IABH & HRBH

FAMILY COURT OF AUSTRALIA

IABH & HRBH

[2008] FamCA 817

FAMILY LAW – RE-EXERCISE OF DISCRETION / NEW TRIAL – Full Court allowed an appeal and remitted the matter for rehearing – Trial Judge to be bound by Full Court determination that husband’s contribution up to 15 November 2004 be assessed at 70% - Trial Judge to only hear evidence as to updated value of assets, subsequent contributions and section 75(2) factors – whether potential future Capital Gains Tax ought to be included in the pool or as s 75(2) adjustment – how Capital Gains Tax liability should be calculated - whether determination of contributions ought to be global or asset by asset

CHILD SUPPORT – DEPARTURE APPLICATION – Parties agreed that there should be a departure – amount to be paid by husband disputed – additional contributions substantially agreed between parties

Family Law Act 1975 (Cth)
Evidence Act 1995 (Cth)
Child Support (Assessment) Act 1989 (Cth)

A v A [2006] FamCA 1190
IABH & HRBH (2006) FamCA 712
Cavanaugh v Thrum [2002] FamCA 196
G v G (2001) FamCA 1453

Harrison v Harrison (1996) FLC ¶92-682

IABH v HRBH [2006] FamCA 379
Joyce v Joyce (2006) FamCA 951
Rosati v Rosati (1998) FLC ¶92-804

APPLICANT:

Ms IABH

RESPONDENT:

MR HRBH

FILE NUMBER:

TV 6 of 2003

DATE DELIVERED:

8 October 2008

PLACE DELIVERED:

Canberra

JUDGMENT OF:

Faulks DCJ

HEARING DATE:

8-11 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Bartfeld QC

SOLICITOR FOR THE APPLICANT:

Mr Taussig QC

COUNSEL FOR THE RESPONDENT:

Mr Kirk SC
Ms Pagani

SOLICITOR FOR THE RESPONDENT:

Mr Keogh

Orders

Property

That within 30 days the Husband pay to the Wife a sum equivalent to 25% of the asset pool taking into account the monies received by the Wife pursuant to paragraph 15 of the Orders made by the Honourable Justice Buckley on 22 March 2005 and the property transferred to and/or retained by the Wife pursuant to paragraphs 16 and 17 of the said Orders (“the payment”).
That in default of the payment be the Husband in accordance with paragraph 1, the Husband sign all documents and do all such acts and things as are required to sell the real property in far north Queensland being the whole of the land more particularly described as Lot … on Building Unit Plan … in the County of …, Parish of … in the State of Queensland (“the Villa”) and upon the settlement of the sale of the Villa, the proceeds to be applied as follows:
(a)       Firstly, to pay the costs of and incidental to the sale;
(b)       Secondly, to discharge any mortgages registered on the title;
(c)       Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act 1975 and the Family Law Rules 2004 from the date of default until payment;
(d)       The balance (if any) to the Husband.
That in the event that the proceeds of sale of the Villa are insufficient to meet the payment by the Husband in accordance with paragraph 1 hereof, the Husband in his capacity as a Director of WB Pty Ltd sign all documents and do such all acts and things as are required to sell the real property at M Street in far-north Queensland being the whole of the land more particularly described as Lot … on Registered Plan … in the County of …, Parish of … in the State of Queensland (“[M property]”) and upon the settlement of the sale of M Street property, the proceeds be applied as follows:
(a)       Firstly, to pay the costs of and incidental to the sale;
(b)       Secondly, to discharge any mortgages registered on the title;
(c)Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act 1975 and the Family Law Rules2004 from the date of default until payment;
(d)       The balance (if any) to the Husband.
That in the event that the proceeds of sale of the Villa and M Street property are insufficient to meet the payment of the Husband in accordance with paragraph 1, the Husband in his capacity as a director of K Pty Ltd sign all documents and do all acts and things as are required to sell the real property at G Street being the whole of the land more particularly described as Lot … on Crown Plan … in the County of …, Parish of … in the State of Queensland (“[G Street shops]”) and upon the settlement of the sale of the G Street shops, the proceeds be applied as follows:
(a)       Firstly, to pay the costs of and incidental to the sale;
(b)       Secondly, to discharge any mortgages registered on the title;
(c)Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act 1975 and the Family Law Rules 2004 from the date of default until payment;
(d)       The balance (if any) to the Husband
That pursuant to Section 106A of the Family Law Act 1975, the Registrar or a Deputy Registrar of the Family Court of Australia at Cairns is hereby appointed to execute all deeds and documents in the name of the Husband and do all acts and things necessary to give validity and operation to these Orders.
That the Husband indemnify the Wife and keep her indemnified in relation to all past, present and future liabilities including:
(a)income tax, goods and services tax, fringe benefits tax, capital gains tax and any other tax and/or penalties howsoever incurred by the Wife as a result of her previous interest in, and/or her involvement in, any company and/or trust entity which is to be retained by the husband in accordance with any Orders made by this Honourable Court (including the Orders made by the Honourable Justice Buckley on 22 March 2005);
(b)any Guarantees signed by the Wife during the course of the marriage and cause the Wife to be discharged from any liability arising under the Guarantees;
(c)any liability for the debts of WB Pty Ltd, the BH Family Trust and/or K Pty Ltd (“the business entities”) including any debt or credit loan accounts; and
(d)any other liabilities which have arisen or are yet to arise as a result of the Wife’s previous involvement in the business entities.
That unless specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date.
(b)Money standing to the credit of the parties in any bank account is to be become the property of the person named as the owner of the bank account.
(c)Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other.
(d)All insurance policies shall become the sole property of the owner named thereon.
(e)Each party be liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

Child Support

That pursuant to Section 116 of the Child Support (Assessment) Act 1989, there be a departure from the Court Varied Assessment for child support for the period commencing 22 March 2005 with respect to the children, J born … November 1989 and E born … November 1993 (“the children”) and/or from any Administrative Assessment of child support with respect to the children which has been made for the period commencing 22 March 2005.
That the Husband pay to the Wife the sum of $300 per week per child for the child support of the children commencing as at 22 March 2005.
That within 30 days the Husband pay to the Wife a sum equivalent to the arrears of child support owed by the Husband to the Wife pursuant to paragraph 9 hereof for the period 22 March 2005 to the date of this Order (“arrears of child support”).
That in default of payment of any arrears of child support by the Husband in accordance with paragraph 10 hereof, the provisions for the sale of the Villa specified in paragraph 2 hereof be applied with interest calculated on any arrears of child support in accordance with the Family Law Act 1975 and the Family Law Rules 2004 from the dare of default until payment.
That the payments of child support made by the Husband to the Wife pursuant to paragraph 28 of the Order made by the Honourable Justice Buckley on 22 March 2005 be credited against any liability that the Husband may have pursuant to paragraphs 8 and 9 hereof for the period 22 March 2005 to the date of this Order.
That additionally the Husband pay to the Wife or as directed by the Wife for the child support of the children, the following:
(a)Private school fees for both children to the end of secondary school including tuition fees, capital levies, foundations fund contributions, school books, uniforms, computer rental, school camp and excursion participation fees and expenses;
(b)All sporting, tuition, and participation fees;
(c)All musical tuition and participation fees;
(d)All private tutoring for any tutor either agreed between the husband and wife or as recommended by their teachers;
(e)Internet at the existing level of connection;
(f)School bus fees.
All material produced subpoena will be returned to the person producing it (or destroyed at the option of the person producing it) by the Registry at Canberra at the conclusion of the Appeal period.
Any exhibits tendered in the proceedings will be returned to the person from whose custody the material came, or if tendered from subpoenaed material, to the producer of such material.
The matter is removed from the Pending Cases Inventory.

