Lovine & Connor

FAMILY COURT OF AUSTRALIA

LOVINE & CONNOR AND ANOR

[2011] FamCA 432

FAMILY LAW - CHILDREN - Best interests – application seeking equal time – order made for substantial and significant time - relevance of father’s availability.

FAMILY LAW - PROPERTY SETTLEMENT– competing applications for alteration of property interests – determination of pool of assets – treatment of party’s interest in testamentary trust – add-backs for legal fees – potential capital gains tax liability.

FAMILY LAW - PROPERTY SETTLEMENT - Contributions - relevance of initial contributions.

FAMILY LAW - PROPERTY SETTLEMENT - Future needs.

Family Law Act 1975 (Cth)

Ashton and Ashton, (1986) FLC ¶91-777
Bremner and Bremner, (1995) FLC ¶92-560
Chorn and Hopkins, (2004) FLC ¶93-204
Davidson and Davidson (1991) FLC ¶92-197
Lawler and Lawler, (1988) FLC ¶91-927
Money and Money, (1994) FLC ¶92-485
Pierce and Pierce, (1999) FLC ¶92-844
Rosati and Rosati, (1998) FLC ¶92-804
Stephens and Stephens and Ors (2007) FLC ¶93-336)

APPLICANT:

Mr Lovine

FIRST RESPONDENT:

Ms Connor

SECOND RESPONDENT:

X Investments Pty Ltd

FILE NUMBER:

MLC

9419

2009

DATE DELIVERED:

10 June 2011

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:	Mushin J
HEARING DATE:	25 – 29 October 2010 inclusive, 1 November 2010 & 3 November 2010, 22 - 23 February 2011 inclusive

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Ackman QC
Ms Johns

SOLICITOR FOR THE APPLICANT:	Taussig Cherrie & Fildes
COUNSEL FOR THE RESPONDENT:	Mr St John SC Mr Dickson

SOLICITOR FOR THE RESPONDENT:

Lander & Rogers Lawyers

IT IS ORDERED THAT

The husband and the wife have equal shared parental responsibility for making all decisions with regard to the care, welfare and development of the children W born … January 2001 and V born … October 2003.
The said children live with the wife.
The children spend time and communicate with the husband as follows:
a)during school term –
i)from after school on Thursday to the commencement of school on Monday (or the commencement of school on Tuesday if Monday is a non-school day) on each alternate week commencing 14 days after the commencement of the last such period; and
ii)each alternate Thursday from the conclusion of school until the commencement of school on Friday commencing 14 days after the commencement of the last such period;
b) during school holidays –
i)for one half of school holidays and the long summer vacation period at times to be agreed (such agreement to be in writing and exchanged no later than 21 days prior to the conclusion of the preceding school term) and failing agreement the second half of the school holidays beginning in even-numbered years and the first half of the holidays beginning in odd-numbered years; and
ii)from 5:30pm Christmas eve to 5:30pm on Christmas Day commencing 2011 and each alternate year thereafter; and
iii)from 5:30pm Christmas Day to 5:30pm Boxing Day commencing December 2012 and each alternate year thereafter; and
b)such other times as may be agreed between the parties.
Notwithstanding any other provision of these orders the children spend time and communicate with the parties as follows:
a)if the children are in the wife’s care, with the husband –
i)from 5:30pm on the day preceding Father’s Day to 5:30pm on Father’s Day;
ii)on each of the children’s birthdays at times to be agreed between the parties and failing agreement from 4:00pm to 6:00pm if a school day and 11:00am to 3:00pm if a non-school day; and
iii)on the husband’s birthday as agreed between the parties and failing agreement from after school until 7:00pm and on non-school days from 11:00am to 5:00pm; and
b)if the children are in the husband’s care, with the wife -
i)from 5:30pm on the day preceding Mother’s Day to 5:30pm on Mother’s Day;
ii)on each of the children’s birthdays at times to be agreed between the parties and failing agreement from 4:00pm to 6:00pm if a school day and 11:00am to 3:00pm if a non-school day; and
iii)on the wife’s birthday as agreed between the parties and failing agreement from after school until 7:00pm and on non-school days from 11:00am to 5:00pm; and
c)at such other times as may be agreed between the parties.
When a changeover occurs other than at school the husband deliver the children to the wife’s ordinary residence at the commencement of her time with the children and the wife deliver the children to the husband’s ordinary residence at the commencement of his time.
Each party be at liberty to attend extra curricular activities and school related activities notwithstanding that they may occur during a time that the children live with the other party.
The parties record all relevant information in relation to the children in a communication book to be used and completed by each party and returned with the children to the other party at changeover.
Each party notify the other as soon as practicable of any significant illness or injury sustained by either child which requires treatment by a medical practitioner.
The parent with whom the children are not living be at liberty to telephone the children once every second day and the parent with whom the children are living from time to time facilitate the children telephoning the other parent if the children (or either of them) express a reasonable wish to speak to that parent.
Each party notify the other of any change to their landline or mobile contact telephone numbers within 24 hours of such change.
Each party give the other the first option to care for the children for any period in excess of 24 hours that they are unable to do so.
No later than 10 September 2011 or such other time as may be agreed between the parties in writing the husband pay or cause to be paid to the wife the sum of $3,232,454 (“the payment”) as follows:
a)the sum of $655,618 by the second respondent; and
b)the sum of $2,576,836 by the husband or on his behalf as he may elect.
No later than the payment or such other earlier time as may be agreed between the parties in writing, the husband and the wife do all things and sign all documents necessary to cause C Pty Ltd, as trustee of T Investment Trust (“T Trust”), to transfer to the wife at her expense –
a)the property known as and situated at R Suburb in the State of Victoria and being more particularly described as the whole of the land in Certificate of Title Volume … Folio … lodged in the Office of Titles (“R suburb property”) to the wife in her capacity as a beneficiary of the T Investment Trust at her expense (“the transfer”); and
b)T Trust including resigning any position in favour of the wife or her nominee.
Contemporaneously with the payment, the wife do all things and sign all documents necessary at the expense of the husband to –
a)surrender any claim, whether at law or in equity, to any interest in the real properties situated at and known as –
i)K Suburb in the State of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“K Suburb property”); and
ii)M Suburb in the State of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“the beach property”);
b)resign any position and transfer any share held by her in favour of the husband or his nominee in –
i)The Y Trust;
ii)C Pty Ltd; and
c)indemnify the husband and keep him indemnified against all liability past present and future in respect of all rates, taxes including income tax and capital gains tax and all other outgoings relating to –
i)R Suburb property; and
ii)T Trust.
Contemporaneously with the payment, the husband indemnify the wife and keep her indemnified against all liabilities past present and future in respect of any rates, taxes, income tax and/or capital gains tax together with all charges in respect of the entities in sub-paragraphs 14(a) and (b) hereof.
Until the payment the husband continue to pay or cause to be paid to the wife all amounts due to her pursuant to the Orders of the Court made on 5 May 2010, at which time all prior orders be and are hereby discharged.
The parties each do all things and sign all documents necessary to roll out to a complying superannuation fund nominated by the wife her member’s entitlement in the Family Superannuation Fund (“the Superannuation Fund”).
Subject to the provisions of these orders, property in all items of personal property forthwith vest in the party in possession thereof, the husband’s interest in the Superannuation Fund being deemed to be in his possession.
Any application for costs or any other order incidental to or arising out of these orders be made by written submissions to be filed and served in accordance with the following timetable:
a)by any applicant by 4:00 p.m. on Tuesday 21 June 2011;
b)by any respondent thereto by 4:00 p.m. on Thursday 30 June 2011; and
c)by any applicant in reply thereto by 4:00 p.m. on 8 July 2011.
All extant applications be otherwise dismissed.
That pursuant to Sections 65DA and 62B the particulars of the obligations these Orders create and the particulars of the consequences that may follow if a person contravenes these Orders and details of who can assist parties adjust to and comply with an Order are set out in the Fact Sheet attached hereto and those particulars are included in these Orders.

IT IS CERTIFIED

Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel and senior counsel.

IT IS NOTED that publication of this judgment under the pseudonym Lovine & Connor and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9419 of 2009

Mr Lovine

Applicant

And

Ms Connor

First Respondent

And

X Investments Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

introduction

After a period of cohabitation of approximately 10 years, the parties physically separated in May 2010. The two children of their marriage are presently aged 10 and 7 years and have lived in the primary care of the wife, spending substantial and significant time with the husband.
Throughout their relationship, the husband has been a partner at a large professional firm. The wife has been essentially involved in home duties and parenting but in that capacity, has been engaged in other areas of the parties' endeavours.
In these applications, the parties are in dispute with regard to parenting orders for their children and alteration of property interests. The parenting orders relate to the issue of whether the children should live with the wife for nine nights per fortnight and the husband for five nights per fortnight during school term or whether the parties should share equal time with them. As was noted by one counsel during the trial, that dispute amounted to a difference of approximately 240 hours per year. The parties are agreed that whatever the result with regard to that dispute, they should essentially share equal time during school holidays together with various special occasions.
In the area of alteration of property interests, the parties have net assets which total in excess of $14 million. They are in dispute with regard to the details of the asset pool together with issues of contribution and future factors.

The parties, their marriage and children

The husband was born in 1961 and is now 50 years of age. As noted above, he is a partner at a large professional firm and has been engaged in that employment since prior to the parties' cohabitation. He has recently changed his employment from full-time to part-time which has resulted in his receiving less income than previously. However, he has always been remunerated at the very highest levels of income in the community.
The wife was born in 1970 and is now 40 years of age. Prior to the commencement of the parties' cohabitation, the wife had an interest in a textile agency which was sold after the parties married. As noted above, she has been essentially involved in homemaking and parenting throughout the parties' relationship although it is asserted on behalf of the husband that she has also been occupied in property development or renovation. I will consider that in due course.
The parties commenced cohabitation in late 1999 and married in August 2000. It is common ground that their physical separation occurred on 10 May 2010 when the wife left the matrimonial home with the children and went to live at another property which is owned by or on behalf of the parties. There is an issue between them as to whether they separated under the one roof in December 2006 or at all. I will also consider that issue in due course as it pertains to the competing applications for alteration of property interests.
The parties have two children by their marriage. The older child is W who was born in January 2001 and is presently aged 10 years. The younger child is O who was born in October 2003 and is presently aged 7 years.
Since the parties' physical separation, the children have lived with each of them in the proportions of approximately 9 nights per fortnight with the wife and five nights per fortnight with the husband.

