yet in the property at Suburb B.
68.8The wife seeks to include in the asset pool the amount of $57,000.00 that the husband has paid by way of legal and accounting costs in relation to this case. The husband opposes that on the basis that the same has come from income and not capital.
There is no agreement between the parties as to the assessment of their respective contributions. The husband says that they should be assessed at 97.5%/2.5% in his favour, and the wife says 80%/20% in the husband’s favour is appropriate. The specific areas of disagreement are as follows:
69.1The value of the husband’s interest in the accounting practice of P & M at the date of commencement of cohabitation. The husband says that the value was in excess of $400,000.00 but the wife says that the evidence is insufficient to support a finding to this effect.
69.2The assistance that the wife gave in establishing the new accounting practice of T R. The wife claims that she spent substantial time and effort in attending to inspect and assess office equipment, in attending auctions to purchase equipment and in setting up filing and other systems. The husband denies the alleged extent and value of these contributions.
69.3The extent of the wife’s care and support of the two children of the husband’s former marriage. The wife herself concedes that it was not significant but the husband suggests that it was minimal.
69.4The husband asserts that the wife spent excessive amounts of money on herself and for her own purposes. The wife concedes that she often engaged in “retail therapy” as she described it, but she denies that her spending was excessive or that it was solely for her purposes.
69.5The wife says that the husband in his evidence has set out to denigrate and diminish the worth of her contributions. The husband says that from late 1997 the wife lacked commitment and contributed very little to the marriage.
69.6What if any assistance the wife provided to the husband in relation to the establishment and maintenance of his winery and vineyard interests.
69.7The extent of the wife’s contribution as a homemaker given that they resided in rental accommodation, they had domestic assistance, they had no children of their own, and they went out to dinner on several occasions in each week.
There is also no agreement between the parties as to what (if any) adjustment should be made on account of relevant Section 75(2) factors. The wife says that there should be a 5% adjustment in her favour, but the husband says that there is no basis for any adjustment to either party. The specific area of disagreement is as follows:
70.1The wife says that there is a substantial disparity between the parties’ respective earning capacities, incomes, property and resources. The husband says that this disparity is not sufficient to require any adjustment.
The parties are also in dispute as to how the wife should receive her entitlement. If I find that her entitlement is more than $50,000.00 the husband says that he would not be able to meet that payment and the wife should have to take her entitlement by way of a transfer of part of the husband’s interest in the A Vineyards. The wife says that the husband should have to pay to her the full amount of her entitlement.

The principles applicable to the matters before the court

The provisions of Section 79 of the Family Law Act define the court's power and obligations in determining applications for property settlement. The court has a discretion to make orders altering the interests of parties in property, provided the court is satisfied that such orders are appropriate, just and equitable.
The court is obliged by the provisions of Section 79(4) of the Family Law Act to take into account the following matters:
73.1The financial and non-financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them (sub-paragraph (a) and (b));
73.2The contribution made by a party to the marriage to the welfare of the family, including any contribution made in the capacity of homemaker or parent (sub-paragraph (c));
73.3The effect of any proposed order upon the earning capacity of either party to the marriage (sub-paragraph (d));
73.4The matters referred to in Section 75(2) so far as they are relevant (sub-paragraph (e));
73.5Any other order made under the Act affecting a party to a marriage or a child of the marriage (sub-paragraph (f));
73.6Any child support payable (sub-paragraph (g)).

Accordingly, in assessing the entitlement of each of the parties for property settlement, there is both a retrospective element relating to the contributions of each of the parties and a prospective element relating to matters referred to in Section 75(2).
According to guidelines established through a series of leading decisions, the court should determine the following matters on the evidence, that is:
75.1Firstly, the court must determine the assets, liabilities and financial resources of the parties to the marriage.
75.2Secondly, the court must consider all relevant contributions of each of the parties, and, where possible, the court should assign an entitlement of each of the parties arising as a result of those contributions.
75.3Thirdly, the court should then consider the prospective components of the claims of each of the parties arising as a result of the provisions of Section 75(2). The court should then identify what alteration, if any, should be made to the entitlement of each of the parties earlier assessed on account of contributions having regard to the relevant Section 75(2) factors.

The evidence

The wife was represented by Mr Richards. The wife relied on her affidavits filed on the 22^nd January 2003 and the 6^th February 2004, and her Form 17 Statement of Financial Circumstances filed on the 5^th December 2003. She gave evidence and was cross-examined.
The wife called one witness, namely Mr B, accountant. He filed an affidavit on the 3^rd October 2003. He gave evidence and was cross-examined.
The husband was represented by Mr Jordan. He relied on his affidavit filed on the 23^rd April 2003 and his Form 17 Financial Statement filed on the 4^th December 2003.
The husband called one witness, namely Mr M, accountant. He filed an affidavit on the 4^th December 2003. He gave evidence and was cross-examined.
In accordance with the relevant rules of court the accountants conferred, and a joint statement was filed on the 23^rd January 2004.
I was not impressed with the evidence of the wife. There were instances where she did not tell the truth in her affidavit and this was only revealed in cross-examination:
81.1In paragraph 22 of her affidavit filed on the 22^nd January 2003 the wife deposed to talking with the husband about starting a family and in 1997 purchasing items in preparation for that. However, in cross-examination she conceded that the car seat was purchased for the husband’s brother and that the baby items were purchased for other people.
81.2In paragraph 22 again the wife suggested that she and the husband were trying to have a baby in 1997 and 1998, that she went on the contraceptive pill just before they travelled overseas in May 1998, and they did not resume trying to have a baby after their return because there were difficulties in their relationship. However, what was revealed in cross-examination was that the wife was having a relationship with her language teacher. She first met him in late 1997, and initially said that the relationship only started in June/July 1998 when she and the husband returned from their overseas trip. She then conceded that she went away with him to Town M at Easter in 1998. She told the husband that she went on a camping trip to Victoria with her mother. The wife said that they stayed in the same room and slept in the same bed but they did not commence a sexual relationship until much later. The wife insisted that this was what happened, but I do not believe her.
I pause to indicate that the relevance of this evidence was that on the wife’s case she was committed to a relationship with the husband until the final separation and she continued to make valuable contributions as a wife and homemaker.
The wife was also deceitful in the lead-up to the separation:
83.1She purchased Telecom New Zealand shares in her mother’s name for approximately $6,700.00, and she accumulated cash in the household including from joint monies. She said in cross-examination that she did not know for how long she was hiding money or where she kept it, but I do not believe her, and I have no confidence that she has revealed precisely how much cash money she had at the time of the separation.
83.2The wife also had control of the cheque account and when paying certain accounts she would put a different amount on the cheque than on the cheque butt. For example, she wanted to clear her Mastercard account but not let the husband know, and she put a lesser amount on the cheque butt than on the actual cheque. She did this with the Visa account as well. In cross-examination she agreed that these were dishonest acts.
83.3For four months prior to separation the wife rented accommodation and purchased furniture and effects without telling the husband. The bond and the rent cost approximately $4,000.00 and the items of personalty cost $25,434.00. With the latter she put $11,123.00 on a Visa account and left the husband to pay that after separation, she put $1,799.00 on her David Jones account, and she used $12,512.00 of the cash that she had hidden.
Apart from the falsehoods and the deceit I find that the wife exaggerated in her evidence of her contributions. I will expand on this later in these reasons but for now I mention that she exaggerated in her evidence of her contributions to the household, her contributions to the establishment of the accounting practice of T R, and her contributions to the care and support of the husband’s children.
Finally, I was far from impressed with the wife’s failure to either reveal the full details of the income, property and resources of her partner, or, if she truly did not know them, to not call him as a witness. In any event, I do not accept the wife’s evidence that she did not know what income, property and resources Mr H has outside of the business.
The husband gave his evidence in a straightforward manner and I found him to be a witness of credit.
The expert evidence was provided by Mr B for the wife and Mr M for the husband. Mr M was a far more impressive witness than Mr B. Indeed, Mr B’s evidence and presentation provides a prime example of the need for a single expert witness where value is in dispute.
Mr B either failed to make obvious concessions, for example, the inappropriateness of including loans from the G T Family Trust to beneficiaries or was slow in making concessions, for example that if the husband was required to sell his interest in the A Vineyard to meet an order then he would need to at least consider whether a discount should apply to the husband’s minority interest.
Mr B could only have included the loan to beneficiaries in the assets on the basis of a view that he should be an advocate for the person who instructed him rather than an independent expert witness who was there to assist the court. This is confirmed by him saying many times in his report and in his oral evidence that he was valuing in accordance with the instructions given to him. Of course, as referred to already, the wife’s counsel indicated in his final address that the wife no longer pursued the inclusion of these loans in the assets of the Trust, but this should have been the position from the start.
Mr B made substantial errors in his report and fortunately Mr M was able to point these out in his report. For example, Mr B double-counted the T interest in W Vineyards resulting in an overstatement of value of $1,469,000.00. As a result of the matters raised by Mr M, at the joint conference of the experts Mr B varied his opinion of value down from $5,095,000.00 to $3,616,000.00.
At that same conference Mr M revised his opinion up from $2,807,000.00 to $2,826,000.00 as a result of a miscalculation of $19,000.00 in his original figures. However, this is a far cry from the major error that Mr B made.
Mr M provided a consistent and well-reasoned position, and he was highly professional in giving his evidence. Mr B was hesitant and unclear in his presentation and I have no confidence that he has a sufficient grasp of the material or of the relevant issues.
That said, I will refer in detail to the differences in their valuations later in these reasons.

