Mallet v Mallet

[1984] HCA 21

HIGH COURT OF AUSTRALIA

Gibbs C.J., Mason, Wilson, Deane and Dawson JJ.

MALLET v. MALLET

(1984) 156 CLR 605

10 April 1984

Matrimonial Causes

Matrimonial Causes—Proceedings with respect to the property of the parties—Interests—Alteration—Judicail discretion—Principles—Whether equality of division to be presumed—Function of appellate court on appeal from exercise of discretion—Valuation of assets for division in matrimonial proceedings—Shares in proprietary company—Family Law Act 1975 (Cth),s. 79.

Decisions

GIBBS C.J. This appeal is brought by special leave from a judgment of the Full Court of the Family Court which varied an order made by a judge of that Court (Bell J.) on an application by a divorced wife under s.79 of the Family Law Act 1975 (Cth), as amended, for an order altering the interests of the parties to the marriage in the property which they owned either jointly or individually. The appeal raises for consideration the principles which govern the manner in which a judge at first instance should exercise his discretion in deciding upon an application under s.79, and the manner in which an appellate court should proceed in determining an appeal from a judgment made on such an application. The amendments made to the Family Law Act by the Family Law Amendment Act 1983 were not in force at any material time, although to say that is not to suggest that the result would have been different under the legislation as it now stands.

2. The Family Law Act was passed at a time when great changes had occurred, and were continuing to occur, in the attitudes of many members of society to marriage and divorce, but when it was (as it is now) difficult, if not impossible, to say that any one set of values or ideas is commonly accepted, or approved by a majority of the members of society. Conflicting opinions continue to be strongly held as to the nature of marriage, the economic consequences of divorce and the effect, if any, that should be given to the fault or misconduct of a party when a court is making the financial adjustments that divorce entails. It is not surprising that given this diversity of opinions the Parliament did not require the power conferred by s.79 to be exercised in accordance with fixed rules. On the contrary, it has conferred on the court a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made (see sub-ss.1 and 2 of s.79) although there are some broad principles to which the court is required to give effect, and some circumstances which it is required to take into account. A principle which the court is expressly required to apply, so far as practicable, is that it will make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them: s.81. A second principle, which is implicit in many of the sections contained in Part VIII of the Family Law Act, is that the parties to a marriage are equal in status. The circumstances which the court is specifically required to take into account may be regarded as falling within two main classes. First, the court must consider the extent to which either party has in the past contributed to the acquisition, conservation or improvement of the property; the contribution need not have been financial, but may include "any contribution made in the capacity of homemaker or parent": see s.79(4)(a) and (b). Secondly, the court must consider all those circumstances which relate to the present and future needs, and to the means, resources and earning capacity, actual and potential, of the parties: see s.79(4)(d) and s.75(2)(a)-(m); these circumstances include "the need to protect the position of a woman who wishes only to continue her role as a wife and mother" (s.75(2)(l)) and "the effect of any proposed order upon the earning capacity of either party": see s.79(4)(c). In addition, the court may take into account "any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account": s.75(2)(o) and s.79(4)(d). It is not necessary in the present case to consider whether this includes the fault or misconduct of either party. The Act does not indicate the relative weight that should be given to different circumstances, or how a conflict between opposing considerations should be resolved - those things are left to the court's discretion, which must, of course, be exercised judicially.

3. It is proper, and indeed often necessary, for the Family Court, in dealing with the circumstances of a particular case, to discuss the weight which it considers should be given, in that case, to one factor rather than another. It is understandable that practitioners, desirous of finding rules, or even formulae, which may assist them in advising their clients as to the possible outcome of litigation, should treat the remarks of the court in such cases as expressing binding principles, and that judges, seeking certainty, or consistency, should sometimes do so. Decisions in particular cases of that kind can, however, do no more than provide a guide; they cannot put fetters on the discretionary power which the Parliament has left largely unfettered. It is necessary for the court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.

4. In some cases, the Family Court, rightly starting with the proposition that the contribution made by the wife as a homemaker and parent should be recognized "not in a token way but in a substantial way" (Rolfe and Rolfe (1979) FLC 90-629, at p.78,273) has gone on to conclude that, at least in ordinary circumstances, such a contribution "ought to be equally equated to the efforts of the husband who is thus freed to pursue his direct outside employment." (Wardman and Hudson (1978) FLC 90-466, at p.77,385; and see Rolfe and Rolfe, at p.78,273 and Crawford and Crawford (1979) FLC 90-647, at pp.78,410-1). Even if it were assumed that the contribution made by one party to the home and family should be regarded as of equal value to the financial contribution made by the other, it would not necessarily follow that an equal division of property should be made by the order of the court (see Albany and Albany (1980) FLC 90-905, at pp.75,720-1). However, it has been said there is a "general rule ... that where the parties have been married for a substantial time, and there have been contributions by each of the parties, there should be an equal division": Racine and Hemmett (1982) FLC 91-277, at p.77,574. In other judgments, the matter has been stated more circumspectly; it has been said that "after a long marriage, where both parties have worked together and built up such an asset as the matrimonial home by their joint efforts, even if the efforts of one were that of homemaker alone, equality should be considered the normal starting point": Zdravkovic and Zdravkovic (1982) FLC 91-220, at p.77,207 and see Potthoff and Potthoff (1978) FLC 90-475, at p.77,446; Aroney and Aroney (1979) FLC 90-709, at p.78,789; Dupont and Dupont (No. 3) (1981) FLC 91-103, at p.76,765 and Pickard and Pickard (1981) FLC 91-034, at p.76,314. However the Parliament has not provided, expressly or by implication, that the contribution of one party as a homemaker or parent and the financial contribution made by the other party are deemed to be equal, or that there should, on divorce, either generally, or in certain circumstances, be an equal division of property, or that equality of division should be the normal or proper starting point for the exercise of the court's discretion. Even to say that in some circumstances equality should be the normal starting point is to require the courts to act on a presumption which is unauthorized by the legislation. The respective values of the contributions made by the parties must depend entirely on the facts of the case and the nature of the final order made by the court must result from a proper exercise of the wide discretionary power whose nature I have discussed, unfettered by the application of supposed rules for which the Family Law Act provides no warrant.

5. When an appeal is brought from an order of a judge made under s.79 the Full Court of the Family Court must decide the appeal in accordance with the established principles which apply when an appellate court is hearing an appeal against an exercise of discretion. I have referred, in De Winter v. De Winter (1979) 23 ALR 211, at pp 216-7, to the well known authorities which state those principles.