The trial and these reasons for judgment

This trial was conducted over a period of seven days in October and November 2010. Both parties were represented by very senior and experienced senior and junior counsel. As it had exceeded the time previously set down for it and there were issues on which the parties proposed obtaining further information, it was adjourned for further evidence and final submissions. It was eventually relisted for those purposes in February 2011 and occupied a further two days. Ultimately, neither party sought to call further evidence and that time was therefore occupied with final addresses.
The trial proceeded without the appointment of an Independent Children's Lawyer (“ICL”). Prior to the trial I conducted several Directions Hearings on various issues to ensure that it was ready for hearing. Neither party sought the appointment of an ICL and I determined not to appoint one of my own motion. I was, and remain, satisfied that the relatively narrow ambit of parenting orders in dispute between the parties did not warrant such an appointment. As I will refer to in due course, I had the benefit of extensive written and oral evidence from a highly competent and skilled single expert agreed to by the parties on all issues between them with regard to parenting orders. No submission to the contrary was made by any counsel at any time during these proceedings.
On several occasions during this trial there was discussion between myself and counsel with regard to the possibility of splitting the trial to enable the determination of the parenting orders prior to consideration of the applications for alteration of property interests. Ultimately, it was decided not to take that course. However, in my consideration of the structure of these reasons for judgment I have decided that it is appropriate to determine the parenting issues separately from and prior to the financial issues. To the extent that the two areas of jurisdiction may overlap, the determination of the parenting issues may be relevant to the financial issues. Conversely, the financial issues would not be relevant to the parenting issues if determined in that order.

Credibility

It is appropriate to make certain general findings with regard to the credibility of the parties. The submissions of counsel for each party mirrored each other in asserting that the other party was of comparatively lesser credibility. By way of general finding, I disagree with those submissions on both sides. I find that there are instances in the relevant facts of each party exaggerating his or her respective versions. However, such exaggeration does not amount to a lack of credibility.
Senior counsel for the husband submitted that the relationship between the parties was essentially amicable and that they communicated well together. He asserted that the wife had artificially manufactured an atmosphere of dispute between them in order to further her basic proposition that the relationship between the parties would not support an equal sharing of time with regard to care of the children. I disagree with those propositions. While I will develop my view in my consideration of the children's best interests, the question of the relationship between the parties can be relevant to the issue of credibility.
On the basis of my view that the relationship between the parties is not as positive as was asserted by and on behalf of the husband, in the emotional and volatile atmosphere which inevitably accompanies relationship breakdown those most intimately involved have their own interpretations of the relevant facts. In my view, that has occurred here. At times, each party is open to criticism and where necessary, such criticism will be made. However, those interpretations do not extend to the proposition that the evidence of either party is to be preferred over that of the other or that such evidence is generally unreliable.

Parenting orders

Relevant facts

As I have previously found, without diminishing the importance of the parties' issues with regard to parenting orders, those issues are in relatively narrow compass. Accordingly, the relevant facts are neither extensive nor complicated. The determination of those issues will primarily depend on an evaluation and application of the relevant legislation pertaining to the best interests of the children.
On 5 May 2010, that is five days before the parties' physical separation and presumably in anticipation of it, interim proceedings were heard by the Senior Registrar. The parties consented to an order that they equally share parental responsibility for the children. The Senior Registrar otherwise ordered that during school term the children live with the husband from after school on Thursday until the commencement of school on Monday of each alternate week, which was to be extended to Tuesday if the Monday were a public holiday, and on each alternate Thursday from the conclusion of school until the commencement of school on Friday in each other week. Otherwise, the children were to live with the wife. Accordingly, the children were to live with the wife for nine nights in each fortnight and with the husband for five nights.
Further orders were made with regard to the time to be spent with the children by each of the parties during school holidays. Essentially the parties were to share those holidays and specific arrangements were made with regard to Christmas Day, Mothers' and Fathers' days and the parties' and children's birthdays. Save to note that the orders were extremely detailed, it is not necessary to further particularise them. However, in my view the need for such detail, which responded to the parties' respective applications, at least partially confirms the finding which I have made above as to the relationship between the parties.
The orders referred to in the previous two paragraphs have continued to operate with comparatively little difficulty. Nevertheless, there have been individual instances which have demonstrated the parties' antipathy towards each other. The incident relevant to property orders which occupied most time during this trial involved the children's bicycles. The children were in the care of the husband during a weekend. Their bicycles were at the wife's home. The husband telephoned the wife to attempt to arrange to collect the bicycles for the children. The wife told him that the bicycles were locked behind the gate, but she would not be home and that he could not come and collect them. Despite that, the husband went with the children to the wife's home. He assisted one of the children to climb over the fence to collect the bicycles which he took back to his home.

Upon returning home, the wife discovered that the bicycles had been removed. Whilst she could not be certain that the husband was responsible for the removal, I am satisfied that she was not in any realistic doubt as to that fact. She telephoned the police to report the bicycles as missing and suggested to them that they contact the husband to ascertain that he had them. The police attended at the husband's home to the knowledge of the children and when they confirmed the fact that he had the bicycles, quite properly they did not take the matter any further.
In my view, both parties are open to criticism with regard to that incident. Rather than take the children back to the wife's home and retrieve the bicycles by climbing over the fence, the husband could have persuaded the children to do without them for that weekend. Conversely, the wife should have been more cooperative in providing the bicycles and when she discovered that they were missing, she should not have involved the police, particularly because she would have been very confident that the husband had them.
While both parties are open to criticism, in my view the wife's actions are less acceptable than those of the husband. To involve the police in those circumstances was contrary to the children's best interests and a significant overreaction to the husband's removal of the bicycles. However, ultimately I see this incident as being a manifestation of the tensions between the parties, particularly in the heat of the dispute as to care of the children.
Having been more critical of the wife than the husband with regard to the incident involving the bicycles, it is important to record that I do not regard the wife's unacceptable actions as being a deliberate attempt to create a dispute for the purpose of enhancing her position in these proceedings. I will develop that concept below. It relates to the parties' personalities and the nature of their relationship.
Another matter which took up more time than necessary during this trial was the wife's actions in registering several internet user names which were quite insulting towards the husband. The children were not involved in this exercise. The wife's conduct expressed her anger towards the husband which again, in the circumstances of the breakdown of the relationship and the different views of the breakdown taken by the parties as discussed below, was understandable. The wife acted in an unacceptable manner and I criticised her for it. However, I do not attribute to her actions the criticisms levelled against it by and on behalf of the husband, particularly by way of intent to manufacture an artificial dispute between the parties, as submitted on the husband's behalf.
One of the key planks of the husband's case in seeking that the parties equally share the time with the children is his availability. Until last year he was engaged in his employment as a partner in his firm for very long hours. The evidence persuades me that he has taken significant steps to adjust his hours to enable him to work on a part-time basis.
On 7 April 2010 the Chief Executive Officer … of the firm, Mr B, wrote to the husband confirming his application to become a part-time partner in the firm. Mr B noted the firm's policy –
… of promoting flexibility so that it can allow partners (and others) to balance significant non-work commitments with their work commitments.
…
you have proposed that you would be a part-time partner and be relieved of your normal partnership responsibilities on days when you are required to collect your children from school and care for them. In particular, you propose that, during school term, you would leave the office no later than 3 p.m. on:
·Tuesdays and Wednesdays each week; and
·Friday every second week.
The letter noted the requirement of formal approval of the Board of Partners and that the proposal had the support of the husband's partners in his section and the National Head of the … Group.
I am satisfied that the husband's application to convert his hours to part-time has been approved by all the relevant processes required by the firm. I will discuss the consequences of that approval in due course.

The parties' proposals

The husband proposes that the parties equally share their time with the children on a fortnightly basis. The parties are agreed that in the event that I were to order that they equally share that time, the sequence of sharing should be alternating periods of five days each and alternating periods of two days each with the effect that the children are never away from either parent for more than five days.
During the trial, I suggested that in the event that I were to find that it was in the children's best interests that the parties equally share time with them, it may be preferable for a sequence of week and week about. Both parties stated their preference for the sequence referred to in the previous paragraph.
The wife proposes the continuation of the present status quo. That sequence would be for the children to be in the care of the wife for nine nights each fortnight and the care of the husband for five nights in each fortnight. The husband's five nights would be broken into two periods of four nights and one night respectively.
It is common ground that no matter what I decide with regard to the children's care during school terms, there is to be an effectively equal sharing of the time during school holidays and other special occasions which would be generally in accordance with the present status quo in those regards.
It will be clear from the above summary of the parties' proposals that my determination will be as between equal shared time and substantial and significant time.

legislation

I now turn to the legislative framework within which I must decide these applications. It is contained within Part VII of the Family Law Act 1975 (“the Act”).

Children's best interests paramount

The fundamental starting point is that the children’s best interests are the paramount consideration in my determination of the issues. Best interests means “most important” as distinct from “sole”. There are various factors which I must take into account in determining those best interests which I will discuss shortly.

Legislative objects and principles

The next step in my consideration is of the rights of the children and the duties and responsibilities of the parties as parents of the children. The legislation sets out a number of objects relevant to the determination of parenting disputes. Those objects place a primacy on ensuring that the children have the benefit of both their parents as parents. However, it must be emphasised that the objects are subject to their being in the best interests of the children. To that extent, the legislation provides that -
·the parties should have “a meaningful involvement in [the children's] lives”;
·the children should be protected “from physical or psychological harm from being subject to, or exposed to, abuse, neglect or family violence”;
·the children should “receive adequate and proper parenting to help them achieve their full potential”; and
·the mother and father must “fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.”
The legislation also contains a number of principles which underlie the objects detailed in the previous paragraph. Again, those principles apply “except where it is or would be contrary to a child's best interests.” Those principles are -
·the rights of the children to -
a)“know and be cared for by both their parents”;
b)“spend time on a regular basis with, and communicate on a regular basis with, both their parents and other people significant to their care, welfare and development (such as grandparents and other relatives)”; and
c)enjoy their culture; and
·the obligation of both the father and the mother to “jointly share duties and responsibilities concerning the care welfare and development of the children.”
The legislation also encourages parents to “agree about the future parenting of their children.”