The assets, liabilities and financial resources of the parties
At the commencement of cohabitation - June 1993

The evidence indicates that the husband had the following assets, liabilities and resources:
Assets
Interest in the accounting practice of P & M and
the building at Suburb W  $400,000.00
BMW 528I  NK
Haines Hunter boat  NK
Household furniture and effects  NK
Shares  NK
Savings and investments  NK
Liabilities
NK
Financial resources
Superannuation entitlement  NK
The evidence indicates that the wife had the following:
Assets
Alfa Romeo motor vehicle  NK
Savings  NK
Household furniture and effects  NK
Liabilities
NK
Financial resources
Superannuation entitlements  NK
In relation to these assets, liabilities and financial resources:
96.1Apart from the husband’s interest in the accounting practice and the building, each party estimated the value of their assets and superannuation entitlements. However, there was no agreement about the same and no valuation evidence was presented. In these circumstances I find that the parties had the assets and financial resources that they each identified but I am not in a position to make a finding as to the value of the same.
96.2The major issue in dispute here was the husband’s interest in the accounting practice and the building. The husband’s evidence is that his interest was worth at least $400,000.00, but the wife denies this and says that there is no evidence on which I can make any finding as to the value of the husband’s interest. I disagree with the wife’s submission in this regard, and I find that there is sufficient evidence from the husband for me to find that his interest was worth at least $400,000.00 at or about the relevant time.
The husband left the practice on the 30^th June 1994. At that time he had a client base, a capital interest in the partnership, an entitlement to profits and an interest in the building. The husband and his partners fell into dispute over what the husband should receive upon his departure. That dispute took a considerable period of time to resolve, but eventually an agreement was reached and a document signed in 1999. In the end result the husband kept the client base that transferred to him, he received no money by way of repayment of his capital and loan accounts (totalling $260,000.00) and he was not required to pay any shortfall in relation to the building (allegedly $100,000.00).
In relation to the husband’s client base, that represented $675,000.00 in fees in the 1993/1994 year (Exhibit H6). The evidence indicates that of that client base clients with fees totalling $318,377.00 transferred to the husband almost immediately (Exhibit H7), and that in due course further clients with total fees of up to $127,106.00 transferred. Indeed, the husband’s fees rendered in the 1994/1995 year totalled approximately $560,000.00, and the majority of those fees came from clients that transferred to him from P & M. The husband’s evidence, which I accept, is that repetitive fees generally have a market value calculated on a dollar for dollar basis. In negotiations with P & M though he offered to discount that to 80 cents in the dollar.
In addition to the client base, I confirm that the husband had capital and loan accounts totalling $260,000.00, an entitlement to profits which was not determined precisely and an interest in the building. Thus, without taking into account the further clients that transferred, and without adding in any profit entitlement, the husband’s claim upon departure totalled $414,000.00 approximately. This comprised the capital and loan accounts at $260,000.00, $254,000.00 being 80% of the fees, less $100,000.00 being the shortfall in relation to the building. Eventually he settled for retaining the entire client base that transferred to him. In money terms this represented clients with fees totalling $445,483.00 and the husband could have sold that client base on a dollar for dollar basis. Thus, I have no difficulty in finding on any basis that the value of the husband's interest in P & M was at least $400,000.00 at the relevant time and that this value was in fact re-couped by him.

At the date of separation – 6^th November 1999

The parties had the following assets, liabilities and financial resources:
Assets
The husband’s interest in the accounting practice of
T R (including the current account)  $   453,000.00
The husband’s winery and vineyard interests (net)  $1,353,000.00
The wife’s Audi motor vehicle  NK
The husband’s BMW motor vehicle  NK
Household furniture and effects  NK
The wife’s shares  $     24,950.00
The wife’s savings  $     11,700.00
The wife’s artwork and jewellery  NK
Liabilities
Credit cards  NK
Franklin House litigation  NK
Financial resources
The husband’s superannuation entitlement in the
T Superannuation Fund  $     64,000.00
The wife’s superannuation entitlement  NK
In relation to these assets, liabilities and resources:
98.1Mr M valued the husband’s interest in the accounting practice and the husband’s winery and vineyard interests as at the 30^th June 1999, and these are the figures that I have used above. Mr B was not instructed to undertake this valuation exercise and thus Mr M’s evidence was the only evidence before me on this topic.
98.2The Audi motor vehicle was retained by the wife following the separation. It was a leased vehicle and the husband continued to make the payments including the residual amount payable at the end of the lease. The husband also met the registration and insurance costs until December 2001.
98.3The husband retained the BMW motor vehicle following the separation. He eventually sold it in September 2000 for $13,000.00 and he subsequently purchased a Subaru motor vehicle in September 2003 for in excess of $50,000.00. This purchase was fully financed.
98.4The wife moved into rental accommodation that she had set up prior to the separation leaving the husband to meet the Visa card debt for furniture and effects of $11,122.95 (Exhibit H1). However, the figure that the husband has used in his case is $9,855.00 and that is the figure that I propose to adopt.
98.5The husband moved from his rented accommodation into a house property that he purchased at Suburb W for $310,000.00 borrowing $255,000.00 from the Commonwealth Bank of Australia.
98.6The wife sold almost all of her shares following the separation realising $22,190.00. She retained her David Jones shares.
98.7When the husband was a partner at P & M the national firm experienced problems over their audit of a large institution. Litigation was subsequently commenced in the Eastern States against all of the partners claiming $10,000,000.00. The husband’s exposure to this was approximately $250,000.00, but he has heard nothing for two years. The litigation is being handled by solicitors in the Eastern States and an insurance company is involved. In any event, the husband does not seek that this amount be taken into account as a liability in this case.