6. In the present case, the marriage had lasted for some twenty-nine years before its dissolution in 1979. Bell J. found that "the parties originally suffered financial difficulties, but as a result of the hard work of the husband (the present appellant) and his ability, as well as to an extent the assistance of the wife to the husband, the parties by 1974 found themselves in a much better financial position, and from about 1974 until the date of separation, both the parties lived at a very high standard." At the trial much of the evidence and argument concerned the value of the property of the parties, including the value of shares in a family company. Each party held twenty-six ordinary shares in that company and a further forty-eight shares were held by or on trust for the three children of the marriage (all of whom are adult and self-supporting). In 1973 the articles of association of the company were amended so that the shares held by the husband carried 76% of the voting power in the company and the husband was appointed governing director. It was apparently suggested at the trial that this action taken in 1973 was invalid, since one of the children was then under age, and Bell J. said that he did not take into consideration the resolution passed in 1973. However, he did proceed on the footing that the husband would "control the destiny of (the family company) completely", once the husband had purchased the wife's shares under an order which Bell J. proposed to make. According to the judgment of the Full Court, counsel for the husband "conceded" at the commencement of the appeal to that court that all shares should be valued as if they had equal rights. It is not clear why this should have been regarded as a concession, since the fact that the husband had complete control of the company would, if anything, increase the value of his shares, although it might at the same time depreciate the value of the wife's shares. However, it was submitted to the Full Court that it was a disadvantage to the wife to value the shares as if all had equal rights. This submission was rejected. The Full Court said:
"This group of companies was a family business
built up over the years by the parties and of latter years particularly by the husband. The group was asset rich but cash poor and it had been so controlled that ultimately there would be capital gains. There was very little likelihood that the husband would in all of the circumstances wind up the group or, unless he was forced to dispose of assets to obtain cash, any part of the group."

7. After considering the evidence, Bell J. held that the value of the property of the parties was as follows:
Property jointly owned $240,662
Property owned solely by the 261,077

husband (excluding his 26 shares)

Property owned solely by the 5,700 wife (excluding her 26 shares)

Value of 26 shares owned by the 86,996 husband

Value of 26 shares owned by the 86,996 wife ________

$681,431

He concluded that the wife should receive one-half of the value of the jointly owned property and twenty per cent of the value of the property owned solely by the husband and that she should transfer her interest in the shares in the family company to her husband on payment of $86,996. He accordingly ordered that the wife should, on payment to her by the husband of $260,000, transfer to him her interest in the jointly owned property and her twenty-six shares in the family company. He further ordered that the husband should indemnify the wife for all or any indebtedness she might have to the family company and to the Commonwealth Savings Bank and the Commonwealth Trading Bank. It is now agreed that the value of the indemnity against the indebtedness to the banks was about $25,000; the value of the indemnity against the indebtedness to the family company was not satisfactorily proved.

8. On appeal the Full Court said that none of the findings made by Bell J. as to values were attacked except his valuation of the shares. Their Honours analysed the way in which Bell J. made his valuation of the shares and concluded that it could not be said that he was in error in rejecting the valuations made by Messrs Bottomer and Millard, the two valuers called by the wife, or in accepting the method of valuation proposed by a third valuer, Mr Downing. They went on to say that "the method of assessment of the value of shares adopted by (Bell J.) in this case should be upheld", and they apparently also held that it had not been shown that the method had been wrongly applied, for they said, "we find his Honour to be correct in his approach to the share valuation problem". In their final statement of the value of the property of the parties, they attributed to the shares the value which Bell J. had placed upon them.

9. However, their Honours indicated that they had some difficulty in following the reasons which led Bell J. to allow the wife only twenty per cent of the value of the assets owned separately by the husband when he allowed her fifty per cent of the value of the jointly owned property. They said:

"It appears on the facts that these assets in

the husband's name alone were acquired in exactly the same manner as were the jointly owned assets, namely from the profits, both income and capital gains, of the businesses conducted by the parties over the years. His Honour in this assessment appears to have given no real weight to the way in which the assets of the parties were built up and the financial contribution made by the wife particularly in the earlier period, her contribution as a wife over 29 years of cohabitation and her care of the three children of the marriage. There is also to be considered the far greater potential as to financial improvement of the husband compared to that of the wife. It should not be lost sight of that, although the shares are not of high value at the present time, the potential of the company structure is high and in particular as to non-taxable capital growth. In addressing his attention to the principal

assets separately rather than taking an overall view of all of the relevant matters, while it cannot be said that his approach was wrong, his Honour in our view failed to give proper weight to the matters referred to in the previous paragraph and little if any weight to the relative future financial potential of the parties. In our view the more appropriate and safer approach is to make an overall assessment."

They concluded that "a just and equitable result would be to adopt the 50% figure overall". They varied the order of Bell J. by substituting $335,000 for $260,000.

10. The fact that Bell J. allowed the wife fifty per cent of the value of the jointly owned property and only twenty per cent of the value of the property owned solely by the husband in itself provided no reason for the Full Court to interfere with the order made at first instance. Bell J. was quite entitled to take the view that the wife should retain the half interest to which she was legally entitled in the absence of any order made under s.79, and to decide what proportion of the remaining assets she should take in addition. He explained the course which he took in relation to the husband's solely owned property as follows:
"I am clearly of the opinion that the acquisition
of these properties was brought about as a result of the husband's association with the (family) companies and the properties were acquired through his own efforts in the management of the companies and in an endeavour to increase the profitability of the companies. Notwithstanding this, I consider that the wife is entitled to a reasonable percentage of the value of such properties. She has throughout her married life acted as a hostess, reared children and generally assisted the husband by allowing him to have more time to devote his obvious energetic endeavours in the management of the companies. I do not think however that I should find she is entitled to anything more than 20% of the value of these amounts ..." The decision to allow the wife twenty per cent was within the bounds of the judge's discretion. It seems that one consideration that prompted the Full Court to interfere with it was the notion that an equal division of assets was a convenient starting point. Their Honours said:

"It is appropriate to point out again that there is no 'principle' in family law that equality is equity. In the first instance with respect to sections such as Sections 72 and 79 where the court is given a discretion it cannot lay down principles for to do so would be to fetter its own discretion. In the second place the cases which refer to equality do not lay it down as a principle but merely as a convenient starting point where the matter at issue involves a long marriage."

As I have already indicated, it is not right for a judge to start with the assumption that the property should be divided between the parties in any pre-determined proportions.

