JS & GP - [2006] FamCA 150

[2006] FamCA 150

FAMILY LAW ACT 1975

IN THE FULL COURT OF

THE FAMILY COURT OF AUSTRALIA

AT ADELAIDE

Appeal No. SA 33 of 2005

File No. ADF 2328 of 2001

IN THE MATTER OF:

Appellant/Wife

- and -

Respondent/Husband

REASONS FOR JUDGMENT

BEFORE:Kay, Warnick and Boland JJ
HEARD:11 and 12 October 2005

JUDGMENT: 13 March 2006

APPEARANCES:

Mr McQuade of counsel (instructed by Lempriere Abbott McLeod of 93 Carrington Street, Adelaide SA 5000) appeared on behalf of the Appellant Wife
Mr Stathopoulos of counsel (instructed by Alderman Redman of 28 Grenfell Street, Adelaide SA 5000) appeared on behalf of the Respondent Husband.

APPEAL SUMMARY

MATTER:JS and GP
APPEAL NUMBER: SA 33 of 2005
CORAM:Kay, Warnick and Boland JJ
DATE OF HEARING: 11 and 12 October 2005

DATE OF JUDGMENT: 13 March 2006

CATCHWORDS:

APPEALS – From decision of Family Court Judge – Property settlement –PROPERTY – Family company – Family trust – Whether trial Judge erred in finding property was asset of discretionary trust of which company is corporate trustee –– Findings of trial Judge in respect of manifestation of declaration of trust in writing based on connectivity of documents not open on evidence, but evidence leads to conclusion that land not an asset of company in own right - Trial Judge correct in not including any sum to represent husband’s interest in company - Findings did not vitiate trial Judge’s discretion - Whether trial Judge erred in including debt due by husband to partnership in list of assets and liabilities - No error in trial Judge’s inclusion of debt in parties’ list of assets and liabilities - contributions – Trial Judge’s assessment of relevant factors under s 79 not outside generous ambit of discretion – SPOUSAL MAINTENANCE –Whether trial Judge erred in dismissing wife’s application for spousal maintenance – Trial Judge’s finding wife did not satisfy threshold not open on expert evidence - Re-exercise of discretion - Husband has capacity to pay – Spousal maintenance order for defined period made as lump sum.

Legislation

Statute of Frauds 1677 (29 Car.11c3) ss 7, 8, 9
Law of Property Act 1925 (UK)
Family Law Act 1975 (Cth) ss 75(2) and (3), 74, 79, 80, 83
Law of Property Act (1936) (SA) ss 26, 29, 30
Conveyancing Act (1919) (NSW) s 54A

Case law

Af Petersens and Af Petersens (1981) FLC 91-095
Anast and Anastopoulos (1982) FLC 91-201
Antmann v Antmann (1980) FLC 90-908
Baloglow v Konstantinidis & Ors [2001] NSWCA 451
Barkworth v Young (1856) 56 LJ CH 153
Bevan and Bevan (1995) FLC 92-600
Biltoft and Biltoft (1995) FLC 92-614
Clauson and Clauson (1995) FLC 92-595
Davut and Raif (1994) FLC 92-503
De Winter and De Winter (1979) FLC 90-605
DKLR Holding Co Pty Ltd v Commissioner of Stamp Duties (NSW) 149 CLR 431
Equuscorp Pty. Ltd. v Jimeniz; sub nom [2002] SASC 225
Ferraro and Ferraro (1993) FLC 92-335
Georgeson and Georgeson (1995) FLC 92-618
Gronow v Gronow(1979) 144 CLR 513
House v The King (1936) 55 CLR 499
Kennon v Kennon (1997) FLC 92-757
Kronheim v Johnson (1877) 7 Ch D 60
Le Steere and Le Steere (1985) FLC 91-626
Little and Little (1990) FLC 92-147
Mallett v Mallett (1984) 156 CLR 605
Monte v Buongiorno [1978] WAR 49
Parker v Manessis [1974] WAR 54
Pastrikos and Pastrikos (1980) FLC 90-897
Prpic and Prpic (1995) FLC 92-574
Re Danish Bacon Co Ltd staff pension fund Christensen and other v Arnett and others (1971) 1 All ER 486
Spiteri v Spiteri (2005) FLC 93-214
Vautin v Vautin (1998) FLC 92-827
W v W (1997) FLC 92-723
Whiteley and Whiteley (1996) FLC 92-684

APPEAL ALLOWED

Introduction

This is an appeal by JS (“the wife”) against orders made by Dawe J pursuant to
s 79 of the Family Law Act 1975 (“the Act”). The trial Judge found that the parties’ net assets of $502,270 should be divided equally between GP (“the husband”) and the wife. Additionally, the trial Judge found the wife should retain the sum of $71,575 received in settlement of a claim between her and a company JP (“the company”).
The wife’s appeal is directed to three major areas. First, the wife asserts the trial Judge was in error in finding that a farming property in rural South Australia (“the rural land”) was the property of a discretionary trust of which the company is the corporate trustee, rather than that land being owned by the company in its own right. It is asserted this finding was an error of law because the provisions of s 29(1)(b) of the Law of Property Act 1936 (SA) (“Law of Property Act”), which require a declaration of trust in respect of land to be evidenced in writing, were not satisfied on the evidence before her Honour. Second, the wife asserts that the trial Judge’s findings on contribution and assessment of relevant s 75(2) factors were outside the reasonable ambit of discretion. She also challenges the trial Judge’s inclusion of a debt, due by the husband to a partnership, into the parties’ assets and liabilities available for division. The third challenge to the trial Judge’s orders is a challenge to her Honour’s dismissal of the wife’s application for spousal maintenance. It is asserted, on the expert medical evidence before the trial Judge, the wife established a need for spousal maintenance.
The husband filed a cross-appeal, but abandoned his appeal on the second day of the hearing of the appeal.
Before us, the wife abandoned ground 8 of her Notice of Grounds of Appeal filed on 23 May 2005. During the hearing before us the wife sought, and was granted leave, to amend her grounds of appeal to include a new ground 6(d). Although both parties initially sought in the event that the appeal and/or cross appeal were successful we should re-exercise the discretion, at the conclusion of the hearing before us counsel for the husband conceded that, in the event that the wife was successful on her challenge to the trial Judge’s finding that the rural land was property of the trust, it would be necessary for there to be a retrial if the wife asserted a figure for the husband’s interest in the company should be included in the parties’ assets and liabilities. Counsel for the wife initially sought to persuade us that, in the event the appeal succeeded on an error of law by her Honour, we could re-exercise the discretion, and attribute a value to the husband’s shareholding in the company. We will return to this proposition later in our reasons. In respect of the spousal maintenance ground, counsel for the husband was instructed in the event we upheld that ground, that the husband did not concede he had the capacity to pay the wife $250 per week for a period of 12 months.