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

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: TV 6 of 2003

Ms IABH

Applicant

And

Mr HRBH

Respondent

REASONS FOR JUDGMENT

Introduction

This matter came on before me as a consequence of orders of the Full Court of the Family Court of Australia on 18 May 2006[1] and 4 August 2006.[2]
[1] IABH & HRBH [2006] FamCA 379
[2] IABH & HRBH [2006] FamCA 712, (2006) FLC ¶93-276
The Full Court had dealt with the matter on appeal from orders made by his Honour Justice Buckley (as he then was) at first instance on 22 May 2005.
There were a number of Grounds of Appeal which were upheld by the Full Court on behalf of the wife on 18 May 2006. These include, most relevantly for these proceedings, the following:
77.[t]he trial Judge’s finding that the “sale of the entities as an inevitable consequence of the Husband continuing to conduct his business in the manner in which he has done so for many years” …was not open to him given his failure to have any apparent regard to the evidence of the husband to which we have referred of his determination to refrain from selling any real property other than the [Far north Queensland] villa. The trial Judge failed to consider the impact of a sale of the [Far North Queensland] villa on the prospects of the husband being able to achieve his stated ambition of retaining the trust properties. Nor did the trial Judge consider the clear absence of need to liquidate all of the trust properties. Capital Gains Tax liability and selling expenses of the magnitude Mr [C] had calculated were thus not able to be found “probable”.
78.The issue of the likelihood or otherwise of Capital Gains Tax and selling expenses becoming a reality was live and substantial at trial… The quantum of the Capital Gains Tax and selling expenses relative to the net asset pool exclusive of them renders the issue significant. Regrettably, the trial Judge predicated his conclusion on a finding that the sale of the entities was “inevitable”, without explaining why that was so. The evidence to which we have referred did not establish the sale of these properties to have been “inevitable”. We are thus persuaded that this challenge has substance.
The orders of the Full Court relevant to these proceedings, made 4 August 2006, are as follows
1.That the appeal be allowed.
2.That the orders of the trial Judge be set aside.
3.That the proceedings be remitted for re-hearing before a single judge other than the original trial Judge provided that
a.the proceedings for settlement of property be limited to
i     further evidence with respect to valuation of assets and quantification of liabilities as at the date of the new trial.
ii     further evidence with respect to contributions made subsequent to 15 November 2004; and
iiifurther evidence with respect to s 75(2).
b.   the contribution based entitlements of the parties to the assets of the marriage as found by the original trial Judge at 15 November 2004 be accepted as 70 per cent to the husband and 30 per cent to the wife.
4.That there be no order for costs of the appeal as between the parties.
5.That the court grants to the appellant wife a costs certificate pursuant to the provisions s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant wife in respect of the costs incurred by the appellant wife in relation to the appeal.
6.That the court grants to the respondent husband a costs certificate pursuant to the provisions s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal.
The facts up to the date of the first hearing of this matter before his Honour Justice Buckley are set out in some detail both in his judgment and in the judgment of the Full Court and I do not propose to repeat them, particularly as the orders of the Full Court require that I adhere to his Honour’s determination of the contributions to the parties up to 15 November 2004. What has happened since that time I will deal with in the course of my consideration of the matters the subject of submission and evidence before me.
Throughout this judgment from time to time reference will be made to the parties as the husband and the wife. This is for convenience only and I do not wish to cause any offence to either party by doing so.
The wife sought orders as set out in her Proposed Orders which was annexed to her Outline of Argument. These are set out below:
Property
1.That within 30 days the Husband pay to the Wife a sum equivalent to 40% of the asset pool taking into account the monies received by the Wife pursuant to paragraph 15 of the Orders made by the Honourable Justice Buckley on 22 March 2005 and the property transferred to and/or retained by the Wife pursuant to paragraphs 16 and 17 of the said Orders (“the payment”).
2.That in default of the payment be the Husband in accordance with paragraph 1, the Husband sign all documents and do all such acts and things as are required to sell the real property at [the villa in Far north Queensland] being the whole of the land more particularly described as Lot […] on Building Unit Plan […] in the County of […], Parish of […] in the State of Queensland (“the Villa”) and upon the settlement of the sale of the Villa, the proceeds to be applied as follows:
(a)Firstly, to pay the costs of and incidental to the sale;
(b)Secondly, to discharge any mortgages registered on the title;
(c)Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act and the Family Law Rules from the date of default until payment;
(d)The balance (if any) to the Husband.
3.That in the event that the proceeds of sale of the Villa are insufficient to meet the payment by the Husband in accordance with paragraph 1 hereof, the Husband in his capacity as a Director of [WB] Pty Ltd sign all documents and do such all acts and things as are required to sell the real property at [M Street] being the whole of the land more particularly described as Lot […] on Registered Plan […] in the County of […], Parish of […] in the State of Queensland (“[M Street]”) and upon the settlement of the sale of [M Street], the proceeds be applied as follows:
(a)Firstly, to pay the costs of and incidental to the sale;
(b)Secondly, to discharge any mortgages registered on the title;
(c)Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act and the Family Law Rules from the date of default until payment;
(d) The balance (if any) to the Husband.
4.That in the event that the proceeds of sale of the Villa and [M Street] are insufficient to meet the payment of the Husband in accordance with paragraph 1, the Husband in his capacity as a director of [K] Pty Ltd sign all documents and do all acts and things as are required to sell the real property [at G Street] being the whole of the land more particularly described as Lot […] on Crown Plan […] in the County of […], Parish of […] in the State of Queensland (“[G Street property]”) and upon the settlement of the sale of the [G Street property], the proceeds be applied as follows:
(a)Firstly, to pay the costs of and incidental to the sale;
(b)Secondly, to discharge any mortgages registered on the title;
(c)Thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act and the Family Law Rules from the date of default until payment;
(d)The balance (if any) to the Husband
5.That pursuant to Section 106A of the Family Law Act 1975, the Registrar or a Deputy Registrar of the Family Court of Australia at Cairns is hereby appointed to execute all deeds and documents in the name of the Husband and do all acts and things necessary to give validity and operation to these Orders.
6.That the Husband indemnify the Wife and keep her indemnified in relation to all past, present and future liabilities including:
(a)income tax, goods and services tax, fringe benefits tax, capital gains tax and any other tax and/or penalties howsoever incurred by the Wife as a result of her previous interest in, and/or her involvement in, any company and/or trust entity which is to be retained by the husband in accordance with any Orders made by this Honourable Court (including the Orders made by the Honourable Justice Buckley on 22 March 2005);
(b)any Guarantees signed by the Wife during the course of the marriage and cause the Wife to be discharged from any liability arising under the Guarantees;
(c)any liability for the debts of [WB] Pty Ltd, the [BH] Family Trust and/or [K] Pty Ltd (“the business entities”) including any debt or credit loan accounts; and
(d)any other liabilities which have arisen or are yet to arise as a result of the Wife’s previous involvement in the business entities.
7.That unless specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date.
(b)Money standing to the credit of the parties in any bank account is to be become [sic] the property of the person named as the owner of the bank account.
(c)Each party hereby forgoes any claim they may have to any superannuation benefits belonging to or earned by the other.
(d)All insurance policies shall become the sole property of the owner named thereon.
(e)Each party be liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Child Support
8.That pursuant to Section 115 of the Child Support (Assessment) Act 1989, there be a departure from the Court Varied Assessment for child support for the period commencing 22 March 2005 with respect to the children, [J] born […] November 1989 AND [E] born […] November 1993 (“the children”) and/or from any Administrative Assessment of child support with respect to the children which has been made for the period commencing 22 March 2005.
9.That the Husband pay to the Wife the sum of $300 per week per child for the child support of the children commencing as at 22 March 2005.
10.That within 30 days the Husband pay to the Wife a sum equivalent to the arrears of child support owed by the Husband to the Wife pursuant to paragraph 9 hereof for the period 22 March 2005 to the date of this Order (“arrears of child support”).
11.That in default of payment of any arrears of child support by the Husband in accordance with paragraph 10 hereof, the provisions for the sale of the Villa specified in paragraph 2 hereof be applied with interest calculated on any arrears of child support in accordance with the Family Law Act and the Family Law Rules from the dare of default until payment.
12.That the payments of child support made by the Husband to the Wife pursuant to paragraph 28 of the Order made by the Honourable Justice Buckley on 22 March 2005 be credited against any liability that the Husband may have pursuant to paragraphs 8 and 9 hereof for the period 22 March 2005 to the date of this Order.
13.That additionally the Husband pay to the Wife or as directed by the Wife for the child support of the children, the following:
(a)Private school fees for both children to the end of secondary school including tuition fees, capital levies, foundations fund contributions, school books, uniforms, computer rental, school camp and excursion participation fees and expenses;
(b)All sporting, tuition, and participation fees;
(c)All musical tuition and participation fees;
(d)All private tutoring for any tutor either agreed between the husband and wife or as recommended by their teachers;
(e)Internet at the existing level of connection;
(f)School bus fees;
(g)Private health insurance premiums at the existing level of cover; and
(h)Non-rebateable or gap medical and ancillary health costs including hospital, medical, optical, dental, orthodontic, psychological and counselling costs.

The husband sought orders as set out in his Proposed Orders which was annexed to his Written Submission. These are set out below:
1.That within 30 days of the date of this Order the Husband pay the Wife the sum of three hundred thousand dollars $300,000.00 (“the payment”).
2.That in default of the payment by the Husband in accordance with paragraph 1, the Husband in his capacity as a Director of [WB] Pty Ltd sign all documents and do all such acts and things as are required to sell the real property at [M Street] being the whole of the land more particularly described as Lot […] on Registered Plan […] in the County of […], Parish of […] in the State of Queensland (“[M Street]”) and upon the settlement of the sale of [M Street], but subject to the provisions of clause 4 hereof, the proceeds be applied as follows:
(a)firstly, to pay the costs of and incidental to the sale;
(b)secondly, to discharge any mortgages registered on the title;
(c)thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act and the Family Law Rules from the date of default until payment; and
(d)The balance (if any) to the Husband.
3.That in the event that the proceeds of sale of [M Street] are insufficient to meet the payment of the Husband in accordance with paragraph 1, the Husband in his capacity as director of [K] Pty Ltd sign all documents and do all acts and things as are required to sell the real property [at G Street] being the whole of the land more particularly described as Lot […] on Crown Plan […] in the County of […], Parish of […] in the State of Queensland (“[G Street] Shops”) and upon the settlement of the sale of the [G Street] shops, but subject to the provisions in clause 4 hereof, the proceeds be applied as follows:
(a)firstly, to pay the costs of and incidental to the sale;
(b)secondly, to discharge any mortgages registered on the title;
(c)thirdly, to make the payment to the Wife together with interest calculated in accordance with the Family Law Act and the Family Law Rules from the date of default until payment; and
(d)The balance (if any) to the Husband.
4.In the event that any or all of the real property is sold in order to satisfy the payment to the wife pursuant to clause 1 hereof, then the payment to the wife shall be adjusted in the following manner:
i.In the event that the net sale price, after deduction of capital gains tax assessed at the time of sale, is greater than the valued ascribed to the respective properties, less any allowance made by the Trial Judge for Capital Gains Tax and Costs of Sale, the husband and the wife shall share in the surplus at such percentage as has been assessed as the respective distribution of the pool between the parties.
ii.In the event that the net sale price, after deduction of capital gains tax assessed at the time of sale, is less than the value ascribed to the respective properties, less any allowance made by the Trial Judge for Capital Gains Tax and Costs of Sale, the husband and the wife shall share in the deficiency at such percentage as has been assessed as the respective distribution of the pool between the parties.
5.That pursuant to Section 106A of the Family Law Act 1975, the Registrar or a Deputy Registrar of the Family Court of Australia at Cairns is hereby appointed to execute all deeds and documents in the name of the Husband and do all acts and things necessary to give validity and operation to these orders.
6.That the Husband indemnify the Wife and keep her indemnified in relation to all past, present and future liabilities, including:
(a)income tax, goods and services tax, fringe benefits tax, capital gains tax and any other tax and/or penalties howsoever incurred by the Wife as a result of her previous interest in, and/or her involvement in, any company and/or trust entity which is to be retained by the Husband in accordance with any Orders made by this Honourable Court (including the orders made by the Honourable Justice Buckley on 22 March 2005);
(b)any guarantees signed by the Wife during the course of the marriage and cause the Wife to be discharged from any liability arising under the guarantees;
(c)any liability for the debts of [WB] Pty Ltd, the [BH] Family Trust and/or [K] Pty Ltd (“the business entities”) including any debit or credit loan accounts; and
(d)any other liabilities which have arisen or are yet to arise as a result of the Wife’s previous involvement in the business entities.
7.In the event that the liquidator of [S] Pty Ltd successfully pursues the Insolvent Trading claim for $360,177 made by letter of demand to the husband dated 4th January 2006, then forthwith upon receipt of the sum ordered to be paid, the husband and wife shall make such payment in the percentages of the pool as are awarded to them respectively pursuant to these Orders, provided however, the that husband shall keep the wife informed, and provide her with all documents and correspondence relating to any proceedings relating to the demand, in a timely fashion.
8.That, unless otherwise specified in these orders, and except for the purposes of enforcing the payment of any money due under these or any subsequent orders –
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;
(b)money standing to the credit of the parties in any bank account is to become the property of the person named as the owner of the bank account;
(c)each party herby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(d)all insurance policies shall become the sole property of the owner named thereon; and
(e)each party be liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Child Support
9.That, pursuant to section 115 of the Child Support (Assessment) Act 1989, there be a departure from the court varied assessment for child support for the period commencing 22 March 2005 with respect to the children, [J] born […] November 1989 and [E] born […] November 1993 (“the children”) and/or from any Administrative Assessment of child support with respect to the children which has been made for the period commencing 22 March 2005.
10.That the Husband pay to the Wife the sum of $150.00 per week per child for the child support of the children commencing as at 22 March 2005.
11.That the payments of child support made by the Husband to the Wife pursuant to paragraph 28 of the Order made by the Honourable Justice Buckley on 22 March 2005 be credited against any liability that the Husband may have pursuant to paragraphs 8 and 9 hereof for the period 22 March 2005 to the date of this Order.
12.That, additionally, the Husband pay to the Wife or as directed by the Wife for the child support of the children, the following:
(a)private school fees for both children to the end of secondary school;
(b)all sporting tuition and participation fees;
(c)all musical tuition and participation fees;
(d)all private tutoring fees; and
(e)school bus fees.

