Marlowe-Dawson and Dawson (No 2) - [2014] FamCA 599

FAMILY COURT OF AUSTRALIA

MARLOWE-DAWSON & DAWSON (NO. 2)

[2014] FamCA 599

FAMILY LAW – PROPERTY – Final – Where a period of almost nine years elapsed between final separation and the filing of the wife’s application for property orders – Where the husband has made significant financial contributions post-separation – Where the husband filed an Application to re-open the proceedings given changes to his financial circumstances, in particular, his involuntary retirement – Where the wife seeks an order for 25 per cent of the husband’s net monthly income derived over a future 10 year period – Whether the husband’s income derived from his interest in a partnership constitutes property – Where the Wife seeks orders for spousal, child and adult child maintenance to be paid by way of lump sum.

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

B and B (No 2) (2000) FLC 93-031
Best & Best (1993) FLC 92-418
Brown & Brown (2007) FLC 93-316
Bulleen & Bulleen (2010) 43 Fam LR 489
Clyne v NSW Bar Association (1960) 104 CLR 186
Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12
Cosgrove v Cosgrove (1996) FLC 92-700
Cosgrove v Cosgrove (No 2) (1996) FLC 92-701
Dorman v Rodgers & Ors (1982) 148 CLR 365
Federal Commissioner of Taxation v Everett (1980) 143 CLR 440
Ferraro & Ferraro (1993) FLC 92-335
Gollings and Scott (2007) FLC 93-319
Grace v Grace (1998) FLC 92-792
Kennon v Spry (2008) 238 CLR 366
Kowaliw v Kowaliw (1981) FLC 91-092
Martin v Martin (1986) FLC 91-706
McFarlane v McFarlane (2006) UKHL 24
Mitchell & Mitchell (1995) FLC 92-601
Mullane v Mullane (1983) 158 CLR 436
Parlour v Parlour (2004) 3 All ER 921
Perrett & Perrett (1990) FLC 92-101
Rosati v Rosati (1998) FLC 92-804
Stanford v Stanford (2012) 247 CLR 108
W & W (1980) FLC 90-872

APPLICANT:

Ms Marlowe-Dawson

RESPONDENT:

Mr Dawson

FILE NUMBER:

SYC

2011

DATE DELIVERED:

4 August 2014

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Kent J

HEARING DATE:

18, 19, 20 and 21 September 2012; by written submissions filed 29 November 2012; and 22 and 23 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Kirk QC

SOLICITOR FOR THE APPLICANT:

Hopgood Ganim

COUNSEL FOR THE RESPONDENT:

Mr Richardson SC with Ms Black of Counsel assisting on 18, 19, 20 and 21 September 2012

SOLICITOR FOR THE RESPONDENT:

Barkus Doolan Family Lawyers

Amended on 26 August 2014 pursuant to rule 17.02 of the Family Law Rules 2004

Orders

It is ordered that:

Property Orders

Husband’s Firm K Interests and Retirement Benefits

Upon the Husband receiving each of the payments from Firm K in GBP currency in respect of his Firm K interests or retirement benefits as identified in and referred to in paragraphs 91 and 92 of the Reasons for Judgment delivered on 4 August 2014, net of any loan repayments to Barclays or Firm K as likewise identified, the Husband shall forthwith cause 70 per cent of the amount of each such payment in GBP currency to be transferred to and credited to the bank account of the Wife nominated by the Wife to the Husband from time to time for this purpose.

Sale of S Street, Town P, United Kingdom (“S Street property”)

The parties shall do acts and things and sign all documents necessary to list the S Street property for sale by private treaty for the best price reasonably obtainable.

That for the purposes of the sale of the S Street property pursuant to paragraph 2 of these Orders, the husband shall be responsible for the conduct of the sale of the S Street property and:

a.   the husband shall within fourteen (14) days nominate three (3) real estate agents to be appointed as the selling agent and the wife shall select one within fourteen (14) days of receipt of the nomination from the husband and if she does not do so, the husband shall select the selling agent and notify the wife;
b.   the husband shall within fourteen (14) days nominate three (3) solicitors to be appointed to have the carriage of the sale and the wife shall select one within fourteen (14) days of receipt of the nomination from the husband and if she does not do so, the husband shall select the solicitor and notify the wife;
c.   the parties shall sign all documents as required by the selling agent, the solicitor and Natwest to facilitate the sale of the S Street property within fourteen (14) days of receipt of any request from the selling agent, the solicitor and Natwest.