Background

There was no challenge to any of the background facts recorded by the trial Judge in her reasons for judgment.
At the time of the trial the husband was aged 50 years and employed as acting Head of School at a tertiary institution. The wife was aged 47 years and was in receipt of a Newstart allowance.
The parties were married in 1979 and they separated in 1999.
The parties’ only child P was born in 1987. The trial Judge noted she would be 18 in 2005. At the date of the trial P was living on a “month about” shared parenting arrangement with each of the parties.
In 2000 the husband commenced living in a de facto relationship with KP.
The trial Judge set out the history of the acquisition and facts relevant to the ownership of the rural land as follows:
“13.In 1976 the husband’s grandfather died. As a result of his death the husband’s mother inherited approximately 100 acres of land [in rural South Australia]..
14.In November 1976 the [land in rural South Australia] was transferred into the name of the husband’s mother CP.
15.In May 1977 [the company] was incorporated. Shortly, thereafter [in] June 1977 the [PF] Trust was established by Deed in which the trustee is [the company].
16.The husband’s parents, the husband and the husband’s sister each hold one share in [the company] and have done so from its inception to the current time.
17.Also in 1977 the partnership known as ‘[GTC]’ was established in which the husband, his parents and the Trust are partners. The partnership agreement is dated 1 July 1977. [The company], one of the partners, is described as ‘trustee for the [PF] Trust’. The partnership was set up to carry on the business of ‘share farmers or such occupation as the partners may from time to time agree upon and shall be carried on [in rural South Australia] the aforesaid or such other place or places as the partners may from time to time agree upon’.
18.In the Trust Deed dated 24 June 1977 the [PF] Trust was established with the settlor named as N (the mother of C and grandmother of the husband). The trustee is [the company]. The Trust was set up with a settlement of $100 and is a discretionary Trust in which the specified class of beneficiaries are the husband’s parents, the husband, his sister and ‘any other child or remote issue of the said [M] (the husband’s father) born before the vesting day’. The power of appointing new trustees is vested in the husband’s parents and the survivor of them.
19.Originally the husband had a small interest in the partnership [GTC] but at the time of trial he held a 14/25ths share in the partnership business.
20.By transfer dated 5 September 1977 the husband’s mother CP transferred the [rural] land (subject to the mortgage then on the title) to [the company] in consideration of the sum of $39,780.”
At the time of the parties’ marriage neither party had significant assets. The husband had an interest in the GTC partnership (“the partnership”) and was a shareholder of the company.
In 1980 the husband commenced employment with his present employer. In that year the parties purchased a property in the Adelaide region (“the first Adelaide property”)The deposit for the first Adelaide property was sourced from the parties’ very modest savings, and borrowings from the husband’s parents. The parties lived in the first Adelaide property until 1987 when it was rented and rental monies applied to the mortgage. During the parties’ residence at the first Adelaide property the wife commenced growing flowers for sale, eventually leasing adjoining land for this purpose. Approximately one year after separation the wife moved into the first Adelaide property, and paid a portion of the payments due under the mortgage. The husband met the balance of mortgage payments.
In 1985 the parties had plans drawn up, obtained necessary building approvals and commenced construction of a home on the rural land (“the matrimonial home”). The home was completed with assistance from relatives and friends. Both parties participated in the construction of the home. The construction costs of the home were met from the parties’ savings and a loan of $60,000 from the husband’s father. During their occupation of the matrimonial home the wife grew flowers for supply to florists on a portion of the rural land.
In 1991 the parties entered into a partnership with two other couples to operate a business known as “S”. The business grew and supplied flower bulbs. In 1996 the parties purchased the interests of the other couples using a fully drawn advance and overdraft secured against the first Adelaide property. The husband’s father subsequently lent the parties $25,000 to reduce the fully drawn advance and to extinguish the overdraft. The business was adversely affected when the majority of the bulbs were accidentally destroyed, and the partnership ceased operation in 2000.
In about 1993 the parties purchased an investment unit in the Adelaide region (“the second Adelaide property”). The whole of the purchase price was borrowed from the State Bank, and the investment unit was subsequently rented.
In February 2001 the husband and KP took up occupation of the matrimonial home.
During 2003 P travelled overseas as an exchange student. She returned to Australia in January 2004.
The wife, by way of Amended Response filed on 13 February 2004, sought orders against the company, CP and MP (“the other parties”) as particularised in an annexed Statement of Claim and Defence to Counterclaim. A Defence and Counterclaim were filed by the other parties on 21 November 2003. The counterclaim sought orders that the wife pay MP (“the husband’s father”) certain sums. The wife sought an order declaring she had a 25 per cent interest in the rural land.
The competing claims of the wife and the other parties were compromised by consent orders made on the first day of the trial. The consent orders provided that the company pay to the wife the sum of $71,575 and the rural land was charged to secure the payment. The trial Judge noted the consent orders further provided:
“46.…that judgment be entered for the husband’s father, [MP], as against the husband and wife for the following sums:
(a)$60,000.00 in respect of the housing construction loan;
(b)$9,000.00 in respect of the wife’s car loan;
(c)$8,500.00 in respect of the husband’s car loan;
(d)$25,000.00 in respect of the ‘[S]’ loan.
47.It was part of the notation on the consent order of the 9 February 2005 that the husband and wife would seek orders as to the payment or indemnity of the loans referred to in 11 (a), (c) and (d).”