At the date of the hearing

During final addresses I was presented with separate schedules by each counsel. Some of the items are agreed but there are a number that are still in dispute. I have consolidated the two schedules as follows with all items in issue included:
Assets
The husband’s house property at Suburb W  $   425,000.00
  (agreed)
The husband’s interest in the accounting practice of
T R including the current account of
the husband’s Family Trust  $   769,000.00/
  $   632,000.00
The husband’s winery and vineyard interests  $2,638,000.00/
  $2,194,000.00
The husband’s interest in the T Superannuation
Fund  $   114,897.00
  (agreed)
The husband’s Subaru motor vehicle  NK
The sale proceeds of the husband’s BMW motor vehicle          $     13,000.00
  (agreed)
The husband’s legal and accounting fees (paid)  $     57,000.00
The capital advances made by the husband though the
Family Trust to his two adult children  $     20,650.00
The wife’s savings at separation  $     11,700.00
The wife’s shares and the proceeds of sale of shares
held by her at separation  $      2,760.00/
  $     24,950.00
The wife’s Audi motor vehicle  $     30,000.00
  (agreed)
The wife’s artwork and jewellery  $     12,000.00
  (agreed)
The wife’s superannuation entitlements in the
Australian Retirement Fund  $     18,233.00
  (agreed)
The wife’s interest in the S Business
business   NK
The wife’s interest in the house property at
Suburb B  NK
Liabilities
The amount owing pursuant to the lease on the husband’s
Subaru motor vehicle  $    52,863.00
The wife’s credit card at separation (paid by the husband)       $     9,558.00
The mortgage to the Commonwealth Bank of Australia
registered on the title to the Suburb W property  $ 200,000.00
  (agreed)
The husband’s overdraft and bank bills  $ 450,000.00
Financial resources
Nil.
In relation to these assets and liabilities I make the following comments:
100.1To repeat, Mr B valued the husband’s interest in the accounting practice of T R at $464,000.00. Mr M valued the same interest at $367,000.00. In addition there is a current account of the husband’s family trust at $265,000.00.
These valuations are as at the 30^th June 2002, which is an agreed valuation date by both parties. Since then though the evidence of the husband is that the current account of his family trust has increased by $40,000.00. The wife seeks to include this in the asset pool but the husband says that the valuations were struck by agreement as at the 30^th June 2002 and there should be no alteration to that. I will return to this issue later in these reasons.
Mr B valued the husband’s interest in the practice on a going concern basis by using the capitalisation of maintainable earnings method. He determined the value of the goodwill of the entire business and then divided that by 27.08% being the husband’s share, arriving at the figure of $464,000.00.
Mr M valued the husband’s interest on the basis of the terms of the partnership agreement that applies when a partner leaves the practice. After giving notice to the other partners, the exiting partner receives 2.5 times the profit of the partnership for the preceding year, together with the repayment of any loan account. The payment of this amount is then to be made over three financial years depending on when the notice of departure is given.
Applying this formula Mr M arrived at a retirement pay-out of $525,000.00. He then deducted income tax at the rate of 30% resulting in a final figure of $367,000.00.
Mr B’s position is that in the circumstances of the husband intending to continue in the partnership the value of his interest to him is the value of the future income stream that he can expect from the business. Mr M says that that would be the case but for the partnership agreement. That agreement puts a value on the husband’s interest albeit it is premised on him retiring from the firm. Mr M says that it is necessary to allow for the vicissitudes of life, and the husband will not remain in the partnership forever. Thus, the value provided for in the agreement is the appropriate one to use. The valuation of Mr B assumes that the husband will simply continue forever to receive the same level of benefits from the partnership.
In my view Mr M is correct in his approach to this issue. Where there is a partnership agreement which provides for the only way that the husband can realise his interest then that is how the value should be determined.
There is also nothing in any of the authorities cited by Mr Richards generally on the issue of valuation that would require a different approach.
The wife’s case is that where as here there is no evidence indicating the sale of the husband’s interest in the partnership or that he is intending to retire and seek to be paid out by the other partners then the interest is to be valued on the basis of the value of the same to the husband as a going concern. In other words, without regard to what might be achieved on a sale or a departure from the practice. However, that is not the law. For example, where there is a market for an interest in a business then that will be highly relevant even where there is no intention to sell (RAMSAY and RAMSAY (1997) FLC 92-742, at p. 83,999).
The concept of value to the owner primarily arose in the context of minority interests in companies where the market value is nil or minimal and/or where the interest is not realisable or readily realisable. However, this terminology has subsequently created confusion, and to refer to the value to the owner certainly does not indicate that where there is a market or the interest is realisable that that is ignored in valuing the interest. As Warnick J said in RAMSAY (supra), at p. 83,997:
“In a number of cases in which it was stated that the value to be ascertained was that to the shareholding party, it was also stated that the value must be ‘realistic’, as if these terms are synonymous. If the use of the term ‘realistic’ is seen as simply ‘shorthand’ for the expression ‘value to the shareholder’, then no doubt there is no inconsistency.
It seems arguable however that what is ‘realistic’ (literally taken) may not be the same as the value to the shareholder. The latter is often not the value that can be achieved on sale and also often takes account of a number of assumptions about the receipt of benefits (often not attaching to the shareholding ‘per se’). Thus it has a strong ‘notional’ aspect, in contrast to the reality of the market. It seems arguable that the concept of ‘realistic’ value to the shareholder ought include a recognition of what can be achieved on sale. Alternatively, such recognition ought be granted some other place in the decision-making process.
It is in this area of tension, between what I suggest is realism and what might be assessed as the value to the shareholder, that the failure to identify factors pertinent to the valuation exercise being undertaken and in particular the failure to identify those factors, the import of which ought be left to the discretion of the court, causes particular difficulty.
Thus, focussing on which can be achieved on disposition, one expert pursues a particular approach, while the other, ignoring the question of what can be achieved on disposition, focuses on the value of the company’s assets or the capitalisation of benefits received or receivable by the shareholder.
Perhaps this scenario can be avoided, if the point at which a difference, between value to the shareholder (exclusive of a consideration of ‘market value’) and the ‘market value’ becomes relevant, can be established.”
Warnick J took up the use of the phrase “the value to the owner” in the case of AJW v JMW (2002) FLC 93-103. His Honour highlighted the difference between the use of the term to describe the objective of the valuation process and the use of the term to describe a valuation methodology. His Honour considered that the former is the correct usage and the term can only be descriptive of the objective of the valuation exercise; it cannot refer to a valuation methodology in itself.
In this case the confusion that Warnick J is referring to is evident from the circumstance that although Mr B’s valuation is promoted as being a valuation of the husband’s interest in the practice as a going concern on the basis that he has no intention to sell his interest or retire, in his own words the assessment of the value of the entire enterprise from which the value of the husband’s interest is derived, still represents a figure that “an investor would be prepared to employ in the business to fund its intangible and fixed assets (goodwill and plant) and working capital”. In other words, it is still nothing more than the amount that a hypothetical purchaser would pay for the practice, the primary test of value. However, that methodology is not appropriate whereas here the partnership agreement sets out a formula that must be followed by any partner wishing to leave the practice.
Thus, in my view the value to the husband of his interest in the practice is the value that has been agreed upon by the partners in the event that a partner retires. Accordingly, I find that subject to the issue of taxation, the value of the husband’s interest is $525,000.00.
In relation to taxation, Mr M’s evidence is that the payment to the husband should be treated as income and not capital. As the husband explained in his evidence, the formula provides an estimate of the work in progress and the debtors of each partner at any particular time, and thus it is income based. Further, the payment over three financial years allows the departing partner to spread the tax consequences over those years. Mr M also pointed out that the remaining partners would want the payment to be treated as income to allow them to claim a deduction.
Mr B did not deduct tax in his calculation because he was valuing on the basis that the interest would not be realised, but he also argued that a payment pursuant to the partnership agreement would be a capital payment and not income. He relies on the terms of the agreement and says that what will be occurring is the payment of cash for shares and units, but I prefer the evidence of Mr M on this point. It is logical and soundly based.
Thus, I find that the value of the husband’s interest in the partnership is $367,000.00 and in addition of course there is the amount of $265,000.00 which was the amount of his family trust’s current account as at the 30^th June 2002.
100.2I now turn to the issue of the extra $40,000.00 that the wife seeks to include. The evidence of the husband was clear as to this amount, but the point is that if the parties have chosen to use the value of the husband’s interest in the practice as at the 30^th June 2002, and they have deliberately not updated the same, then why shouldn’t that also apply in relation to the amount of the current account which is part of the valuation.
In the lead-up to the trial both parties were initially looking to present updated accounting valuations including in relation to the husband’s winery and vineyard interests, using the 2003 and even possibly the 2004 figures, as well as providing updated real estate values. However, it seems that the wife then changed her mind about this and the husband filed a Form 2 application in a case seeking leave to present evidence of what had occurred since the 30^th June 2002 and for leave to file an updated report of Mr M. That application was strenuously opposed by the wife. Her position was that the trial should proceed on the basis of the valuations of the 30^th June 2002 and there should be no updating of any aspect of the same. The basis of that submission was that if say new figures were provided in relation to one aspect such as the real estate then that would be unfair and may prejudice one of the parties given that a different overall result might follow if other figures were not updated. In any event, I determined that there was insufficient evidence before me to make any of the orders sought by the husband and I dismissed the application.
Then, on the 25^th June 2004 I called the matter on preparatory to its commencement as a trial on the 28^th June 2004. I was told by both counsel that neither party wished to make an application for leave to file any further affidavits or reports. Thus, the trial proceeded on the basis of the valuations as at the 30^th June 2002.
Given this, I do not consider it appropriate to include the amount of $40,000.00 in the asset pool. The current account is part and parcel of the husband’s interest in the accounting practice, and to take the wife’s counsel’s own point, to change this amount without addressing all changes that may have taken place in relation to the accounting practice and in particular the result of applying the formula in the partnership agreement, could prejudice one or both of the parties and would be inconsistent with the way that both parties have presented their cases.
100.3With the husband’s winery and vineyard interests the dispute again centres around the different approaches of the two valuers. They both valued on a net asset basis, but Mr M then applied a 15% discount to most of the husband’s interests and a 20% discount in one instance. He did this because they are minority interests and they will not command values equivalent to the respective proportions of the entire net asset value.
As referred to already, Mr B’s valuation became $2,887,000.00 and Mr M’s valuation became $2,194,000.00 after they each revised their figures at a joint conference which took place in January 2004. In his final address the wife’s counsel conceded that beneficiaries loans totalling $249,000.00 should be excluded from Mr B’s valuation and thus his figure becomes $2,638,000.00. In addition, the wife seeks to add on the following amounts:
100.3.1An amount of $120,000.00 contributed by the husband to A Vineyards.
100.3.2An amount of $70,000.00 contributed by the husband to the G Vineyard.
100.3.3An amount of $105,000.00 used by the husband to purchase 70,000 shares in H Wines Pty Ltd.
100.3.4An amount of $22,000.00 paid by the husband to reduce a loan due to P Pty Ltd in relation to B Vintners.
100.3.5An amount of $50,000.00 paid by the husband to reduce loans from the Commonwealth Bank of Australia.
These amounts were paid by the husband after the 30^th June 2002 and thus are not accounted for in the valuations of Mr B or Mr M. Indeed, except in one area they were not even asked about them and any impact that they might have on their valuations. Mr M was asked about the price the husband paid for the Heartland shares, and he said that that increased the valuation of all the shares held by or on behalf of the husband in that entity.
In any event, the wife proposes adding these amounts to the valuation of the husband’s business interests, but for the same reason that I have set out in rejecting the wife’s claims to include the increase to the husband’s family trust’s current account in the partnership, I also reject this claim by the wife.
Mr B has not applied a discount to the value of any of the husband’s minority winery and vineyard interests because he has valued “on a going concern basis assuming continuity of ownership”. He points to there being no evidence that the husband will sell any of these interests, and his valuation is said to be consistent with the principle of “value to the owner”.