Foreword

By the conclusion of the hearing the parties through their lawyers had reached substantial agreement about the identification of matters which might properly be included in the property pool. Some were asserted to be of no value because of the unlikelihood of their being able to be realised. I will deal with these and make findings about them in the course of my judgment.
A major issue of contention between the parties remained (as it had done during the course of the previous hearings) was whether (notional) Capital Gains Tax and expenses relating to the sale of properties should be deducted from the value of property before its division pursuant to Court orders. This was a matter which had exercised the trial Judge and had been the subject of some consideration (and decision) by the Full Court. However, some new evidence and submissions made in the light of the judgment of the Full Court were before me for consideration and determination.
Also in issue, as was foreshadowed by the Full Court, were what contributions the parties had made since 15 November 2004. (This was more significant because the value of the parties’ assets had substantially increased since that time.)
At the time of the original hearing the property pool was found to be worth $6,418,442 whereas at the time of the completion of the hearing before me the net assets of the parties were in excess of $12,000,000. (The increase in value of course also affected the amount of notional Capital Gains Tax sought to be included as a liability by the husband as well as the actual Capital Gains Tax incurred because one of the properties had been sold.)
His Honour Justice Buckley made a determination under s 75(2) of the Family Law Act 1975 (‘the Act’) at the time of the original trial. The Full Court left open for the trial Judge the adjustments to be made under that section. Their Honours,[3] after determining that the contribution entitlements of the parties should remain at 70 per cent to 30 per cent in favour of the husband up to 15 November 2004, stated as follows,
Whilst it might be thought that similar conclusions would apply to the s 75(2) adjustment then determined, the absence of possible practical benefit in so doing disinclines us to impose any restrictions with respect to s 75(2). The differing characters of contributions, which largely focus on the past, and s 75(2) factors, which focus more on the present and the future, support that conclusion.
[3] IABH & RHBH [2006] FamCA 712 at paragraph [26]
Also before me was the determination of a child support departure assessment. Although this matter had been before the trial Judge, and a matter about which he made determinations and orders, this matter was remitted to me by the Full Court and the parties’ circumstances since that time have changed. This is partly as a result of his Honour’s orders about property (which have been partially carried out) and also due to further developments which made the consideration of this matter again appropriate.
This matter was heard by me in May 2007. There has been a delay in delivery of judgment of some 16 months. For this delay, I sincerely apologise to the parties.
Given the lapse of time between hearing and judgment I foresaw the possibility of there being a change in circumstances of either or both of the parties. As such, I offered both parties the opportunity to make any further submissions to me if they thought it necessary.
My Associate communicated by telephone and email with both of the parties’ lawyers and indicated my willingness for either side to reopen (either by written submissions or a court appearance by phone or video link); to provide revised orders sought; and/or to provide a current child support assessment from which a departure order might be made. In regard to the latter, it was noted that the legislation had changed since the hearing and the eldest child had turned 18. My Associate also indicated to the parties that I did not require new material but wished them to have the opportunity.
In response, both parties confirmed that they did not wish to adduce any further material, but reserved the right to do so if the other party did so. As such, my Associate replied that since neither side wished to provide further material, I would proceed to deliver judgment as soon as possible.

The determination of matters for inclusion in the property and liabilities of the parties

The trial Judge previously found the parties’ assets and liabilities to be as follows:

Total	[K] Pty Ltd	[WB] Pty Ltd	[Husband]		[Wife]
$	$	$	$		$
ASSETS
Cash assets
Petty cash		311	311	-	-		-
German bank account		5,000	-	-	5,000		-
English bank account		3,000	-	-	3,000		-
Venezuelan bank account		3,470	-	-	-		3,470
Receivables
Rental debtors		42,295	2,340	39,955	-		-
Investments
[S] Pty Ltd		45,025	-	-	45,025		-
Less provision for diminution in value		(45,025)	-	-	(45,025)		-
[A] Pty Ltd		-	-	-	-		-
Inventory
[…] Duty Free		13,560	13,560	-	-		-
Intangibles
Goodwill – […] Duty Free		72,394	72,394	-	-		-
Less provision for diminution in value		(72,394)	(72,394)	-	-		-
Land and buildings
[G Street shops]		2,500,000	2,500,000	-	-		-
[BT property]		3,000,000	-	3,000,000	-		-
[M Street]		3,425,000	-	3,425,000	-		-
[K Street]		720,000	-	720,000	-		-
[The villa]		2,000,000	-	-	2,000,000		-
Property in Germany		80,000	-	-	80,000		-
Property in Venezuela		34,019	-	-	-		34,019
Motor vehicles
Mercedes 300E (1990)		18,000	-	18,000	-		-
Mercedes 300E (1989)		18,000	-	-	18,000		-
Rolls Royce Silver Shadow (1976)		30,000	-	-	30,000		-
Plant and equipment
Household contents		59,185	-	-	29,570		29,615
Jewellery		13,365	-	-	260		13,105
Office equipment		7,252	4,098	3,154	-		-
Matrimonial expenditures
Legal and other expenses paid from Westpac account		60,000	-	-	30,000		30,000
ANZ funds held to pay interest charges		35,000	-	-	17,500		17,500
ANZ borrowing costs to establish loan		5,000	-	-	2,500		2,500
Legal fees and expenses fund (ANZ)		360,000	-	-	180,000		180,000
TOTAL ASSETS				12,432,457	2,520,309	7,206,109	2,395,830		310,209
Total	[K] Pty Ltd	[WB] Pty Ltd		[Husband]	Wife
$	$	$		$	$
LIABILITIES
Bank overdrafts
PDDF business overdraft account […]		6,717	6,717	-		-	-
Westpac overdraft account […]		40,594	40,594	-		-	-
Westpac overdraft account […]		35,105	35,105	-		-	-
Westpac overdraft account […]		82,765	-	82,765		-	-
Westpac overdraft account […]		4,441	-	-		4,441	-
Westpac BCD […]		-	-	-		-	-
Westpac BDL-CP […]		58,415	-	-		29,208	29,207
Westpac VSD […]		32,132	-	-		16,066	16,066
Payables
Professional fees accrued
- Accounting		20,000	-	-		20,000	-
- Legal fees		-	-	-		-	-
Trade creditors
- […] Duty Free rent		30,205	30,205	-		-	-
- Land tax		56,267	5,499	50,768		-	-
- Local council rates		46,708	-	46,708		-	-
- Other		9,885	5,908	3,977		-	-
Superannuation payable		1,662	1,662	-		-	-
Unsecured loans		30,000	-	-		30,000	-
Bank loans
Westpac business development loan […]		110,394	110,394	-		-	-
Westpac business development loan […]		1,000,000	1,000,000	-		-	-
Westpac business development loan […]		650,000	-	650,000		-	-
Westpac business development loan […]		71,800	-	71,800		-	-
Westpac business development loan […]		176,687	-	176,687		-	-
Westpac business development loan […]		622,000	-	-		622,000	-
Westpac business development loan […]		191,473	-	-		191,473	-
ANZ		500,000	-	-		250,000	250,000
Other
[S] Pty Ltd guarantee		210,313	-	-		210,313	-
Tax liabilities
PAYG instalment 2004 plus interest		26,196	-	-		-	26,196
Income tax (2004 estimate)		69,827	14,711	40,530	14,586
ATO - GST, PAYGW, PAYGI and interest		40,085	-	40,085		-	-
TOTAL LIABILITIES				4,123,671	1,250,795	1,122,790		1,414,031	336,055
NET ASSETS				8,308,786	1,269,514	6,083,319		981,799	(25,846)
CONTINGENT LIABILITIES
Property selling expenses			282,750	80,000	202,750		-	-
Capital gains tax			1,607,594	297,600	1,126,474		91,760	91,760
1,890,344	377,600	1,329,224		91,760	91,760

Of these, the wife was to retain the money in the Venezuelan bank account ($3,470), the K Street property ($720,000), the property in Germany ($80,000) and Venezuela ($34,019), household contents ($29,615), jewellery ($13,105), Mercedes ($18,000) and a share of “matrimonial expenditures” ($230,000) and receive a cash payment.
I have appended to this judgment the (almost final) version of the wife’s modified list of assets handed up during the course of final addresses on 11 May 2007. It is Endnote One.E^{ndnote 1} I note that this document is not entirely accurate in regard to legal fees, as discussed at paragraph 37. I have taken account of the correct amount in my final calculations.
I have also included as Endnote TwoE^{ndnote 2}an extract of the report of the Single Expert in this matter, Mr C, a Chartered Accountant, who was retained, among other things, for the production of a combined list of assets and liabilities. His findings were accepted substantially by the parties but were the subject of challenge in other areas. I should caution as well, that it was discovered (for all practical purposes) on the first day of the hearing, that there was an error in Mr C’s calculations in that he had omitted to bring into account the sum of $1,000,000 which was part of the proceeds of the sale of the BT property.
I propose to deal with the matters in controversy first, reserving to the end of my considerations, my findings and determination and reasons for so doing about the Capital Gains Tax issue.