The trial Judge’s judgment

Having identified the issues in dispute and background history, the trial Judge set out her “findings on main issues”. Her Honour noted the wife’s contention that the company was the legal and equitable owner of the rural land, and recorded the wife’s assertion as follows:
“She therefore asserts that because the husband holds one-quarter of the shares in the company his shareholding is worth one-quarter of the value of the land.”
The trial Judge noted the wife’s assertion that the sum of $167,375, representing one quarter of the rural land, should be included in the parties’ list of assets available for division.
The trial Judge recorded the husband’s contention that the company held the land as trustee for the trust. In those circumstances the husband opposed “any amount representing any interest in the [rural] land being brought into account”. However, the husband sought to include in the property available for division between the parties the sum of $71,575 payable to the wife pursuant to the consent orders.
The trial Judge set out a chronology from the documents in evidence before her. Those documents revealed:
·the rural land was transferred to the husband’s mother, CP, in late 1976;
·the trust was settled by Deed dated June 1997;
·CP transferred the rural land to the company for a consideration of $39,780 in September 1977; and
·the transfer by CP to the company was subject to an existing mortgage which was discharged in February 1980.
The trial Judge said “[t]here is nothing in the Trust Deed which declares the [rural] land to be part of the [PF] Trust”. She further recorded “[t]he husband, his mother and father all insist that it was the intention of the mother to transfer the land to the company to hold the land as trustee of the [PF] Trust”.
Having set out the effect of the provisions of s 162 of the Real Property Act 1886 (SA), which section precludes references to the transferee accepting a transfer as trustee on the transfer document, the trial Judge noted the procedure for registering a declaration of trust, which had not occurred in the instant case.
The trial Judge referred to the submissions made on behalf of the wife of the necessity for a declaration of trust to be in writing and signed by some person who was able to declare the trust in accordance with the provisions of s 29(1)(b) of the Law of Property Act.
The trial Judge made a finding “there is no document signed by the husband’s mother or executed by the company specifically declaring that the company holds the rural land on Trust in accordance with the terms of the PF Trust Deed”.
The trial Judge thereafter examined the evidence of CP, and in particular, documents annexed to her affidavit of 15 January 2004. Those documents included a letter from land agents dated 2 May 1977 which enclosed documents including the Memorandum and Articles of Association of the company, the Trust Deed and a document entitled “Outline of Proposed Arrangement”.
The trial Judge set out extracts from the outline of proposed arrangement as follows:
“63.…On page 5 the section headed ‘1.3 Vesting of property in trust’ says:
‘[MP and CP] or for that matter any one can sell and transfer to the trustee such Real Estate mortgages and other investments as desired on following conditions:
1.3.1Price to be determined by valuation (mortgages etc. at face value).
1.3.2Purchase money to remain owing as debt due on demand, free of interest.
1.3.3Payments on account of this debt will be made from time to time as funds are available and as needed by [MP and CP].
1.3.4The debt may also be forgiven in part from time to time.
64.At 1.11 it says:
‘Future purchases of land or shares could be purchased directly in the name of the Trust and if the Trust needed funds to buy such property you and your wife could lend the money to the Trust to enable the Trust to do so or the Trust could mortgage property held by the Trust.’
65.On page 7 the document concludes:
‘2.Transfer of Property
2.1Property owned by [CP] to be transferred to the trust.
2.2This is to be done after Trustee Company has been registered.’”
The income tax returns for the trust for a five year period from 1995 to 30 June 2000 were before the trial Judge. Her Honour noted that the only asset declared by the trust in its tax returns were small sums of cash. Her Honour also recorded that “[n]one of the balance sheets of the company disclose that the company owns the [rural] land”.
However, her Honour noted that “[s]ome of the Annual Reports of the Directors refer to the company acting as trustee of a Trust”. She also noted:
“70. The Annual Return made up to the 27 November 1981 shows that the company carried on business under the name of [GTC] (this is the partnership in which the Trust held an interest). Again, the Annual Report attached to that Return says:
‘The company acts solely as trustee of a Trust and did not derive any income during the year.’
71.The Balance Sheet did not disclose any assets. The Directors’ report for the year ended 30 June 1983 says:
‘The principal activities of the company during the financial year was acting as trustee for the [PF] Trust.’
72.The return for the company for the year ended 30 June 1987 refers to an annexure as an indemnity. The annexure dated 30 November 1987 reads:
‘Note, in its capacity as a trustee the company incurs liabilities in the administration of a Trust but is entitled to have these liabilities discharged out of Trust property. The Directors believe the assets of the Trust at the 30 June 1987 to be sufficient to meet the liabilities so incurred and unpaid at that date. The liabilities so incurred and unpaid at the 30 June 1987 are as follows:-
Liabilities Nil.’
73.The Annual Return of the company for the year ended 30 June 1988 refers to the principal activities of the company as ‘acting as trustee only. Farming Trust.’ Similarly, an indemnity statement appears attached to that document. The return for 1989 is similar.
74.Exhibit 23 consists of the Annual Returns of the company from 1991 to 2002. The front page of the 1991 Annual Return of the company says at item 7:
‘Principal activities acting as trustee only. Farming trust.’”
Her Honour said that the rural land was not shown as an asset of the company in its own right, nor was it shown as an asset in the tax returns of the trust. Her Honour recorded CP’s explanation why the rural land was not included as an asset of the trust in its financial statements and income tax returns as an oversight by her accountant.

The trial Judge found “[t]he evidence clearly indicates that [the company] was established to act as trustee of the [PF] Trust”.
Her Honour then turned to consideration of the law relating to the interpretation of s 29 of the Law of Property Act, citing the judgment of Besanko J in Equuscorp Pty. Ltd. v Jimeniz; sub nom [2002] SASC 225 including the principle that “[t]here can be a series or group of documents as long as one document exists which is signed by the person declaring the Trust”. Her Honour concluded “[i]t is therefore necessary to determine whether any writing exists, signed by a person able to declare the Trust, which is sufficient to satisfy the requirements of Section 29 of the Law of Property Act”.
After referring to the documents annexed to CP’s affidavit, including the outline of proposed arrangements, her Honour found “[g]rouping these documents together I am satisfied that there is sufficient compliance with Section 29 of the Law of Property Act to establish that [the company] holds the [rural] land on Trust in accordance with the terms of the [PF] Trust Deed”. She further found “[t]he one share of the husband in [the company] representing one-quarter of its issued capital is therefore a minority shareholding in the trustee company and does not give the husband an asset which is worth a quarter interest in the real estate owned by the company”.
The trial Judge thereafter discussed the inclusion of the sum of $71,575 into the asset pool available for division between the parties. The trial Judge’s treatment of this sum is no longer in contention by reason of the withdrawal of the husband’s cross appeal.
The next matter in issue determined by the trial Judge related to the “[d]ebt due by husband to partnership [GTC] and the lack of accounting between the husband, partnership and Trust”.
The trial Judge recorded that, at the date of separation, the husband’s debt to the partnership was in the sum of $42,570 and at the time of trial the figure had risen to $68,873. She noted the husband sought to include the larger figure in the parties’ list of liabilities, a course which was opposed by the wife.
Having recorded that the balance sheets for the partnership showed the husband’s capital account had been in debt for many years and there had been no valuation of the partnership assets, her Honour noted “[m]uch of the fencing, sheds, and dams referred to in the depreciation schedule of the partnership are part of the [rural] land owned by [the company] on behalf of the trust”. She also noted the husband’s concession that some of the work carried out on the rural land ought to have improved its value. Her Honour said “[t]he evidence of all of the parties and the exhibits all indicate that there has been no accounting between the company, the Trust or partnership for the work carried out improving the real estate”.
Her Honour concluded:
“109.If the husband’s current debit capital account in the partnership is brought into account as a liability it needs to be remembered that this liability arises from the context in which the husband has participated in the partnership business which has allowed the trust land to benefit from improvements paid for by the partnership and the maintenance of the property by the general farming business on the real estate without a corresponding benefit being received by the partnership and the partners. The husband has at all times both before the separation and since had the benefit of the tax deduction of the losses to offset against his salary income. The inclusion of the debt of $68,873 needs to be taken into account on the basis of this negative contribution by the husband to the overall assets of the husband and wife.”
The trial Judge thereafter considered the increase in the husband’s superannuation entitlements from the date of separation to the date of hearing.
The trial Judge examined the wife’s claim for spousal maintenance and considered the evidence about the wife’s capacity to work, both in respect of her spousal maintenance claim, and as a factor to be taken into account under
s 75(2) in the property proceedings.
The trial Judge set out the wife’s work history during the marriage which included work as a part time waitress, orchard hand and counter assistant. The wife was also engaged in flower production and following separation was in receipt of a supporting parent’s pension. At the time of the trial, she was in receipt of a Newstart allowance. The trial Judge noted the wife had commenced courses in food technology and was last employed in January 2001. She had, since that date, undertaken some voluntary work at a drop in centre two days per week. The trial Judge said “[t]he wife gave evidence about her health and efforts to obtain employment. In her oral evidence she said that she was now actively seeking work, although her personal support officer has told her that it was not necessary at this point in time to be applying for jobs until after the Family Court proceedings had been concluded”.
The trial Judge recorded the evidence of Dr P, the wife’s general practitioner, which included her opinion that “the wife is likely to improve once the Family Court proceedings had concluded, but she was not sure how long this would take”. The trial Judge said “[t]he evidence of Dr [P] was that the major stresses for the wife were her relationship with the husband and the Family Court proceedings”. The trial Judge made the following finding:
“I am not satisfied that the wife has made all appropriate efforts to obtain suitable employment”.
Her Honour concluded, in dismissing the wife’s application for spousal maintenance, that:
“The evidence before me does not establish that the wife has been unable to support herself from gainful employment. The evidence indicates that the wife has made only a token effort to apply for positions. It is expected that on the conclusion of these proceedings the wife will have the ability and correct attitude which will enable her to obtain suitable gainful employment. There is no evidence to suggest that a time period of two years would be necessary or appropriate.”
The trial Judge found the parties had gross assets of $864,410, including the parties’ respective superannuation entitlements, which were included as property at the request of the husband and wife. Her Honour found the parties had total liabilities, including the husband’s debit capital account in GTC, of $362,140, resulting in total net assets of $502,270.
The trial Judge thereafter considered and made findings about each party’s contributions.
The trial Judge said:
“163. I also bring into consideration the negative contribution by the husband of the debt due by him to [GTC] and the absence of any accounting between that partnership, the company and the Trust in relation to improvements to the [rural] land by way of dams, bores, sheds and other miscellaneous improvements which is to a certain extent offset by not bringing into account the sum of $71,575 to be paid to the wife.
164.I have not brought into account the sum of $71,575 to be received by the wife, having determined it would not be just and equitable to do so in view of the husband’s failure to maintain any claim against the Trust for his share of the substantial improvements to the [rural] land by the building of the former matrimonial home.
165.Taking this into account and in particular the contribution by the husband’s father of interest free periods on the loans, the husband’s post-separation contribution to his significant superannuation entitlements, payment of the joint debts since separation and both parties ongoing support of the child [P], I determine that contribution should be 60 per cent to the husband and 40 per cent to the wife.”
The trial Judge then examined relevant factors under s 75(2) and found a further adjustment of ten per cent in the wife’s favour was appropriate. The trial Judge then turned to consideration of whether the orders to be made under s 79(2) were just and equitable. Her Honour set out the composition of the assets and liabilities to be retained by the wife as a result of her orders, and concluded the orders were just and equitable.

