In the Marriage of Lenehan

[1987] FamCA 8

In the marriage of LENEHAN, G.H.R. and LENEHAN, J.I.

(1987) FLC ¶91-814

Other publishers' citations: (1987) 11 FamLR 615

In the Full Court of the Family Court at Brisbane.

Judgment delivered 30 April, 1987.

Before: Fogarty, Maxwell and Gun JJ.

Fogarty, Maxwell and Gun JJ.: By notice of appeal dated 18 July 1986 Janet Irving Lenehan has appealed against orders which were made by Mr Justice Lambert on 20 June 1986 after a trial before him on 3 to 6 February 1986. For the sake of convenience we will refer to the parties as ``husband'' and ``wife'' respectively although they have in fact been divorced for several years.

The proceeding before his Honour was an application by the wife under sec. 79 of the Family Law Act. The effect of his Honour's orders is to require the husband to pay to the wife the sum of $72,000 within two months. The orders went on to provide that in default of that payment the former matrimonial home registered in the name of the husband was to be sold and the proceeds divided as to $72,000 to the wife and the balance to the husband.

The appeal as conducted before us raised several individual issues which we will deal with separately. In those circumstances it is sufficient for present purposes to outline relatively briefly the facts as found by his Honour and then turn to the individual issues which were raised on behalf of the appellant.

The parties were married on 10 February 1963. They separated on 25 September 1982, although there had been a previous separation of about six months in the first half of 1980. The parties were divorced by this Court on 4 January 1984. There are four children born of the marriage namely S, born in 1962 and now aged 24, R, born in 1964 and now aged 22, G, born in October 1970 and now aged 16 years and D, born in July 1972 and now aged 14 years. After separation S remained living in the former matrimonial home with the husband until 1985 and R has remained living in that home throughout the period to the trial. Neither of those children is dependent on the parties. G and D divide their time between their parents. Both are attending private schools, G in grade 12 and D in grade 9 in 1986. At the time of the trial the husband was aged 54 and the wife 45.

At the time of marriage the husband was a pharmacist employed by his father. The wife was then employed in a secretarial position but ceased that employment approximately six months after the marriage due to the impending birth of their first child. She resumed permanent employment when she commenced nursing training in 1974. However during the intervening period to 1974 she engaged in periods of casual employment cleaning, sewing, typing and ironing.

At the time of marriage the husband owned a block of land at Taringa then valued at about $1,200 and a motor car. Both parties had some cash savings and personal possessions. They lived in rented accommodation until their first home was built on the husband's land in October 1963. That home was financed by a loan from a bank and approximately $2,000 by way of gift to the husband from his father. The home was sold in 1969, and the net proceeds of $21,000 were applied to the purchase of land at Pullenvale and the construction of the home which was to be the matrimonial home of the parties until separation. The title was registered in the sole name of the husband and a bank loan of approximately $14,000 was obtained to complete the construction of the home. In later years further moneys were borrowed and expended on improvements to the home and its surroundings.

In November 1977 the pharmacy business of the father was transferred to the husband by way of gift, its value on the gift return being stated as $16,357. That business was conducted on a property situated at Logan Road, Woolloongabba, which was also owned by the father and at the same time as the father transferred the pharmacy business he transferred to the husband two-thirds of his interest in the freehold.

Between 1974 and 1977 the wife was engaged in training as a nurse and during that period the husband performed extra pharmacy work to obtain additional income for the family. After completion of her training the wife was engaged in part-time employment as a nurse in a hospital or privately until August 1981. She then took up office work for a Dr R on a part-time basis and continued that occupation until the final separation in 1982. Since 1983 the wife has been living in a de facto relationship with Dr R.

In November 1977 a family trust was created by the husband and it acquired the freehold property at Logan Road in relation to both the husband's two-third interest and the father's one-third interest.

In November 1978 the husband acquired a second pharmacy business at leased premises at Stanley Street, Woolloongabba. He amalgamated the two pharmacy businesses and conducted the amalgamated business from the leased premises in Stanley Street and still so conducts that business.

The trust has continued to earn income from the Logan Road property and from July 1980 operated the non-pharmaceutical side of the husband's business. In April 1980 the trust acquired from the husband the ownership of the matrimonial home at Pullenvale.

It is unnecessary to analyse the detail of the trust since the trial proceeded on the basis that the financial positions of the husband and the trust should be treated as one. Accordingly it is not necessary to consider liabilities as between the husband and the trust. During the separation in 1980 the wife resigned as a director of the trustee company and her share was transferred to the husband's mother.