I have already made comments about the use of this terminology in relation to the valuation of the husband’s interest in the accounting practice, and the comments apply equally as well here. The value to the owner is the objective of the exercise and not a valuation methodology in itself. It is not the case as submitted by the wife’s counsel that “where an investment interest is held in such a way as to restrict its negotiability, the interest should be valued in accordance with its value to the party (the husband) and without regard to technical limitations involved in the sale of the asset”.
Where the minority interest holder receives benefits such as dividends, loan account availability and the provision of motor vehicles the value may not be what can be obtained on a sale of the interest in limited and restricted circumstances, but rather the value to the interest holder of enjoying the continuing benefits. But that is not the case here.
The appropriate methodology here is to value the entire venture first, and that is what both valuers have done. They both adopted the net assets method described by Mr B in his report as attributing “value to the businesses’ assets based on current realisable values” (my emphasis). They have both then valued the husband’s interest as a proportion of the value of the entire venture. It was at this point that they diverge with Mr M applying a discount.
Whether a discount is applied is always a matter within the discretion of the court. It is not the case, as suggested by the wife’s counsel, that no discount should be applied where there is no evidence indicating that the minority interest will be sold, and such an approach is certainly not justified by the application of the so called principle of “value to the owner”. Indeed, it is worth noting that even in the authorities cited by Mr Richards where the concept of “value to the owner” is referred to such as TURNBULL and TURNBULL (1991) FLC 92-258, HARRISON and HARRISON (1996) FLC 92-982 and RAMSAY and RAMSAY (1999) FLC 92-742, discounts were still applied to the minority interests being valued.
Turning then to whether there should be a discount applied here. As Mr M says, the theory is that valuations of minority interests need to recognise the minority’s inability to control the enterprise and, in the case of unlisted investments, the lack of negotiability of the investment.
The husband says that this is the position with his interests and he relies on Mr M’s assessment of the appropriate discount. The wife says that the evidence indicates that there is no basis for a discount to be applied. In his final address the wife’s counsel pointed to the following in support of that position:
100.3.6That a sale of the units in B Vintners by a minority interest holder at less than the value without a discount was subject to circumstances peculiar to the vendor and cannot be used as it was by Mr M to justify the application of a discount.
100.3.7That the holders of all other interests in each venture are well known to the husband, they are persons with whom he has a good relationship and with whom he proposes to maintain his business relationship and, they entrust the financial affairs of the ventures to the husband in his capacity as an accountant.
100.3.8That the husband has a management role in each of the ventures and in that capacity he is able to influence the strategy of the business operations.
100.3.9That no single investor is in a position to control any of the ventures.
100.3.10That the only disposition of an interest occurred in circumstances where the vendor was under pressure to sell.
Dealing with these in turn:
§During 2003 T Vintners sold a number of units in B Vintners for $1.25 per unit, and B Vintners also redeemed a number of T Vintners units at the same price. This price was less that the non-discounted value determined by both Mr B and Mr M. Mr M used these transactions as evidence of the market value of the units and although it represented a lesser percentage discount than he was prepared to apply, he adopted the price of $1.25 per unit as his discounted value. However, the husband gave evidence that the sales by T Vintners was as a result of a family break-up and the group was “in need of cash”. On the basis of this evidence which was unknown to Mr M at the time, the wife’s counsel says that they were not arms-lengths transactions and it was likely that the sale price had more to do with the pressure on T Vintners to obtain funds than any lack of control or lack of negotiability.
Now, this is certainly a persuasive argument but there were also other transactions involving the units in B Vintners including a sale at $1.24 per unit of a holding similar in size to the husband’s holding. However, the details of this sale were not pursued with the husband in cross-examination as was the sale by T Vintners and there is no evidence to indicate the circumstances of the transaction. Accordingly, the fact that there were circumstances peculiar to the T Vintners transaction cannot be determinative of whether or not the market value of the units should be discounted to approximately $1.25 per unit.
§This presumably goes to the question of control, but it does not indicate that the husband is able to control the entire venture which is the relevant point.
§This again goes to the issue of control but the evidence does not establish that the husband’s managerial role provides him with the necessary or any control of the entire venture to indicate that at this point a discount should not be applied.
§I assume that this also goes to the question of control, but I fail to see how the fact that there are only minority interest holders provides the husband with any measure of control over the entire venture.
§This clearly relates to the T Vintners transactions, but it is factually incorrect given that there was certainly one other transaction at $1.24 per unit in respect of which there is no evidence to indicate in what circumstances the sale was made.
Thus, in my view these factors do not indicate that the husband’s interests are anything other than minority interests where the lack of control and negotiability require a discount to be applied.
As to the size of the discount, Mr M’s evidence is that generally the values of minority interests are discounted by between 15% and 30%, but here 15% is called for in all instances except where he applied a 20% discount but then he used the result of an actual sale as the appropriate value. For Mr B’s part, he of course did not apply a discount, but in cross-examination said that if a discount was applied, then 15% would be appropriate. Thus, I am satisfied to adopt Mr M’s figures in this regard.
100.4In relation to the husband’s interest in the T Superannuation Fund, on the 13^th December 2004 I raised with counsel whether there was a double-counting here. The amount of $114,897.00 was put to me as the agreed current value of the husband’s superannuation entitlement. However, both Mr B and Mr M included in their valuations the husband’s interest in this same superannuation fund as at 30^th June 2002. Mr M had a figure of $79,000.00 and Mr B seemed to have a figure of $173,000.00. However, at their conference Mr B reduced his figure to $83,300.00, the difference then being the application of a discount by Mr M. In any event, as I pointed out to counsel these amounts could not remain if there is to be a separate item for the husband’s superannuation at $114,987.00. On the 15^th December 2004 both counsel requested me to deduct the amount of the husband’s superannuation from the valuations of the two accountants. Of course, given that I prefer the valuation of Mr M it is only necessary for me to subtract the amount of $79,000.00 from his valuation, leaving an amount of $2,115,000.00.
100.5In relation to the husband’s Subaru motor vehicle there is no valuation of the same, although there is agreement about how much is owing pursuant to the lease. The wife says that I should ignore both the asset and the liability because the motor vehicle was fully financed when it was purchased in September 2003. This is in fact the case, and for this reason and also because there is no valuation of the motor vehicle I agree with the wife’s submission.
100.6The husband has paid his legal and accounting costs in the sum of $57,000.00 from his earnings, and that was not in issue. The wife though has not yet paid her legal and accounting costs.
In these circumstances the wife seeks that the amount of the husband’s costs be added back on a notional basis to the asset pool. However, as the relevant authorities establish, although this is a matter for my discretion, in exercising that discretion regard should be had to the source of the funds used to meet the costs (CHORN and HOPKINS [2004] Fam CA 633, 9 July 2004, per Finn, Kay and May JJ). For example, if the funds used existed at separation such that both parties have an interest in them, then the amount of the costs should be added back. However, if the funds have been generated by the parties’ own endeavours since the separation then they should generally not be added back.
Here the funds came from the husband’s earnings, namely from income received by him for his work in the accounting practice. Thus, in my view they should not be added back. It is the case that the wife contributed to the husband’s accounting practice prior to the separation, but it would be drawing a long bow to suggest that on the facts of this case that required the adding back of the funds because their use was a premature distribution of funds in which both parties have an interest (TOWNSEND and TOWNSEND (1995) FLC 92-569).
100.7In the 2003/2004 financial year the husband through his family trust made capital advances to his two adult children totalling $20,650.00. The wife seeks that this total amount be added back to the pool of assets on the basis that the capital of the Trust to which she has an entitlement through these proceedings has been reduced by that amount.
The same principles apply to this claim as applied in relation to the issue of the husband’s legal and accounting costs. Here though it would seem that the wife is on stronger ground given the source of the advances. In other words it can more easily be said that the funds have been generated from property to which the wife has made sufficient contribution to require the exercise of discretion in her favour. However, the Trust and its assets have been valued for the purpose of these proceedings as at the 30^th June 2002, and for the reasons which I have set out in paragraph 100.2 above, I do not consider it appropriate to add to the pool of assets an increase to an asset of the Trust since then when the entire value of the Trust is not being updated. These funds have clearly been generated since the 30^th June 2002 and thus I do not propose to include them in the asset pool.
100.8The wife had savings at separation totalling $11,700.00. However, the wife has now spent this money in meeting her living expenses. In these circumstances I do not propose to add back the amount of the savings to the asset pool as notional property. As was said by the Full Court in MARKER and MARKER (1998) Fam. CA 42, 1 May 1988 per Baker, Kay and Chisholm JJ:
“2.11There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge”.
There is no evidence before me to indicate that the wife’s expenditure since separation has been “extravagant” (see also CERINI and CERINI (1998) Fam. CA 143, 8 October 1998, per Nicholson CJ, Ellis and Kay JJ, at paragraph 46).
An appropriate figure to include though is the amount of the wife’s current savings, and the evidence of that is contained in Exhibits W3 and W2. She has $45.87 in her Credit Union account and $15,913.63 in her J account.
100.9The wife had shares at separation but she has long since sold all but her David Jones shares. The husband seeks to add back the sale proceeds of these shares totalling $22,190.00 as well as including the David Jones shares at $2,760.00. The wife says that only the David Jones shares should be included. Again, and for the same reasons as I gave in relation to the wife’s savings, I do not consider that the sales proceeds should be added back. Obviously though the agreed value of the David Jones shares should be included.
100.10The wife and her partner Mr H operate the S business in partnership. The husband seeks to include in the asset pool the wife’s interest in this business. However, he is not able to even suggest a value of that interest and the only documentary evidence before me is a balance sheet as at the 31^st March 2004 which indicates that the wife has “equity” of $8,484.46. However, that evidence is still insufficient to allow me to make a finding as to the value of the wife’s interest currently, and certainly the husband does not suggest that I use the balance sheet for that purpose. Thus, I do not propose to include this in the asset pool.
100.11The wife and Mr H rent a house property at Suburb B from the wife’s father. The wife’s evidence is quite clear that she and Mr H want to purchase this property and a purchase price has even been struck at $400,000.00. The wife has spent $15,000.00 already on renovations, but that does not necessarily translate into the wife having an interest in that property. The husband says that she has, but I reject that claim. Indeed, the husband again did not even suggest a figure for the value of the wife’s alleged interest. Thus, I do not propose to include this in the asset pool.
100.12Initially each party was seeking to include furniture and household effects in the asset pool, but because no value of the same could be agreed, in the end result it was agreed to leave out this item.
100.13Given the approach that I have adopted already with the husband’s Subaru motor vehicle, I do not propose to include the amount owing pursuant to the lease as a liability.
100.14The husband seeks to include as a liability the wife’s credit card debt that he was left to pay following the separation. The wife purchased items of furniture and household effects on this card and with cash that she had accumulated, and she retained all of these items after the separation. In these circumstances I consider it appropriate for the wife to reimburse the husband the sum of $9,558.00 from her share of the net assets. On this basis there is no need to include this as a liability of the parties.
100.15The husband has included in his schedule as a separate item the Commonwealth Bank overdraft and the Bank Bills. However, it is quite clear that these liabilities have been taken into account in the valuations of both Mr B and Mr M.
100.16The wife tendered her latest MasterCard and American Express statement, but she has not sought to include the amounts owing as liabilities, and nor has the husband. However, on the basis that I have included the wife’s current savings it is only appropriate that I include her current debts. The MasterCard debt is $3,855.15 (Exhibit W5) and her American Express debt is $7,651.20 (Exhibit W4).