The wife’s grounds of appeal

Before us, the wife relied on the following grounds of appeal set out in her Amended Notice of Appeal dated 12 October 2005:
“1.That the learned Trial Judge erred at law in finding that the Company, [JP] held the [rural] land on Trust in accordance with the terms of the [PF] Trust Deed.
2.The learned Trial Judge erred at law in finding that the requirements of Section 29(1)(b) of the Law of Property Act (SA) 1936 had been satisfied.
3.The learned Trial Judge erred at law in finding that the documents annexed to the Affidavit of [CP] filed on 15 January 2004 satisfied the requirements of Section 29(1)(b) of the Law of Property Act (SA) 1936.
4.The learned Trial Judge erred at law in failing to find that [the company] was the beneficial and legal owner of the [rural] land to the value of $167,375.00.
5.The learned Trial Judge erred at law in failing to bring to account the Husband’s interest in the said [rural] land by virtue of his shareholding in [the company] as an asset of the marriage.
6.The learned Trial Judge erred at law and in the exercise of her discretion in the assessment of the parties’ contribution as to 60% to the husband and 40% to the wife in that:
(a)The learned Trial Judge failed to give any or any sufficient weight to the contribution to the parties’ assets made by the wife in her capacity as parent and as homemaker during the period of the parties’ cohabitation.
(b)The learned Trial Judge gave undue weight to the husband’s contribution to his superannuation entitlements since separation.
(c)The learned Trial Judge gave undue weight to the contribution by the husband’s father of interest free periods on loans.
(d)The learned Trial Judge gave undue weight to the payment by the husband of the parties’ joint debts since separation.
7.The learned Trial Judge erred in the exercise of her discretion in bringing the debt due by the husband to the partnership known as [GTC] into account as a liability of the marriage in the sum of $68,873.00 or at all.
8.[Abandoned]
9.The learned Trial Judge erred at law and in the exercise of her discretion in finding that the division of assets ordered by her was just and equitable.
10.The learned Trial Judge erred at law and in the exercise of her discretion in dismissing the wife’s Application for spousal maintenance in that:
(a)The learned Trial Judge failed to give any weight or sufficient weight to the evidence of Dr [P] that the illness of the wife had interfered with her ability to seek, obtain and maintain gainful employment and was likely to continue to do so for some time following the conclusion of proceedings.
(b)The learned Trial Judge failed to give any weight to the age and limited work skills and experience of the wife and the consequent difficulties arising there from as regards the Wife’s suitability for or likelihood of obtaining employment commensurate with her age and limited work skills and experience”.
We propose to deal with grounds 1 to 5 as a group, and thereafter to consider ground 7, as these grounds go to the identification and value of property available for division between the parties. We propose thereafter to consider ground 9, which is directed to the trial Judge’s exercise of discretion in finding an equal division of the parties’ assets and liabilities was a just and equitable order, and finally to consider ground 10 which challenges the trial Judge’s dismissal of the wife’s application for spousal maintenance.

The “error of law” grounds (grounds 1-5)

(a)Identification of the issues

Grounds 1 to 5 inclusive challenge the trial Judge’s finding that the rural land is the property of the trust, and therefore should not be included in the parties’ list of assets and liabilities.
The focus of both parties’ counsel on the hearing of the appeal was directed to whether or not, in the factual circumstances of this case, a declaration of trust in respect of the rural land was “manifested or proved by some writing”. We were referred by counsel for the wife to many authorities dealing with the Statute of Frauds 1677 (29 Car.11c3) in support of his assertion that the trust was not so manifested or proved.
There is no dispute that s 29 of the Law of Property Act, and similar legislation in other states of Australia, are modern enactments of the Statute of Frauds and its replacement legislation in the United Kingdom. Principles espoused in cases considering the Statue of Frauds can have relevance in interpreting s 29 of the Law of Property Act, although care must be exercised having regard to precise words of the legislation under consideration. Further, judicial consideration of the relevant sections of similar legislation in other states has not been without controversy as to interpretation (see discussion of the decision of the High Court in Adamson v Hayes (1973) 130 CLR 276 in Meagher RP, Heydon D and Leeming M, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, (Sydney: LexisNexis, 4^th ed, 2002, at 7-035); Austin RP, “The Conveyancer” (1974) 48 ALJ 323; and Ford HAJ and Lee WA, Principles of the Law of Trusts, (Sydney: Lawbook Co., 3^rd ed, 1996)).
The case was conducted before the trial Judge, and before us on a “narrow” basis. In effect, the argument of counsel for the wife was directed solely to whether there was writing capable of evidencing a declaration of trust in respect of the rural land. Absent such evidence, it was asserted the trial Judge should have found the land was owned by the company. We discern such a narrow focus is not appropriate and consider a wider focus to determine the controversy in this appeal is warranted. It is important to appreciate that in this case, unlike all the authorities to which we have been referred, no party was seeking to rely on the relevant legislation to enforce the terms of the trust, or to seek specific performance of obligations created by the trust. CP did not deny she had transferred the land to the trust. To the contrary, her sworn evidence was that it had always been her intention on transferring her interest in the land that it become the property of the trust. The husband and CP, as directors of the company, did not deny they held the rural land on trust for the beneficiaries of the trust. The beneficiaries did not assert claims against CP or the trustees.
We propose to examine the relevant legislation, the principles extracted from the authorities applying the legislation, and whether on the facts of this case, the requirements of s 29(1)(b) of the Law of Property Act were satisfied. In our examination we also consider whether compliance with the legislation was necessary at all having regard to obiter comments of Mason J in DKLR Holding Co Pty Ltd v Commissioner of Stamp Duties (NSW) 149 CLR 431. Finally, we consider whether the emphasis before the trial Judge on compliance with the statutory requirements of the Law of Property Act was the fundamental question for determination by her Honour, or whether for the purposes of s 79 of the Act, her Honour’s focus should have been the question of whether there was property of the husband which should have been included in the asset pool, and whether failing to include any sum to represent the husband’s interest in the company, vitiated the trial judge’s exercise of her discretion.