Overseas Bank Accounts

There were German ($3,041), English ($4,252) and Venezuelan ($24,816) bank accounts. The German and English accounts were in the husband’s name and in the latter case, in the wife’s name. The accounts totalled $32,109 which the wife claimed were inappropriate to include in the property pool as she believed that they were, effectively, irrecoverable. The evidence as to why this should be so was singularly inadequate and was largely contained in an affidavit of the wife’s. I determined by judgment in relation to an interlocutory application during the course of the hearing that an issue raised by the husband relating to a notice purported to be given under s 67 of the Evidence Act 1995 should be resolved in favour of the admission of the hearsay evidence “referred to” in the Notice given by the wife’s lawyers.[4] Notwithstanding the removal of that impediment to the evidence, many of the paragraphs of the affidavit remained either inadmissible or so vague as to be unreliable. I remain at the end satisfied that the wife believes (and I find and accept that she so believes) that the amounts were irrecoverable on both her part and the husband’s, but unsatisfied, as a matter of fact, that they are.
[4] I pointed out during the course of my short judgment about this matter that in my opinion the Notice complied with the provisions of s 67 of the Evidence Act 1995 because it complied with the Rules of the Family Court of Australia. I did comment however at that time that it seemed to me that the Rules were inadequate to the extent that they did not require a more precise identification of those parts of the affidavit which was annexed to the Notice for which the advantages of giving the notice under s 67 was required.
I propose therefore to include the three bank accounts referred to in the list of assets but to make an adjustment (although of relatively minor proportions) in favour of the wife under the provisions of s 75(2). The adjustment will recognise the possibility (perhaps even real possibility) that these “assets” may be worth significantly less than an equivalent amount of other assets.

S Pty Limited

The situation in relation to the husband’s liability under S Pty Ltd had advanced somewhat since it was before the first trial Judge. The husband in combination with two, and at one point, potentially, three other persons, agreed to provide funding by way of a guarantee for the development of a system of fencing. In short, the venture failed, the guarantee was called upon and the husband met his joint and several obligation to pay to the relevant bank the full amount of the guarantee. This was an amount in excess of $200,000. It seemed agreed that the husband would at least potentially be able to recover contribution for his payment with the guarantee from the other directors. There were two other guarantors although there is some possibility of a fourth guarantor. In fact the husband began proceedings against two of the other directors, by letter of demand with a draft Statement of Claim annexed, a matter of days before these proceedings came on before me. The lateness of this claim was the subject of some comment from Mr Bartfeld QC on behalf of the wife but its genuineness did not appear to be impugned otherwise.
As a result, in the wife’s modified list of assets a figure of $151,335 is included which mirrors the amount set out in Mr C’s list of assets and liabilities. What occupied a little time before me was the amount sought to be off-set against that asset (the amount recoverable from the other guarantors) as an “allowance for impairment” as it was termed by Mr C. This effectively was his adjustment based as he said on the evidence for the husband that a full recovery of the amount from the other guarantors was not likely.
The wife’s counsel seemed to accept that this was reasonable in relation to one of the guarantors (a gallery owner who is apparently in straightened financial circumstances). However, the other guarantor was conceded by the husband as having sufficient substance to meet his share of the contribution. The situation was somewhat complicated by the fact that person (from the material in Exhibit H3) claimed to be only a quarter guarantor not a third guarantor. This came from the (potential) inclusion in the guarantee liability of the fourth proposed guarantor. I did not have sufficient evidence before me to determine that issue even if it had been properly put before me as a matter pursuant to Part VIIIAA of the Act.
If I misunderstood Mr Bartfeld QC’s concession in this regard I would be prepared to find in any event on the evidence of the husband, both in his affidavit and orally that one-third of the amount paid by the husband would be recoverable. In other words the listing of this matter by Mr C was accurate and his “allowance for impairment” is appropriate.
Before I leave this area it should be noted that included in the list of assets by both Mr C and in Endnote One is the value of the investment in S Pty Limited off-set by a further “allowance for impairment” for the fact that, essentially, it is not recoverable. At the time of hearing, the company was in liquidation. The wife, notionally at least, accepts that the investment has no value. Perhaps more accurately, it does not matter because although she says it has no value and attributes no value to the allowance for impairment, the two cancel each other out having no net effect on the pool of assets.
There is a potential claim by the liquidator against S Pty Ltd for insolvent trading. The husband’s argument in relation to this matter is contained in paragraph 2.2(b) of the husband’s submissions. In my opinion, the uncertainty of such a claim and the fact that there has been no application to re-open the matter notwithstanding the time that has elapsed, leave me to conclude that I should remove any offset for such a claim from the property pool and in the circumstances, it does not appear to be appropriate to make an adjustment under s 75 (2) either.

Acquisitions since original judgment

There have been a number of developments in this area which probably require some attention. Most are uncontroversial to the extent that by the time of the conclusion of the hearing there was acceptance about how property had been acquired or disposed of and about the items that were to be included in the pool as a consequence. It is perhaps appropriate to add at this point that revaluations have occurred in relation to real estate and the substantial increases that had occurred in this area were also included in the schedules of Mr C and of the parties.

Sale of the BT Property

It will be necessary to consider this transaction in the course of my determination about the contributions of the parties since November 2004. The property was sold at a value of $2,000,000 more than it was originally valued at before the trial Judge. The disposition of the sale price is reflected in the lists of assets both in a reduction of liabilities and in the acquisition of some new pieces of property including Item 40 from the wife’s list[5], a luxury car at $349,000.
[5] Endnote One

Mercedes CLK 200K Motor Car

Although initially disputed it was agreed that this new acquisition should be included at a value of $60,000 but should have off-set the lease liability of $82,483 as appears on lines 36 and 61 of Endnote One.

Superannuation

The wife invested about $1,000,000 in superannuation, and that appears in the list of assets. This arose because the husband, pursuant to his Honour Justice Buckley’s orders, had paid the sum of $1,439,167.80 to the wife.

Liabilities

Initially the wife contested the inclusion as liabilities of legal and accounting fees paid by the parties. There is really no doubt that the accounting fees ought properly to be included and I include those. The legal fees for the wife are in a different category and should as she suggests not be included in the total.[6]
[6] See line 51 in the table at Endnote 1

Add Backs

One of the tragedies in this matter is that the parties have each expended in excess of $500,000 each in legal fees before this hearing came on. Line 71 on the wife’s list of assets records the husband had paid and indeed was agreed to have paid $587,672 in fees. Even in this “final version” of the list of assets, the wife had set out that she had paid $352,124.71. It was agreed that this was an error and that she had in fact previously paid a further $230,000 in other proceedings. This means that each of the parties agreed that they had expended more than $500,000 in legal fees and further agreed (appropriately) that these figures should be added back.
In relation to the fees and interest paid to Impact Capital, I accept the submission from the wife at paragraph 26(d). This will mean that the sum of $38, 697 is added back into the pool.
The husband’s counsel submitted at paragraph 2.4 that it is apparent from the fact that it is NOT included in the final list of assets and liabilities as found by me in this matter that there should be any add back as sought by the wife in respect to the money expended by the husband in relation to his family and his friend Ms K. The sum involved is not insignificant ($72,223) but in broad terms I accept the submissions made by the husband’s counsel in paragraph 2.4 of the submission made. It is appropriate that the expenditure was not frivolous or of a wasteful nature and in my opinion, it is appropriate in the exercising of my discretion if nothing else that this is not a matter which should be the subject of any add back in accordance with the recognised authorities referred to by Counsel but substantially summarized in Omacini v. Omacini[7].
[7] 2005 FLC 93-218

Trade Creditors and Tax

Initially there was a dispute about the items listed as provisional fees accrued for trade creditors in Mr C’s report. These were conceded in the final version of the wife’s list of assets and liabilities. This was appropriate.
Similarly the references for provision for tax under the heading “GST Payable 2007 Year to Date $63,665” and “ATO Running Balance Account $50,134” were conceded in the end and again, appropriately so.