11. However, it appears from an analysis of the passage from the judgment of the Full Court which I have earlier cited, and from later statements in the judgment, that their Honours further considered that Bell J. had not given sufficient weight to a number of factors which they considered relevant to the decision. Those factors were:
1) the fact that the assets in the husband's name were

acquired in exactly the same manner as the jointly owned assets, namely from the profits and capital gains of the businesses conducted by the parties;

2) the financial contribution made by the wife particularly in the earlier period, her contribution as a wife over twenty-nine years of

cohabitation and her care of the three children of the marriage;

3) the fact that the wife had to spend $24,000 to maintain herself and the youngest child during the period after the separation;

4) the far greater potential for financial improvement of the husband compared with that of the wife, having particular regard to the potential of the family company for non-taxable capital growth, and to the fact that the wife would not be able to share in the benefits arising from that growth.

The meaning of the statement which is found in the

authorities that an appellate court may interfere with an exercise of discretion when it reaches the clear conclusion that no weight, or no sufficient weight, has been given to relevant considerations was explained by Latham C.J. in Lovell v. Lovell (1950) 81 CLR 513, at p 519, as follows:

"If completely irrelevant considerations have been taken into account and they have really affected the decision the case is clear, and the order, though made in the exercise of a discretion, should be set aside. Similarly, if relevant considerations are plainly ignored the same result follows. But when the appellate tribunal is considering questions of weight it should not regard itself as being in the same position as the learned trial judge. In the absence of exclusion of relevant considerations or the admission of irrelevant considerations an appellate tribunal should not set aside an order made in the exercise of a judicial discretion ... unless the failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion actually entrusted to the court." (See also per Kitto J., at pp.533-4.)

In Gronow v. Gronow (1979) 144 CLR 513, the principle was similarly expressed by Stephen J., at pp 519-520, and Aickin J., at pp.534, 537-8; see also per Mason and Wilson JJ., at p.525. In the present case it was clear that Bell J. did not overlook any of the factors to which the Full Court referred. He said nothing to indicate that he did not give them adequate weight. The conclusion reached by the Full Court that he had failed to give them proper weight can only be explained by the fact that their Honours disagreed with his conclusion. However the mere fact that they themselves would have made a more liberal provision for the wife was no justification for substituting their own exercise of discretion for that of the primary judge.

12. There is however one further aspect of the matter that requires mention. As has been shown, although the Full Court accepted the correctness of the valuation placed on the shares by Bell J., their Honours were impressed by the potential for growth of the assets of the company. In relation to these questions, their Honours dealt with some particular grounds stated in the wife's Notice of Appeal to that court. It is sufficient to refer to grounds 1(b), (c) and (d) which were as follows:
"(b) His Honour wrongly adopted, as the exclusive

method of determining the said financial resources, a method of valuing the respondent's present shareholdings in the (family company) by capitalisation of that company's predicted future profits.

(c) His Honour, in adopting such method, made no or no proper allowance for the following :- (i) The said company and its subsidiaries had become the repository of family earnings, savings and investments over many years; and

(ii) In consequence the said company and its subsidiaries had very substantial assets which in value (and especially in terms of predicted future capital growth) far exceeded what would be reasonable in a commercial trading company which was not a 'family holding company'; and

(iii)The future prospects of the said company both as to income (and the amount thereof under the control of the respondent) and as to capital growth.

(d) (i) His Honour failed to determine accurately or with sufficient accuracy the value of the assets of the said company and its subsidiaries which were assumed by Mr Downing (the respondent's accountant and share valuer). His Honour found to the effect that they were closer to $700,000.00 than $560,000.00 (the latter figure being that assumed by Mr Downing); and

(ii) His Honour made no sufficient use of his limited finding referred to in the preceding paragraph hereof in that he merely 'guessed' that Mr Downing's capitalisation rate should be increased by 5 percent; and

(iii)The result of his Honour's findings was that the appellant's shareholdings were ordered to be transferred to the respondent for $86,996.00. The appellant holds 26 percent of the shares in (the family company). On his Honour's findings as to the assets of that company the appellant has been ordered to transfer 26 percent of the shares for 13 percent of the value of the assets backing for such shares."

As to par.(b) their Honours said that "we hold the firm view that it was open to his Honour to adopt the method he did and it cannot be said that in that he erred." As to par.(c) their Honours said that both Bell J. and the valuer, Mr Downing, had taken the matters mentioned into account and they pointed out that Bell J. had increased Mr Downing's valuation because he believed that insufficient weight had been given in that valuation to the assets. However they added: "Future capital growth was taken into account in the share valuation but was given no or no sufficient weight in the overall assessment." It is difficult to understand what was meant by this statement or by an earlier observation made by their Honours that "In our view the more appropriate and safer approach is to make an overall assessment." It is plain that Bell J., after discussing the assets separately, considered their total value in reaching his conclusion. If the future capital growth of the assets of the company was properly taken into account in the valuation of the shares, it is impossible to say that it was not properly taken into account in an overall assessment which was based on the sum of the value of all the property, including the shares. As to par.(d), the Full Court said that it was not necessary for Bell J. to calculate or assess with precision the value of the assets of the company, that he did not "guess" at a capital rate but made a proper assessment on the information put before him, that there was no basis on which a Full Court could upset his assessment and that his approach was well within his discretion and his result not unreasonable.

13. It might at first sight seem surprising that the shares in a company whose assets are valued at close to $700,000 should have a total value of only $334,600, the value which the judgment of Bell J. would place on them. In determining the value of shares it is necessary to take into account both the earning power of the company and the value of its capital assets: Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Limited (1947) 74 CLR 358, at p 362 and see Gregory v. Federal Commissioner of Taxation (1971) 123 CLR 547, at pp 564-570. In many cases the real value of the shares will depend more on the former than on the latter item. Where, however, the company is merely a convenient means of holding the assets, and the person who owns the shareholding in question is able to put the company into liquidation at will, the real value of the shares will be likely to be the amount which the holder would receive if the company were voluntarily wound up. And since the purpose for which a valuation is made may affect the court's attitude (Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Limited, at pp 373-4), there is much to be said for the view that the court will be more ready to value shares on a liquidation basis in a case such as the present than in a revenue or even in a compensation case.