After setting out these basic facts his Honour in his judgment then dealt with an issue raised at the trial relating to the nature and quality of the roles performed by each of the parties within the marriage. His Honour's conclusion in relation to that matter, which was not the subject of any challenge before us, was in the following terms:

``Much of the evidence given by the parties related to the nature and quality of the roles performed by each within the marriage. I do not propose to canvas that evidence in detail. The husband worked long hours in his profession, first as an employee and later on his own account. The wife's contribution to the conduct of the husband's business was a very minor one. The wife was in the early years until she commenced her nursing training the primary nurturing, supervising and care giving parent, and she was mainly engaged on a full time basis in the domestic home care duties. Her return to the workforce, initially in training, meant that the husband was more closely and regularly involved in the children's care. The homemaking and parenting duties were shared more between the parents when the wife returned to share the role of financial provider with the husband. Within their exclusive and shared roles I am satisfied completely that each devoted themselves entirely to the provision of the needs of their household throughout their marriage. Neither misdirected their time, energy or resources to personal advantage.''

The principal assets of the parties at the time of the trial were:

1. The former matrimonial home at Pullenvale, its value being one of the matters in controversy on this appeal.
2. The property at Logan Road — $60,250.
3. Shares of the husband — $18,345.
4. Plant, stock, equipment and goodwill at the husband's pharmacy business, also a matter of controversy on this appeal.

There were other assets which can at least broadly be disregarded for the purposes of dealing with this appeal. There were several vehicles of small value in the possession of each of the parties. The husband retained the majority of the furniture in the former matrimonial home (valued at about $5,600) but on the other hand the wife had some furniture and her jewellery. Trade debtors and trade creditors of the husband's business at the time of the trial almost equally cancelled each other out and whilst the husband had cash in bank deposits at trial of approximately $18,000 he had overdraft obligations of approximately $10,000. The shares referred to above were a gift from the husband's mother shortly prior to separation, they originally having been owned by the husband's father who died in 1981. The liabilities of the husband at the trial (ignoring trade creditors and his overdraft) were —

Bank Loans           $34,060
     Commercial Bill      $10,000

In addition it was part of the husband's case that the husband or the trust was indebted to the husband's mother in an amount of $26,906. His Honour took that directly into account as a liability. That was a matter of challenge on this appeal.

The above assets were all under the control or ownership of the husband. His Honour concluded that the wife had no assets other than a motor car, furniture and a small amount of savings, and she had bank debts of approximately $8,000. No challenge was made to those findings.

The present financial circumstances of the parties and their future prospects can be briefly referred to. His Honour analysed that in some detail but concluded (Appeal Book p. 24):

``In all of those circumstances there does not appear to me to be any substantial basis in justice and equity for alteration of the interests of the parties in property by reason of the factors relevant to my determination pursuant to sec. 75(2) of the Act.''

No challenge was made to that. It might be said for the sake of completeness that the husband continues to obtain significant income from his pharmacy business whilst the wife lives in a de facto relationship with Dr R, a surgeon, and is employed part-time as his secretary for which she receives approximately $300 per week.

His Honour concluded that the value of the matrimonial home was $150,000, and in relation to the pharmacy business the net tangible assets were $19,551 (wrongly referred to at p. 19 of the Appeal Book as $15,991) and the goodwill $6,603 (wrongly referred to as $10,163 on the same page), making a total of $26,154. Those conclusions were the subject of challenge before us.

His Honour's ultimate conclusion was that he should divide the net assets as he found them to be in the percentages of 65% to the husband and 35% to the wife and that conclusion was also the subject of challenge before us.

It is therefore convenient to turn to the individual issues raised on this appeal. As argued before us there were five separate issues namely:

1. The value of the former matrimonial home at Pullenvale.
2. The value of the pharmacy business.
3. The debt owed by the husband to his mother.
4. Expenditure by the husband on the support of the children of the marriage since separation.
5. His Honour's exercise of discretion under sec. 79.