Before leaving this topic I need to consider the issue of capital gains tax. The husband’s position is that if the payment to the wife is in excess of $50,000.00 then because he has no cash reserves or the ability to borrow, the wife will have to take her entitlement by way of a transfer to her of the husband’s interest in the A Vineyard.
The wife’s position is that she seeks that the husband simply pay out her entitlement and she is not concerned where the money comes from.
On the basis that the payment to the wife will be in excess of $50,000.00, the issue for me is that if I do not accede to the proposal of the husband then there is no doubt that he will have to sell assets to meet the payment required. In that event there will be a capital gains tax liability, and maybe other taxation consequences. However, there is no evidence before me of what that liability might be. The husband has estimated that there is a potential liability of $561,000.00 in the event that all of his business interests are sold at the values determined by Mr M, but that of course does not help with this discrete exercise.
I have the following options in relation to this issue:
104.1If the amount is known, I could include in the liabilities the capital gains tax that would be payable by the husband in relation to the sale of assets necessary to meet the amount that is payable to the wife.
104.2I could order that the husband transfer to the wife sufficient property to meet the payment, and in that event I am told that no issue of capital gains tax arises between the husband and the wife.
104.3I could order that the wife contribute to any capital gains tax, or indeed for that matter any taxation that might be assessed as a result of the husband selling assets to meet the payment required to be made to the wife.
104.4I could take into account as a relevant factor under Section 75(2) the circumstance that the husband may have to pay capital gains tax if he sells assets to make the required payment to the wife.
The principal authority in relation to this issue is the decision of ROSATI and ROSATI (1998) FLC 92-804. There the Full Court said this at p. 85,043:
“6.36It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s 79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.”
Here, I do not consider it appropriate to require the wife to take an asset or part of an asset in satisfaction of her entitlement that she does not want. The asset would be one acquired by the husband as a result of his interest in the wine industry and in respect of which the wife had little or no say. Thus I will be requiring the husband to make a cash payment to the wife, and on the evidence that raises the spectre of capital gains tax and maybe the prospect of the assessment of other taxes. However, I have no evidence of precisely what if any assets the husband will sell and I have no evidence to indicate what the capital gains tax or any other taxation might be. Thus I propose to require the wife to reimburse to the husband the same percentage of any capital gains or other taxation that is payable by him as a result of the sale of any asset as the percentage that I determine her entitlement is to the property of the parties.
In SPG and BAG (2001) Fam CA 1453, 20 December 2001, per Lindenmayer, Finn and Guest JJ, the Full Court said that it is preferable to deduct the amount of the liability from the gross figure than to do this, but of course that has to depend on the state of the evidence before the court.
In his final address Mr Richards made some vague reference to the extent of the liabilities being looked at once the percentage entitlement of the parties has been determined, but there was no application made about that, and it was not taken any further. Thus, given the state of the evidence, I have no choice but to adopt the approach that I propose.
This will still leave the husband with the majority of the capital gains or any other taxation to pay when he clearly does not particularly want to sell any of the assets. However, the husband chose not to present any evidence as to the capital gains tax that is payable beyond the amount that would be assessed on the sale of all of the assets, and more importantly, the husband chose to make the investments that he did and put himself in the position where he has no other way to meet the payment to the wife than to transfer or sell some of the assets involved. Thus, in these circumstances I consider this to be the appropriate result.