Legislative structure

The legislation sets out a structure by which I must decide these applications. First, there is a rebuttable presumption that parents will equally share the parental responsibility of and for their children. That presumption –
does not apply if there are reasonable grounds to believe that a parent of the child … has engaged in … abuse of the child … or family violence.
Further, -
the presumption may be rebutted by evidence that satisfies the court that it would not be in the best interests of the child for the child's parents to have equal shared parental responsibility for the child.
In this matter, the parties are agreed that they should equally share parental responsibility of and for their children. I agree that that is in the best interests of the children.
Section 65 DAA of the Act provides that in circumstances in which the parties equally share parental responsibility, the court is required to -
… consider whether [the children] spending equal time with each of the parents would be in the best interests of [the children].
In considering that factor, I must also consider whether the children spending equal time with the parents “… is reasonably practicable.” If it is “reasonably practicable”, I am required to consider making the order.
In the event that I decide against the children spending equal time with each of the parties in accordance with the previous paragraph, I am required to -
consider whether [the children] spending substantial and significant time with each of the parents would be in the best interests of [the children].
The concept of “substantial and significant time" includes “days that fall on weekends and holidays” and “days that do not fall on weekends or holidays”. Further, such time should enable the parents to be involved in the children's “daily routine”, “occasions and events that are of particular significance to the child” and -
the time [the children] spend with the parent allows [children] to be involved in occasions and events that are of special significance to the parent.
As with equal shared time, my consideration of substantial and significant time must include the question of whether it is “reasonably practicable”.

Best interests

Before examining the means by which I must decide the children's best interests, it is appropriate to refer to the expert evidence. The parties engaged Mr P, a highly experienced and skilled clinical and consulting psychologist in the family law jurisdiction to prepare a family report on all issues relevant to the competing applications for parenting orders. Mr P read all the relevant affidavit material and other documentation. He interviewed the parties and the children on 14 September 2010. His written report is dated 13 October 2010 and is annexed to an affidavit sworn by him on 21 October 2010 which is evidence in these proceedings. He also gave oral evidence and was cross-examined on behalf of both parties.
Mr P's qualifications and expertise have not been challenged. I accept the accuracy of his observations and have found his opinions and recommendations most helpful. I consider his evidence in the context of my determination of the children's best interests.
The paramountcy of the children's best interests is fundamental to my determination of the competing applications for parenting orders. The object and principles referred to above may be rebutted in the event that they are contrary to those best interests. The issue of equal shared time as against substantially significant time must be decided in accordance with those interests together with the issue of reasonable practicability. Accordingly, I now turn to a consideration of those best interests.
In my determination of the children's best interests, I must consider the various matters in sections 60CC of the Act. The relevant factors are divided into “primary considerations” and “additional considerations”.

Primary considerations

The primary considerations require me to consider the benefit to the children “… of having a meaningful relationship with both of [their] parents” together with the need to protect them “… from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence.” I am satisfied that no matter what I decide with regard to parenting orders within the ambit of the parties' proposals, the children will have “a meaningful relationship” with both of their parents.
There is neither any evidence nor submission that either of the children is subject to a risk of harm as contemplated by the second of the primary considerations referred to in the previous paragraph.

Additional considerations
Children's wishes

In my consideration of any view expressed by the children, I am required to have regard to their maturity, level of understanding or like matters as I think may be relevant to the weight which I give such wishes. Mr P's evidence satisfies me that the children's primary position is that they would like their parents to be living together again. Understandably, because of the nature of their relationship with both their parents they preferred not to express a preference as between them. In my view, given their ages that is entirely appropriate.
The husband swore that the children would like to spend more time with him. While I note that evidence and have no reason to doubt it, the complexity of the issues involved in the parties' dispute relating to parenting orders together with the children's ages persuade me that it would not be in their best interests for me to rely and act on those wishes.

The nature of the children's relationships

I am required to consider the nature of the relationships of each of the children with each of their parents as well as other people including any grandparent or other relative. In this regard, the children's relationships with each other and each of the parties must be considered.
There is no evidence to suggest that the children have other than an appropriate sibling relationship with each other. Quite properly, no submission has been made which might change those relationships.
I am satisfied on all the evidence and particularly that of Mr P that each of the children has a very close and loving relationship with each of their parents. While Mr P reported on differences between the parties, he wrote that “… they both have good relationships with their children, albeit that they engage with them in very different ways.”
The nature of those relationships is different in each case. Mr P wrote:
There is no doubt that their parenting styles are different, that [the wife] is much more affect driven, emotionally intuitive, empathic, and both boys do convey a real sense of dependency and understanding in relation to her. However, the boys do have a very good relationship with her father, albeit that it is very different to the relationship with their mother. They value and enjoy the time with him and extract from him in an emotional sense, all they need, albeit that it is different in a qualitative sense to what they get from their mother.
It was not submitted that either child has any other relationship relevant to my consideration of this factor.

Promotion of children's relationships with other parent

Despite the tensions between the parties to which I have referred above, the children appear not to have experienced much conflict between their parents and have therefore been able to enjoy their time with them. There is no evidence to suggest that the situation is likely to deteriorate. On the contrary, the husband's optimism that it should improve when these proceedings are concluded is quite realistically based.

The status quo

I am required to consider the likely effect of any change in the children's circumstances “… including the likely effect on [the children] of the separation from …” the parents or any other person. That is often referred to as the “status quo”. That issue occupied significant time during this trial.
The status quo, in so far as it affects the children, has changed significantly since the parties' physical separation. However, it has maintained one common element from the time the children were born. That is that the wife has spent greater time with the children and has been more involved with them than has the husband. That is not a criticism of the husband and is by no means decisive of these applications. The common facts are that the husband has been deeply involved in his occupation described above and that has required him to be at work and therefore away from the home for most of the children's waking hours, at least when they were young. Again, that does not detract from the fact that he has been very involved with the children when not at work. His obviously very good relationship with them amply demonstrates that proposition.
The changes in the status quo have been most evident since the parties' physical separation last year. As I have previously found, several days prior to that separation detailed orders were made dividing the children's time between the parties. The result has been that the husband has spent approximately 35% of nights per fortnight with the children and has seen them for at least part of approximately 65% of days on a four-week cycle. In addition, he has spent half of holiday periods with them as well as other special occasions. On any view, he has spent substantial and significant time with the children which has enabled him to have the relationship with him which is described above.
However, on any view the wife has had the primary care of the children. She has spent more time with them than has the husband and has provided significantly more care of them than he has. The wife has been involved in other pursuits in addition to her care of the children. One of those pursuits which was canvassed during the trial was her involvement in the renovation of one of the parties' properties. I will discuss that further in my consideration of the applications for alteration of property interests but at this stage it is sufficient to find that in my view, that involvement did not detract from the fundamental proposition that she was the primary carer of the children.

Practical difficulty and expense of spending time and communicating

There was no evidence or submission to establish that this factor is relevant to my consideration.

The parties' capacity to provide for the children

The legislation requires me to consider the parties' capacities to provide for the children in all respects including physically, materially, emotionally and intellectually. There is no issue with regard to the capacity of both parties to provide for the children materially. They have a very high quantum of net assets which are the subject of the competing applications for alteration of property interests which I will consider in due course. However, no matter what the result of those applications, both parties will have ample capacity to house the children and provide for them to a very high standard of living. No submission has been made to the contrary.
I now turn to the question of the parties' capacities to provide for the children emotionally and intellectually. In those respects the parties are very different which, I suspect, was one of the major factors in the breakdown of their relationship. However, those differences are not to be seen as being a criticism of either party. I agree with Mr P's evidence that the parties' diversity in those regards are potential significant strengths in my consideration of the best interests of the children.
Mr P referred to those differences in both his written and oral evidence. He described the wife as being “generally more emotional and more intuitive in her style” and the husband as being “more practical and analytic … .” My observation of the parties satisfies me that that analysis is correct.

Mr P commented on the parties' personality differences as follows:
44. It is extremely unlikely that [the husband's] personality and characteristics are different now to what they were when she first met him, and whilst I can see how the mismatch of characteristics culminated in an unhappy relationship, it is the decimation of trust emanating from the financial proposals and [the husband's] subsequent behaviour that has created such a different context for [the wife]. [The husband] is no different now to what he was like throughout the relationship. Qualitatively it is not likely he will be different in the future. The differences that are so obvious are likely to continue. It is then really a question of how much damage is done to the relationship [in] terms of the trust and the parental relationship through the process of litigation that will ultimately determine how they reflect upon the situation and themselves.
In his oral evidence, Mr P swore with regard to the differences between the parties:
From my perspective, they both come across as capable parents but very different in their style and in their interaction and what they bring to their relationship with their children. I think that if we were talking about much younger children, I would be talking about feeling more comfortable with their mother's level of attunement, general sense of emotional connection, empathy, and just in the way she interacts with them. I tried to describe it in a way that really made it alive. But she really engaged with them. There was more emotional energy and there was a general level of emotional activity that was really obvious. With their dad, the kids were great, but it was much more contained and managed in much the way they present differently themselves as parents.
One of the most significant arguments advanced on behalf of the husband in support of equal shared time might be paraphrased by the proposition that if the husband were available to care for the children on that basis, he should be given the opportunity. While I will discuss the mirror to that argument shortly, it is appropriate to refer to Mr P's evidence in that regard. Mr P wrote:
46…. Whilst I clearly understand [the husband's] stated wish to be more involved and his assurances that he can organise himself and be involved, the reality is that he has a very senior position, which has in the past, required a significant commitment time wise. Ultimately it will need to be determined whether in fact he can realistically allocate the time to the children that he proposes.
…
47…. I don't necessarily think that [the husband] having more time with the children will exponentially contribute more to their overall welfare, although clearly there is no reason why, if his circumstances allow, that he should not be as equally involved in all aspects of the children's lives as is their mother. It is then a question of fact. If [the husband] can care for the children, then there is no reason why an equal time arrangement should not be implemented, however, if there is doubt, or if [the husband] cannot satisfy that he can genuinely allocate the time to the children, at least to the levels shown by their mother, then things should stay as they are. It is not about either parent's right to time with the children, but the children's right to maximise their welfare and development. Either way, [the husband] and [the wife] will share the care of their children, it is just then a question of whether it will be a sharing based on equal or unequal time. The reality is, that from the children's perspective, it probably doesn't matter much either way. (Emphasis included)
Prior to the cross-examination of Mr P by counsel, I put a number of matters to him. I put:
See, I would normally state a preference for the more insightful, the more perceptive, the more intuitive, the more at emotionally aware person, and if that's the case, then on all of those factors, I think the mother wins.
Mr P responded:
Yes, I think that's right. I, however, also struggle with realistically, can the other parent, the mother or father, be genuinely actively continuously involved in these children's lives, as can the parent who is traditionally at home with them? And I think in [the husband's] case, if in fact he does have the opportunity to do that, then his position is different to many of the other people I see, and certainly many of the other dads. They just don't realistically have the amount of time available to them to be able to do so. I must say, I have some doubt that he can. I don't know - just given his history and seniority and his personality, I have some residual doubt that he can really devote the time he can, but that's just me being subjective.
… But, you know, if it's not broken, maybe there is no need to fix it. These kids are doing okay, and they are connected to their mum in a different sort of a way. That doesn't mean that their father can't fulfil as active and integral a role. I think it's a relatively safe choice, frankly.