1. VALUE OF THE MATRIMONIAL HOME AT PULLENVALE

Two valuers gave evidence on this issue. Mr C for the husband, reached a valuation of $144,000 being $70,000 for the land and $74,000 for improvements. Mr Q, for the wife, reached a valuation of $165,000, being $77,500 for the land and $87,500 for the improvements. Mr Q used the summation method as his basic method with a check reference to other sales of comparable land in the locality. Mr C used comparable sales as his basic method with a cross check by a summation method. His Honour after referring to that and to some other differences in their approaches said (Appeal Book p. 15):

``There are some features of both valuations which demonstrate the reasonable range of probability of error in estimating the current market value of development of this type in a locality with a range of individualistic home construction and design, in the absence of comparable sales of unimproved land and the opportunity of close inspection of the improvements on comparable sites subject to recent sale.

On a careful consideration overall I am unable to come to a clear conclusion that one estimate more probably represents the current market value than the other. I tend to accept Mr Q's measurements having regard to the sketch plan exhibited. That would tend to reduce Mr C's valuation. In the circumstances I propose to adopt a value of $150,000 for the Pullenvale home.''

His Honour did not indicate the extent by which he reduced Mr C's valuation but having regard to the difference in measurement (249 square metres) the reduction would have been to approximately $135,000, so that the figure accepted by his Honour ($150,000) was midway between the two valuations as so adjusted.

It was submitted by counsel for the appellant, that his Honour was not entitled to approach the matter in that way; that is, he was not entitled to take a midway figure between the two valuations but was required to determine the issue on the evidence before him.

This problem arose in a more acute way in this case for two reasons. The first was that neither valuer was invited to give or gave a range of valuations as distinct from a specific valuation. Secondly the case was conducted upon the basis that the husband should retain the home (in which he was living with some of the children) and the wife should receive a cash amount representing her entitlement to it. The present problem may not have been important if the orders had directed a sale of the property and a division of the proceeds between them on a percentage basis, it being clear what was the range of possible values.

Counsel for the respondent submitted that in reality the two valuations constituted a range within which the trial Judge was entitled to select a figure and his Honour had approached the issue in that way.

It appears to us, however, that counsel for the appellant is correct and that the approach of his Honour was in error. It was not suggested that the evidence before his Honour was unsatisfactory or incompetent; the problem was that his Honour was faced with a determination of an issue which may arise in many different ways. A trial Judge, as part of his ultimate responsibility under sec. 79 or otherwise, is normally required to determine a number of issues. Some of those issues may properly attract the evidence of expert witnesses. In appropriate circumstances their opinions are admissible to assist in the determination of such an issue. It is the responsibility of the trial Judge to take into account the opinions of such witnesses; however the ultimate duty of the Judge is to determine the issue on the whole of the material before him including such opinions. The expert evidence is called to enable the Judge to form his own independent judgment on the matter by the application of the appropriate principles.

In a case such as this that responsibility is not performed by simply selecting a mean or average between the rival opinions of the experts. Expert evidence on an issue of the value of real estate is but a particular example of this problem, rendered in many cases more acute because of the circumstance that the witnesses, as part of their expertise, give evidence upon that very issue, namely the value to be ascribed to the particular item of property; but the duty of the trial Judge remains the same.

It appears to us that the views of Dixon C.J. and Kitto J. in Commonwealth v. Milledge (1953) 90 C.L.R. 157 at p. 160 et seq. are apposite. In that case, which was a compulsory acquisition case, six valuers gave evidence as to the value of the relevant land, each valuation being different.

The trial Judge's approach to that and the criticisms of it by the members of the High Court are summarised in the following passage at pp. 160-161:

``The learned judge formed a confident opinion that all six of these valuers were men of experience and integrity, and he drew no distinction amongst them in regard to soundness of judgment or otherwise. Since they differed so widely, not only in result but in approach and in choice of material, the task presented to a judge to whom they all seemed equally reliable was one which could not be satisfactorily performed in any other way than by making a critical selection of the most helpful facts from the mass of information provided by the evidence, and applying correct principles in the light of the selected material. Unfortunately it does not appear from the judgment which his Honour delivered that he dealt with the matter in this way. He did not make any choice amongst the proved sales of other lands for the purpose of finding a basis for any reasoning of his own. Indeed he expressed the view, although he does not seem to have acted upon it, that the true basis for computation is not that to be found in one comparable sale, but in the average of a number, the larger the number the more acceptable the result. `Such a statistical average', he added, `will tend to eliminate the effect of the individual peculiarities (if any) of those in the transaction'. We do not find it possible to give countenance to this view. Perhaps it would be safer to work from an average of several prices than from one price if the sales were substantially contemporaneous sales of parcels of land which were identical in all material respects, but it must be rarely, if ever, that a process of averaging sale prices can be anything but fallacious.