Conclusion on the relevant assets and liabilities

I find that the relevant assets and liabilities of the parties are as follows:
Assets
The husband’s house property at Suburb W  $   425,000.00
The husband’s interest in T R including
the capital account  $   632,000.00
The husband’s winery and vineyard interests  $2,115,000.00
The proceeds of sale of the husband’s BMW motor vehicle     $     13,000.00
The husband’s superannuation entitlement  $   114,897.00
The wife’s savings  $     15,959.50
The wife’s David Jones shares  $      2,760.00
The wife’s Audi motor vehicle  $     30,000.00
The wife’s jewellery and art  $     12,000.00
The wife’s superannuation entitlement  $     18,233.00
$3,378,849.50
Liabilities
Mortgage to the Commonwealth Bank of Australia registered
on the title to the house property at Suburb W  $   200,000.00
The wife’s credit card debts  $     11,506.35
  $   211,506.35
NET ASSETS (to the nearest dollar)  $3,167,343.00

Contributions

I turn now to the respective contributions of the parties pursuant to Section 79(4) of the Family Law Act.

Section 79(4)(a) and (b)

I have set out above the assets and financial resources that each party had at the commencement of cohabitation in 1993. Given my finding that the value of the husband’s interest in the accounting practice of P & M was approximately $400,000.00 at about that time, it is readily apparent that in this regard the husband has made a substantially greater contribution than the wife was able to. Of course though, in accordance with authorities such as PIERCE and PIERCE (1999) FLC 92-844 these contributions must still be weighed with the contributions that each party made during cohabitation and following the separation.
During cohabitation the husband made the following contributions under this heading:
111.1The husband worked full-time as a partner in firstly the accounting practice of P & M and then in the accounting practice of T R. His income from all sources, including through the G T Family Trust during this time was substantial, totalling almost $1,400,000.00. There is no issue that this income was then used for the benefit of the husband and the wife, and to a limited extent for the benefit of the husband’s two children from his previous marriage.
The court recognises of course that this is not solely a contribution to the acquisition, conservation and improvement of any particular property of the parties or either of them, but it is still appropriate to take it into account here.
The court also recognises that it would be “double counting” to take into account as entirely separate and discrete contributions the value of the husband’s interest in the accounting practice at the start and his income over the next few years. Because of how the husband’s interest is valued, there is a necessary overlapping of the two.
111.2The husband received $26,000.00 from his mother in 1995, and this money was then invested.
111.3The husband left P & M and he and Mr R commenced the accounting practice of T R. As between the husband and the wife I find that the husband made the overwhelming contributions to the establishment of this practice, and the wife does not necessarily disagree with that.
111.4The husband worked long hours and made a significant and substantial contribution to the development and growth of the firm T R. It became a successful practice with four partners and a number of staff. Again, the wife does not disagree with the extent of the husband’s contributions in this regard.
111.5The husband, primarily through the G T Family Trust, acquired, maintained and developed a number of winery and vineyard interests. Not only did the husband provide the funds, but he committed a considerable amount of his time and effort to these ventures. There is also no dispute about the value and importance of the husband’s contributions in this regard.
However, another potential for “double counting” should be recognised with the husband’s contributions to the accounting practice and to the winery and vineyard ventures. One result of these efforts is the income that the husband has received and thus it is not open to take that income into account as an entirely separate and discrete contribution.
111.6In his final address the husband’s counsel submitted that the husband made “a contribution to the maintenance of the parties’ rented accommodation”. However, there is no evidence of this, and there is no basis to take this into account, save and except to the extent that the husband paid the rent from his earnings.
111.7The husband is the sole member of the T Superannuation Fund and he has made direct financial contributions to that fund.
The wife’s contributions during cohabitation under this heading are as follows:
112.1Apart from the period from March 1994 to June 1994 when T R was being set up, the wife was in full-time employment until 1995 when she reduced her working time to four days per week and commenced part-time study. Then in January 1996 she reduced that to two days per week until ceasing altogether in March 1996. She resumed full-time employment again in January 1999.
The wife’s income during these periods totalled $98,511.00, although in 1997 and 1998 she was allocated a total of $45,000.00 from the profits of the family trust.
The wife conceded in cross-examination that she used very little if any of this money for the joint benefit of her and the husband. She used it almost entirely for her own purposes. She agreed that it was the husband who met all expenses of the household including the provision of domestic help.
In addition to her income the wife had unlimited access to the parties’ cheque account and to various credit cards. The husband says that the wife’s level of expenditure from these sources was excessive and unnecessary. For example, the husband alleges that over the period of approximately two and a half years immediately prior to separation the wife’s total expenditure through the cheque account totalled $222,614.78 (Exhibit H2).
The wife says that she was “very unhappy” and lonely in the last few years of the marriage and that she reacted to this “by finding solace in shopping”. She says though that the husband was fully aware of the level of her personal expenditure and he made no complaint about it whilst they were living together. The husband conceded the latter, and although he does not necessarily concede the former, I find that what the wife says is correct in this regard.
In any event, in relation to the schedule of expenditure tendered by the husband it soon became apparent in cross-examination that it included the motor vehicle lease payments, and the registration and insurance costs, and that it included the cost of items purchased for the household, the wages paid for cleaning services, and expenditure for the direct benefit of the husband. Thus, the schedule did not establish that the wife’s level of expenditure was excessive or unreasonable, or indeed unauthorised by the husband.
In my view, although the wife readily conceded that shopping was her form of entertainment there is no basis for a finding that this in some way diminished her contributions or should be viewed as a negative contribution.
112.2The wife says that she organised the parties’ wedding and reception. The husband suggests that this did not take that much time or effort, and although I can accept that it was more than a few telephone calls, it is inconsequential in the overall assessment of the parties’ respective contributions.
112.3The wife says that she made a significant contribution to the setting up of the accounting practice of T R. For example, she claims that:
112.3.1she researched options for administrative systems;
112.3.2she inspected potential business premises with the husband and Mr R;
112.3.3she previewed and assessed office equipment;
112.3.4she and her father attended auctions acquiring furniture;
112.3.5she enquired about filing systems and franking machines;
112.3.6she purchased stationary and the necessary forms and documents, and set up filing systems for them.
The husband says that the wife did most of these things but that she has exaggerated the time involved and the effort required. He says that she did not do these things by herself, that the office was set up relatively quickly and easily, that the expenditure on furniture was less than $1,000.00, that there were only six people in all to cater for, that all fixtures and fittings were in place, that the same plant and equipment was purchased as was used at P & M and no research was required, and that all office procedures were adopted from those used at P & M.
I prefer the evidence of the husband on this topic and I do find that the wife has exaggerated her contributions in this regard. In cross-examination it became apparent that very little time was involved in this exercise and that what the husband was saying was the more accurate version.
112.4The wife conceded in cross-examination that once she ceased working at T R in March 1996 there was almost no input by her to that practice. Indeed, she agreed that there was very little business entertaining undertaken by her either in the home or elsewhere.
112.5The wife claims that she assisted the husband with his vineyard and winery interests. However, she agreed in cross-examination that it was not a significant contribution and that the husband made all the necessary decisions. She made some preliminary drawings for a wine label, she once spent a day assisting with the bottling process, and she gifted one of her oil paintings to the manager of W Vineyards.
112.6The parties lived in modest rented accommodation during cohabitation. The wife was keen for them to purchase a house but she says, and I accept, that the husband’s response was that it would be better to invest their money in winery and vineyard ventures.
112.7For the last ten months of cohabitation the wife was a member of the Australian Retirement Fund and a percentage of her salary was contributed to that fund.
There is no doubt that overall the contributions of the husband pursuant to Section 79(4)(a) and (b) of the Family Law Act far outweigh the contributions of the wife made under those headings. Indeed, the husband’s contributions can be considered overwhelming.