That the parties have liberty to apply to the Court as to the mechanics for the sale of the S Street property if the parties are unable to agree on the sale process, the sale price, the marketing campaign or any other matter relating to the sale of the S Street property.

5. That pending the sale of the S Street property, the husband be granted exclusive occupation of the S Street property.

That the husband be at liberty to expend up to £50,000 (or such other additional amount to which the wife agrees in writing in advance) to cause the work set out in Annexure “MRW-1” to the affidavit of Mr G filed 21 May 2014 to be effected (or such other work as the wife agrees in writing in advance) to ready the property for sale with such amount to be repaid to the husband from the sale proceeds.

On the settlement of the sale of the S Street property, the proceeds of sale be applied in the following order and priority:
a.   to pay all costs of sale including agent’s fees, auction expenses and any costs in readying the S Street property for sale or in meeting marketing or agent or advertising fees for the S Street property, including any amount expended as referred to in paragraph 6;
b.   the usual adjustments on sale including Council and water rates;
c.   to discharge the Natwest mortgage or any other mortgage registered in substitution for the Natwest mortgage;
d.   that from the net proceeds of sale of the S Street property if the said sum is of the order of £2,125,000 the sum of £121,227 and AUD $23,092 shall be deposited in the Trust Account of Hopgood Ganim Lawyers on trust for the parties jointly and subject to these Orders, such sum to be invested in an interest bearing account, such sum including interest to be available to pay (and payments shall be made therefrom) of any taxation liability (including capital gains taxation) that arises in respect of either party in the period up to 6 April 2017 under taxation law of Australia and/or the United Kingdom in respect of the sale of the S Street property;
e.   should the net sale proceeds be higher or lower than the said sum of £2,125,000 by 5 per cent or more, then the husband shall obtain an updated assessment of his likely taxation liability in the United Kingdom from Firm TT of Cambridge (to be determined on the assumption that he resumes United Kingdom tax resident status before 6 April 2016) and the wife shall obtain an updated assessment of her likely taxation liability in Australia (and if there be a change in legislation in the United Kingdom) from Firm TH of Brisbane and the sum total thereof shall be substituted for the sum referred to above;
f.   that should the sum so retained be in excess of the sum required to pay the said taxation liabilities, the surplus, including any accrued interest, shall be divided and paid to the parties in the proportions of 70 per cent to the wife and 30 per cent to the husband and should the sum so retained be insufficient, then the parties shall contribute to the shortfall in the same percentages; and
g.   70 per cent of the net proceeds remaining to be paid to the wife with the balance 30 per cent to be paid to the husband, provided that from the wife’s 70 per cent share there be an adjustment in favour of the husband of the equivalent in GBP of AUD $35,000.

That the wife retain and/or receive the following as part of her entitlement to property settlement, with the husband and the wife to do all acts and things and sign all necessary documents to transfer the said interest to the wife:
a.property at V Street, Suburb C, subject to the existing mortgage registered against the property (“the C mortgage”);
b.        the property at W Street, Suburb U (“U property”), subject to the       mortgage registered against the          property (“U mortgage”);
c.the Volvo motor vehicle, subject to any loan referable to the said motor vehicle;
d.        the furniture/jewellery and personal effects in the wife’s possession;
e.        the contents of the C property;
f.         bank accounts in the wife’s sole name;
g.        the notional adjustments in respect of the wife’s paid legal fees;
h.        the wife’s AMP superannuation; and
i.any other property, superannuation and/or financial resource of the wife wherever situate.

On and from 15 September 2014 the wife shall indemnify the husband and keep him indemnified in respect of:

a.the mortgage on the C property;
b.the mortgage on the U property; and
c.the CBA joint personal loan in respect of the Volvo motor vehicle;

pending her receipt of her share of the proceeds of sale of the S Street property as provided for in these Orders and upon her receipt of those proceeds the wife shall do all acts and things reasonably required to discharge or refinance into her sole name those mortgages in order to obtain the husband’s release from liability in respect of those mortgages.