(b)The requirements for a valid declaration of trust in respect of land

The requirement for an effective equitable disposition of a legal or equitable interest in land to be in writing is not in doubt (see Meagher, Heydon and Leeming, Equity Doctrines and Remedies at 7-025). There are a number of contrary judicial decisions about the relationship between the requirement for an agreement for sale of land to be in writing (s 26(1)) Law of Property Act, s 54A Conveyancing Act 1919 (NSW)) and what may appear to be differing requirements by a person declaring a trust pursuant to s 29 of the Law of Property Act (see Parker v Manessis [1974] WAR 54; Monte v Buongiorno [1978] WAR 49; and Baloglow v Konstantinidis & Ors [2001] NSWCA 451). We are attracted to the reasoning of Giles JA (with whom Mason P concurred) in Baloglow that the relationship between the sections is harmonious. Their Honours found that the requirements of s 54A of the Conveyancing Act (1919) NSW applied when a purchaser seeks to enforce an “agreement to assure property in the future” and that the requirements of the section are “less stringent than the requirements in s 23C” (the New South Wales equivalent of
s 29 of the Law of Property Act). The force and effect of these decisions are relevant to our consideration later in our reasons of whether compliance with
s 29 is necessary in the case of an express trust.
We have already referred in paragraph 54 to the controversy about the interpretation of ss 29(a) and (b) and the apparent or potential overlap between the requirements of the sub-sections. There appears to be no dispute however that the strict requirement of writing in both s 54A of the Conveyancing Act and its equivalent sections in other states and s 29(1)(a) is modified, to a degree, by s 29(b) which requires only that the disposition be manifested and proved by some writing.
(i) the relevant legislation
(A) The Statute of Frauds 1677 (29 Car.11c3)
As many of the cases to which we were referred were decided by reference to the Statute of Frauds we now reproduce the relevant provisions:
“7. AND bee it further enacted by the authoritie aforesaid That from and after the said fower and twentyeth day of June all Declarations or Creations of Trusts or Confidences of any Lands Tenements or Hereditaments shall be manifested and proved by some Writeing signed by the partie who is by Law enabled to declare such Trust or by his last Will in Writeing or else they shall be utterly void and of none effect.
8. PROVIDED alwayes That where any Conveyance shall bee made of any Lands or Tenements by which a Trust or Confidence shall or may arise or result by the Implication or Construction of Law or bee transferred or extinguished by an act or operation of Law then and in every such Case, such Trust or Confidence shall be of the like force and effect as the same would have beene if this Statute had not been made. Any thing herein before contained to the contrary notwithstanding.
9. AND bee it further enacted That all Grants and Assignments of any Trust or Confidence shall likewise be in Writeing signed by the partie granting or assigning the same or by such last Will or Devise or else shall likewise be utterly void and of none effect.”
The Statute of Frauds was repealed in 1924 and replaced by the Law of Property (Amendment) Act 1924 (UK) and subsequently the Law of Property Act 1925 (UK) which re-enacted in a substantially modified form the relevant provisions of the Statute of Frauds. The provisions of the Law of Property Act 1925 (UK) are similar to the state legislation in the various Australian states.
(B) The Law of Property Act
In South Australia s 29 and s 30 of the Law of Property Act provide as follows:
“29. Instruments required to be in writing
(1) Subject to the provisions hereinafter contained with respect to the creation of interests in land by parol--
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will.
(2) This section shall not affect the creation or operation of resulting, implied, or constructive trusts.

30. Creation of interests in land by parol
(1) All interests in land created by parol and not put in writing and signed by the persons so creating the same, or by their agents thereunto lawfully authorised in writing, shall have, notwithstanding any consideration having been given for the same, the force and effect of interests at will only.
(2) Nothing in the preceding sections of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.”
(C) The Conveyancing Act

A number of the cases to which we were referred, and which we consider, applied the provisions of the Conveyancing Act. To facilitate understanding we set out the relevant provisions of that legislation. Section 23C is substantially identical to s 29 of the Law of Property Act. Section 54A provides as follows:
54A Contracts for sale etc of land to be in writing
(1)No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
(2)This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.
(3)This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.”
We note that s 29(1)(b) relates only to a declaration of trust and not to both the creation of and declaration of a trust.
The trial Judge in paragraph 84 noted that the “well accepted principle that provisions such as Section 29… do not allow a person to rely upon the statutory provisions as an instrument of fraud”. Her Honour correctly noted the facts in this case did not involve a trustee who had property transferred to him on trust denying a trust in respect of land and claiming it as his own.

(c) Principles extracted from the authorities

From an examination of the case law and relevant texts, (Meagher, Heydon and Lemming, Equity Doctrines and Remedies at 7-035; Jacobs KS, Gummow WMC and Meagher RP, Jacobs’ Law of Trusts in Australia (Sydney: Butterworths, 6^th ed, 1997, at 707); and Ford and Lee, Principles of the Law of Trusts), the following principles relevant to trusts emerge:
·a transaction which falls within s 29(1)(a) or (c) of the Law of Property Act is entirely ineffective unless in writing;
·that s 29(1)(a) probably does not apply to declarations of trust in respect of land;
·a declaration of trust need only be manifested and proved by some writing;
·the creation of a trust may be oral, provided it is subsequently evidenced in writing. The trust takes effect from when it was created orally: it is merely unenforceable until evidenced in writing;
·the writing must set out the beneficiaries, the trust property and the nature of the trust;
·the trust may be evidenced by a single document, or a combination of relevant documents, including correspondence, an affidavit, or answers to interrogatories, but the documents must evidence the terms of the trust;
·the signature must be by the person enabled by law to declare the trust;
·the date of the writing is not material, it may come into existence at any time after the creation of the trust; and
·the court will admit oral evidence in cases of fraud, and the statute will not be allowed to become an “instrument of fraud”.

(d) Was the trial Judge’s determination on connectivity of documents sufficient to satisfy the legislation?