Section 79(4) (c)

The wife suggests that she has made significant contributions under this heading. She says that she ran the household with little or no assistance from the husband because of his work ethic and his commitment to the accounting practice and his winery and vineyard interests. However, the parties lived in rented accommodation and they had no children of their own. Further, there was a house cleaner, an ironing person, and the parties ate out several times a week. In these circumstances the husband says, and I accept, that the wife has exaggerated her contributions in this regard. There is no doubt that she did do housework, but I find that in the latter years when the wife’s commitment to the marriage waned significantly, so did her attention to such things as the household duties. Indeed, given that the husband conceded that he did virtually none of the housework, I suspect that the husband is right when he said in cross-examination that almost no housework was done by the parties in the later years of cohabitation. However, the wife did create a vegetable patch, she did the weeding and planting in the garden, she did the cooking when the parties were home, and she did most of the shopping.
For the husband’s part he paid the rent, assisted with the shopping, pruned the roses, sprayed the fruit trees, and provided the funds for the employment of a house cleaner, an ironing person, and for the lawns to be cut.
In his final address the wife’s counsel submitted that the wife gave “substantial assistance to the husband in the provision of care and support for the husband’s two children by his former marriage in the time they spent at the home of the parties”. However, in her affidavit the wife acknowledged that these contributions were not significant, and that is quite apparent from the evidence. The wife assisted in the care of the two children when they came on contact, she furnished A’s bedroom, and she provided some support and assistance for A when A lived with her and the husband for approximately six months before running away.
Both parties though became distracted by accusing the other of them of not having a good relationship with the children and particularly with A. This is irrelevant to the issues that I have to determine and thus I have ignored these allegations.
Both counsel chose to identify the issue of the wife’s care for and support of the husband’s children as a relevant matter to be taken into account under Section 79(4)(c). However, that is not the law. This is a matter that should be taken into account if at all under Section 75(2)(o) of the Act (ROBB and ROBB (1995) FLC 92-555, BEIL and BEIL (2003) Fam CA 472, 18 June 2003, per Ellis, Finn and May JJ). Thus I will refer to this again when considering that sub-paragraph.

The husband submitted that wife’s contribution as a wife and homemaker over the last two years of cohabitation was minimal. He points to the relationship that the wife developed with her language teacher in late 1997 and throughout the first half of 1998, and that from the middle of 1998 it was as though the parties were living separated under the same roof. The wife denied that this was the case, but I do not believe her about her relationship with her language teacher, and it is clear on the evidence that the relationship of the parties deteriorated from the time of their overseas trip in mid-1998. I accept that the wife’s contributions over this period were minimal but I have already taken that into account in considering the specific categories of the wife’s contributions under this heading.
I find that the wife’s contributions pursuant to Section 79(4)(c) are greater than the husband’s, but in the overall assessment of the parties’ respective contributions they have minimal impact.

Post-separation contributions

The effect of the parties’ agreement to only present valuations of the husband’s interests in the accounting practice and in the winery and vineyard ventures as at the 30^th June 2002 is that it is not possible to take into account any contributions to those interests since then. I have referred to this already in the context of the wife’s claim to include in the asset pool money that the husband has contributed to the various entities and the increases in value of some elements of the assets involved, and the same reasons for refusing to do that apply here. Indeed, it would be inconsistent to take into account contributions that the husband has made since the 30^th June 2002 and not include in the asset pool the specific amounts involved. Of course, I can still take into account the husband’s contributions between the separation on the 30^th June 2002 and they are as follows:
121.1The husband contributed $378,000.00 to A Vineyards.
121.2In 2000, through the G T Family Trust, the husband obtained a wine producers license and registered the business name G T Wine Sales. He then purchased grapes, made bulk wine and sold it. The husband borrowed $300,000.00 from the Commonwealth Bank to fund this enterprise, but by the 30^th June 2002 he had acquired stock holdings of $126,714.00 over the Bank debt.
121.3In 2000 the husband invested in a wine industry venture known as G Vineyard. The T Superannuation Fund contributed $90,000.00 and the husband contributed $45,000.00 from his own earnings.
121.4In 2001 the husband and others commenced H Wines Pty Ltd. The husband’s initial contribution was $26,000.00.
121.5The husband contributed his labour and expertise to the development and maintenance of his winery and vineyard interests.
121.6The husband continued to work long hours in the accounting practice of T R increasing its profitability and the current account of the G T Family Trust.
An indication of the extent of the husband’s contributions to all of these interests is that according to Mr M his interests were valued at $1,870,000.00 at separation, yet by 30^th June 2002 they were valued at $2,826,000.00. This includes an increase in the net assets of the superannuation fund of $15,000.00.
The husband contributed $65,400.00 to his superannuation fund since the separation, and currently the agreed value is $114,897.00
Following separation the husband purchased the house property at Suburb W. The purchase price was $310,000.00 and the husband borrowed $255,000.00. That home now has an agreed value of $425,000.00 and the husband has reduced the mortgage by $55,000.00.
The husband paid off the credit card debt of $9,558.00 incurred by the wife in purchasing items of furniture and household effects for herself in the lead-up to the separation. In addition, he continued to make the lease payments on the wife’s motor vehicle including the residual payout at the conclusion of the lease. He also paid the registration and insurance costs until December 2001.
The husband covered the wife’s private medical insurance until the 6^th April 2001.
For the wife’s part there have been no relevant contributions save and except that she has remained employed resulting in her superannuation entitlement now having an agreed value of $18,233.00. She has of course established a business with Mr H but there is virtually no equity yet in that business. She has also spent money renovating the house property at Suburb B but she has no interest therein.

Conclusion on contributions

The wife’s counsel submitted that the contributions should be assessed at 80%/20% in the husband’s favour, and the husband’s counsel submitted that the division should be 97.5%/2.5% in the husband’s favour.
The husband has clearly made the greater financial and non-financial contributions, and although the wife has made the greater contributions as a homemaker that is only of marginal significance leaving the husband’s contributions overall at so much more than the wife’s that in my view they should be assessed at 87.5% to the husband and 12.5% to the wife.

Section 75(2) of the Family Law Act

I turn now as Section 79(4) (e) dictates to the individual matters to be taken into account pursuant to Section 75(2) of the Act. The sub-paragraphs that are relevant are (a), (b), (m) and (o).

(a)The age and state of health of each of the parties;

There is no issue about the wife’s health, but the husband says that he is not in good health and it will be necessary for him to reduce his workload. However, the husband produced no medical or other evidence to support these claims and thus I am not in a position to take it into account.
The husband is now aged 54 years and the wife is now aged 36 years. The husband says that the wife has a longer working life ahead of her than he does, and that this is a relevant factor to be taken into account. I agree. The husband is approaching the age when he can start to consider retirement, but the wife has many years before she will be in that position. However, it must not be forgotten that the husband has a higher income earning capacity than the wife and thus the difference in their ages may not be as important when comparing what they may each earn during the balance of their working lives.

(b)The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

The husband draws $15,000.00 per month from the accounting practice, but according to Exhibit H4 his taxable income in the 2002/2003 financial year was $319,666.00. There is no evidence of his taxable income in the 2003/2004 financial year, but there can be no doubt that he continues to enjoy a significant income from his practice and from his investments. Nor is there any evidence to indicate that that will not continue into the future. The husband says that he needs to slow down but that remains to be seen given the husband’s evidence that he intends to continue working, and, to repeat, there is no medical or other evidence to support this claim.
The wife earns approximately $65,000.00 per year as a marketing/sales manager at S Wines. She also has her motor vehicle expenses and mobile telephone costs paid.
There is no evidence to indicate that the wife will not be continuing that employment in the foreseeable future, but in any event she conceded in cross-examination that she has no difficulty in obtaining employment.
One factor that may affect her employment in the future is the success or otherwise of the business that she operates in partnership with Mr H, S Business. Currently Mr H works in this business but the wife’s evidence is that shortly it will provide an income of between $650.00 and $2,000.00 per week. Thus, it may be that the wife chooses to undertake more work in the business and not work full-time in outside employment. In any event, there is no doubt that the wife has a capacity for appropriate gainful employment.
On the basis of this comparison, it is quite clear that the husband has a greater income than the wife as well as a greater earning capacity, and these disparities need to be taken into account.
In relation to the property of the parties I have set out in paragraph 108 my findings as to their assets and liabilities. For the reasons that I have explained already, the value of the husband’s interests in the accounting practice and in the winery and vineyard ventures are as at the 30^th June 2002, and I have no evidence as to their current value. However, that does not limit my consideration of this issue given that the parties have agreed that the values that I do have should be used for the purposes of this case.
As a result of my findings on contributions the husband is entitled to a greater percentage of the net assets of the parties than the wife, and thus this is another disparity that needs to be taken into account.
Neither party has any financial resources.