What his Honour appears to have done is to put aside the evidence of sales — he said he could not pick a sale or sales that satisfied him as closely comparable — and to take, as a figure from which to work, the average of the valuations of the six expert witnesses.''

Their Honours then proceeded to reject this approach saying:

``We think that a valuation made on this basis ought not to be sustained. Even if all the witnesses had used the same material as one another, and had approached the problem in the same way, the average of the values they respectively reached would most likely be a figure which each of them would consider to be wrong. But what is worse is that it would be a figure not arrived at by the application by the court of the established principles of valuation''
(p. 161).

Their Honours went on to reiterate the correct approach which must be applied in relation to a valuation issue, namely:

``by a commonsense endeavour, after consideration of all the material before the court, to fix a sum satisfactory to the mind of the court as representing the value contained in the land...''
(p. 162).

Their Honours went on to say:

``The problem was not to eliminate the idiosyncrasies of the individual opinions; it was to form an estimate which really satisfied his Honour's mind as being the value of the property to the plaintiff on the material date''
(p. 162).

See also as an example of this approach Brewarrana Pty. Ltd. v. Commissioner of Highways (No. 2) (1973) 6 S.A.S.R. 541 and the cases referred to in each of the above cases.

We conclude that his Honour was in error in his approach to this issue. Mr B for the wife submitted that in those circumstances this Court should determine that issue for itself, there being no issue of credibility or any aspect arising from observing either of the two witnesses in Court which was relevant to a determination of that issue. On the other hand counsel for the respondent submitted that if his Honour's approach was found to be wrong this Court should order a retrial of that issue.

Neither party submitted that the issue should be determined by ordering a sale of the property (which would demonstrate its real value beyond controversy) and a distribution of the proceeds either on the percentages arrived at by the trial Judge or otherwise.

Having regard to our conclusions on other issues raised on this appeal, difficulties may arise if we were to make orders remitting that single issue for determination by the trial Judge as distinct from remitting to the trial Judge the exercise of the power under sec. 79 subject to the directions of this Court.

However we need not in this case analyse any such difficulties because an examination of the evidence satisfies us that it is open to us and proper for us to determine that issue for ourselves. We agree with counsel for the appellant that it does not appear that any issue of credibility or any advantage in assessing the evidence of the two witnesses arose from observations of them in the witness box. His Honour did not suggest this in his judgment and before us counsel for the respondent did not make any submission to that effect. Consequently the exercise for us is to apply the appropriate principles of valuation to the evidence at the trial. In that exercise we are in much the same position as the trial Judge was; we consider that there would be little advantage in remitting that issue for further consideration but disadvantages in doing so involving additional delay and expense.

The trial Judge described the different approaches of the two valuers in these terms:

``Mr Q used the summation method as his basic method with reference to the sales of comparable land in the locality. Mr C used comparable sales in the locality with a cross check by the summation method.''

We agree with counsel for the appellant's submission that, having regard to the transcript at p. 173, it could not properly be said that Mr C used a cross check by the summation method at all. It appears that what he did was to use the summation method to get the value of the improvements and subtracted that from the total value of $144,000 which he had already fixed and treated the difference as being the value of the land. The summation method is a method of valuation by which:

(a) the value of the improvements is arrived at,
(b) the value of the land as vacant land is arrived at (generally by reference to comparable sales),

and by the combination or summation of those two the valuer reaches a total value for the property in question.

We consider on balance that the approach adopted by Mr Q was the more satisfactory one and that we should accept his evidence of the value of the land. Our reasons for that can be summarised as follows:

Mr C made what his Honour accepted and what appears to have been on the evidence an error in the calculation of the relevant area. More significantly Mr C did not consider that that error had any effect upon the value at which he arrived, although the difference was approximately 249 square metres. The trial Judge obviously regarded this as important because it led him to reduce the C valuation probably to a figure of $135,000.

On the other hand it must be said that Mr Q's valuation was a very detailed one. It was accompanied by a careful and accurate sketch plan. He valued the residence by considering three different types of construction, namely brick veneer for one section, cavity brick for a second section, and then the third or patio section, and depreciating that figure by 10% to take into account the age of the building (14 or 15 years). In addition he gave individual consideration to other improvements on the property such as the car port, inground pool, feature fireplace, tiles and carpet, sewerage connection and depreciated that figure by reference to repairs and painting which would be required to make the house attractive for sale.