Attitude to children and responsibilities of parenthood

I am required to consider the parties' attitudes to their children and the responsibilities of parenthood. On the basis of both Mr P's evidence and my own observations of the parties and their evidence, I am satisfied that both parties behave entirely within the children's interests in those regards.

Other additional considerations

By way of completeness I make the following findings with regard to the remaining additional considerations:
·there is no issue of family violence or any other like risk to either of the children;
·these applications have been conducted on the basis that I will make final orders. I agree with that approach as being in the best interests of the children; and
·there is no other relevant fact or circumstance.

Discussion of children's best interests

I now turn to a discussion of the children's best interests in light of the findings which I have made above.
First, I refer to my discussion of the legislation relevant to these applications and particularly the requirement that any order which I may make for either equal shared time or substantial and significant time be "reasonably practicable". There is neither evidence nor submission by or on behalf of either party to suggest there any such order would not be "reasonably practicable". I accept that that requirement does not create a barrier to any such order.
In my consideration of these applications, I am fortified by several propositions as follows:
·the fundamental issue between the parties of the division of time as between them of nine nights to the wife and five nights to the husband as against equal shared time is primarily an issue for the parties and specifically not an issue for the children;
·either decision is “safe”; and
·the parties will adapt to the decision and continue to parent their children to a very high standard.
I do not accept Mr P's opinion that in the event that the husband is “available” in the true sense of the word, he should be given the opportunity to be equally involved in the children's upbringing. It follows that I also do not accept that the determination of these applications should be reduced to a question of “fact” as quoted above. The balance pertaining to the children's best interests is, in my view, more subtle and complicated than that.
However, it is nevertheless necessary to make findings with regard to the husband's availability to parent the children equally with the wife as far as time is concerned. In that regard, Mr P had doubts and so do I. I respect the fact that the husband has reduced his working hours to enable him to spend more time with the children. The husband believes that that is sufficient to make the concept of equal shared time a reality.
In my view, “availability” incorporates a much wider concept than that. As Mr P swore, that concept would require the husband to
… be genuinely actively continuously involved in these children's lives, as can the parent who is traditionally at home with them[.]
The husband will continue in his partnership at the firm, albeit probably on a part-time basis. That may place some minor limits on his availability. However, more importantly it is a regrettable reality for the husband that throughout the children's lives, their mother has been the parent who has been “available” for them in that sense of the word. That is no criticism of the husband. It is a statement of fact. Accordingly, I find that, contrary to the submission of counsel for the husband, the husband has not been as available to the children as has been the wife. The wife will continue to be more available to the children in relevant respects.
The wife's relationship with the children is different to that of the husband. Because she has been “the parent who is traditionally at home with them”, she is more attuned to their needs. The fact that she is intuitive and emotional has assisted that attunement. The children have bonded with her differently to their bond with their father and, in Mr P's words -
It does seem however that [the wife] is more the emotional hub for the children, that she is the parent who has more hands-on contact and experience with them, and that they are generally more reliant upon her.
In my view, that last proposition is fundamental to the best interests of the children.
A concerning aspect of the husband's comparative lack of perception is the proposition advanced on his behalf that the wife was effectively manufacturing a dispute between them in order to promote her case against equal shared time. Following the breakdown of the parties' relationship, to their credit they worked long and hard at creating a positive atmosphere for the children and not involving them in the conflict. However, their efforts did not extend to the improvement of their own relationship. The husband does not appear to understand the positive aspects of the wife's personality and the effect that they have on the children's best interests. He has regarded those differences as being part of her efforts to artificially manufacture dispute. In fact, they have been much more the manifestation of the reasons for the breakdown of the relationship which have resulted in disagreements between them.
I will shortly commence a consideration of the competing applications for alteration of property interests. That will include a detailing of the parties' proposals for resolution of those applications. At this stage it is sufficient to find that I accept the wife's views as expressed to Mr P that the husband's attitude to what might be a just and equitable resolution has not assisted the parties' relationship. That relationship appears to have been soured at least in part at the time that those applications were commenced.
Accordingly, I have determined that the children's best interests are best served by accepting the wife's proposal for the division of the children's time between the parties on the basis of nine nights to the wife and five nights to the husband in each fortnight during school terms.

determination of disputed parenting orders

Having decided the essential issue between the parties of the proportions of time in which the children are to spend with each parent on a fortnightly basis during school terms, I now turn to consideration of those parts of other proposed parenting orders on which the parties had been unable to agree. Fortunately, those disagreements are minor and relate to specific matters. However, the parties did not see fit to lead evidence on these matters and Mr P was not asked to express a view on them. I therefore determined them on the basis of what I regard as being general principles relating to the children's best interests. I do not refer to any matter which is not in dispute.
The first issue is the question of whether the children are to spend time with the husband on Christmas Eve, as sought by him, in alternate even years or whether that time should commence on Christmas Day. The wife did not make any proposal with regard to this matter. In my view, it is in the children's interests for that time to commence on Christmas Eve. I have provided accordingly in paragraph 3(b)(ii) of the Orders.
The next disagreement arises from sub-paragraphs 4(a)(iii) and 4(b)(iii) of the Orders. The issue is the time to be spent by the children with a parent when he or she has his or her birthday when they would otherwise be in the care of the other parent. Each of the parties agrees that on a non-school day the time should commence at 11 a.m. Each asserts that the children's time be more limited when the parent has to forego time. Accordingly, when the children are with the wife on the husband's birthday, she proposes that the time of the husband conclude at 8 p.m. and the husband proposes that it conclude at 3 p.m.. When the children are with the husband on the wife's birthday, he proposes the reverse arrangement.
In my view, whatever the determination, it should be the same in both circumstances. This is another manifestation of the subtle conflicts which continue between the parties. In my view, the appropriate resolution in the best interests of the children is the opportunity to celebrate their parents' birthdays for a substantial part of the day. On a non-school day four hours is not sufficient and nine hours is excessive. Accordingly, in both instances the time will conclude at 5 p.m. being a period of six hours.
Where the birthday falls on a school day the wife proposes time should cease at 8:00 p.m. and the husband at 6:00 p.m.. I find that it should conclude at 7:00 p.m..
The next issue arises from paragraph 6 of the orders and concerns the manner of changeover at times other than school times. The wife proposes that the children be collected by the parent to whose home they are moving from the parent in whose care they are presently. The husband proposes the opposite. I prefer the husband's proposal. My reasons are that if the parent with whom the children are presently spending time delivers them to the other parent, he or she is effectively saying to the children that they should be in the care of that other parent. That is a positive statement which will promote their relationship with both parents.
There is an issue between the parties with regard to planning extra curricular activities for the children. While the parties appear to have been in agreement as to some of the proposed orders, in my view they all form part of shared parental responsibility and should therefore not be particularised in individual orders. While it may be unrealistic on my part, I hope that the parties will be able to come to an accommodation on such matters. Accordingly, I have omitted those provisions from the orders.
Finally, the husband proposed several orders providing for a means by which the parties should attempt to resolve any dispute between them with regard to their parenting of the children. He proposed a specific psychologist from whom advice was to be sought and a process by which that should be undertaken. He sought an order that failing agreement in those circumstances, the parties should attend upon Mr P.
In my view, it is a negative commentary on the parties' relationship that one party should seek such orders. I would have hoped that after the trauma and stress of these proceedings, the parties might realise that they need to increase their levels of cooperation with each other. Further, it is not in the children's best interests that a blanket order be made for attendance upon a particular psychologist in the event of disagreement. There are any number of disagreements which can arise between parents, particularly in the circumstances of a difficult relationship breakdown as in this matter, which do not require a psychologist. It would not be appropriate to give one party the power to demand attendance upon a psychologist in any circumstance of disagreement. Accordingly, I reject the husband's application for those provisions.

Alteration of property interests

introduction

I now turn to the competing applications for alteration of property interests. While I am considering those applications separately from the applications for parenting orders which are the subject of the earlier part of these reasons for judgment, many findings which I made above are relevant to this part of the reasons. Accordingly, I rely on them as necessary.
There are many issues between the parties in these applications. They include premarital contributions, valuation of several assets, a significant trust asset in respect of which the disagreement centres around whether it should be regarded as an asset in the name of the husband for the purpose of these applications together with issues of contribution and future factors.

Credibility

I made certain findings with regard to the parties' credibility in the competing applications for parenting orders. Regrettably, it is necessary to make further credibility findings with regard to property matters.
There are two particular areas in which the husband's evidence concerned me. The first of those was his clear innuendo that the wife had virtually nothing to do with the purchase of the parties' matrimonial home. The second was his assertion that his interest in a family trust established by the will of his late father was little more than that of a trustee. I will detail both of those findings below.
Further, the husband significantly downplayed the wife's role in the parties' marriage in circumstances in which he was so heavily involved in his occupation of senior partner in a very large professional firm. His proposal for resolution of these applications which I will also detail below demonstrates his attitude.
As a result, I am concerned by the credibility of the husband in the financial parts of these applications and generally prefer the evidence of the wife unless otherwise found.

Relevant facts

At the time of commencement of the parties' cohabitation, the husband was a partner of a national professional firm. He was already earning a very large income and had acquired valuable assets. An exhibit to his trial affidavit prepared by his accountant lists his gross assets in the sum of $4,138,756 with liabilities of $804,302, giving a net asset position at the commencement of the parties' cohabitation of $3,334,454.
The parties' matrimonial home was purchased shortly prior to the commencement of their cohabitation. It was purchased in the husband’s sole name. The husband swore:
The main asset I owned at the commencement of cohabitation was the property at [K Suburb] … . I purchased it in late 1999 for $1,925,000. The purchase was financed from approximately $1,125,000 in cash deposits and I borrowed the sum of approximately $802,000 from my parents (on an unsecured and undocumented basis). My parents generously lent me this money on the basis that I could repay them when it suited me. The loan was provided interest free and I finally repaid in full in or about 2007. [The wife] did not contribute to the purchase.
The husband made no reference to any role played by the wife in the purchase of that property.
The wife agreed that the husband owned the matrimonial home at the time of cohabitation and otherwise swore to her role with regard to that property as follows:
The husband and I had viewed and selected the property together, which we purchased at or about the commencement of our cohabitation for $1,925,000.
There is no issue with regard to the financial contributions to purchase of the matrimonial home. They were in accordance with the husband's evidence quoted above and were not challenged by the wife. However, the husband had difficulty in acknowledging that the wife played any role in finding the property and inspecting other properties in the course of the decision. The decision to purchase the matrimonial home was made together and was made in anticipation of the parties' imminent cohabitation and their marriage in the following year. In due course, appropriate recognition of the husband's financial contribution will be made but the wife's role also needs to be acknowledged.