Capital Gains Tax

Probably the most controversial matter before me related to how any Capital Gains Tax which may be incurred in relation to the properties in the future should be dealt with.
In accordance with what he said was the appropriate way of dealing with a matter under the current Australian Accounting Standards, Mr C included a sum for potential tax in relation to the remaining properties held by the husband together with provision for property selling expenses. These two amounts between them came to $2,012,380. These figures effectively represented the best estimate (and no contest was advanced as to the accuracy of the figures in this regard) of the Capital Gains Tax and the potential selling costs of the properties as at the date of the trial or thereabouts.
This figure does not represent what the tax or the cost will be. Almost inevitably it will be different.
The husband’s evidence was that he preferred to retain properties and saw their rental as being the major source of his income. He set out in his most recent affidavit[8] his history in buying, selling and managing properties and concluded that he estimated that he held on to properties for an average for about five years.
[8] Affidavit of the husband, filed 29 March 2007, paragraphs[62]-[72]
When tested in cross-examination about his intentions about the properties he indicated to Mr Bartfeld QC (on behalf of the wife) that, even if as a result of these proceedings he had to pay to the wife an additional $2,000,000, he would prefer to find some other way of paying it than the selling of any of his properties.
In these circumstances, in this case, it is clear that there is no imminent prospect of the sale of the properties. I do not propose to make an order that the properties be sold except as a default provision. The husband has demonstrated quite recently his ability to raise significant amounts of money. In this regard, it is appropriate for me to take account of what the husband himself says are his intentions and, for that matter, his capabilities.
Mr Kirk SC on behalf of the husband relied upon a number of authorities in this Court to which I will return in a moment (including the Full Court judgment in this matter). He submitted that it was almost certain that there would be some Capital Gains Tax paid at some point in the future. He further submitted that, in effect, the amount payable “today” as calculated would represent realistically the minimum amount that might be payable by the husband in the future.
The commercial properties have shown a propensity for significant capital growth and hence it is probable that there would be a larger capital gain if or when they were sold. That in turn would attract a larger amount of tax. He also pointed out that, unlike some cases in which the amounts might be significantly smaller, the rate of tax applicable to any capital gain was likely to be predictable because his client fell into the maximum tax bracket and accordingly one of the uncertainties associated with predicting what the tax might be in the future, was (he argued), eliminated.
I summarise my understanding of his argument. There is a history of the sale of properties (usually reluctantly) by the husband. He himself gives some evidence that five years might be the appropriate time to consider a sale. There is some evidence from the husband that he would like to have more manageable assets as part of the trust fund for his children and grandchildren. The husband’s income is unlikely to fall below maximum marginal tax rates in respect of any profit derived from the sale of the property. If there is a significant capital gain, there will be additional Capital Gains Tax payable but the increase in the value of the property is an acceptable compensation for that on the part of the husband. If for some reason the properties drop in value, the tax would be less but so would any potential gain. The husband would not be unfairly treated (and neither would the wife) if in those circumstances a greater allowance had been made than the tax ultimately proved to be.
On the other side it might be said that the husband is aged 81 and although his family has a history of some longevity, if he were to suffer an accident or simply to die from natural causes relatively soon, the property would pass to his trustees and whether or not his estate incurred any liability for tax, be it income, capital gains or otherwise, is not a relevant consideration for this Court in determining what would be the pool of property for division between the “parties to the marriage”.[9] Moreover the husband’s personal circumstances include whether or not he had incurred any capital losses which might be off-set against any capital gains either in the year of the gain or carried forward from previous years. These circumstances also include his income, whether or not the legislation relating to Capital Gains Tax alters, and whether the rate of Capital Gains Tax had altered. This means that it is impossible to predict precisely what amount might be payable by the husband. Further, there is no certainty that the husband would sell the property within five years or for that matter at any time given his evidence about the desirability of holding on to property.

[9] s 79 Family Law Act 1975

The relevant law about Capital Gains Tax

The leading case in this matter still remains Rosati v Rosati.[10] The paragraphs most usually quoted are as follows:
6.36 It 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. (my emphasis)
[10] (1998) FLC ¶92-804 at page 85,043
Paragraphs 1 and 2 of the abovementioned quotation establish the principle that if it is certain that an asset will be diminished in value by the effect of Capital Gains Tax then this is a factor:
1.properly to be taken into account in determining the division of property between the parties and,
2.if it is calculable, a proper matter for the reduction in the value of the item in the inventory of the assets of the parties.

An example in the present situation is that of the sale of the BT property. This will incur a liability for Capital Gains Tax acknowledged by the parties and this circumstance should properly be brought into account in diminishing the assets of the parties.
It might be noted that even if an estimate is made, on reasonable grounds, at the time of trial, that an asset if sold immediately will incur taxes of a certain figure, this, is at best, an estimate about what that tax payable on that asset will be. In the same way as mortgage payout figures vary from day to day or even possibly from hour to hour so too does the level of tax bearing in mind the sorts of variations referred to by their Honours in the Full Court in Joyce v Joyce.[11]
[11] (2006) FamCA 951 at paragraphs [35]-[38]
I mentioned relatively early in the proceedings that the fact that the tax may not be precisely calculable at this point did not necessarily mean it should not be taken into account as a liability in reducing the pool of assets. I suggested that in those limited circumstances the uncertainty was within “ordinary tolerances”.
However, once it is clear that the property will not be sold immediately, if it is also clear that there will be a Capital Gains Tax liability, the amount of such liability will be almost certainly incapable of calculation with precision. The variations referred to by their Honours in the Full Court in Joyce (supra) (and indeed in the Full Court in this matter) demonstrate that to include an amount for Capital Gains Tax as a liability of the parties in circumstances where there is no imminent sale is to engage in an exercise of guesswork. This would appear to be the underlying rationale of paragraph 3 of the general principles enunciated in Rosati (supra) above. If there is uncertainty about the liability, but it nevertheless exists, as a liability, it is appropriate to “take it into account” as one of the factors affecting the financial future of the party against whom the liability will be levied. How it is to be taken into account will vary from matter to matter and in some cases, the vagaries of the potential contingencies may indicate that it should not be taken into account at all, except perhaps in a nominal way.
This appears to be the thrust of the fourth paragraph of their Honours’ statement of principles in Rosati (supra). I confess that I find some difficulty with the proposition that it would be appropriate to take account of the Capital Gains Tax “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”. Perhaps what was meant by their Honours was that it would be inappropriate in most cases to take account of Capital Gains Tax at its present rate and to give that amount in effect full weight under s 75(2) (almost as if it were an adjustment of the property pool itself). This seems obvious. If it is a suggested (I do not believe it is and, if it were it would be obiter in any event) that there is some basis for discounting the rate by reference to the time before the property is sold then I have some difficulty with their Honours’ reasoning. That is important to some extent in the way in which Mr Kirk SC on behalf of the husband approached the issue in this case.
In G v G[12] their Honours may have been thought to have extended the principles in Rosati by saying that if property was acquired “as part of a business of acquiring, developing and reselling real property for profit” that the Court “should ordinarily take into account both the estimated realisation costs and the tax which will ultimately be paid on its sale”. Their Honours suggested that fell within the purview of the principles taken from paragraph 2 of the principles from Rosati (supra). However their Honours in IABH v HRBH [2008] FamCA 712 made it clear that G v G (supra) (which so far as I am able to see has not otherwise been followed on this point) should not be taken to have extended the principle in Rosati (supra).[13] The facts in G v G (supra) would not necessarily have caused their Honours to have to make the decision of principle referred to above and it would seem that their Honours were saying (as it is controvertibly true) that if it is clear that something is going to happen at some point in the future then that should be taken into account in doing justice and equity between the parties.
[12] (2001) FamCA 1453
[13] IABH v HRBH [2006] FamCA 379 at paragraph [76]
Mr Kirk SC with scrupulous fairness advanced the argument (paragraph 3.6 of his final submission) that the amount to be taken into account should be discounted before being deducted from the pool as a liability. This is because if in fact the tax were not payable for another five years, the husband would have the benefit of the money (set aside notionally) in which he would then be able to invest and make provision for tax.
In essence the argument is that if the husband had to pay out say $2,000,000 worth of tax in five years, if he invested (at the government bond rate) $1,500,000 that would produce the necessary amount. Therefore it would be appropriate to take that amount ($1,500,000) into account at present to compensate (in fairness and justice) for the husband’s “use of the money” until sale. I struggled to see the relevance of this submission. It was put to Mr C, the Single Expert, who looked somewhat startled at the suggestion. He said that it was necessary because of accounting standards to set aside the full value at the present time. He however also struggled to deal with the suggestions put to him by Mr Kirk SC that the diminished value to the buyer of the property was represented by the potential liability off-set by whatever might happen in the meantime. There are a number of matters which might properly be put in response to this. The first is that the Australian Accounting Standards are not necessarily relevant to or binding on proceedings under s 79 of the Act. The principles enunciated in Rosati (supra) examined above would suggest that it would be inappropriate to do exactly what the Australian Accounting Standards apparently require. The principles set out for division of property under the Act are different from those set out under the Australian Accounting Standards.
Further, Mr C’s expertise was not queried. However the “Ready Reckoner” he produced for the circumstances in this case which refers to the interest rate predicted for government bonds, suffers from the same uncertainty as does a general prediction about what tax might be payable. In addition, in this matter so far as I can determine, and from the evidence before me, the husband has not invested in government bonds at any time as part of his portfolio. Hence, even if there were some validity in the argument generally, the discount rate selected is not obviously relevant to him. In fact the logical extrapolation of his experiences since the first trial in this matter would suggest that he is likely to have a massive return on his investments prior to having to find the money to pay the Capital Gains Tax.
The fact that this argument was advanced demonstrates the uncertainties with the prediction of what a tax liability will be at some point in the future.
It seems to me also that Mr Kirk SC is on stronger ground in arguing that if one were to take account of the variables nominated by their Honours (admittedly only illustratively) in Joyce (supra), these certainties are reduced in the circumstances of the husband because of the amount of tax potentially involved, the relatively short period before it is suggested a sale might occur, and the fact that the husband already pays tax at the full marginal rate. In other words Mr Kirk SC argues that the amount of Capital Gains Tax payable by the husband almost certainly will exceed the present figure and that therefore the property “pregnant” with Capital Gains Tax must produce tax no less than the tax payable today.
Mr Bartfeld QC in reply to this submission suggests that the analogy with ‘pregnancy’ is flawed because while a child will be produced by a pregnancy, in this matter, particularly if the husband were to die either from natural causes or by accident before the sale of the properties, there would be no relevant factor to be taken into account at all because the pregnancy would not have produced the Capital Gains Tax child. Mr Kirk SC did not challenge Mr Bartfeld QC’s proposition that no Capital Gains Tax would be payable simply because the properties fell into the husband’s estate.
Inherent in the argument from Mr Bartfeld QC is that what the trustees of the husband’s testamentary trusts or for that matter what the trustees of his inter vivos trusts may do or what liability they may incur as trustees is irrelevant to my considerations after the death of the husband. So far as I am aware this has not previously been determined but it seems to me that it is right in principle.
Section 79 of the Family Law Act requires
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i)either or both of the parties to the marriage; or
(ii)the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution 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, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) 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, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