We consider that there is substance in counsel for the appellant's submission that at least by comparison Mr C's valuation was done rather casually. In relation to the land he arrived at a value of $70,000 based as follows (transcript p. 123):

``That was just basically my [sic], once again, without any specific reference to any particular sales, it was based on my experience of properties in the area and in relation to my overall apportionment.''

In relation to the value of the dwelling he applied a uniform brick veneer value (excluding the patio) apparently not appreciating that a portion of it was cavity brick in respect of which there was justification for concluding that a different value might apply. Finally he did not appear to give the same individual care or consideration to individual aspects of the property which would have influenced its probable value in the market place.

Mr C seemed to have placed his major reliance on comparable sales although his inspection of most of the properties was superficial. Mr Q used the summation method as his basic method, the reason being that the houses in the area were highly individualistic properties and it was difficult to draw any satisfactory comparisons. His Honour seems to have accepted that view because he said: ``the individualistic development of comparable land in the locality introduces an element of speculation unless the improvements are available for inspection'', and in a later part of his judgment referred to it being ``a locality with a range of individualistic home construction and design''.

Applying our minds to the material before us on this issue in order to form a proper estimate of the value of the property at the relevant date we conclude that a proper valuation is $165,000.

2. VALUE OF HUSBAND'S PHARMACY BUSINESS

The value of the husband's pharmacy business was a matter in issue before the trial Judge. It was contended before us by the appellant that his Honour was in error in reaching his conclusion as to the value of that business and that the value was greater than the figure arrived at by his Honour.

The evidence consisted of that of the husband who gave evidence about pharmacy businesses in general and particular aspects of his business. His Honour accepted the substance of that evidence and no challenge was made about that. The more significant matter related to the evidence of two experts who gave opinion evidence as to the value to be ascribed to the business. Both of these witnesses adopted the approach of capitalisation of future maintainable net earnings. Neither used any other method. His Honour accepted that approach and no criticism was made of that before us: See generally McCathie & Ors v. F.C. of T. (1944) 69 C.L.R. 1 at pp. 10-11; Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Ltd. & Ors (1947) 74 C.L.R. 358 at pp. 361-362; Eastaway & Ors v. Commonwealth (1950) 84 C.L.R. 329 at pp. 340-341.

Under this method, instead of arriving at a value for goodwill and then adding the value of the tangible assets to make up the total value of the business the reverse procedure is adopted, namely the value of the business as a whole is calculated and the value to be assigned to goodwill is determined by deducting the value of the net tangible assets.

A chartered accountant gave evidence for the husband. His evidence produced a valuation of $15,991 being $3,564 below his valuation of the net worth of the tangible assets. A pharmacy consultant and broker gave evidence on behalf of the wife. His evidence produced a valuation of $59,663, being $34,663 above his valuation of the net worth of the tangible assets ($25,000). The trial Judge did not wholly accept the evidence of either witness but preferred the approach of the chartered accountant. He concluded that the valuation on a capitalised future maintainable earnings basis was $26,154, that the net tangible assets were $19,551 (the chartered accountant's evidence) and that goodwill should be assessed at $6,603 (these figures are the figures at p. 19 of the Appeal Book after adjustments agreed during the course of the appeal).

It is unnecessary to consider all of the aspects of difference in the evidence of the two valuers. The appeal before us on this issue raised three separate points, namely:

(a) the capitalisation rate;
(b) whether it was appropriate to include the circumstance of borrowed capital of the husband;
(c) whether it was appropriate to include in the net tangible asset calculation trade creditors, trade debtors, loans and moneys in bank accounts.

As to (a) each valuer carried out an exercise to determine the net maintainable profits of the business and then capitalised that, each using a figure which each estimated an investor would want by way of return if he were to purchase this business. The chartered accountant used a figure of 22.5% on the investment after tax (the tax assumed to be at 46 cents) that is, 48 to 49% return before tax. The pharmacy consultant used a figure of 25% to a maximum of 30% before tax, that is 13.8% after tax. His Honour's conclusion was that ``a capitalisation rate of 22.5% chosen by Mr C would appear to me to represent a somewhat higher allowance for the risks associated with a purchaser's investment in this business'' and concluded that ``I propose to adopt a capitalisation rate of 17.5% after tax''.