Also at the time of the commencement of the parties' cohabitation, the wife was employed in her own business -
… as an agent for [overseas] manufacturers, selling to large … retailers. The business was successful.
The wife also owned -
·a property at an inner suburb which she swore was valued at approximately $400,000 and was subject to a mortgage of $156,000; and
·a motor vehicle valued at approximately $20,000.
The husband swore that the commencement of the parties' cohabitation the wife's inner suburban property had a net value estimated in the sum of $230,000. He acknowledged that she also owned a textile business and a motor vehicle but did not know the value of either of those assets.
The wife's business was sold in February 2001. She swore that the sale price was approximately $125,000 and the husband swore that it was $95,000. Following the sale the wife continued to consult to the new owners of the business for two years and was paid $15,000 per annum for that work.
The mortgage which encumbered the wife's inner suburban property had been reduced to $110,700 by March 2001. The proceeds of sale of her business referred to above were used to discharge that mortgage, at least in part, and to the extent that there may have been any further amounts required for that discharge, they were provided by the husband.
The inner suburban property was sold in May 2007. Until the sale it had been rented out, most recently at a rental of approximately $25,000 per annum. The sale price was $660,000. An amount of $60,000 was applied to capital gains tax (“CGT”) which resulted from the sale and the balance to construction costs of an investment property referred to below.
The husband's father died in January 2001. His will appointed the husband and his two sisters as executors and trustees. It established two testamentary trusts which have owned, and continue to own, assets of significant value. The relevance of those assets to these applications is an important issue in these proceedings. I will consider that issue under a separate heading below.
During their marriage, the parties established several entities being corporations and trusts. Those entities have owned assets at various times including superannuation benefits. It is common ground that the entities have been the alter egos of the parties or either of them and accordingly, no third-party issue has been raised. The entities have given the parties tax and like advantages. The entities and their assets and liabilities will be included in the list of assets and liabilities which I will consider below. Otherwise, it is unnecessary to make any further finding with regard to them.
I have previously referred to an investment property. It is at R Suburb. It was purchased in December 2006 for the sum of $345,000. The funds required to purchase it were obtained from the testamentary trusts referred to below. The nature of the advance of those funds is in dispute and I will consider it shortly. The property was registered in the name of one of the corporate entities referred to above, the trustees of which include the husband, the wife and the children.
I have previously referred to the sale of the wife's inner suburban property. The balance of proceeds of that property as referred to above were, on the evidence of both the parties and in the husband's words, “spent largely on building works” for the R Suburb property. It is common ground that as a result of these proceedings the wife will retain that property and proposes living in it. The parties had previously agreed to that, as a result of which its beneficial ownership was transferred to the wife. That enables the wife to claim that property as her primary residence, thereby quite properly negating any potential CGT.
I accept the husband's evidence that the wife was integrally involved in those building works. However, I do not accept that that involvement was more than coordination and supervision as a non-expert owner. I will consider that involvement in due course.

The testamentary trusts

I have already referred to the death of the husband's father in January 2001 and the creation of two testamentary trusts by his will. The essential issue is the benefit, if any, which the husband might have in those trusts. The wife asserted that the funds were essentially owned by the husband and the assets of the trusts should therefore be treated as the husband's assets. The husband contested that assertion.
The husband's father made his will on 23 March 2000 ("the will"). He appointed the husband and the husband's two sisters, Ms S and Ms H, as executors and trustees. The will settled certain personal items on the father's widow and otherwise left the residuary estate to his trustees upon certain trusts.
Two thirds of the residuary estate was to be applied -
… to or for the benefit of all or such one or more exclusively of my son [the husband], his children and remoter issue … or such relative (as defined in section 995 of the Income Tax Assessment Act 1997) of [the husband] as he nominates in writing for this purpose … in such shares as [the husband] from time to time in his sole and absolute discretion determines from time to time … .
The will also granted the husband the “sole and absolute discretion” to determine the distribution of the remaining balance of the residuary estate after a named vesting date. The classes of beneficiaries are the same as those provided by the above quotation.
The will provided that the remaining one third of the Estate was settled on the same terms as the two thirds but for the further benefit of Ms H, her children and remoter issue and other relatives as defined by the same legislation referred to above.
The entirety of the evidence satisfies me that the intention of the testator as clearly understood by the husband was for the three children of the deceased to benefit in equal shares either by themselves or their children, that is the grandchildren of the deceased. However, it will be noted that the deceased's other daughter, Ms S or her children, were not specifically referred to as beneficiaries under the will or the trusts created by it. There was a reason for that. At the time that the will was executed Ms S was in the throes of relationship breakdown with her then partner and the deceased specifically sought to exclude the possibility of her partner receiving any benefit from the will or estate. That problem was overcome in the drafting of the will by the reference to section 995 of the Income Tax Assessment Act 1997 in which the definition of “relative”, in this circumstance of the husband, includes his sister. That is the reason why the testamentary trusts were divided into the proportions of two thirds and one third. The two thirds proportion was intended, and has actually benefited, both the husband and Ms S without referring to the latter.
First, I consider the parties' affidavit evidence. The husband swore:
73. The Will establishes two testamentary trusts (“the Testamentary Trusts”) although, in practice, these have been administered as if there was only one such trust. The potential beneficiaries under the Testamentary Trusts are my father's children and remoter issue. The Testamentary Trusts are to vest upon the expiration of 21 years from my death (in relation to the first trust) and the expiration of 21 years from my sister, Ms [H’s] death (in relation to the second trust).
74. To date, the Testamentary Trusts have been administered for the benefit of my sisters and my father's grandchildren. Neither I nor [the wife] have received a distribution of income from the Testamentary Trusts and I have only received one capital distribution from the Testamentary Trusts, being the sum of $5,000 received in 2003. At present, the Testamentary Trusts hold the following assets:-
(a) a warehouse at [R Suburb];
(b) a portfolio of publicly listed shares; and
(c)an account with National Australia Bank (with a balance of approximately $20,000).
75. The Testamentary Trusts have liabilities including underpaid distributions to beneficiaries and a debt to me of $175,500 being the amount I lent to the Testamentary Trusts to assist with the purchase of [the warehouse] and taking up some rights issues of shares in the existing investments). In addition, in the event that the shares of the Testamentary Trusts were sold, there would be a significant capital gains tax liability.
The husband's sister, Mrs S, swore an affidavit in support of the husband's case. She deposed to having read the relevant parts of husband's affidavit, partly quoted above, and agreed with the context. She particularly agreed with those parts relating to the estate of her late father. She swore:
4. I am one of three trustees, and with [the husband] and my sister, …, administer the trust for certain members of our family, primarily my father's grandchildren.
5. The Will establishes a testamentary trust in respect of two thirds of the residuary estate, and the income therefrom is to be applied for the benefit of my siblings and I, our respective children, remoter issue and other “relatives”. Under the terms of the Will, the testamentary trusts established under the will does not vest until "the expiration of 21 years from the death of the survivor of myself and my son (sic) [husband's name].
In response, the wife swore:
38. … In essence, it is the husband who controls the distribution of the assets of two thirds of the Estate and can determine which beneficiary, if any, received any of the capital or income of the Estate. It is my understanding that a capital distribution has been made to each of the Husband's sisters, [Ms H] and [Ms S]. Other than minor distributions in favour of grandchildren, I say that essentially the balance of the Estate is available for the husband to use as he sees fit. I say further that this has been borne out in a transaction involving the purchase by us of [a warehouse in R Suburb].
[The warehouse in R Suburb]
39. In 2008, the husband and I looked at a property at [R Suburb]. We were impressed with the property and sought to acquire same to house the motor vehicles which we had acquired during the course of the marriage as we did not have space for them at [K Suburb]. He colloquially refers to it as his “car [facility]”. We agreed to buy the property. The husband signed the Contract for the purchase of the property on the 14th of May 2008. It was around this time that the husband and I suffered a crisis in our marriage as previously deposed to in this Affidavit.
40. Subsequently, I have discovered that, instead of the purchase continuing in the husband's name, that he exercised a nominee clause to purchase the property in the name of the Estate. The husband also asserts that he has advanced the Estate, the sum of $175,500 from our funds which he claims was to assist the Estate in respect of the purchase of the property.
41. In May of 2008, when the [warehouse] property was purchased, the husband did access the Estate funds, to pay a deposit for the purchase of the property. He then, on the seventh of July 2008, credited to the Estate with funds from our accounts of $370,000, which he asserts is “loan repayment”. In turn, the husband paid a further $145,000 from our financial resources into the Estate bank account on the 20th of August 2008 which he noted as “[…] advance”. Some three days later, a cheque for $510,125.30 was withdrawn from the Estate to complete the purchase of the [warehouse] property.
42. As I understand the husband's position, he now asserts that the [warehouse] property is owned by the Estate. I do not accept that this is the case. At all times the property has been considered ours. It is used solely to store our motor vehicles, which we regularly drive and which we cannot store at [K Suburb]. We would often swap over our cars at [the warehouse] when we elected to drive different cars during the week. I have always had unfettered access to the property (save when the husband denied me access by changing the locks to the property in December of 2009). After we purchased the property, we paid a tradesman to remove internal partitioning to open up the floor plan to house our motor vehicles and to use same as a car [facility]. We also installed a security system to protect the vehicles. At no stage was it ever considered by us, or referred to by either of us as being anything other than our property.
Subsequently in the same affidavit, the wife swore that there had been no need to advance money to the Estate as it had plenty of funds to enable it to purchase the property without assistance. She further swore that the parties did not pay any rental or interest in respect of their alleged occupation of the property. Further, she swore with regard to the parties' alleged beneficial interest in the R Suburb property:
My view in this regard is further reinforced by virtue of the fact that when we settled the [R Suburb] property in April of 2007, the husband accessed $342,900 from the Estate to fund the purchase which was not repaid to the Estate until July 2008.
The wife alleged that “… the husband can use the Estate monies, as he sees fit.”
In an affidavit sworn after and in response to the wife's affidavit referred to in the previous two paragraphs, the husband did not refer to the issue of the testamentary trusts. That was surprising given what was at stake in these applications. To the extent that he did not respond to the wife's affidavit he swore:
Where I have not addressed an allegation contained in the wife's affidavit, I say that I do not admit the same.
I now turn to a consideration of the oral evidence on this topic. It is convenient to consider the evidence of Ms S first. Ms S had very little knowledge of general aspects concerning the maintenance of a trust. For example, she did not know what a loan account is. Clearly, she leaves the entire management of the testamentary trusts to the husband and only concerns herself with issues of distributions to herself and particularly her children. I am satisfied that she did not understand the essence of her short affidavit. Accordingly, I find that the evidence of Ms S was unhelpful, at least in so far as the husband's case is concerned, and assisted the wife to the extent that it corroborated her basic assertion that the husband effectively controlled the testamentary trusts.
I find the following facts. The will appointed the husband and his two sisters as executors and trustees. It divided the Estate, to the extent that it was not left to the deceased's widow, into the proportions of two thirds and one third. The one third portion was designated for the husband's sister, Ms H and has been applied accordingly. The two thirds portion was designated for the husband but intended for both the husband and his other sister, Ms S. The reason for the difference between the designation and the intention was the breakdown of Ms S's relationship. However, Ms S and/or her children have effectively received approximately half of the two thirds of the estate being one third of the entirety of the trust funds. As a result, there is a remainder of one half of the two thirds being one third of the entirety of a trust fund. They have not been distributed. It is entirely consistent and probable that they are intended by the husband to be distributed to himself and/or the parties' children.
Despite the husband's evidence, I am not persuaded that such a distribution would constitute any breach of fiduciary duty by the husband. While acknowledging the discretionary nature of the trustees' decision making with regard to distribution of trust assets, I find that in practice it is the ultimate intention of the husband to distribute an equal share of the assets of the first trust to himself and/or the children of himself and the wife. While there is no direct evidence to establish the point, I am satisfied on the basis of the context of the entirety of the evidence that it is probable that such distribution has not taken place because of these proceedings. To that extent, I have regrettably formed the view that the husband has misled the Court in his intention in that regard.
Circumstances in which a party to proceedings for alteration of property interests before the Court might have control of a trust in relevant terms have been the subject of judicial consideration on many occasions. In Ashton and Ashton, 1986 FLC ¶91-777, the husband had created a trust of which he was appointor and in exercise of that power of appointment, had appointed several different trustees over a period of time. However, the Court found that he had always had control arising out of that power of appointment and determined that the assets of the trust were there for assets of the husband to be included in the pool of assets in the proceedings. (See also Davidson and Davidson (1991) FLC ¶92-197, Stephens and Stephens and Ors (2007) FLC ¶93-336).
The circumstances of this matter are distinguishable from those in Ashton's case (supra) but not in any ultimately material sense. While that trust was not a testamentary trust, there were beneficiaries other than the husband. The husband had the sole power of appointment and treated the assets of the trust as effectively his assets.
In this matter there are other beneficiaries. However in every sense the husband is the only real decision maker and while the will appointed his sisters as trustees with him, they play no active role. The actual distributions in this matter have already benefited the husband's two sisters and/or their children and it is entirely consistent with the facts that the residual benefit should be applied to the husband and/or his children. Accordingly, I find that the residual assets must be included as an asset in these proceedings. I will refer to their quantum in due course.