(i) the facts – discussion

Before the trial Judge, issue as to whether the rural land was or was not property of the trust was essentially confined to argument as to whether documents annexed to CP’s affidavit demonstrated sufficient connectivity to satisfy
s 29(1)(b) of the Law of Property Act. We now examine whether the trial Judge’s finding that there was sufficient connectivity was open to her on the evidence.
The trial Judge found “that evidence clearly indicates that [the company] was established to act as trustee of the [PF] Trust”. CP’s own evidence established she sought advice from accountants in 1997 (this appears to be a typographical error and should be a reference to 1977) about arrangements to minimise or avoid the incidence of death duties then applicable, and acted on that advice by incorporating the company to be the corporate trustee of a trust, made arrangements for the establishment of the trust, and finally executed a transfer in respect of the rural land to the company as trustee. She deposed:
“33. The [rural] land is registered in the name of [JP] in its capacity as trustee of the [PF] Trust.
34. The trust has always intended to be and it has been understood to be under my control.
35. Since 1977 the [rural] land has been in the [PF] Trust.”
If the test was whether, on the balance of probabilities, the company held the rural land its in capacity as corporate trustee of the trust, on the evidence before the trial Judge, we would be satisfied to the requisite standard that it did so. However, that is not the test for the purpose of establishing an enforceable trust, although we later query whether, for the exercise under s 79, proof of an enforceable trust was necessary at all. We accept as correct the finding of the trial Judge that the company was established to act as trustee of the trust was one clearly open on the evidence. The trial Judge at paragraph 82 noted:
“The difficulty is the absence of any writing signed by either the husband’s mother [CP] or the company specifically declaring the land to be part of the Trust (my emphasis). Thus the documents exist which set out the nature of the Trust and the beneficiaries but there is no document signed by the husband’s mother or the company declaring the [rural] land to be part of the Trust.”
The trial Judge further said at paragraphs 87 and 88:
“87.The documents annexed to the affidavit of [CP] filed on the 15 January 2004 should be considered together as a group of documents. Included in this group is Annexure ‘E’ the Outline of Proposed Arrangements. Even though this document is not signed by either the husband’s mother or the company, it is a document which came into existence in 1977 and specifically refers to ‘property owned by [CP]’ being transferred to the Trust after the trustee company had been registered. The trustee company [JP] was thereafter registered. The Trust Deed of the 24 June 1977 sets out the terms of the Trust and the beneficiaries of the Trust. Subsequently [in] September 1977 the husband’s mother [CP] and the company executed the Memorandum of Transfer of 5 September 1977.
88.Grouping these documents together I am satisfied that there is sufficient compliance with Section 29 of the Law of Property Act to establish that [the company] holds the [rural] land on Trust in accordance with the terms of the [PF] Trust Deed. In making this finding I do so notwithstanding that the tax returns of the [PF] Trust have failed to disclose the Real Estate as an asset. I accept that this was an oversight by the Directors of the company and their advisers.”
The sufficiency of connectivity between documents was considered in Kronheim v Johnson (1877) 7 Ch D 60 by Fry J. In that case the plaintiff asserted she had advanced funds towards the purchase price of a leasehold, giving long term occupation of a home, and that the defendant leaseholder held it on trusts which the plaintiff had communicated to him for an infant. It was asserted the plaintiff had made a valid declaration of trust. The evidence of the declaration of trust was said to comprise a letter written by the plaintiff to the mother of the infant. An unsigned postscript to the letter written on separate paper, but posted in the same envelope as the letter, said the leasehold house was to be the property of the infant. The post-script bore the introductory words “I had quite omitted to tell you and Martin”. Fry J found the postscript and the letter did not satisfy s 7 of the Statute of Frauds. He held:
“In my opinion the signature to the letter does not satisfy this condition. There is no physical connection between the two documents, except that they are found in the same envelope, and there is no sufficient reference in the one to the other. I therefore hold that the postscript was not signed within the meaning of the Statute of Frauds.”
The sufficiency of connectivity between documents was also considered in Re Danish Bacon Co Ltd staff pension fund Christensen and others v Arnett and others (1971) 1 All ER 486 by Megarry J. Under consideration were the rules of a company pension scheme. The rules provided a member could, on a specific form, nominate a person to receive the member's entitlement in the event of the member's death. In default of nomination, on the member's death the entitlement was paid to his or her legal personal representative. In the instant case the member had made an original nomination in 1941 on the prescribed form which he signed nominating his wife. Many years later the member, responding to a letter from the trustee asking if his nomination was still appropriate, wrote a letter without specifically mentioning the fund, requesting his nomination of his wife be changed to another named woman (“the new nominee”). The trustee struck through the wife’s name on the original form, inserted the new nominee's name, and wrote on the original form “see attached letter”. On the member's death competing claims were made for his entitlements and the trustees of the fund sought a declaration as to whether the widow, the new nominee, or the deceased member's legal personal representatives were entitled to the funds.
The widow and the executor argued that the nomination was a disposition of an equitable estate, that s 23(1)(c) of the Law of Property Act 1925 (UK) applied, and that the letter signed by the member naming the new nominee without mention of the fund did not satisfy the requirements of that sub-section. Counsel for the new nominee argued that s 40 of the Law of Property Act 1925 (UK) applied. That section provided an agreement, on which an action was brought, could be satisfied by two or more documents provided they were sufficiently connected. Megarry J rejected the argument put on behalf of the widow that it was necessary to start with the document signed by the member, and that no reference could be made to documents which came into existence after that document. Megarry J held the issue to be determined was whether there was sufficient connectivity between the deceased member’s signature on the specified form, the notation on the form by the trustee, and the deceased’s letter naming the new nominee in place of his wife, to satisfy the requirements of the section. Although Megarry J ultimately determined the character of the disposition was not testamentary, nor was it an equitable assignment, but an equitable interest to be construed under the pension schemes rules, he found if
s 23(1)(c) had been applicable there was sufficient connectivity between the documents to satisfy the requirements of the sub-section.
Annexure E to CP’s affidavit is a document described as “Outline of Proposed Arrangement”. The document is undated and unsigned. However, CP deposes to receiving the document from land agents from whom she sought advice in 1977. The document reflects the arrangements deposed to by CP in her Affidavit in these proceedings. Paragraph 2 of the document is as follows:
“2.Transfer of Property
2.1Property owned by [CP] to be transferred to the trust.
2.2This is to be done after Trustee Company has been Registered.”
The trust deed defines the trust fund as:
“(i)The said sum of $100 paid by the settlor to the trustee;
(ii)All monies investments and property paid or transferred to and accepted by the trustee as additions to the trust fund;
(iii)The accumulations of income hereinafter directed or empowered to be made…”
A memorandum of transfer dated 12 July 1976 discloses CP’s purchase following the death of her father from a company controlled by her parents of the rural land for a consideration of $37,230.00. The letter from the land agents to MP and CP dated 2 May 1977 forwarded, inter alia, the Memorandum and Articles of a company, a deed of trust, an outline of arrangement and instructions for NM (the settlor of the trust) to provide a cheque for $100 when the company was registered. The letter also said “I am making regular checks with the Land Titles Office but as yet the new Title has not issued, don’t let this part worry you as it will not affect things to any extent”. A handwritten postscript to the letter read “P.S. Your title has now issued. I found out to-day.” The Minutes of the first meeting of the company although partly illegible note “it was resolved that the company act as trustee for certain trust created this 30^th day of May 1977”. It is clear that the trust deed is dated 24 June 1977. CP signed a Memorandum of Transfer which recorded a consideration of $39,780 (inclusive of an amount secured by mortgage) to the company on 5 September 1977.
(ii) conclusions - connectivity
There is no evidence of an oral declaration of trust by CP. There are no minutes of any meeting of the company acknowledging receipt of the rural land as trustee of the trust from CP. The land is not recorded in either the financial records of the trust or the company. While the beneficiaries of the trust are clearly identified in the trust deed, the deed does not particularise the rural land as part of the trust fund. The property owned by CP is not identified in the land agents’ letter. The lack of identification of the land is compounded by a lack of any evidence by CP that the rural land was the only property owned by her at the relevant time, particularly as her address shown in the correspondence from the land agents and on the transfer is not the rural land.
The subsequent financial statements of the company give some support to the manifestation of the trust referring, as they do, to the company only acting as trustee of a farming enterprise . The documents annexed to CP’s affidavit lead to the clear inference that the rural land was transferred by CP to the trust to minimise death duties, and that the company is not the owner of the rural land. However, having regard to the specificity required to satisfy
s 29(1)(b) of the Law of Property Act in respect of the subject matter of a trust, we are not satisfied that the rural land was sufficiently identified in the terms of that legislation to establish a declaration of trust for the purposes of enforcement.