Before us counsel for the appellant submitted that the chartered accountant's capitalisation rate was outrageously high and was properly rejected by his Honour. He then submitted that as the only other evidence on this issue was the evidence of the pharmacy consultant his Honour was under an obligation to accept that evidence, and that his Honour provided no explanation for his after tax rate of 17.5% (before tax rate of 38%). In our view his Honour was entitled to approach the matter in this way and to reach his own conclusion on this issue. It is to be contrasted with his approach in relation to the value of the property where he chose a midway figure between two valuers apparently for that very reason. Here his Honour generally preferred the approach of the chartered accountant but treated his capitalisation rate as too high. His Honour was under no obligation to accept the evidence of the other witness on that issue and that evidence was at least impliedly rejected. It was open to his Honour and an ordinary exercise of the fact-finding duties of a judge to consider the whole of the material and to arrive at his own conclusion upon the matter — that is, what was a fair rate of return from this business. His Honour was entitled to apply his own common sense to the evidence of the witnesses, including the evidence of the husband, as to this particular business and reach his own conclusion on that matter. We are satisfied that his Honour approached the matter in that way and that his conclusion was open to him on the evidence.

In regard to (b) it appears from his Honour's judgment that he accepted the evidence of the chartered accountant that in calculating the value of the business one should take into account the borrowed capital of the vendor. His Honour appeared to endorse that in the following passage (Appeal Book p. 18):

``I do however agree with his contention that the interest on borrowed capital applied to the conduct of the business should not, having regard to the history of this business, be disregarded in determining its maintainable profits.''

A reference to the working figures of the chartered accountant indicate that he took into account bank charges and associated charges relating to the business and interest paid on borrowed capital by the husband.

In this regard we agree with counsel for the appellant's submission that in ordinary circumstances the vendor's borrowings are irrelevant to the question of the value of that business which is to be calculated independently of those factors. Otherwise it would mean that the value of the business would vary depending upon the particular circumstances of the individual vendor. It is not a matter which the hypothetical purchaser would take into account.

Similarly with (c) above, the approach of the chartered accountant (which his Honour appears to have adopted) of including in the calculation of net tangible assets items such as trade creditors, trade debtors, loans and moneys in bank accounts is incorrect. Ordinarily the net tangible assets are constituted by the stock, plant and equipment which the purchaser acquires on the purchase, and do not include assets and liabilities personal to the vendor which would not normally pass with the sale.

In relation to this question of value we do not accept the first of the appellant's counsel's submissions about the capitalisation rate but accept the submissions in (b) and (c) above. In the course of his argument counsel for the appellant submitted written calculations reworking the value of the business on the basis that each of these three submissions was correct. It is clear that if his Honour was in error in the capitalisation rate a substantial variation would need to be made to his Honour's conclusion about the value of the business. Counsel for the appellant submitted that it would have produced a valuation of $53,572, a figure close to the evidence of the pharmacy consultant. However for reasons which we have already stated we do not consider that his Honour was in error in this regard.

In relation to (c) above, counsel for the appellant submitted to us reworked calculations of the value of the net tangible assets on that basis, namely the value of stock, plant and equipment. That came to a total of $27,559 compared with the figure of $19,551 arrived at by the trial Judge. However that adjustment does not assist the appellant because of the method of valuation adopted by each of the valuers. If the capitalisation of future maintainable earnings figure arrived at by his Honour of $26,154 is maintained (as it must be consistently with our conclusion in relation to (a) above) then to demonstrate that the net tangible assets are of greater value does no more than reduce the figure to be ascribed under this process to the value of the goodwill. In fact here it would produce a result that no value should be ascribed to goodwill, a conclusion which is consistent with the approach of the chartered accountant.

Submission (c) above would result in some reworking of the calculations, but in the context of this case would produce a relatively small adjustment. In those circumstances we do not consider that any adjustment to the figure of his Honour as to the value of the business, namely $26,154, should be made by this Court.

3. DEBTS OWED TO HUSBAND'S MOTHER

The evidence at the trial established that there were debts owing by the husband (or the trust) to his mother of $26,906 and his Honour in arriving at the net assets of the parties deducted that as a liability.

It was counsel for the appellant's submission that this debt was not a true commercial debt and ought not to be directly taken into account. Alternatively, he submitted that his Honour had given it double value by taking into account the generosity of the husband's parents in the building up of assets over the years as a factor to be considered in arriving at his apportionment of 65% to the husband and 35% to the wife.