Assets and liabilities

I now turn to an examination of the relevant assets and liabilities. I list them in order of agreed assets, disagreed assets, agreed liabilities and disagreed liabilities. I will make necessary findings and comments after each of those categories.

Agreed assets

Asset Owner/Possession Agreed value

Real Property

K Suburb property Husband $5,000,000

Beach property (incl bathing box) Y Trust $1,815,000

R Suburb property Wife $1,800,000

Motor vehicles

Prestige Vehicle 1 Husband $155,000

Prestige Vehicle 2 Husband $26,000

Prestige Vehicle 3 Husband $36,000

Prestige Vehicle 4 Husband $65,000

Investments

Husband’s share portfolio Husband $2,198,144

Monies owed to Husband by the Estate of his father Husband $175,500

Husband’s bank accounts Husband E$62,106

X Investments (including loan owed by Y Trust) X Investments Pty Ltd
$653,191

Payment to wife from X Investments Pty Ltd pursuant to 17 February 2011 Orders Wife $100,000

TOTAL AGREED ASSETS

$12,085,941

It is common ground that the husband has lent the sum of $300,248 to his professional firm which is therefore an asset in his hands. However that loan is serviced by a loan of the same value from the ANZ Bank. Accordingly, I have omitted both the loan and the debt as balancing each other out.
The payment of $100,000 by X Investments to the wife was made pursuant to an order which I made by consent on 17 February 2011. Accordingly, it is appropriate to be included in the agreed assets.

Disagreed assets

Asset Owner Wife’s value Husband’s value

Proceeds of sale of SAAB retained by the wife Wife Nil $3,000

Husband’s share of balance of the Estate Husband $1,656,748
Nil

If included, $1,392,184

Wife’s bank accounts Wife Nil $8,904

Part property settlement in favour of the wife Wife $200,000 $209,500

Legal fees paid by husband to date of trial – Herbert Geer & Rundle Husband $230,000 Nil

Legal fees paid by husband to date of trial – Taussig Cherrie & Associates Husband $177,000 Nil

Addback for funds paid to husband’s family Husband $682,000 Nil

TOTAL DISAGREED ASSETS $2,945,748 $221,404

In the husband’s listed assets submitted at the commencement of his counsel’s closing address, the sum of $3000 was claimed as proceeds of sale of the motor vehicle retained by the wife. The wife admitted in her Financial Statement that this asset was in fact realised for the sum of $3000 and accordingly I will allow it.
I have included the sum of $1,392,184 pursuant to my findings above with regard to the husband's interest in the testamentary trusts. It was asserted on behalf of the wife that the figure to be included should be $1,656,748. While during final addresses junior counsel for the wife informed me that the higher figure was now agreed, that does not appear to be correct. The difference is in the amount of $267,009.88 being asserted unpaid distributions. I am satisfied by the husband’s Financial Statement and Exhibit “W7” that that amount is outstanding and accordingly should be deducted from the available assets of the trust.
An amount of $8,904 was claimed on behalf of the husband as being the balance of the wife's bank accounts. I am satisfied by the wife’s Financial Statement that this amount should be allowed as an asset in her possession.
Counsel for the wife conceded that the sum of $200,000 by way of part property settlement in her favour should be included as an asset. However, Exhibit W11, an aide memoire on behalf of the wife, included that item in the sum of $209,500 which is the claim made on behalf of the husband. It is appropriate to be included at that higher figure.
Counsel for the wife submitted that the total sum of $407,000, being payments by the husband to two firms of solicitors in respect of legal fees to these proceedings and constituted by the amounts of $230,000 and $177,000 respectively, should be included as notional assets of the husband. During his oral evidence, the husband swore that those amounts had been paid from post-separation income and specifically not from assets. That evidence was not challenged and I accept it.
While the authorities make it clear that while there are circumstances within the Court's discretion in which it is appropriate to include prepaid legal costs as a national asset, there are other circumstances in which it is not appropriate to include them. In Chorn and Hopkins, (2004) FLC ¶93-204, the Full Court held (pp. 79,322-3):
56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
59. Outstanding legal fees themselves are generally not taken into account as a liability.
60. If in the exercise of the discretion, it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.
The facts of this matter are the same for all relevant purposes as are those in Chorn's case quoted in the previous paragraph. While the husband's financial circumstances which enabled him to make such payments from income will be relevant in due course, his ability to make those payments from post-separation income lead to the conclusion that they should not be included as a notional asset in this matter on the basis of the ratio in that case.
Counsel for the wife submitted that an amount of $682,000 should be included as a notional asset of the husband being funds paid by him to members of his family during the marriage. The evidence satisfies me that those amounts were paid from income to which the husband was entitled as arising out of his partnership in the legal firm. While it would be appropriate to include that amount if the husband had realised one or more assets to enable him to make the payments, the fact that he paid it from income leads to the conclusion that it should not be included. Again, it will be relevant in my consideration of the parties' respective financial circumstances in due course.
Arising out of my findings with regard to disagreed assets, I find the following disagreed assets together with their total values:

Asset Value

Husband’s share of balance of the Estate $1,392,184

Part property settlement in favour of the wife $209,500

Proceeds of sale of SAAB retained by the wife $3,000

Wife’s bank accounts $8,904

TOTAL GROSS DISAGREED ASSETS
$1,613,588

Resulting from my findings above I find the following gross assets:

TOTAL AGREED ASSETS

$12,085,941

TOTAL DISAGREED ASSETS $1,613,588

TOTAL GROSS ASSETS

$13,699,529

Agreed liabilities

The parties agreed on the following liabilities:

Liability Agreed value

Amount required to complete R Suburb property -$90,000

Beach property liability to X Investment -$365,947

TOTAL AGREED LIABILITIES -$455,947

Disagreed liabilities

The parties disagree on the following liabilities:

Liability Owner Wife’s value Husband’s value

Land tax Husband Nil -$5,887

Capital gains tax on shares Husband Nil -E$331,675

X Investment CGT on sale of shares to effect transfer to wife Husband Nil -$9,794