14. However, in my opinion, it is not possible to sustain the judgment of the Full Court on the basis that the shares were valued by Bell J. at far too low an amount. The Full Court repeatedly affirmed both the method and the result of Bell J.'s valuation. To enable us to decide whether a valuation on a liquidation basis would be appropriate, and if so what result such a valuation would produce, it would be necessary to determine a number of questions of fact upon which no findings have been made. Although the husband has power to wind up the company, that power must be exercised, not solely in his own interest, but in that of the shareholders as a whole (in other words, not neglecting the interests of the three children). There is no finding on the question whether a winding up would be in the interests of the children. The Full Court considered that a winding up was in fact unlikely, and nothing has been shown to cast doubt on the correctness of that view. No precise finding has been made of the value of the assets; it appears that the approximate estimate of $700,000 was of their gross value and no findings have been made to enable us to estimate their probable nett value, except any that may be implicit in the valuation which Bell J. placed on the shares. We were not referred in argument to evidence which would enable us to decide for ourselves such questions as whether the assets are capable of ready realization, whether it would be prudent to realize them, and what the proceeds of realization would be likely to be. In short, we cannot, in my opinion, uphold the decision of the Full Court for reasons which that Court itself rejected and which depend on questions of fact which we cannot resolve.

15. For these reasons in my opinion the Full Court was wrong to vary the order made by Bell J. and that order should be restored.

16. The husband also appeals against the decision of the Full Court in so far as it declined to interfere with the decision of Bell J. to award costs of $30,000 to the wife. In relation to this aspect of the matter I have read and agree with the judgment of my brother Wilson, to which I could not usefully add anything.

17. I would accordingly allow the appeal and restore the judgment of Bell J.

MASON J. This appeal by the appellant husband is brought by special leave from an order of the Full Court of the Family Court made on 16 February 1983 allowing in part an appeal by the respondent wife against an order made on 8 July 1982 by Bell J. sitting at first instance. By his order Bell J. resolved the property questions that had arisen between the parties on the dissolution of their marriage. By another order made on 16 February 1983, the Full Court on an appeal by the husband varied an order made by Bell J. on 20 September 1982 relating to the terms on which the husband was to make payments to the wife in respect of property ordered to be transferred by her to him. There is no appeal from this order of the Full Court.

2. On 8 July 1982 Bell J. ordered -
(1) That as and by way of property settlement the wife

should, upon payment to her by the husband of the sum of $260,000, transfer to the husband the whole of her right, title and interest in certain designated property. That property included her twenty-six shares in Mallet Holdings Pty. Ltd. ("the Company"), and certain jointly owned property consisting of real estate, the former matrimonial home, an interest bearing deposit, shares held by the parties in public companies, cattle on the property upon which the former matrimonial home was situated and cheque accounts in the name of the husband and the wife;

(2) That the husband indemnify the wife in respect of any

indebtedness she might have to Mallet Holdings Pty. Ltd. and the Commonwealth Savings and Trading Bank of Australia Ltd.;

(3) That the wife's application for maintenance be

dismissed; and

(4) That the question of costs be adjourned.

3. The primary judge arrived at the round figure of $260,000 by placing a value of $120,300 on the wife's interest in the jointly owned property which she was required to transfer to her husband, and by valuing her shares in the Company at $86,996 and her interest in certain property owned solely by the husband at $52,200.

4. A further order was made by his Honour on 27 July 1982, varying the indemnity contained in par.(2) of the earlier order. It is not material to the present appeal.

5. By its order made on 16 February 1983 on the wife's appeal the Full Court substituted the sum of $335,000 for the sum of $260,000 appearing in par.(1) of the order made by Bell J. on 8 July 1982.

6. The appellant's challenge to the correctness of this order is largely based on the chain of reasoning by which the Full Court arrived at its conclusion that the husband should be required to pay a larger sum for the transfer by the wife of her interest in the properties mentioned. It is appropriate therefore to summarize, as briefly as may be, the reasons of the Full Court in so far as they relate to this question.

7. Critical to the dispute between the parties was the valuation of the shares in the Company which, with its subsidiary companies, was engaged in a variety of business activities. The ordinary shareholding in the Company was as follows:
Husband 26 shares
Wife 26 shares
Lester (son) 16 shares
Paul (son) 16 shares
Trust for Celia (daughter) 16 shares
Three expert witnesses were called to give evidence of the value of the shares, Mr Bottomer and Mr Millard, experienced accountants, for the wife, and Mr Downing for the husband. Mr Downing had acted for a number of years as the accountant for the Mallet group of companies. Mr Bottomer placed a value of either $5,718 or $8,175 on each ordinary share. The variation in his values was attributable to the possible difference in the value of freehold property and plant and equipment owned by the companies. Bell J. rejected Mr Bottomer's valuation on the footing that it was based on the ultimate liquidation or winding up of the companies and on his concession in cross-examination that the only person who would pay anything like $7,800 per share was the husband. The Full Court agreed with his Honour's rejection of Mr Bottomer's valuation.

8. Mr Millard assessed the value of the shares at $7,906. Again, his valuation was rejected by the primary judge. This rejection was accepted by the Full Court and it is unnecessary for me to set out the reasons for it.

9. Mr Downing was the only valuer to value the shares on the footing of capitalization of future maintainable profits. Adopting this method he assigned a value of $2,435 for each ordinary share. In arriving at this figure he selected a capitalization rate of 20 per cent, justifying this by reference
"... to the group's sound future prospects, to the
very high asset backing of ordinary shares, to the poor past and equally poor future payment performance dividend, to the restrictions contained in the Articles of Association and to the high yields that are currently obtainable on interest bearing securities with reasonable risk protection".

10. However, Bell J. thought that Mr Downing had failed to give sufficient emphasis to the assets backing of the ordinary shares, placing too low a valuation on the assets of the Company, and had given too much emphasis to the restrictions on transfer in the articles of association, ignoring the fact that the husband would as a result of the proceedings obtain 52 per cent of the ordinary capital of the Company. In the result his Honour increased the capitalization rate by 5 per cent. This produced a corresponding increase in the valuation of each ordinary share from $2,435 to $3,346, raising the total value of the ordinary share capital to $334,600, the value of the shares of each party being $86,996. The Full Court upheld the method of valuation of shares in the Company adopted by the primary judge.

11. Although the Full Court expressed its agreement with the primary judge's assessment of the value of the assets of each party, it disagreed with his estimate of the provision which should be made for the wife. In particular the Full Court criticised his approach to the property which was owned solely by the husband. His Honour had concluded that, having regard to the husband's contribution to the management of the Company and its subsidiary companies, the wife was not entitled to more than 20 per cent of the value of these assets, a percentage which entitled her to $52,200. The Full Court thought that these assets had been acquired from the income and profits of the businesses conducted by the parties over the years in the same fashion as the jointly owned assets. The Court went on to say:
"His Honour in this assessment appears to have
given no real weight to the way in which the assets of the parties were built up and the financial contribution made by the wife particularly in the earlier period, her contribution as a wife over 29 years of cohabitation and her care of the three children of the marriage. There is also to be considered the far greater potential as to financial improvement of the husband compared to that of the wife. It should not be lost sight of that, although the shares are not of a high value at the present time, the potential of the company structure is high and in particular as to non-taxable capital growth.