The evidence establishes that this liability had its origin in the figure of $6,919 in the financial year 1978/79 and that was referable to the Logan Road transaction. Financial documents produced on behalf of the husband show that figure increasing from that financial year to a total figure for the financial year 1984/85 of $26,906. The husband's father died in 1981. In the figures for 1982/83 the amount entered as a liability owing to the mother increased from $8,919 to $18,007. No explanation was given of any of these liabilities other than the initial $6,919. It was further submitted to us by counsel for the appellant that having regard to the age of the mother and the circumstance that the husband is the only child and that no attempt has been made to seek repayment of any amount of these debts over a significant number of years it was inappropriate for his Honour to have treated this as a direct liability. The alternate submission of counsel for the appellant was that if his Honour was justified in treating it as a direct liability he ought not to have double counted it by treating it as a major factor in the apportionment of the net assets. Counsel for the respondent submitted that the trial Judge was entitled to treat it as a debt which was in fact owing, but he did not make any direct submissions in relation to the alternate view put forward by counsel for the appellant.

It appears to us that his Honour was in error in, in effect, double counting this aspect. For reasons which we will refer to hereafter we consider it an appropriate case to exercise our own discretion in this matter rather than remit it for a further trial and on this aspect we consider the more convenient course is to disregard it as a direct liability but take the history of loans and other financial assistance by the husband's parents over the years as a significant matter in favour of the husband in determining the appropriate distribution of assets between them.

4. EXPENDITURE BY THE HUSBAND ON THE CHILDREN SINCE SEPARATION

This is a somewhat similar point. After separation the husband expended substantial sums on the education of the children. His Honour referred to this early in his judgment in the following passage:

``The husband undertook to pay the children's educational expenses including their books and uniforms, and a half share of their extra-curricular school expenses including study trips. He also provided the family Medical and Hospital Insurance cover and paid the additional charges in relation to the children. As well he undertook to pay to the wife $120 per week being $40 per week for each of S and D and $40 contribution towards her rental. He reduced the weekly payment to the wife to $80 in April 1985.

His expenditure on the support of the children since the separation has been heavy. In the 1982/83 and 1983/84 financial years it totalled around $19,000 and $16,000 respectively, which expenses were in part appropriated out of the children's income from the Family Trust. The wife herself has expended in excess of $2,000 in the extra curricular expenses of the two younger children since the separation.''

In arriving at the net assets the trial Judge took directly into account the overdraft liability of the husband of $34,060 which included approximately $19,000 referable to this matter. When he came to the ultimate question of the apportionment of the net assets between the parties his Honour again took that aspect into account. At p. 22 of the Appeal Book his Honour, after referring to the parties' contributions to the family as being equal, went on to say:

``since their separation the husband has made the much greater financial contribution to the... welfare of the children through the application of his earnings from the pharmacy business and income derived from the Lenehan family trust.''

At p. 23 his Honour concluded that the contributions by the parties to the matrimonial home should be treated as equal but that in relation to other assets regard must be had to the wife's relatively minor contributions to them and ``the liabilities (the husband) has assumed by reason of his continued support of the children since the separation''.

There is little doubt that the husband made a substantial financial contribution to the support of the children post separation, although the wife must be treated as having at least indirectly contributed to that aspect as well. Nevertheless there appears to have been again an element of double counting in his Honour's approach to the disadvantage of the wife. In the exercise of our discretion in this matter we propose, as the most convenient course, to treat the $34,060 as a direct liability but otherwise to disregard this aspect.

5. EXERCISE OF DISCRETION

The final submission by counsel for the appellant was that his Honour had misdirected himself in the exercise of his discretion and in particular had adopted an approach which resulted in significant injustice to the wife.

This is a case where no sec. 75(2) factors are relevant. The trial Judge (p. 23 of the Appeal Book) concluded that in all the circumstances the contributions which the parties had made to the home should be treated as equal. On his Honour's conclusion as to its value ($150,000) that would have led to a conclusion that the wife was entitled, all other things being equal, to $75,000. There was an excess of other assets over all of the liabilities which the trial Judge had taken into account, and his Honour had concluded that the net value of property was $206,000. His Honour took the view that the wife's contribution to the other assets both directly and indirectly was small, referring to it as a ``relatively minor contribution''. The conclusion arrived at by his Honour was as follows (Appeal Book p. 24):

``Accordingly I conclude that it is just and equitable that there be an alteration of their interests in the property in the ownership of both or either of them accumulated during their marriage to the effect that the husband be entitled to a 65% interest and the wife a 35% interest therein.''