The Act requires that there be no order dividing or altering the interests of parties to property unless it is just and equitable to do so. Parties in this context would not include the potential beneficiaries under the husband’s Will as it currently exists. It would seem anomalous if the determinations of trustees (in this case unbridled by any directive discretion as is evidenced by the Will of the husband and his own oral evidence) must necessarily affect the husband’s intentions at the present time or what he would have done if he had survived. It is, it would appear, piling yet another uncertainty onto the already significant pile of uncertainties.
Accordingly, in this matter I decline to reduce the property pool for the so-called liability for Capital Gains Tax or for the property-selling expenses. I decline to do so either at the full rate as it was done in Mr C’s analysis or at the discounted rate proposed by Mr Kirk SC. However in my opinion it is appropriate as indeed the Full Court in this matter suggested,[14] that the Capital Gains Tax should be brought into account as a factor under s 75(2). This will enable the level of uncertainty to be adjusted in the more flexible environment for consideration of the future financial circumstances of each of the parties.
[14] IABH v HRBH [2006] FamCA 379 at paragraph [79]
In relation to costs and tax regarding the wind up of K Pty Ltd[15], for the reasons I have already indicated, it is inappropriate in my view to take into account the Capital Gains Tax associated with the sale of assets that may become subject to Capital Gains Tax. Accordingly, the notional adjustment in relation to the costs to wind up K Pty Ltd as shown in appendix A to the husband’s submission of $57, 251 (a discounted figure from what was then calculated to be the tax of $76,112) is not appropriate and for these purposes disallowed. I note that it does not appear in the list of assets and liabilities in this matter.
[15] Submission 3.7 by the husband

How is it to be taken into account

It would seem to be a fairly meaningless exercise to merely translate the potential liability into a factor under s 75(2) and then make an equivalent adjustment. It is the uncertainty of the amount that generates the need for it to be taken into account under s 75(2) rather than as a liability under s 79 in the division of property.
His Honour Justice O’Ryan in A v A[16], while expressing a concern that there should not be a flood of “formulaic” orders, adjusted the percentage that the wife would otherwise have received by 5 per cent. This was not directly referable to the amounts that might have been paid for Capital Gains Tax at the time of the hearing. It was suggested that it was inappropriate for judges to hide behind the uncertainties of s 75(2). They should make determinations that are open to the scrutiny of those who are affected by them.
[16] A v A [2006] FamCA 1190
Section 75(2) of its nature is not a section which allows a precise addition and subtraction of various percentages to arrive at a final figure. Indeed the Full Court has indicated that it would be inappropriate to do this.
In this particular case it seems to me that I should indicate my process of reasoning, not because I disagree with their Honours in Harrison v Harrison[17],but rather because of the size of the adjustment and accordingly the importance of those who are affected by my judgment to understand how I arrived at the determination I did.
[17] (1996) FLC ¶92-682
In round figures if the full present notional Capital Gains Tax and realisation costs were brought into account they would represent approximately 17.67 per cent of the property pool. This would suggest that it would be appropriate if that were the figure to be taken into account for the differential between the parties to be that figure or that the percentage distribution figure should be adjusted by about 9 per cent. If I were to adopt the approach suggested by Mr Kirk SC then the appropriate amount to be taken into account would be $1,500,000, which represents about 12 per cent of the pool or a 6 per cent adjustment on the husband’s share.
Any determination about the adjustments to be made under s 75(2) must to some extent be imprecise (if not arbitrary). Accordingly it would be reasonable in my opinion to say that the 8.5 per cent adjustment would be obviously too high for the reasons set out above and the 12 per cent or the 6 per cent adjustment would be arbitrary. This was the high point of the claim from the husband. Therefore at the highest end of the scale some figure less than 6 per cent may be appropriate. The figure less than 6 per cent should be determined by reference to the circumstances of this case including the factors I have analysed at some length above. In my opinion they suggest that I should make an adjustment in the husband’s favour as a factor under s 75(2) of 3.5 per cent or a 7 per cent differential. This would represent between the parties an adjustment of $910,000 in favour of the husband, which is of course less than the amount that would have to be paid if he sold the properties tomorrow, but may be more than a million dollars in his favour if in fact the properties were not sold during his lifetime.

Contributions

In a comment in an article on the Full Court decision in this matter Michael Kearney, of Counsel, said as follows:
Whether, ultimately, the further trial judge is able to maintain the distinction between matters relevant to “prior” contributions and the current pool and s 75(2) remains an open question. There is substantial potential for overlap in issues of fact which cross over such categories and similarly for the determination of issues across more than one category.
The fact is that the remittance for rehearing was subject to a condition that the trial Judge accept the determination of the original trial Judge that the contributions to November 2004 were to be on the basis of 70 per cent to the husband and 30 per cent to the wife as of to the date of hearing, being 15 November 2004.
Counsel for the wife suggested with, in my opinion, some force, that while the Full Court’s prescriptions impose some difficulties on the trial Judge, essentially the situation was little different from that applying in many property cases before the Court in which the parties announce at the beginning of the proceedings that there is agreement that contributions by the parties during the course of the marriage should be regarded as equal. This frequently leaves for determination the adjustment of contributions by reference to pre-marriage contributions and post-marriage contributions as well as (some times) contributions from external sources during the course of the marriage.

The possible different approaches

There would appear to be four different possible ways in which I could approach the question of contributions between the parties. These are:
1.To treat contributions to all of the property globally but to include as part of that consideration the fact that the contributions up to November 2004 are to be regarded as equal. In favour of adopting such an approach is the fact that a substantial part of the property has not changed since November 2004 except that it has increased in value. Moreover apart from such increases in value there have not been any substantial additions from external sources.
2.A second approach may be to simply treat the property pool as it was found to be in November 2004 as a starting point and to divide that in the ratio of 70 per cent to 30 per cent at least notionally, and then to examine the property pool as I have found it to be at this trial, and to deal with the increase and the changes globally but nevertheless not directly incorporating the earlier property pool. Against adopting this approach is the artificiality of separating the value of property at one point from the value of another and treating that difference in value as in some way as different property. In favour of this approach is that it enables a distinct examination of why the property pool may have increased by reference to the contributions of each of the parties.
3.I could approach the entire property pool as it presently is on an asset-by-asset basis and consider in relation to each item of property what the contributions might be found to be while maintaining the prescriptive 70 per cent to 30 per cent division for each item of property up to November 2004.
4.I could approach the property pool as it is today but in effect quarantining the property as it was in November 2004 and consider each of the items of property in the pool since 2004 and determine contributions in relation to each of the items.

Commentary

The advantage of dealing with the property either since November 2004 or as a whole on an asset-by-asset basis is to allow for the fact that since November 2004 some of the property has increased in value without there being any particular effort on anyone’s part. For example the G St shops, M Street, K Street and the villa properties have increased in value, but it has not been suggested by anyone that this has been caused by anything other than the inflationary effects of the local property market. At the same time the husband sold the BT property for significantly more than it was found to be worth at the time of the first hearing. If I were to approach the matter on an asset-by-asset basis the transaction involving the BT property might possibly be isolated and examined more effectively then if it were simply to be submerged in a global approach to the matter. Complicating that approach in relation to that property however is the fact that the husband’s supposed skills in relation to this transaction were those effectively of a real estate agent in negotiating a deal. It is not suggested that he developed the property or did anything to enhance the property other than to conduct negotiations with the buyer and to hold out for his best price.
In those circumstances it might be argued that the husband was entitled to something akin to a real estate agent’s commission as no agent was otherwise involved. I have no evidence about the value of such a commission.
However that is not the end of that matter because over the period since November 2004 the wife has continued to be the primary carer for the children and her contribution has continued since that time notwithstanding the pre-emptive division of property pursuant to his Honour Justice Buckley’s orders.
It may seem to be logical in many cases for parties who divide property either by court order or of their own volition before a court hearing thereafter to be able to keep and harvest the fruits of their labors. If one party were to take his or her share and simply put it in a low interest yielding bank deposit should that person be entitled to share in the other parties entrepreneurially engineered significantly preferable result?
A similar situation arose in the matter of Cavanaugh v Thrum, where their Honours stated,[18]
58.The High Court's decision in Norbis further illustrates the point that there are many ways open to a trial judge to reach an appropriate conclusion and that no one way is required. However the authorities do not create a basis for the assertion made by the trial Judge in this case that a line should be drawn at the point of separation to determine what property should be included in the pool. Contributions may clearly change after separation in that there is no longer necessarily a community of contribution between the parties. There may no longer be a carrying out by each of their contributions in their own sphere to the mutual benefit of the other.
59.In many cases, contribution continues from one party without assistance from the other. This contribution might take the form of caring for the children or the management and improvement of assets. Sometimes the contribution consists of the obtaining of a windfall gain such as a lottery win or gambling win or the receipt of an inheritance or gift. The fact that these events have occurred post-separation goes to the weight to be given to the contributions rather than to the exclusion altogether of the asset out of the pool and the reconstruction of an artificial pool of assets as at the date of separation.
60.In this case the parties have each received $100,000 and have each retained control over some of the assets to the exclusion of the other. Each has acquired a new asset at about or shortly after the time they separated. The husband's investment has borne fruit; the wife's investment has remained more static. In our view, these are matters that would normally go to issues of contribution to the asset pool as at the date of hearing and can be afforded appropriate weight at that time.
[18] [2002] FamCA 196 at paragraphs [58]-[60]
In that matter their Honours in the Full Court, in correcting me as trial Judge, pointed out that while it was open to the trial Judge to determine the contributions subsequent upon a pre-emptive division were differential and to make findings and to deal with the matter accordingly, it was not open to the trial Judge to regard the time of division as in some way drawing a line in the sand. The requirement of s 79 of the Act is for the trial Judge to divide the property of the parties and that means at the time of the trial. Hence that means that in this case because the mother’s contributions as a whole were continuing as home-maker and parent at least it would be inappropriate to simply ascribe to the husband the responsibility and credit for all of the additional profit from the BT property sale.
I should mention that in his submissions Mr Kirk SC for the husband argued that there was only a small amount of the wife’s entitlement invested by the husband (a percentage he calculated as “…a mere 3 per cent”). He therefore suggested[19] the staggering factor that of the $3,800,000[20] increase in the value of the pool, the husband was responsible for $3,500,000 or 92 per cent.
[19] Written Submissions on Behalf of the Husband at [4.2]
[20] This of course is not the figure as I have found it in these proceedings finally
He then submitted,[21]
In these circumstances, it is inconceivable the Wife can be entitled to a percentage (let alone 30 %) of the increase in the pool created by the Husband post-November 2004. It is for this reason we seek that Your Honour provide the Wife with a “dollar” figure overall.
[21] Written Submissions on Behalf of the Husband at [4.5]
He goes on to submit that this should be quantified in the sum of $300,000.[22]
[22] Written Submissions on Behalf of the Husband at [4.5]
He did suggest that in the alternative I could assess contributions to the property on an asset-by-asset basis.
If I were to undertake the exercise of determining contributions on an asset-by-asset basis this would still involve an element of artificiality. At the end of the determination of my calculations in relation to each of the items of property the total will then have to be aggregated and the final determination made. It is hard to imagine that such an exercise would achieve any more precision than the broader global approach would produce. The sum of inexact and imprecise parts is not necessarily preferable to or any more accurate than a broader calculation taking into account all of the relevant matters.
Moreover notwithstanding the strong submission of Mr Kirk SC, there can be little doubt that much of the increase in the value of property of the parties as a whole was brought about by increases in the value of the property as a result of movements in the market without any particular additional contribution from either of the parties. Hence it might reasonably be argued that contributions that were made prior to November 2004 in creating a pool of property which although altered in some respects is substantially similar to that which existed that time should be regarded as continuing and relevant. Although it may be a matter for determination, perhaps under the so-called fourth step of determining that orders were just and equitable, it seems inappropriate to simply allow that any capital gain must necessarily be to the benefit of the husband to the exclusion of the wife.
I therefore propose to determine contributions of the parties by reference to what has occurred since November 2004 and from a starting point with contributions to that point between the parties should be regarded as to 70 per cent to the husband and 30 per cent to the wife (in accordance with the directions of the Full Court) but to assess the contributions of the parties overall in a global way.