In addressing his attention to the principal

assets separately rather than taking an overall view of all of the relevant matters, while it cannot be said that his approach was wrong, His Honour in our view failed to give proper weight to the matters referred to in the previous paragraph and little if any weight to the relative future financial potential of the parties. In our view the more appropriate and safer approach is to make an overall assessment."

The importance which the Full Court attached to prospects of future capital growth was illustrated by the further comment: "Future capital growth was taken into account in the share valuation but was given no or no sufficient weight in the overall assessment."

12. Their Honours then concluded:

"Agreeing that His Honour was correct in his assessment of what assets should be transferred to the husband and taking into account what he will then have, his then liabilities and the then financial position of the wife it appears that a just and equitable result would be to adopt the 50% figure overall."

At a later stage, in response to an argument advanced on behalf of the wife, their Honours had this to say about the proposition that in family law equality is equity:

"It is appropriate to point out again that there is no 'principle' in family law that equality is equity. In the first instance with respect to sections such as Sections 72 and 79 where the Court is given a discretion it cannot lay down principles for to do so would be to fetter its own discretion. In the second place the cases which refer to equality do not lay it down as a principle but merely as a convenient starting point where the matter at issue involves a long marriage."

The order made by the Full Court in the wife's appeal is explained, albeit insufficiently, by the following calculation which appears at the end of the judgment:

"The total assets were: Joint property $240,662 Husband's assets 261,077 Wife's assets 5,700 Shares - Mallet Holdings

Pty. Ltd. 173,992 Total $681,431

Half share 340,715 Less 5,700 ________

Balance to wife $335,000 "

The figure of 5,700 represents the value of a motor car solely owned by the wife which was not included in the property otherwise taken into account.

13. It has been accepted, at least since the judgment of Gibbs J. in De Winter and De Winter (1979) FLC 90-605, that a judgment of the Family Court in determining what order should be made under s.79 of the Family Law Act 1975 (Cth), as amended, is exercising a judicial discretion and that the well settled principle governing an appeal from the exercise of that discretion applies to the Full Court of the Family Court when it hears and determines an appeal from the making of an order under the section. The Full Court, in determining the appeal cannot substitute its opinion for that of the primary judge unless it is shown that he made some error in exercising the discretion, i.e., by acting on a wrong principle, by allowing extraneous or irrelevant factors to influence him, by failing to take into account some material consideration or by mistaking the facts (House v. The King (1936) 55 CLR 499, at pp 504-505; Australian Coal and Shale Employees' Federation v. The Commonwealth (1953) 94 CLR 621, at p 627). And in some cases the exercise of the discretion may be vitiated by the primary judge's failure to give sufficient weight to a relevant factor. However, an appellate court needs to view this ground of appeal with considerable caution, as Stephen J. noted in Gronow v. Gronow (1979) 144 CLR 513, at pp 519-520:

"The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge's discretionary decision on grounds which only involve conflicting assessments of matters of weight."

14. On its face the judgment of the Full Court proceeds in accordance with the approach commended by Stephen J. The Full Court, as we have seen, expressly concluded that the primary judge had given (a) "no real weight" to the way in which the assets were built up, the financial contribution of the wife and her contribution as homemaker and parent; and (b) "little if any weight" to the relative future financial potential of the parties. However, the Full Court's conclusion, when it is closely examined, is seen to rest on (1) an erroneous understanding of the operation of s.79(4) of the Act expressed in the Court's proposition that "equality ... is a convenient starting point where the matter at issue involves a long marriage" and (2) an imperfect view of the primary judge's review of the parties' contributions.

15. The significance of the concept that equality is a convenient starting point in the case of a long marriage has been expounded in a series of decisions in the Family Court. The Family Court has stated - and in my view correctly stated - that the purpose of s.79(4)(b) is to give recognition to the position of the housewife who, by her attention to the home and the children, frees her husband to earn income and acquire assets (Rolfe and Rolfe (1979) FLC 90-629, at pp.78,272-78,273; Wardman and Hudson (1978) FLC 90-466; Crawford and Crawford (1979) FLC 90-647, at p.78,411; Aroney and Aroney (1979) FLC 90-709, at p.78,785; Albany and Albany (1980) FLC 90-905, at p.75,721; Dupont and Dupont (No. 3) (1981) FLC 91-103; Mahon and Mahon (1982) FLC 91-242; and Racine and Hemmett (1982) FLC 91-277, at p.77,574). And it has been held, again correctly in my view, that the Act intends that the wife's contribution as homemaker should be recognized in a substantial and not merely in a token way. However, the judges of the Family Court have gone a step further by saying that the contribution of the wife as homemaker is to be equated to the contribution of the husband as income earner. Thus, in Rolfe, Evatt C.J. said (at p.78,273):
"While the parties reside together, the one earning
and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value."

16. This approach has led to the enunciation of the proposition that after a long marriage where both parties have worked together and built up such an asset as the matrimonial home by their joint efforts, even if the efforts of one were that of homemaker alone, equality should be considered the normal starting point, though the particular facts of a case may justify a finding of greater contribution by one than the other - see the cases cited above.

17. It seems that the proposition has been accorded the status of a legal presumption though some attempt has been made to confine its area of operation. Thus in Aroney, Nygh J. (at p.78,789), after referring to a number of decisions of the Full Court of the Family Court including Crawford in which the proposition has been referred to, stated that "... it was never intended by the Full Court to put this guideline forward as a rule of law or as a presumption applicable in all cases." His Honour went on to say:
"The principle is appropriate to a situation where
the assets of the parties consist of the matrimonial home together with ancillary assets such as the proceeds of superannuation or insurance policies which were gained through savings with a view to support both parties in retirement. It would also be applicable in a case where the spouses had worked in a business as a joint venture. But it is of no use in a case such as the present where the wife was never involved in the husband's business. She is admittedly entitled to a share in the property which he built up, but not as an equal partner. In a case such as this, the Court must weigh the various factors and come to a conclusion independently of any starting point." His Honour's remarks were endorsed by the Full Court of the Family Court in Albany (at p.75,720), where the Court (Evatt C.J., Fogarty and Joske JJ.) observed that "in the case of business assets the contributions of the parties, direct or indirect, may be unequal." Their Honours went on to say (at p.75,721) that:

"... the contribution that a wife makes as a homemaker or parent relates to the totality of the assets acquired by the parties during the course of that marriage and whilst the wife was engaged in that role. It cannot, however, apply to assets acquired by inheritance or by the efforts of the parties before marriage (or cohabitation)...".