TOTAL DISAGREED LIABILITIES Nil -$347,356

The sum of $5,887 was claimed on behalf of the husband as land tax. The amount was not conceded on behalf of the wife and has not been proven by the husband. Accordingly, I disallow it.
It is common ground that the husband will be required to pay money to the wife, the issue being the quantum of that amount. The total sum of $331,675 was claimed on behalf of the husband as CGT on shares which the husband swore that he would be required to sell to enable him to meet the requirements of the orders which I will make in these applications. Counsel for the wife opposed the inclusion of any amount in that regard.
In my view, the husband has three possible ways in which he could fulfil his obligations under the orders which I will make the alteration property interests. They are:
o sell shares and other property which would be subject to CGT;
o borrow the money which would require the payment of interest from income as well as ultimately having to repay the principal amount; or
o sell the K Suburb property which is a primary residence and not subject to CGT. However, while not the subject of evidence, it is reasonable to assume that the costs of such a sale together with the costs of the purchase of another primary residence would be substantial and not dissimilar to the amount claimed by the husband by way of CGT.
In Rosati and Rosati, (1998) FLC ¶92-804, the Full Court set out "general principles" applicable in these circumstances. The Court held (p 85,043):
6.36 It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s.79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:-
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s.75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs. [original italics]
I am critical of the way in which this issue has been conducted. In particular, if either an asset or a liability is claimed as being an appropriate part of the asset pool, it is necessary to prove that asset or liability strictly unless it is agreed to. In this matter, there is no agreement with regard to any allowance for CGT and accordingly, the husband should prove the way in which it is calculated. He has not done that. I rejected the proposition that I initially make consent orders and the financial consequences of those orders then be calculated.
However, on the basis of my discussion with regard to the three alternatives which the husband will have to meet his obligations pursuant to the orders, I am satisfied that he will be required to meet significant cost for that purpose. In the absence of proof of the specific amount, I find that the husband has not established the quantum of his claim. Nevertheless, I propose allowing a liability against the husband in a sum of $300,000 being anticipated costs of realisation of assets to meet his obligations pursuant to the orders.
As a result of my findings above, I find that the parties' liabilities for the purpose of these proceedings are as follows:

Liability

Owner

Value

Costs of realisation of assets to meet the husband’s obligations pursuant to Orders Husband -$300,000

TOTAL DISAGREED LIABILITIES -$300,000

TOTAL AGREED LIABILITIES

-$455,947

TOTAL DISAGREED LIABILITIES -$300,000

TOTAL GROSS LIABILITIES

-$755,947

The parties are agreed that the following superannuation benefits are relevant to these applications:

Superannuation

Owner Agreed value

Private superannuation fund Husband
$560,653

Private superannuation fund Wife $79,727

TOTAL SUPERANNUATION
$640,380

The parties have treated those superannuation benefits as being akin to property and have included in all their lists of relevant assets. I will treat it on the same basis.

Total Net Assets

As a result of my various findings with regard to the parties' assets and liabilities for the purpose of these proceedings, their net assets are calculated as follows:

TOTAL ASSETS INCLUDING SUPERANNUATION
$14,339,909

TOTAL LIABILITIES
-$755,947

TOTAL NET ASSETS

$13,583,962

The legislation

Section 79 of the Act empowers me to make such order as I consider appropriate altering the property interests of the parties to the marriage. However, I must not make any such alteration unless I determine that:
… in all the circumstances, it is just and equitable to make the order.
In determining whether to make any, and if so what, order I am required to take into account the various matters in subsection (4). Those matters primarily relate to issues of contributions and future factors.

The parties' date of separation

I have previously referred to the dispute between the parties with regard to the date on which their separation under the one roof commenced. I have received neither evidence nor submission to suggest that that issue is relevant to my consideration of these applications. I agree that it is not relevant. Specifically, there is no evidence relating to the period between the earliest possible date of the parties' separation under the one roof and their eventual physical separation which impacts on any finding in any way.

Contributions

Contributions may be made in three categories. The first two categories are financial and non-financial contributions. Those contributions may be made by or on behalf of a party of the marriage or a child of the marriage and either directly or indirectly. They are contributions to the acquisition, conservation or improvement of any of the property of the parties or either of them, such property including property which has been disposed of since the making of the contribution.
The third category of contribution is to the welfare of the family being the parties and their children and includes contributions in the capacities of homemaker and/or parent.
The legislation does not prioritise one type of contribution over any other.

Future factors

The legislation incorporates the provisions of subsection 75(2) of the Act into the consideration of what are referred to as “future factors”. They include disparity of income, standard of living, age and health together with like matters.

Other matters

Subsection 79(4) of the Act also requires me to have regard to several other matters. They are the effect of any order on the earning capacity of the parties, any other order made under the Act affecting a party or a child of the marriage and issues of child support. Neither counsel submitted that any of those matters was relevant in these applications.

DISCUSSION

Financial contributions

Throughout the marriage, the husband was, by far, the primary breadwinner for the family. As I will detail below, his earnings have been at the highest levels of the Australian community. In my consideration of the manner in which he has applied his income, I found that he has paid considerable amounts to members of his extended family from which the wife and children might have otherwise benefited. He was also able to pay his legal costs from post-separation income. The fact that the husband was able to do that while accumulating the assets which I have found to be relevant to these proceedings is testament to the amount of those earnings.
One of the most significant aspects of my consideration of financial contributions is the contribution made by the husband to the parties' assets at the commencement of their relationship. It is common ground that the husband purchased the matrimonial home for $1,925,000. It is also submitted on behalf of the wife that the commencement of the parties' cohabitation, the husband held shares valued in the sum of $1,357,637. Accordingly, at the commencement of cohabitation, the husband contributed $3,282,637 to the parties' assets. I have already noted that the husband's accountant calculated his net assets at that time in the sum of $3,334,454. In the circumstances, the difference is of no consequence.
Counsel for the husband tendered a document containing the husband's calculations of “the real benefit of assets brought into the marriage” by him. By a process which is unnecessary to reproduce in detail, the husband calculated the accretion in the value of his share portfolio as having resulted in a present value of the shares held at the time of commencement of cohabitation in the sum of $2,446,394. With the increase in the value of the matrimonial home between its original price of $1,925,000 and its present agreed value of $5 million being $3,075,000, on the basis that the husband had contributed the entirety of the purchase price of the matrimonial home he sought to attribute the sum of $5 million as his contribution. Accordingly, that figure together with the shares totalled an asserted financial contribution by the husband in the sum of $7,446,394 at today’s money value.
By contrast, the wife's financial contributions as referred to above were constituted by her inner city property with a net value of approximately $250,000 a motor vehicle valued at approximately $20,000 and her business which was sold approximately 2 years after the commencement of cohabitation for approximately $100,000. The evidence does not enable me to make a specific finding with regard to that sale price.
Accordingly, on the basis of the valuations of financial contributions at the commencement of the parties' cohabitation, the husband's contributions were more than $3 million greater than those of the wife.
The various authorities which consider the issue of financial contributions at the commencement of the parties' relationship demonstrate that the method of calculation of the present value of such contributions, as prepared by the husband and described above, is not the manner by which these issues are determined. One of the considerations is the length of the marriage. The longer the marriage, the more the other party's contribution may offset the financial contribution (Lawler and Lawler, (1988) FLC ¶91-927), –
… even though those later contributions do not necessarily at any particular point outstrip those of the other party.
(Money and Money, (1994) FLC ¶92-485, at p. 81,054; see also Bremner and Bremner, (1995) FLC ¶92-560)).
The asset to which the contribution is applied is also relevant. In Pierce and Pierce, (1999) FLC ¶92-844, p 85,881, the Full Court held:
28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.
In this matter, more than half of the husband's initial contribution was to the purchase of the matrimonial home to which the wife made no financial contribution.
The other aspect of financial contributions is the assets of the testamentary trust which have a value of $1,392,184 and which I have determined should be included as an asset in these proceedings. It cannot be said that the wife has made any real contribution to that asset.

Non-financial contributions

The evidence with regard to non-financial contributions focused on the wife's work in the renovation of the R Suburb property. It is common ground that she applied herself competently and assiduously to that work over several years.

Contributions as homemaker and parent

As I found in my determination of the competing applications for parenting orders, the wife was, throughout the parties' relationship, the primary home maker and, from the birth of their first child, the primary parent. The husband sought to bolster his involvement in those regards. As I have found, he was very involved in certain areas of parenting of the children. It is no criticism of him to find that of necessity, the nature of his occupation required him to be away from the matrimonial home of the family for very long periods of time and presumably, for the greater part of the waking hours of the children, particularly in their earlier years. That is a natural consequence of the proposition that the parties conducted their relationship on the basis that the husband was the primary breadwinner and the wife was the primary homemaker and parent.
Also, it does not take anything away from the wife's role that she had paid assistance in the home. I am satisfied that in all respects, the wife applied herself as diligently and competently in her role as homemaker and parent as did the husband in his role as breadwinner. As a consequence of the wife's role in those regards, the husband was able to apply himself as well as he did to his agreed role. His application to the role of homemaker and parent was, to a very large degree, secondary to the wife's role in those regards and to his role as the breadwinner.

Contributions - findings

By way of summary, the husband has made a very substantial financial contribution to the parties' assets, both by way of capital being the purchase price of the matrimonial home, the shares owned by him at the commencement of the parties' relationship and the testamentary trust to which the wife has not made a contribution. As against that, the wife has made a very substantial contribution as homemaker and parent and a further contribution in a non-financial role but a minimal financial contribution.
Considering all aspects of contributions, the contributions of the husband were very significantly greater than those of the wife and must be recognized accordingly. In my view, the husband's income during the parties' relationship is balanced equally against the non-financial and primary homemaker and parent contributions of the wife. The differentiating factor is the three items of capital contributions referred to above. In my view, contributions should be apportioned between the parties in the proportions of 75% to the husband and 25% to the wife.

Future factors

Age and state of health of the parties

I now turn to a consideration of the future factors referred to above. The first of those is the age and state of health of the parties. The husband is aged 50 years in the wife is aged 40 years. There is neither evidence nor submission to establish that those are relevant factors in my consideration.