Factors bearing upon the determination of contributions

BT property

I have already made reference in part to the BT property situation. It would be reasonable in my opinion to allow some additional value for the contribution of the husband in his conducting of the property negotiations of the BT property sale. In some respects it would have been appropriate to have had some evidence about the value of real estate agent’s commissions because in many respects the husband’s efforts in this regard were akin to those of a real estate agent. Two per cent of the total property pool would be about $240,000 to $245,000. As a differential between the parties this would seem to be in the overall ballpark of an appropriate adjustment to make. This is in the light of the husband’s financial statement which indicates that his income on an annual basis is $47,000. The husband also admitted under cross-examination that he had access to the various trust’s incomes which were about $600,000 per year or $800,000 gross.[23] The differential I have suggested above would be a sum vastly in excess of what the husband would ordinarily have earned in a year and in my opinion would suggest that I should adjust (in a cumulative way) the percentages between the parties to reflect this by finding in relation to that property transaction and that contribution, the overall contribution should be adjusted to be 71 per cent to the husband and 29 per cent to the wife.[24]

[23] Cross-examination of husband, 29 May 2007 at 3.16pm

[24] Reflecting the 2 per cent differential I referred to above

Contributions in respect of the children

Counsel for the husband argued (with some justification) that the husband’s financial contributions to the children were such as to in some respects (he would argue substantial respects) reduce the value of contributions made by the mother as home-maker and parent. Moreover the husband asserted frequently that the children spent about 30 per cent of their time with him and although this figure was somewhat in dispute it is clear that they did spend reasonably substantial time with him.
However, notwithstanding that the wife in this case probably received a greater financial contribution and for that matter shared caring contribution from the husband than is the case in some matters, it does not diminish the fact that she has had on a continuing basis the primary care of the children and this should not be recognised in a dismissive or unsubstantial way.
In summary, while any adjustment in this regard must, to some extent, be arbitrary, it would be unjust and inequitable for me not to make some further adjustment in favour of the husband as a consequence of his involvement with the children. In this regard, I believe his contribution should be regarded as 73% and the wife’s 27%.

Credit

In submissions made on behalf of the wife[25] it was asserted that while it was not open to me to find that the husband was a liar, he frequently gave “non-responsive answers to questions by making a ‘speech’ on a subject under consideration”. The submission is well made and it is true that the husband was extremely careful in the way in which he gave his answers and again as submitted there is no doubt that he sought in his answers to “justify his own position”.[26] In the end however, nothing much turned on these matters because of the way in which the agreement was reached about most matters in the list of assets and liabilities and the determinations I have made which do not necessarily depend in most cases upon the credibility of the husband. To the extent that they do I have already taken that into account.

Section 75(2) Factors

[25] Paragraphs 5 and 6

[26] Paragraph 5

I turn now to each of the factors under s 75(2).
At the time of final submissions, the wife was aged 54 and the husband 80. It would be expected that the wife will live longer that the husband. There are no ongoing health issues that require my consideration.
I have considered the income, property and financial resources of the parties above. The wife received a sum of $2,567,376 as per the orders of Buckley J. After seeking financial advice, she invested that money into a term deposit account, an investment account and a main bills account. She also established a superannuation account and deposited $1,000,000 into that fund. These accounts have earned interest. The husband continues to be self-employed as an investor. The wife has not been in employment during the marriage and does not have recent work experience or skills to draw upon. Her previous employment in the fashion indusry is, she asserts, no longer open to her because of her age. She asserts that she would find the physical demands of waitressing or working in retail unreasonable. While I am not convinced that is so, it is clear that her capacity for employment is for much smaller financial reward than the husband’s.
I have addressed child-care above. The elder child, J, has now attained the age of 18. It is likely that the wife will continue to provide the majority of care of the children with significant contribution from the husband.
The husband has a greater capacity to provide for his own needs than the wife. Both the husband and wife support the children. The husband also supports grand-children and his friend Ms K. Whether he has a duty to do so is not clear. From his evidence, it seems to me that he considers that he has a responsibility to do so.
Neither of the parties receives government benefits.
During the marriage, the parties enjoyed a very high standard of living. The husband continues to enjoy a higher standard of living than the wife, although the wife’s standard of living is still comparatively high.
I was not urged by either party to make an adjustment on the basis of the potential for education, training or establishing a business.
I have above considered the position of potential creditors.
I have above considered the contributions of the parties. The wife’s role as homemaker has allowed the husband time and freedom to increase his property. The substantial increase in the property between the first trial and this judgment was not due to the wife’s contribution, rather, it was more causally related to market forces.
The marriage was of substantial duration. That marriage allowed the wife to work as the primary carer of the children and as homemaker. While this meant she did not earn an income, the duration of the marriage, it seems to me, has provided her with income rather than being a disadvantage requiring adjustment.
I have considered each of the party’s role as parent. The children are of an age where this factor does not influence my decision.
It is not submitted that either party is cohabiting with another person.
The terms of an order dividing the property is likely to provide the wife with substantial assets, more substantial than if the matter had concluded at first hearing.
The husband’s child support obligations are discussed below. They have been ongoing and substantial. They will not continue for a great deal longer. I take this into account as having relieved the wife of a substantial part of the financial responsibility of child care.
Capital Gains Tax liability has been considered above at paragraph 72 at I make an adjustment of 3.5% in the husband’s favour.
Account has been taken for the possibility that the value of the Venezuelan bank account might not be recoverable, as referred to in paragraph 25.
There is no binding financial agreement between the parties.
After consideration of these factors, an adjustment of 1.5% ought to be made in favour of the wife for s 75(2) factors, in particular for her smaller employment potential and homemaker contribution.
In concluding this part of my determination, contributions between the parties began at 70/30 in favour of the husband. An adjustment is made for the sale of the BT property, making the distribution 71/29. Consideration of the husband’s contribution to the children takes the distribution to 73/27. Further adjustment is made for capital gains tax, making the distribution 76.5/23.5. Finally, an adjustment in favour of the wife of 1.5% is made under s 75(2), brings the division to 75/25 in favour of the husband.

Just and Equitable

There are many uncertainties in this case. These include the cause of the increase in the property, the liability for Capital Gains Tax and the life expectancy of the husband. Overall, I consider that the substantial increase in the property will benefit both of the parties and outweigh the potential windfall or loss arising from the precise Capital Gains Tax liability.
Based on a 75/25 division of the assets, the husband would receive $9,245,627.03. The wife would receive $3,081,875.68. The wife previously received $2,567,376.80 as per Buckley J’s orders. A 75/25 division would mean that the wife would receive a further $514,498.88. I am satisfied that a division of 75/25 achieves a just and equitable result.

Child Support Departure Application

Both parties sought a child support departure under s 115 of the Child Support (Assessment) Act 1989 but for very different amounts. That section has been repealed and I will proceed to examine this issue under s 116.
Application for order under Division
(1)A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:
(a)      all of the following apply:
(i)the Registrar has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment;
(ii)      an objection to the refusal has been lodged;
(iii)     the Registrar has disallowed the objection; or
         (aa)     all of the following apply:
(i)a decision has been made in respect of the administrative assessment;
(ii)      an objection to the decision has been lodged;
(iii)in making a decision on the objection, the Registrar has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment; or
(ab)the SSAT has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment; or
(b)      both of the following apply:
(i)the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii)the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or
(c)in the case of a liable parent—the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).
Note 1:        For the orders that a court may make under this Division see section 118.
Note 2:With a court’s leave, a court may make an order under this Division in respect of a day that is more than 18 months earlier than the day on which the relevant application was made (see subsection 118(2B)). A person is taken to have applied under this section if leave is granted.
Note 3:A court may make an order under this Division if the court sets aside a child support agreement under section 136.
(2)An application may be made by the carer entitled to child support, or the liable parent, in relation to the child.
(3)Subject to section 145 (Registrar may intervene in proceedings), the parties to the application are the liable parent and the carer entitled to child support.
In this regard it is important to put the competing applications of the parties into context of the nature of the law that must be applied. In essence there is little difference between the parties about the broad outline of what is to be dealt with. The major difference between the parties relates to the amount to be paid per child per week (the mother seeks $300 per child per week and the husband seeks to pay $150 per child per week) and arrears. In some respects however, the question of arrears is identified but not in issue. Both the husband and the wife seek that whatever payment is to be made should commence on 22 March 2005. The question therefore about the payment of arrears is only the time by which any arrears should be made up not whether any such arrears should be paid.