On his Honour's figures that meant the wife's 35% interest equalled $72,000. That was less than the one-half of the home to which his Honour had previously referred, so that in effect the wife received a negative result in relation to the other net assets. It was counsel for the appellant's submission that this was a patently unjust result and demonstrated that his Honour's ``global'' approach to the matter was in error.

The judgments of the High Court in Norbis v. Norbis (1986) FLC ¶91-712 demonstrate the very wide discretion which a trial Judge has in the approach that he may adopt under sec. 79. In particular the judgments in that case discuss the ``global'' and the ``asset by asset'' approaches, and demonstrate that this is largely a matter for the trial Judge to determine in the exercise of his discretion. However Norbis' case is not a carte blanche to adopt either view irrespective of the circumstances of the individual case. There are cases where one approach or the other is clearly appropriate and a failure by the trial Judge to adopt that approach may demonstrate error. We think this is one such case. His Honour's initial approach of treating the parties' contributions to the home as separate from their contributions to the other (largely business) assets was, we think, a proper approach in the circumstances. The difficulty was that at the last minute his Honour seemed to have swung from that approach to an overall or global approach. The result referred to above demonstrates that in adopting that course his Honour fell into error.

6. OUR EXERCISE OF DISCRETION

In the circumstances we consider that the proper course is for this Court to exercise its own discretion in the matter rather than remit it for a further trial. Other than in relation to the issue of the value of the matrimonial home, neither party submitted to the contrary. The evidence is full and complete and, having regard to the relatively small amounts involved, it would in our view be productive of unnecessary costs and delay to remit this matter for a further trial.

We consider that a proper approach to the matter is to treat the matrimonial home separately from the other assets. In our view the conclusion arrived at by his Honour that that property ought to be divided equally between the parties is the appropriate course. Indeed before us neither counsel submitted to the contrary of that. In our view the value of that property is $165,000 and accordingly, consistently with the framework of the orders which his Honour was invited to make, there should be an order in relation to that asset that the husband pay to the wife $82,500.

The other assets are:

Value of business ...................$26,154
     Logan Road ..........................$60,250
  -------
       Total  $86,405
  -------
     The liabilities are:  
      Bank Loans..........................$34,060
      Commercial Bill ....................$10,000
  -------
     Total  $44,060
  -------

Therefore the net remaining assets are $42,345.

In arriving at that figure we have, as we have previously indicated, disregarded in a broad way the motor vehicles of the parties, furniture, jewellery, trade debtors and trade creditors, and the husband's cash in bank deposits and his overdraft although, of course, each is ``property'' of one or other of the parties within sec. 79. We do not consider it appropriate in this case to alter the interests of the parties in those assets.

For like reasons we think it appropriate to disregard his shares ($18,345) because they came to the husband by way of gift from his parents shortly prior to the separation.

The net assets referred to above arise from the development of the husband's business over the years, the history of which we have set out earlier in this judgment. Clearly the major contribution to those assets came from the generosity of the husband's parents and the business acumen of the husband.

On the other hand it needs to be borne in mind that the second pharmacy business was acquired by the husband in 1978 without reference to his parents and the business was built up by him over the years from 1977 when he took it over from his father. Further the indirect contributions which the wife made during the course of the marriage to those assets cannot be ignored, including her contributions within the home in relation to the four children and her financial contributions from 1974. Clearly those latter matters are outweighed by the factors favourable to the husband and clearly the inheritance factor is a substantial reason why these assets exist. Nevertheless the wife's contribution should not be seen in a token way or as his Honour described it namely ``a relatively minor contribution''.

In the exercise of our discretion we consider that these assets should be divided as to 70% to the husband and 30% to the wife. In round figures this is $12,700. Adding that to the figure previously referred to and rounding off those figures we consider that we should substitute for the $72,000 ordered by his Honour the amount of $95,000.

We do not consider that this is an appropriate case to make an order for costs or to grant a certificate to either party under the provisions of the Federal Proceedings (Costs) Act.

We order as follows:

1. That the appeal is allowed.
2. Substitute for para. 1 of the orders of 20 June 1986 an order in the following terms:

1. That the husband pay to the wife the sum of $95,000 on or before 30 June 1987.

3. Substitute in the second line of para. 2 of the said orders the sum of $95,000 for the sum of $72,000 therein referred to.