Income, property and financial resources and capacity for gainful employment

The husband swore a Financial Statement on 15 October 2010. He disclosed total average weekly income of $12,645 and total personal expenditure of $24,582. That weekly expenditure includes income-tax estimated in the sum of $10,571. On the basis of the concession by senior counsel for the husband during his final address that his client earned “… income after tax of about $500,000”, I assume that the figures in his Financial Statement were in error.
The husband's trial affidavit contains a more accurate statement of his income which, until the parties' separation, included distributions to the wife. He swore:
84.Throughout the marriage, I worked as an equity partner at [a national professional firm]. As a consequence, my income throughout our cohabitation was substantial. My taxable income ranged over that period from approximately $820,000 for the year ending 30 June, 2000 to $1,250,000 for the year ending 30 June, 2007. Since our separation under the one roof, I have continued to earn a substantial income.
85.During that time, [the wife's] income comprised distributions to her from the [the Firm’s] Service Trust (totalling approximately $788,000 for the years ended 30 June, 2002 to 30 June, 2010 inclusive on which tax was paid at a lower rate), rent from the investment property before its sale in 2007, consultancy fees of $30,000 paid by the purchaser of her textiles agency business and interest earned on any money in bank accounts.
The husband also swore to his distributions from the Firm’s Service Trust to his mother and sisters:
86. … I commenced this practice of distributing some of my profit share to my mother and sisters in or about 1997 and have continued to do so since that time. At the time of the commencement of those distributions, I formed the view that I was in a fortunate position to earn a substantial income and I wished to assist my mother and sisters who did not have such an income earning capacity. I felt that they had supported and assisted me throughout my life and I saw this as a means of thanking them. I saw it as appropriate to continue the support my father had provided for them. Upon my marriage to [the wife], I reduced the quantum of the distributions to my mother and sisters although I continued to allocate distributions to them. The distributions to each of my sisters during the marriage ranged between $12,000 per annum and $38,400 per annum. The distributions to my mother during the marriage ranged between $21,000 and $45,000 per annum. The wife was aware that my mother and sisters were receiving distributions. She did not ask me about the quantum of such distributions and never raised objection to those distributions during our relationship. These distributions did not in any way affect our lifestyle.
I note that I have declined to include the sum claimed on behalf of the wife of $682,000 by way of an add back in respect of funds paid by the husband to his family. The above quotes demonstrate the benefits which the husband has received, and could continue to receive, from his partnership at the firm. The gross income received directly by him of up to $1,250,000 in a financial year was only part of the benefits available to him from that partnership. In my consideration of the applications for parenting orders I noted that the husband had reduced his hours from full-time to part-time which has, consequently, reduced his income. While he is entitled to make that choice, the reality is that he has the capacity to earn income at the highest echelon of the Australian community.
The husband swore to the potential of his partnership at the professional firm coming to an end by virtue of his age. He suggested that a professional in his position rarely retained his partnership beyond the age of approximately 55 years. There was some suggestion that a termination of his partnership could occur earlier than that. However, there was no specific evidence of a clear proposal. Rather, the evidence was based on speculation arising out of experience of similar situations.
By contrast, the wife's income earning capacity is no better than modest. Other than some comparatively minor income from the business referred to above early in the marriage, she has not worked in paid employment outside the home for the entirety of the parties' relationship. Counsel for the husband sought to establish that the wife's income earning capacity was significantly greater by virtue of the ability which she displayed in supervising the renovation of the R Suburb property. It was suggested that she might have a calling as some kind of owner/builder. I am not persuaded by that submission. While the wife is young, healthy and anything but lazy, she has no formal qualification which might act as a base for future employment.
Accordingly, I find that the husband's circumstances with regard to all matters presently being considered, and particularly with regard to appropriate gainful employment, are vastly superior to those of the wife.

Care of a child of the marriage who has not attained the age of 18 years

As a result of the parenting orders which I will make, the wife will have the primary care of the parties' two children presently aged 10 and 7 years. The children will require a great deal of support for some years which will militate against her future employment prospects. This consideration is to be seen as consequent upon, but additional to, the previous factor. Again, the husband’s circumstances in this regard are superior to those of the wife.

Standard of living

There is little evidence to establish any detail with regard to the parties' standard of living during their cohabitation. They were involved in the care of the very young children and the husband's occupation consumed the bulk of his waking hours. There is no evidence with regard to the parties' recreational and social activities. The whole context of the evidence, including the gradual breakdown of their relationship, suggested little involvement in those activities. They appear to have enjoyed a high standard of living in a material sense but do not appear to have enjoyed what might have followed from that. There is no evidence to suggest that any order which I will make in these proceedings will have any effect, positive or negative, on their standard of living.

Duration of marriage and effect on any capacity

A consequence of the wife's primary care of the children together with her home making responsibilities have prevented her from obtaining formal qualifications or experience in the workforce. With the exception of the proposal for property development, there is no evidence or submission by or on behalf of the husband to the contrary.

Child support

The parties have consented to a departure from the administrative assessment of child support. The husband will continue to pay all the tuition fees at the G private school or any other school which the parties agree that the children should attend. In addition, he will continue to pay for school books and uniforms as agreed together with private health insurance, other reasonable medical, dental and like expenses and extracurricular activities.

Other factors

There is no evidence or submission to establish the relevance of any other future factor contained in subsection 75(2) of the Act.

Future factors - determination

I now turn to a consideration of what, if any, allowance should be made to either party arising out of my discussion and findings with regard to the future factors. In my view, there are significant matters in support of such an allowance being made in favour of the wife. The first of those is the husband's income and earning capacity. While I note my finding with respect to the possibility of the husband's partnership coming to an end in the next few years by virtue of his age, on any view he is in a vastly superior position to that of the wife. Any shortfall which may result from the orders which I will make will be comfortably recouped by him, at least in significant part, in a comparatively short time.
The second matter is the wife's primary care of the children. Coupled with that is the consequence of that primary care having prevented her from participating in the work force and from obtaining qualifications to further her opportunities for gainful employment. Again, in those regards the husband's circumstances are vastly better than those of the wife.
I have decided that those matters must be recognized by way of a further adjustment of the parties' interests in their property of 15% in favour of the wife. Accordingly, the parties' property is to be divided as to 40% to the wife and 60% to the husband.

Justice and equity

Finally, I must step back and consider whether the above alteration of the parties' interests in their property is just and equitable to both parties. Arising from my determination of the division of the parties' assets as provided in the previous paragraph, the wife is to receive 40% of the net assets valued in the sum of $13,583,962. Accordingly, she is to receive the total sum of $5,433,585. She will retain the following assets:

R Suburb property

$1,800,000

Partial property settlement

$209,500

Payment pursuant to orders

$100,000

Proceeds of sale of SAAB motor vehicle

$3000

Superannuation

$79,727

Bank accounts

$8,904

TOTAL

$2,201,131

Accordingly, the husband will be required to pay the further sum of $3,232,143 to the wife calculated as follows:
Total assets to be received by the wife     $5,433,274
Less assets retained by the wife               $2,201,131
Total payment by the husband                  $3,232,454
My consideration of the concept of justice and equity includes the question of the practical effect of the orders on both parties. The husband will be required to realise substantial assets to meet his obligations. The financial consequences have been included in the net asset pool. He will be able to significantly recover his financial circumstances by virtue of his income earning capacity. He will retain the K Suburb property which he may decide to sell to increase his liquidity. His financial circumstances enable him to exercise options in those regards. However, he will retain substantial financial obligations towards the children with whom he will spend substantial and significant time in high standard accommodation.
The wife will move to live with the children in the R Suburb property when its renovation is completed. That will also constitute high standard accommodation. She will need to provide all the necessary and desirable requirements of herself and the children over and above their education, medical and like needs and also secure her own future. The lump sum payment which the husband will be required to enable her to achieve that.
The parties are in dispute as to the retention of the T Investment Trust. The only purpose of the trust is to own and administer the R Suburb property. On the basis of the fact that it is common ground that the wife should receive the property, it is logical that she should also receive the trust which controls it.
The parties are also in dispute over which of them is to retain the beach property which is a holiday home enjoyed by both the parties and their children. It is owned by The Y Trust which is one of the corporate entities referred to above. As noted above, it is valued in the sum of $1,815,000. In my view, the wife cannot afford to have a property of that value as part of her assets. Her primary need at this stage is for as great a proportion as possible of her assets to produce income for her. By tying up nearly $2 million of assets in a holiday home, she will not achieve that. Further, if she finds that she must sell it, she will need to pay the CGT which will be a further drain on her assets. It is probably too much to hope that the parties may find a means of occasionally sharing the beach property to the benefit of the children.
On the basis of the above analysis, I am satisfied that the division of property which I have determined will be just and equitable to both parties to the greatest extent possible. I will order accordingly.

I certify that the preceding one hundred and ninety-four (194) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mushin

Associate:

Date: 10 June 2011

[2011] FamCA 432

10 June 2011

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Fiduciary Duty

Statutory Construction

Asset	Owner/Possession	Agreed value
Real Property
K Suburb property	Husband	$5,000,000
Beach property (incl bathing box)	Y Trust	$1,815,000
R Suburb property	Wife	$1,800,000
Motor vehicles
Prestige Vehicle 1	Husband	$155,000
Prestige Vehicle 2	Husband	$26,000
Prestige Vehicle 3	Husband	$36,000
Prestige Vehicle 4	Husband	$65,000
Investments
Husband’s share portfolio	Husband	$2,198,144
Monies owed to Husband by the Estate of his father	Husband	$175,500
Husband’s bank accounts	Husband	E$62,106
X Investments (including loan owed by Y Trust)	X Investments Pty Ltd	$653,191
Payment to wife from X Investments Pty Ltd pursuant to 17 February 2011 Orders	Wife	$100,000
TOTAL AGREED ASSETS	$12,085,941

Asset	Owner	Wife’s value	Husband’s value
Proceeds of sale of SAAB retained by the wife	Wife	Nil	$3,000
Husband’s share of balance of the Estate	Husband	$1,656,748	Nil If included, $1,392,184
Wife’s bank accounts	Wife	Nil	$8,904
Part property settlement in favour of the wife	Wife	$200,000	$209,500
Legal fees paid by husband to date of trial – Herbert Geer & Rundle	Husband	$230,000	Nil
Legal fees paid by husband to date of trial – Taussig Cherrie & Associates	Husband	$177,000	Nil
Addback for funds paid to husband’s family	Husband	$682,000	Nil
TOTAL DISAGREED ASSETS	$2,945,748	$221,404

Asset	Value
Husband’s share of balance of the Estate	$1,392,184
Part property settlement in favour of the wife	$209,500
Proceeds of sale of SAAB retained by the wife	$3,000
Wife’s bank accounts	$8,904
TOTAL GROSS DISAGREED ASSETS	$1,613,588

Liability	Agreed value
Amount required to complete R Suburb property	-$90,000
Beach property liability to X Investment	-$365,947
TOTAL AGREED LIABILITIES	-$455,947

TOTAL AGREED LIABILITIES	-$455,947
TOTAL DISAGREED LIABILITIES	-$300,000
TOTAL GROSS LIABILITIES	-$755,947

Owner	Agreed value
Private superannuation fund	Husband	$560,653
Private superannuation fund	Wife	$79,727
TOTAL SUPERANNUATION	$640,380

TOTAL ASSETS INCLUDING SUPERANNUATION	$14,339,909
TOTAL LIABILITIES	-$755,947
TOTAL NET ASSETS	$13,583,962

R Suburb property	$1,800,000
Partial property settlement	$209,500
Payment pursuant to orders	$100,000
Proceeds of sale of SAAB motor vehicle	$3000
Superannuation	$79,727
Bank accounts	$8,904
TOTAL	$2,201,131