The three stage process of assessment required under the Act is summarised in s 117(1)(b). It is necessary that I should find a ground for departure, that it would be just and equitable to the children, the carer and the liable parent to make an order for departure and that it would be otherwise proper to make the particular order under this division.
I note in this regard that I have jurisdiction to consider this application by reference to s 116 (1)(b).
Both parents seek that I make a Departure Order which, while it does not constitute a separate ground under s 117(2), reasonably equates to an acceptance by both parents that in accordance with s 117(2)(c) it would be unjust and inequitable for payment to be made at the level provided by the administrative assessment.
The means of the husband to meet the assessment are not in dispute.[27]
[27] See husband’s submissions paragraph 7.4 page 35.
In addition, both parties seek that additional payments for the children should be met by the husband. I see no significant difference between the additional payments sought although the wife seeks that in addition to those agreed by the husband that he pay private health insurance premiums and the gap between the amount returnable by the medical insurance company and the amount payable. In her affidavit filed 29 March 2007, the wife indicated that medical, dental, optical expenses, not including health insurance premiums, amounted to $16 per week. Little, if any, other evidence was directed to this issue and it is difficult, if not impossible, to make any determination about the quantum potentially which might be required by the wife.
During the course of cross-examination, the husband conceded (notwithstanding the most extensive cross examination of the wife by Counsel previously on the issue) that what the wife claimed in relation to expenses for the children was reasonable. I can only reasonably conclude from the earlier vigorous attempts to discredit the wife’s evidence on this point and the husband’s comparatively ready admission or concession later on, that upon reflection he accepted the expenses. It is notable that in the husband’s written submissions no attempt was made to rely upon cross-examination and no suggestion was made that the amount claimed by the wife was not reasonable in the circumstances.
Accordingly, the evidence itself and the way in which the parties approached the matter would suggest that I should accede to the wife’s application less the claims in respect to medical insurance and the gap between the rebate on medical insurance and the amount actually paid by the wife.
I have some confidence in rejecting these last two items because the amount in respect of each child is relatively substantial even though I accept the wife’s assertion as to the expenses properly outlaid by her in relation to the children. In coming to this conclusion I also take account of the involvement of the husband in the care of the children and the expenses he outlays on their behalf.
I record also my congratulations to the parties in this regard for reaching a common approach to the way in which the financial care for the children should be undertaken.
Because the parties themselves have in fact agreed that it would be just and equitable in relation to the children for payments to be made in the amounts that I have set out above, and I have no evidence to suggest it is not, it remains for me only to conclude that it would be just and equitable to make orders in those terms.
The matters I am to take into account in determining whether it would be proper to make an order as set out in s 117(5).
In relation to these matters I acknowledge that each of the parents has accepted responsibility for his or her duty as a parent to maintain the children. I note that the making of the order would not affect either the husband or the wife in relation to any income-tested pension allowance or benefit and would not have any effect on the rate of any-income tested pension allowance or benefit payable to either of them. In such circumstances, the making of the order is “otherwise proper”.

I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks

Associate:

Date: 8 October 2008

[i]Endnote 1

Assets	Total	K Pty Ltd	WB Pty Ltd	Husband	Wife	Accepted by Wife
Cash Assets
Petty Cash	$311.00	$311.00	$311.00
ANZ Business Account	$349,191.00	$18,982.00	$330,209.00	$349,191.00
ANZ Gold Access Account	$716.00	$716.00	$716.00
Bank of Qld Deposit Account	$141,069.00	$141,069.00	$141,069.00
Westpac 1 Statement Account	$1,472.00	$1,472.00	$1,472.00
Westpac max-I direct acc …	$25,640.00	$25,640.00	$25,640.00
Westpac max-I direct acc …	$162.00	$162.00	$162.00
German bank acc	$3,041.00	$3,041.00	$0.00
English bank acc	$4,252.00	$4,252.00	$0.00
Venezuelan bank acc	$24,816.00	$24,816.00	$0.00
Receivables
Rental Debtors	$264,245.00	$19,001.00	$245,244.00	$264,245.00
Allowance for Impairment	-$144,584.00	-$144,584.00	-$69,584.00
Deposits	$100.00	$100.00	$100.00
German property debt	$64,336.00	$64,336.00	$64,336.00
S Pty. Ltd (directors)	$151,335.00	$151,335.00	$151,335.00
Allowance for impairment	-$75,668.00	-$75,668.00	$0.00
Current Tax Assets	$0.00
Income tax refundable (2006 Ret)	$45,491.00	$45,491.00	$45,491.00
PAYG Instalments (2007 year)	$35,890.00	$12,516.00	$23,374.00	$35,890.00
Inventory
… Duty Free	$13,560.00	$13,560.00	$13,560.00
Investments
S Pty. Ltd	$45,025.00	$45,025.00	$0.00
Allowance for Impairment	-$45,025.00	-$45,025.00	$0.00
Superannuation	$1,219,403.00	$1,219,403.00	$1,219,403.00
Land and Buildings
G Street	$3,500,000.00	$3,500,000.00	$3,500,000.00
M Street	$5,100,000.00	$5,100,000.00	$5,100,000.00
K Street	$750,000.00	$750,000.00	$750,000.00
Villa	$1,950,000.00	$1,950,000.00	$1,950,000.00
Property in Venezuela	$28,816.00	$28,816.00	$28,816.00
Shed at …	$230,000.00	$230,000.00	$230,000.00
Motor Vehicles and Boats
Mercedes CLK 200K	$60,000.00	$60,000.00	$60,000.00
Mercedes 300 Sed (1989)	$4,250.00	$4,250.00	$4,250.00
Mercedes B200 Hatch	$35,000.00	$35,000.00	$35,000.00
Rolls Royce	$11,000.00	$11,000.00	$11,000.00
Luxury car	$349,000.00	$349,000.00	$349,000.00
Plant & Equipment
Household Contents	$51,618.00	$31,935.00	$19,683.00	$51,618.00
Jewellery	$16,845.00	$2,270.00	$14,575.00	$16,845.00
Sundry Plant & Equipment	$4,322.00	$2,839.00	$1,483.00	$4,322.00
Total Assets	$14,215,629.00	$3,567,209.00	$5,592,452.00	$2,730,996.00	$2,324,972.00	$14,334,188.00
LIABILITIES
Payables
Professional Fees Accrued
Accounting	$18,370.00	$13,200.00	$5,170.00	$0.00
Legal Fees	$30,375.00	$30,375.00	$0.00
Trade Creditors
Local Council Rates	$37,043.00	$18,043.00	$19,000.00	$37,043.00
ANZ Credit Card	$38,169.00	$9,622.00	$9,747.00	$18,800.00	$38,169.00
Westpac Credit Card	$9,415.00	$5,294.00	$4,121.00	$9,415.00
Westpac Credit Card #2	$47,357.00	$47,357.00	$47,357.00
Other	$38,333.00	$1,157.00	$35,215.00	$1,961.00	$38,333.00
Unsecured Loans	$2,000.00	$2,000.00	$2,000.00
Loans & Borrowings
ANZ Business Loan	$2,727,848.00	$1,129,848.00	$1,598,000.00	$2,727,848.00
Finance lease liabilities	$82,483.00	$82,483.00	$82,483.00
Current Tax Liabilities
Income Tax Payable (2006 Ret)	$10,455.00	$9,710.00	$745.00	$10,455.00
GST Payable (2007 YTD)	$63,665.00	$8,382.00	$55,283.00	$63,665.00
ATO Running Balance Acc	$50,134.00	$35,045.00	$62.00	$15,027.00	$50,134.00
TOTAL LIABILITIES	$3,155,647.00	$1,211,807.00	$1,799,790.00	$99,678.00	$44,372.00	$3,106,902.00
NET ASSETS	$11,059,982.00	$2,355,402.00	$3,792,662.00	$2,631,318.00	$2,280,600.00	$11,227,286.00
ADD BACKS
Legal Fees Paid (total)	$587,672.00	$352,124.71	$939,796.71
Investment Account ANZ (BT)	$1,004,033.00	$1,004,033.00
Interest and Charges Paid to Impact from BT	$38,697.00	$38,697.00
Less CGT BT property	-$1,112,310.00	-$1,112,310.00
Total Add backs	$870,216.71
Adjusted Pool	$12,097,502.71
Adjusted Pool	$12,097,502.71
Wife Gets	40.00%
Percentage of Adjusted Pool	$4,839,001.08
Wife's Core Assets
Bank of Qld Deposit Account	$141,069.00
Westpac 1 Statement Account	$1,472.00
Westpac max-I direct acc …	$25,640.00
Westpac max-I direct acc …	$162.00
Superannuation	$1,219,403.00
K Street	$750,000.00
Venezuelan Property	$28,816.00
Mercedes B200 Hatch	$35,000.00
Household Contents	$19,683.00
Jewellery	$14,575.00
Legal Fees Paid (total)	$352,124.71
German Debt	$64,336.00
Wife's Unsecured Loan	-$2,000.00
Westpac Credit Card	-$4,121.00
Other Liabilities	-$1,961.00
Income Tax Payable	-$745.00
Total Wife's Core Assets	$2,643,453.71	-$2,643,453.71
Payment to Wife	$2,195,547.37

[2008] FamCA 817

8 October 2008

Key Legal Topics

Areas of Law

Family Law

Tax Law

Legal Concepts

Appeal

Costs

Damages

Remedies