Their Honours later said:

"... a spouse may be entitled, by virtue alone of a contribution as homemaker or parent, to share in the totality of the assets acquired by the parties' efforts during the marriage, including business assets held by the other spouse to which the applicant has made no direct or indirect financial contribution. The extent of the applicant's entitlement so to share will vary according to the circumstances of each case, but it ought to be regarded as something of significance independently of the question of need."

18. This exposition of the proposition that equality is a convenient starting point proceeds upon a misconception of s.79. The section contemplates that an order will not be made unless the court is satisfied that it is just and equitable to make the order (s.79(2)), after taking into account the factors mentioned in (a) to (e) of s.79(4). The requirement that the court "shall take into account" these factors imposes a duty on the court to evaluate them. Thus, the court must in a given case evaluate the respective contributions of husband and wife under pars.(a) and (b) of sub-s.(4), difficult though that may be in some cases. In undertaking this task it is open to the court to conclude on the materials before it that the indirect contribution of one party as homemaker or parent is equal to the financial contributions made to the acquisition of the matrimonial home on the footing that that party's efforts as homemaker and parent have enabled the other to earn an income by means of which the home was acquired and financed during the marriage. To sustain this conclusion the materials before the Court will need to show an equality of contribution - that the efforts of the wife in her role were the equal of the husband in his.

19. No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that other party's role does not extend beyond that of homemaker and parent.

20. The proposition developed by the Family Court and applied by the Full Court in the present case has two flaws. The first is that it has been elevated to the status of a legal presumption; the second is that it obscures the need to make an evaluation of the respective contributions of husband and wife by arbitrarily equating the direct financial contribution of one to the indirect contribution of the other as homemaker and parent.

21. It is apparent that the Full Court's adherence to the concept of equality played a fundamental part in the process of reasoning by which it reached the conclusion that the primary judge failed to give adequate weight to the wife's indirect contribution and consequently to the way in which the assets were built up. But, quite apart from this element in the reasoning, it was wrong to say that the primary judge had given no real weight to the way in which the assets were built up, to the financial contribution of the wife and to her general contribution as a wife. In his careful and comprehensive judgment Bell J. had recounted in some detail the part played by the wife in the marriage and the extent, limited though it was, to which she had provided financial and other assistance in connexion with the businesses and the properties. He clearly took into account her contribution as a wife. In concluding that she should be credited with 20 per cent of the property solely owned by the husband, not including shares in the Company, the Judge said:
"She has throughout her married life acted as a
hostess, reared children and generally assisted the husband by allowing him to have more time to devote his obvious energetic endeavours in the management of the companies."

22. The Full Court attached much significance to its comment that the assets in the husband's sole name had been acquired in exactly the same manner as the jointly owned assets, apparently from the business or businesses which was or were carried on by them jointly. It seems that the wife did not claim that the assets in question were held on trust for the parties in equal shares, as she might have done if the assets were in truth acquired with funds which were the property of both parties. And the Full Court overlooked the circumstance that in the case of the wife's interest in the jointly owned assets which was to be transferred to the husband it was a question of valuing her half-interest, whereas in the case of the assets solely owned by the husband it was a question of ascertaining whether the wife should receive some pecuniary payment in respect of her contribution to those assets and if so in what amount. Nevertheless in evaluating the wife's contribution in this respect the primary judge treated it as indirect only, without making any allowance for the existence of a direct financial contribution arising from the use of funds of the businesses in which she had an interest. Accordingly, the fixing of her interest in the assets so purchased at 20% is vulnerable to the criticism that account was not taken of her financial contribution.

23. The next criticism offered by the Full Court was the statement that the husband had far greater potential for capital improvement than the wife. This was to say that because he became, by virtue of the court order, the owner and controller of the Company structure and other income earning assets, he would, unlike the wife, participate in future capital growth. This potential for future capital growth should have been reflected in the valuations placed upon the properties including the shares in the Company. Although the valuations were acknowledged by the Full Court to be correct, it seems that the Full Court considered that the valuation placed by the primary judge on the shares did not sufficiently reflect the prospects of future capital growth, possibly because the valuation was based on a capitalization of future maintainable profits and was very substantially less than the net assets backing of the shares.

24. What is the most appropriate method of estimating the value of shares in a proprietary company depends upon a variety of factors. They include the purpose for which the valuation is made, the nature of the shareholding, the character of the company's business, its capacity to earn profits and the net value of its assets. It has been said that a valuation based on earning capacity is generally most appropriate because the hypothetical purchaser of shares in a company which is a going concern is looking, not to a winding up, but to the profits which will ensue from the company continuing to trade (McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1; Abrahams v. Federal Commissioner of Taxation (1944) 70 CLR 23; Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Ltd. (1947) 74 CLR 358, at pp 361-362). But it has been recognized that valuation by reference to assets backing or a liquidation basis will be appropriate where earning capacity provides no real measure of the true share value (The Commissioner of Stamp Duties (N.S.W.) v. Pearse (1951) 84 CLR 490) or presents overwhelming difficulties (Elder's Trustee and Executor Co. Ltd. v. Federal Commissioner of Taxation (1951) 96 CLR 563; Jekyll v. Commissioner of Stamp Duties (Q.) (1962) 106 CLR 353) or where the shareholding is such as to enable the holder to bring about liquidation of the company (New Zealand Insurance Co. Ltd. v. Commissioner of Inland Revenue (1956) NZLR 501). See generally the judgment of Gibbs J. in Gregory v. Federal Commissioner of Taxation (1971) 123 CLR 547.

25. There is always the risk that in examining methods of valuation attention is diverted from the object of the exercise, namely the ascertainment of the real value of the shares, to the means by which the object is to be achieved. As a general proposition the valuation by means of capitalization of profits is appropriate to those cases in which the likely purchasers will be looking to the profits which the company will earn as a going concern. Where, however, the valuation of the shares as calculated by reference to their assets backing substantially exceeds their valuation as calculated on a capitalization of profits, the former is to be preferred, subject to a discount for the expenses of winding up and distribution, unless there is some good reason for preferring the latter, as, for example, where the shareholding to be valued is a minority of shareholding and those in control of the company intend to carry on its business because that course has advantages for them. Even in such a case it will be proper to take some account of the assets backing of the shares in order to reflect the possibility that those in control of the company might be minded in the future to sell their shares or to realize the value of the assets of the company.