(e) Does the Affidavit of CP satisfy the requirement of writing?

As we have already noted, the requirement of writing by the donor of the trust evidencing the trust can be by way of an affidavit filed in court proceedings. In the circumstances of this case it is argued on behalf of the wife that CP’s affidavit cannot be relied on because it was sworn for the purpose of these proceedings, as distinct from an affidavit filed in unconnected proceedings. The husband's counsel pointed out in submissions that if there were proceedings, for example, in the South Australian Supreme Court, then CP’s affidavit could be relied on in those proceedings as evidence of the trust sufficient to satisfy
s 29(1)(b). He further submitted that the status of the affidavit in these proceedings is not clear, having regard to the case law, and it is arguable that it may satisfy the legislation.
In Barkworth v Young (1856) 56 LJ CH 153 the plaintiff asserted he had been induced to marry his wife on the promise of his father in law, made prior to the marriage, that he would leave his daughter a share of his estate. In subsequent litigation between the plaintiff and his father in law in which the father in law sought to have the plaintiff declared a lunatic, the father in law swore an affidavit in which he confirmed he had told the plaintiff he would make provision in his estate for his daughter, who was at the time of the lunacy proceedings deceased. The father in law died without having made provision in his Will for his daughter, the plaintiff or their children. At his death, the father in law did not own real estate, but held a considerable quantity of personalty. The plaintiff sought to enforce the contract he asserted was entered into at the time of his marriage. The defendants, executors of the father in law’s estate, relied, inter alia, on the Statute of Frauds and asserted there was no evidence of the agreement prior to the marriage. The Vice Chancellor, Sir R T Kindersley found the affidavit to be sufficient evidence of the agreement. In the course of his judgment he noted that the Court had, in earlier cases, held “if the answer contained an admission of the parol agreement, though accompanied by a protest insisting on the statute, the Plaintiff's should have a decree”, but went on to note those earlier cases had been overruled.
This old authority, which confirms a subsequent affidavit may be relied on as evidence of an earlier parol agreement but not on original pleadings in which reliance is placed on the Statute of Frauds prima facie appears to be distinguishable on the factual circumstances of this case. CP was not, after the compromise of the claim against the other parties, a party to the s 79 proceedings. The compromised proceedings, which were brought in reliance on the accrued jurisdiction of the Court, could have been properly maintained in the South Australian Supreme Court in which case the affidavit would have been filed in such proceedings. We have already averted to the fact that the affidavit could be used in any subsequent proceedings in the Supreme Court to satisfy the statute.
In Equuscorp a defendant who asserted a property was held in trust for him, sought to rely on an Affidavit sworn by his mother in bankruptcy proceedings commenced against her in 1977. The defendant’s mother and her former husband provided the funds used to purchase the property which was registered in the name of the husband’s parents. The defendant’s mother claimed that at the time of purchase it was the intention of herself and her former husband that the property would be held by the husband's parents in trust for the son. Besanko J did not accept the affidavit manifested written evidence of the trust because, although the affidavit contained details of the property and the beneficiary, the son, it did not identify the nature of the trust.
In this case CP’s affidavit discloses the trustee, the beneficiaries and the trust property. The terms of the trust deed are identified. Further, the documents attached to CP’s affidavit are not of recent invention or origin. They are closely contemporaneous with the creation of the trust.
It appears to us, in the unusual factual circumstances of this case, particularly having regard to practical reality of the ability of CP to declare the trust in writing at any time after its creation during her lifetime, it may not be appropriate to take an unduly technical approach to her affidavit which may well be sufficient to comply with the requirements of s 29(1)(b). However, for reasons we refer to later, we do not find it necessary to determine this issue.

(f) Does DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) 1982) 149 CLR 431 provide an exception to the legislative requirements?

We turn to consider the husband’s capacity to pay the maintenance in the quantum sought. In so doing we have regard to relevant s 75(2) factors in respect of each party.
The husband’s Financial Statement sworn 14 January 2005 disclosed a total weekly income of $1,971. The income of the husband’s present partner was disclosed at $800 per week, and that she contributed $300 per week to their joint expenses. The husband claimed total personal expenditure of $2,285 per week with fixed expenditure of $878 per week for himself, including a shortfall between the rent received in respect of the investment unit and the mortgage debt secured over that unit. The unit has been sold and the net proceeds, after payment of capital gains tax are to be retained by the husband. We therefore disregard the sum of $20 per week. Further, his expenditure included an amount of $137 per week payable for child support. Pursuant to the trial Judge’s orders this assessment was reduced to nil. The husband’s average weekly expenses for himself are $503 per week. He claims total average expenses of $878 per week. The latter sum includes KP’s expenditure as well as expenditure for P of $218 per week, $100 per week for legal fees and does not take into account the $300 contribution by KP. We are satisfied that the husband’s claimed expenditure after the orders of the trial Judge should be reduced by not less than $557 per week ($20 rent shortfall, $137 child support, $100 legal fees, $300 KP’s contribution) resulting in weekly expenditure of $1,728 per week leaving an excess of income over expenditure of $243 per week. We further note that P attained the age of 18 years in November 2005.
We also examine the husband’s capital position following the hearing. As a result of the trial Judge’s orders the husband retained the following assets to the net value of $251,135 made up as follows:
[The second Adelaide property]  $187,500
Husband’s shares          $16,688
Husband’s furniture   $4,735
Husband’s motor vehicle   $1,000
Polyhouses    $6,500
IG Life insurances   $6,312
Husband’s superannuation  $367,438
Canoe and paddles  $3,600
Total assets   $593,773
Less:
Capital gains tax  $27,228
Mortgage [second Adelaide property]  $73,149
Loans payable to husband’s father                $93,500
SA bank overdraft  $7,107
SA bank fully drawn advance  $27,414
Credit card debt   $10,477
Partnership capital account debt                   $68,873
Payment to wife  $439
Tax on superannuation  $34,451
Total liabilities   $342,638