(m)If either party is cohabiting with another person – the financial circumstances relating to the cohabitation;

The wife lives with Mr H. However, as I have already indicated, the wife has not presented any evidence of Mr H’s financial circumstances beyond those relating to his involvement in their partnership business. The wife says that she does not know what his financial position is, but the simple answer to that is to call him as a witness. The wife chose not to do this, and in the circumstance that I do not accept her evidence that she does not know about his financial position, I consider that I am justified in making the implication that Mr H was not called because his evidence would not have assisted the wife’s case (JONES v DUNKEL (1959) 101 CLR 298). However, this cannot be used to provide evidence that is not there, and thus I do not have sufficient evidence to take into account as completely as I would want the financial circumstances relating to the cohabitation of the wife and Mr H. What I can say though is that they appear to be comfortable financially, the wife works full-time and earns a relatively substantial income, they have a business that Mr H works in and which has the potential to provide a good income for both of them, they live in a house property at Suburb B which they intend to purchase for $400,000.00 and which they have already renovated, and the wife has a motor vehicle and furniture of her own together with net savings and a small shareholding.

(o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;

The wife’s care for and the support of the husband’s two children from his former marriage was raised by the wife as a contribution to be taken into account pursuant to Section 79(4)(c) of the Act. However, as I indicated in paragraph 118 above this is a matter that should be considered here.
I referred to what the wife says about this in paragraph 116 above and nothing has changed. In other words this is not a significant issue and indeed I have found that the wife exaggerated the importance of her involvement. It should be taken into account but it is of minimal effect.

Conclusion on Section 75(2) factors

The wife’s counsel submits that there should be an adjustment of 5% in the wife’s favour for the relevant Section 75(2) factors. The husband says that there should be no adjustment.
In my view there should be an adjustment of 5% as sought by the wife. There is a significant disparity between the parties’ income and earning capacities, and their property, and an adjustment of that size is certainly warranted. In money terms it represents $158,367.00, and that will provide real and not token weight to the disparities referred to (CLAUSON and CLAUSON (1995) FLC 92-595).

Section 79(4)(d), (f) and (g)

Next, I am obliged to consider the effects of my proposed orders upon the earning capacity of either party (Section 79(4)(d)); any other order made under the Act affecting a party to the marriage or a child of the marriage (Section 79(4)(f)); and any child support under the Child Support (Assessment) Act that a party to the marriage is to provide or has provided for a child of the marriage (Section 79(4)(g)).
In relation to the first matter the evidence does not indicate that the earning capacity of either party will be affected by the proposed orders.
In relation to the second and third matters there is nothing to be considered here.

Conclusion

The net assets of the parties should be divided 82.5%/17.5% in the husband’s favour.

Just and equitable

Pursuant to Section 79(2) of the Family Law Act the orders that I make must be “just and equitable”. To assess that I need to stand back and consider the practical effect of my proposed orders (WATERS and JUREK (1995) FLC 92-635; JEL and DDF (2001) FLC 93-075; PHILLIPS and PHILLIPS (2002) FLC 93-184).
The net asset pool comprises a monetary equivalent of $3,167,343.00. Thus, the effect of my decision is that the husband is entitled to net assets to the value of $2,613,058.00 and the wife is entitled to net assets to the value of $554,285.00.
The wife has or has had the benefit of net assets totalling $67,446.00 calculated as follows:
Assets
Savings  $     15,959.50
David Jones shares  $      2,760.00
Audi motor vehicle  $     30,000.00
Jewellery and art  $     12,000.00
Superannuation entitlement  $     18,233.00
Total  $     78,952.50
Liabilities
Credit card debts  $     11,506.35
NET ASSETS (to the nearest dollar)  $     67,446.00
The husband has or has had the benefit of net assets totalling $3,178,897.00 calculated as follows:
Assets
House property as Suburb W  $   425,000.00
An interest in the accounting practice T R
including the capital account  $   632,000.00
Vineyard and winery interests  $2,115,000.00
Proceeds of sale of BMW motor vehicle  $     13,000.00
Superannuation entitlement  $   114,897.00
TOTAL  $3,299,897.00
Liabilities
Mortgage to the Commonwealth Bank of Australia
registered on the title to the house property at Suburb W  $   200,000.00
NET ASSETS  $3,099,897.00
Thus, if the parties each retain the assets and liabilities referred to the husband will have to pay to the wife $486,839.00. However, as referred to in paragraph 100.14 above the wife must reimburse the husband the sum of $9,558.00 from that amount, and thus the payment to her becomes $477,281.00.
However, as referred to in paragraph 106 above if the husband sells assets to meet this payment then the wife must pay 17.5% of any capital gains tax or other taxation that is assessed as a result. This of course is limited to the sale of assets sufficient to meet the payment of $477,281.00. In other words if the husband sells more assets than are required for that purpose then the wife does not have to contribute to any taxation that may be assessed as a result of the sale or part of any sale that provides sale proceeds to the husband beyond the amount of $477,281.00.
The wife will then have cash of $477,281.00 less any amount that she is required to contribute to any taxation assessment to purchase the house property at Suburb B and/or to invest, she will retain her savings less her credit card debt, her David Jones shares, her Audi motor vehicle, her jewellery and art, and her superannuation entitlements.
For the husband’s part he will end up with his house property at Suburb W subject to a mortgage, his interest in the accounting firm T R including the capital account, and subject to the payment required to the wife he will still have winery and vineyard investments.
Having considered this result and re-visited the history of the relationship between the parties, their respective contributions and the relevant Section 65(2) factors, I am satisfied that my proposed orders are just and equitable.

Orders

In all the circumstances I propose to make the following orders:
159.1That on or before the 18^th day of February 2005 the husband pay to the wife the sum of $477,281.00.
159.2That in the event that any capital gains tax or other taxation is assessed against the husband, H Pty Ltd as Trustee of the G T Family Trust, or the G T Family Trust as a result of the sale of any asset to enable the husband to comply with paragraph 159.1 hereof, the wife do pay 17.5% of such assessment or assessments as relate to the amount referred to in paragraph 159.1, and the wife do indemnify and keep the husband indemnified against the payment of 17.5% of any such assessment or assessments.
159.3That the wife transfer and assign to the husband or the husband’s nominee or nominees any debit loan account she may have in the T Family Trust to the intent that the husband shall thereafter fully indemnify the wife and keep her indemnified against any such liability.
159.4The wife do retain as her sole property absolutely free of any claim, demand, interest, right or entitlement of the husband the following:
159.4.1her savings and investments;
159.4.2her David Jones shares;
159.4.3her Audi motor vehicle;
159.4.4her jewellery and art;
159.4.5her superannuation entitlement;
159.4.6all other items of personalty in her possession or control.
159.5Subject to compliance with paragraph 159.1 hereof the husband do retain as his sole property absolutely free of any claim, demand, interest, right or entitlement of the wife the following:
159.5.1his house property at Suburb W;
159.5.2his interest in the accounting practice of T R;
159.5.3his winery and vineyard interests;
159.5.4the proceeds of sale of his BMW motor vehicle;
159.5.5his superannuation entitlements;
159.5.6all other items of personalty in his possession or control.
159.6Each party do all such acts and things and sign all such documents as may be necessary to give effect to the terms of this order.
159.7Liberty to each party to apply as to consequential matters.
159.8That all applications be removed from the pending cases list.

I certify that the preceding
159 numbered paragraphs are
a true copy of the reasons herein of the
Honourable Justice Strickland.
The 16^th day of December 2004.

……………………………………….

Associate

[2004] FamCA 1160

16th December 2004