26. In the present case, the purpose of valuing the wife's shares was to ascertain the price which she should be allowed for them. The wife's interest was a minority holding of ordinary shares. The result of the transaction was to give the husband a majority of the ordinary capital and of the voting power in the company and to free him from any action which the wife might take on the ground that his conduct of the company was oppressive or otherwise not in the interests of the shareholders taken as a whole. There was, accordingly, a strong case for saying that an acceptable value should have reflected to a fairly substantial extent the assets backing of the shares. According to Mr Downing, the assets backing was between $560,000 and $700,000, giving a value of $5,600 to $7,000 per ordinary share. Mr Downing expressed his preference for the lower figure but the primary judge thought that it was too low. None the less the value he fixed was only $3,346 per share. True it is that he made no allowance for the expenses of liquidation and distribution. But there can be little doubt that had allowance been made for these expenses the assets backing valuation would have substantially exceeded the value fixed by the primary judge.

27. The appellant submits that the Full Court failed to make any allowance in respect of the husband's indemnity in respect of the wife's state of liabilities amounting to $25,000 in respect of a mortgage on the matrimonial home and debts owing to the company. This issue was not important before the primary judge, because he dealt with the properties separately and not on an overall basis, and it seems not to have been argued before the Full Court. Perhaps its relevance first became apparent after the Full Court delivered judgment, adopting an overall, instead of an individual, approach to the parties' property interests. However that may be, the Full Court failed to take into account this benefit conferred on the wife by the making of the order and allowance must be made for it.

28. Accordingly, the Full Court was entitled to conclude that the primary judge did not make adequate allowance for the wife's contribution to those assets of the husband of which he was sole owner. Moreover, although I do not agree that the primary judge failed to have regard to the husband's greater potential for capital growth, the value placed upon the wife's shares in the company appears to have been lower than that justified by the evidence. In these circumstances the Full Court was correct in interfering with the order of the primary judge and there is no reason for thinking that the Full Court was wrong in increasing the amount ordered to be paid by the husband from $260,000 to $335,000, save that it failed to make allowance for the value to the wife of the indemnity, $25,000. Had it done so, the amount to be paid by the husband would have been reduced to $310,000.

29. For the reasons given by Wilson J. I would reject the appellant's argument that the order in favour of the wife for the payment of costs assessed at $30,000 should be set aside.

30. Since writing this judgment I have had the advantage of reading the judgment prepared by Dawson J. where the view is expressed that it is not open to this Court to question the valuation of the shares arrived at by the primary judge. As we have seen, the Full Court of the Family Court considered that the valuation did not sufficiently reflect the prospects for future capital growth. This finding by the Full Court was challenged by the appellant in its grounds of appeal and in its submissions to this Court. Moreover, during the course of argument the question whether the valuation placed by the primary judge on the shares sufficiently reflected their net assets backing was specifically raised. In these circumstances this Court is entitled to conclude that the valuation was insufficient and to take that insufficiency into account. It is well settled that the respondent to an appeal is entitled to support the correctness of the judgment appealed from by an argument not presented below, at least when that argument does not depend on an issue of fact not litigated in the lower courts (N.R.M.A Insurance Ltd. v. B. &B. Shipping &Marine Co. (1947) 47 SR(NSW) 273, at p 282; Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR 418, at p 438).

31. I would allow the appeal but only to the extent of substituting the amount of $310,000 for the amount of $335,000 ordered to be paid by the husband to the wife.

WILSON J. This is an appeal by special leave from a decision of a Full Court of the Family Court of Australia (Emery, Simpson and Ross-Jones JJ.). The decision varied orders made by Bell J. in proceedings with respect to the property of the parties pursuant to s. 79 of the Family Law Act 1975 (Cth) as amended prior to the enactment of Act No. 72 of 1983 ("the Act").

2. The parties were married on 22 October 1949. They separated in 1978 and the marriage was dissolved in November 1979. The learned primary judge described the history of the marriage in the following way:

"In summary, this marriage which lasted some twentynine years, was a marriage in which the parties originally suffered financial difficulties but as a result of the hard work of the husband and his ability, as well as to an extent the assistance of the wife to the husband, the parties by 1974 found themselves in a much better financial position, and from about 1974 until the date of separation, both the parties lived at a very high standard. The wife has had the responsibilities of looking after the children in their formative years when the parties were in straightened financial circumstances."

There are three children of the marriage. They are now aged approximately 33 years, 32 years and 20 years respectively and each is independent.

3. Bell J. valued the total assets of the parties as follows:
Joint property .. .. .. .. .. $240,662
Husband's assets .. .. .. .. .. 261,077 Shares in Mallet Holdings Pty. Ltd. .. 173,992 Wife's assets (approximately) .. .. 5,700

________

Total $681,431

In the result, his Honour determined the property issues by making orders to the following effect:

1. The husband pay to the wife the sum of $260,000.

2. The wife transfer to the husband her interest in the jointly-owned property, and also the shares she held in Mallet Holdings Pty. Ltd.

3. The husband indemnify the wife against any liabilities existing in respect of the shares and in respect of mortgages on the jointly-owned property (said to amount to a total of approximately $50,000).

4. The husband pay to the wife $30,000 towards her costs.

4. He dismissed the wife's application for maintenance.

5. There followed an appeal and cross appeal to the Full Court. The wife appealed on many grounds but it is sufficient for present purposes to mention that the primary thrust of the appeal was two-fold. She attacked the valuation which Bell J. had made of the shares in Mallet Holdings Pty. Ltd. She also attacked the award of $260,000 to her by asserting that "His Honour wrongly departed without justification from the principle that equality is equity". For his part, the husband cross appealed against the order in favour of the wife for costs.

9. However, some of the cases may be seen to have gone further and to say that where the husband is the breadwinner and the wife has accepted the role of homemaker and parent, the only just and equitable basis for an order under s.79 of the Act, or at least the starting point, is an equal entitlement of husband and wife to property acquired during the existence of that relationship. For example, in Rolfe, above, at p.78,273 Evatt C.J. expressed the view:
"While the parties reside together, the one earning
and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value." No doubt such an approach is appropriate in those cases where the financial contribution of the husband does not extend beyond the provision of the family home and the acquisition of savings to provide support for both parties to the marriage in retirement. It may well be appropriate in other cases where the husband's contribution extends beyond the matrimonial home and any savings from earnings to the acquisition of property for commercial purposes. There is no necessary distinction between the acquisition of a matrimonial home or savings for retirement and the acquisition of other assets. If the husband is freed to acquire the one he may equally be freed to acquire the other. Indeed, the purchase of a matrimonial home may be avoided or postponed in order to build up assets of a commercial nature. See Aroney, above, at p.78,785. But it does not follow in every case where the husband earns the family income and the wife carries out her responsibilities in the home that the contribution of each to property acquired during cohabitation should be regarded as equal. If, for example, the husband is engaged in conducting a business, the nature of the business, the skills which the husband applies in it, the way in which he applies those skills and the manner in which the business has been built up, are all factors which may indicate that it is inappropriate to assume equality of contribution towards the acquisition, conservation or improvement of property during the subsistence of the marriage.