Total net assets $251,135

The reality of the husband’s position after the orders was considered by the trial Judge in her assessment as to whether the proposed orders were just and equitable. The trial Judge noted the husband would retain the net proceeds of the second Adelaide property after discharge of the mortgage and payment of capital gains tax, a sum of $87,123. The trial Judge contemplated the husband would use this sum to extinguish his bank loans ($34,521) and his credit card debt ($10,477) leaving $42,125 to be applied to the husband’s debts to his father. As well, the husband retained investments of $16,688.
We have already noted that the husband’s partnership capital debt was in existence throughout the marriage and there was no evidence of a requirement to repay this debt. Further, the evidence before the trial Judge was that the husband had not paid interest on the S loan to his father from 1998. The orders between the wife and the other parties did not require either party to repay the indebtedness to the husband’s father immediately.
The husband and KP have the benefit of occupation of the residence on the rural land. The sale of the [second Adelaide property] has provided the husband the opportunity to extinguish all his liabilities to third parties, other than his father, whilst retaining his shares and some capital from the net proceeds of sale of the investment unit to discharge part of his capital liability to his father if he chooses to do so rather than payment of interest, and/or a partial repayment of capital and a capacity from income to pay interest. We are satisfied that the husband has the capacity to pay spousal maintenance sought by the wife either by way of periodic payments for a period of twelve months or by a one off capital payment of $13,000.
The question of whether lump sum spousal maintenance should be ordered rather than periodical payments falls for our consideration. Neither s 72 or s 74 limit the type of order which may be made, and recent amendments to s 72(2) specifically provide for the payment of a transfer of property to satisfy the liability of a bankrupt spouse in respect of a spousal maintenance order. Section 80 relevantly provides:
“(1) The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
…
(3)The applicable Rules of Court may make provision with respect to the making of orders under this Part in relation to the maintenance of parties to marriages (whether as to their form or otherwise) for the purpose of facilitating their enforcement and the collection of maintenance payable under them.”
In Clauson the Full Court considered an application for lump sum spousal maintenance. Having set out the legislative framework for making such an order, and the criteria to be addressed in making an order under s 79 including a consideration of relevant s 75(2) factors and the separate consideration, after that exercise, of relevant s 75(2) factors in considering spousal maintenance their Honours said at 81,907-81,908:
“In addition, it is necessary to determine the issue of periodic maintenance first because this type of lump sum maintenance is the capitalization of that conclusion. The Court must satisfy itself of the components necessary to justify a periodic maintenance order, namely, in effect, need and capacity, and determine the amount in question and in some cases the duration of that order. If the applicant fails to establish those components that will end any claim for not only periodic maintenance but lump sum maintenance as well.
…
The distinction between s. 74 and the s. 75(2) exercise in a property order is important and must be maintained. In the latter context the s. 75(2) exercise is not an exercise of the maintenance power. Nor is it a ‘back door’ maintenance order. It requires the Court to take into account, so far as relevant, the various matters set out in that sub-section in determining, in effect, what alteration, if any, should be made to the conclusions already reached on the basis of the parties’ contributions to their property.
The other aspect which it is important to identify in this case is that the power to make a maintenance order is to be found in s. 74. As s. 80(1) makes clear, the Court, in exercising that power, can do so in a number of ways, including by a periodic order or a lump sum order. Periodic maintenance should be considered before lump sum maintenance. The central power is to order maintenance; that power may be exercised in different ways. A claim for lump sum maintenance is not a claim to the exercise of a separate head of power; it is a claim for maintenance which may be satisfied by a periodic order or by a lump sum order; see Davidson and Davidson (No 2) (1994) FLC ¶92-469 .
This type of lump sum maintenance is not a separate entity. It is the capitalizing over a period of time of what is considered to be appropriate periodic maintenance for that period, usually with a discount because of immediate payment. The power to capitalize periodic spousal maintenance is a power to be exercised cautiously for reasons referred to by his Honour in the passage cited above: see, for example, Vaughan and Vaughan (1981) FLC ¶91-066 at 76,508; O’Brien and O’Brien (1983) FLC ¶91-316; Spano and Spano (1979) FLC ¶90-707; Anast v Anastopoulos, supra; Vartikian and Vartikian (No. 2) (1984) FLC ¶91-587 at 79,739-40. In particular, uncertainty about future events explains this approach, and capitalization of maintenance would rarely be justified where there was no genuine concern about the capacity and preparedness of the payer to comply regularly with a periodic order.”
In Vautin v Vautin (1998) FLC 92-827 Fogarty and Burton JJ discussed the principles espoused in Clauson in the context of a claim for both lump sum and periodic spousal maintenance brought some years after concluded s 79 proceedings and in circumstances where there had been substantial default by the husband in making periodic payments as ordered. Having noted the usual approach to exercise caution prior to the making of a lump sum payment their Honours said at 85,423:
“However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay (as passages in the judgment in Clauson and Clauson (1995) FLC ¶ 92-595 at pp. 81,907 and 81,908 may suggest) or to cases where the need for or the capacity to pay periodic maintenance is demonstrated.
…It is clear that in exercising the power under s. 72 the trial Judge is not confined to one only of the categories of order referred to in s 80(1). In an appropriate case the Court may make orders which encompass several of those options.”
We take into account the principles espoused in both Clauson and the broader approach adopted by the majority in Vautin. The factual situations in both cases were disparate. In Clauson the Court’s emphasis was directed to the potential confusion between a property order under s 79 and spousal maintenance order made under s 74, each involving a separate consideration of relevant factors under s 75(2). The potential confusion arising from the different applications of s 75(2) is well recognised (see Zalewski). The Court in Clauson sought to establish that lump sum spousal maintenance orders should not be made in the guise of a maintenance order when the order represented a “back door” property order. We discern the majority in Vautin sought to emphasis the wide discretion available within the legislative framework to a trial Judge when making a spousal maintenance order, and to emphasise the flexibility, available in an appropriate case, to make a lump sum order. We consider the flexibility to make a lump sum order is apposite in the factual situation of this case.
In so determining we have taken into account that there is no suggestion in this case that the husband would not obey an order of the Court. To the contrary, his actions from separation to the date of hearing disclosed he had made payments due under the mortgage for both the investment unit as well as part of the mortgage payments for the first Adelaide property when the wife took up occupation of that property. This history supports the making of an order for periodic payments rather than a lump sum payment.
Prima facie, the wife’s immediate capital position looks stronger than that of the husband whose most valuable asset remains his substantial superannuation entitlement which he probably will not access for about nine years. This factor appears to also support an order for a periodic payment. However, the reality is that the husband has accommodation on the rural land, he additionally has the benefit of a secure, substantial income and the ability to share expenses with KP.
The evidence of Dr P supports an order for spousal maintenance to enable the wife to recover from her illness, to have the opportunity if she desires to re-commence her studies, and seek employment in an appropriate time frame. We are satisfied that a spousal maintenance order for a period of twelve months from the date of the trial Judge’s orders is an appropriate one based on the medical evidence and the evidence of the wife. We are further satisfied that in the circumstances of this case it is appropriate that such an order should be made as a lump sum order and not discounted given the limited nature of the order we propose.
In so finding we are conscious that the evidence establishes that the wife’s illness was at its peak in 2003 when her application for spousal maintenance was stood over part-heard. The trial Judge accepted the wife sold shares to meet her genuine living expenses. If her spousal maintenance application had been dealt with at that time as she sought, such a course which depleted her limited capital may not have been necessary. Further, we are satisfied that the husband has available capital and a borrowing capacity to meet an order of $13,000 without substantial hardship to him. We are also conscious of Dr P’s evidence that the completion of the litigation between the parties may aid the wife’s recovery, and the lump sum order will avoid the necessity of an ongoing interaction between the parties.
Whilst the wife seeks the order in her favour should be retrospective to 2001, having regard to each party’s position after the trial Judge’s orders, we find it would be unreasonable to back-date the order further than the date of the hearing.

ORDERS
1.That the appeal is allowed.
2.That within 21 days of the date of these orders the husband pay to the wife by way of lump sum spousal maintenance the sum of $13,000 being maintenance for the period from the 24 April 2005 for a period of 52 weeks.
3.The parties are at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable:
(a)on behalf of the appellant wife within 21 days of the date hereof;
(b)on behalf of the respondent husband in response thereto within 21 days thereafter; and
(c)on behalf of the appellant wife in reply thereto within seven days thereafter.

I certify that the preceding 156 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.

Associate