10. To say this may amount to no more than a recognition of the requirement of s.79(2) of the Act that the Court shall not make an order under the section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. That is the overriding requirement and it admits of no presumptions in the consideration of the relevant circumstances, including those which s.79(4) requires the Court to take into account. For that reason it is misleading, in my view, to speak, as the cases do, of equality of contribution between husband and wife as the starting point in the consideration of their property interests. A starting point is, in reality, another name for a presumption and to prescribe a starting point is to invite a disregard for the requirements of the section. Of course, in many cases, the circumstances in which the parties to the marriage acquired their property will immediately suggest that the proper principle to be applied to achieve justice and equity is equality of interest, but this will be because of the circumstances themselves and not because of the application of an extrinsic principle or presumption.

11. Against this background, I think that it may be seen how the Full Court was led to vary the order made by Bell J. as it did. For it expressed itself in the following way:
"It is appropriate to point out again that there is
no 'principle' in family law that equality is equity. In the first instance with respect to sections such as Sections 72 and 79 where the Court is given a discretion it cannot lay down principles for to do so would be a fetter to its own discretion. In the second place the cases which refer to equality do not lay it down as a principle but merely as a convenient starting point where the matter at issue involves a long marriage." The length of the marriage does not of itself indicate that a convenient starting point for the consideration of property interests is equality of contribution between husband and wife. And when regard is had to the actual circumstances of the marriage in this case it is no guide to the true situation. The financial contribution, direct or indirect, by the wife to the business carried on by the husband was small. It is true that the funds of the business in which the wife had an interest were used to acquire property, but it seems to me that any contribution by the wife in this respect remains an indirect contribution. In any event, the extent of that contribution was ultimately taken into account in the valuation of her shareholding. The business, as Bell J. found, was built up by long hours of work on the part of the husband and by his seizing opportunities as they arose and by careful investment. Eventually what had begun as a one-man plumbing business became a contracting business of a much more sophisticated nature. Except for some assistance at the beginning, the wife played no direct part in the development of the business. The true position is reflected in this passage from the judgment of Bell J.:

"In summary, this marriage which lasted some twenty-nine years, was a marriage in which the parties originally suffered financial difficulties but as a result of the hard work of the husband and his ability, as well as to an extent the assistance of the wife to the husband, the parties by 1974 found themselves in a much better financial position, and from about 1974 until the date of separation, both the parties lived at a very high standard. The wife has had the responsibilities of looking after the children in their formative years when the parties were in straightened financial circumstances."

12. Having regard to the findings made by Bell J. it seems to me that it was well within the proper limits of his discretion to conclude that justice and equity did not require that the wife should have the benefit of more than 20% of the value of the assets acquired by the husband alone. To have reached that conclusion does not indicate a failure on the part of the primary judge to take into account, or to give sufficient weight to, the contribution of the wife, whether as a homemaker or parent or otherwise. No doubt in reaching this conclusion Bell J. had in mind the entitlement of the wife in relation to the jointly owned assets. But no direct comparison can validly be made between the 50% entitlement which Bell J. found in relation to those assets and the 20% entitlement which he found in relation to the assets owned solely by the husband, for in the case of the jointly owned assets the assessment of her entitlement reflects only the true position so far as ownership is concerned and does not of itself effect an alteration of interests which would necessitate the observance of the requirements of s.79.

13. It is difficult to know precisely what the Full Court meant by its observation that Bell J. failed to give sufficient weight to the greater potential for financial improvement of the husband in comparison with that of the wife. To the extent that it is a reference to the future capital growth of Mallet Holdings Pty. Ltd., the amount which Bell J. allowed the wife for her shares in that company took into account its future potential because the method adopted to arrive at the value of the shares was the capitalization of future maintainable earnings. This was recognized by the Full Court and it was not suggested that the rate of capitalization adopted by the primary judge was inappropriate. Rather the Full Court was of the view that future capital growth was given no or not sufficient weight in the overall assessment. But the lump sum which the wife was to receive under the order could be invested by the wife to provide both income and capital growth. Indeed, Bell J. proceeded upon the basis that the wife had no significant earning capacity and found that the amount which he provided for her was sufficient, after the purchase of a house, to produce an adequate income by investment of the residue. The only statutory requirement with respect to earning capacity is that contained in s.79(4)(c), which requires the Court to take into account the effect of any proposed order upon the earning capacity of either party. Even if that can be construed so as to require a comparison of the earning capacities of the parties (and I doubt that that was the intent) there is no reason to suppose that Bell J. did not make the necessary comparison. I am unable to see that there was any error on the part of the primary judge in this aspect of the case.

14. The principles to be applied by an appellate court in reviewing the exercise of a judicial discretion such as that exercised by Bell J. are well established by authority. The cases are discussed in the judgments of Mason J. and Wilson J. and I agree with what they say about them. It is sufficient to remark that in my view there was no error on the part of the primary judge. It has not been demonstrated that he acted upon any incorrect principle or that he failed to take into account those matters which he was required to consider. His findings of fact were not disputed in any relevant respect nor is it apparent that he failed to give sufficient weight to any relevant factor.

15. I should add that in my view it is not open to this Court to question the valuation of the shares in the family company arrived at by the primary judge. In particular, it is not open to conclude that Bell J. should have accorded greater significance to the asset backing of those shares and to reason that his failure to do so justified the conclusion of the Full Court that the allowance to the wife of 20% of the value of the husband's solely owned property was inadequate. The Full Court accepted the primary judge's valuation of the shares. There is no appeal from its conclusion in this regard. That matter was not raised by any ground of appeal and no argument was addressed to us upon the method of valuation adopted or upon the correctness of that valuation. In any event, it does not appear to me to be a sound approach to uphold the conclusion of the Full Court with regard to the husband's solely-owned property by rejecting the trial judge's valuation of shares in the family company when the Full Court's conclusion is based upon an acceptance of that valuation.

16. Upon the question of costs I agree with the conclusion of Wilson J. and with his reasons for reaching that conclusion.

17. I would allow the appeal and restore the order made by Bell J.

Orders

Appeal allowed.

Judgment of the Full Court of the Family Court set aside

and in lieu thereof order that the appeal to that Court be dismissed.

No order as to the costs of the appeal.