The husband shall indemnify the wife and keep her indemnified in respect of the mortgage on the S Street property pending the sale of that property and the husband shall be solely responsible for the outgoings in respect of that property pending its sale.

In the event that the wife fails to discharge or refinance any of the loans referred to in paragraph 9 of these Orders into her sole name upon her receipt of her share of the sale proceeds of the S Street property, the wife shall forthwith do all acts and things and sign all documents necessary thereafter to sell the C property, the U property and/or the Volvo motor vehicle and from the said proceeds, discharge any liability affecting the title of same.

The parties shall within seven (7) days of the date of these Orders, do all acts and things and sign all documents necessary to:

a.transfer and release to the husband the piano presently in the United Kingdom;
b.close any joint accounts with the Commonwealth Bank of Australia and transfer the balance to the husband; and

c. close any joint accounts with Barclays Bank and transfer the balance to the husband.

That except as any paragraph of these Orders provides to the contrary, that the husband retain and/or receive, as part of his property settlement, the following:

a.        the United States property;
           b.        furniture, jewellery and personal effects in the husband’s possession;
           c.        the contents of the S Street property;
           d.        the husband’s interest in bank accounts in his sole name in Australia and                 overseas including under any joint account he has with his current wife;
           e.        the husband’s entitlement (if any) to financial resources with Friends   Life Fund;
           f.         any other property, superannuation and/or financial resource of the   husband wherever situate; and
           g.        the notional adjustments in respect of the husband’s paid legal fees.

That except as these Orders provides to the contrary the wife be solely responsible for and meet payment of all liabilities in the wife’s sole name, including but not limited to the following:

a. personal taxation of the wife in Australia and the United Kingdom; and
b. any credit card in the wife’s sole name, including but not limited to her Visa card with the Commonwealth Bank.

That except as these Orders provides to the contrary, the husband is solely responsible for and shall meet as and when they fall due:

a.        any personal taxation liability of the husband;
           b.        Barclays Bank overdraft for the loan and accounts numbers … and   …;
c.Barclays Bank off-set loan in relation to the husband’s “A” class shares       in Firm K; and

d. the husband’s credit cards.

Each party shall do all acts and things and execute all documents, authorities and writings as are necessary to give effect to all or any of these Orders.

Except as specifically provided by any paragraph herein to the contrary:

a.the husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband;
b.the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to the liabilities in the name of the wife, including the C mortgage and the U mortgage on and from 15 September 2014; and
c.the husband indemnifies the wife in relation to the S Street property mortgage pending the sale of that property.

Except as specifically provided for by any paragraph herein to the contrary, each of the husband and the wife release the other from all debts owing from one to the other.

That except as these Orders provide to the contrary, any party receiving the benefit of a transaction under these Orders is to prepare the documentation necessary to give effect to same at their sole cost and further be responsible for the payment of registration fees, duties and/or rates arising in respect of the transfer of the property.

Spousal Maintenance

That the wife’s application for spousal maintenance be dismissed.

Adult Child Maintenance

That pursuant to s 66L of the Family Law Act 1975 (Cth), in respect of N born … 1994 and B born … 1996 and on the condition that the adult child is attending to full-time tertiary education for their first under-graduate degree or first combined under-graduate degree, the husband shall pay:

a.to the adult child, the amount of $200 per week, said amount to be adjusted annually from 1 January 2015 in accordance with the CPI figure for Brisbane, such adjustment to occur on 1 January each year by comparing the CPI for the quarter ended 30 December immediately prior thereto, with the CPI for the quarter ended 31 December 12 months prior; and
b.the following Medicare or private health insurance in respect of each adult child as and when they fall due:

i. ensure the adult child continues to be covered by the husband’s private health insurance policy;
ii.pay all gap medical expenses for the adult child not able to be recovered under Medicare or private health insurance; and
iii.meet the costs of compulsory student union fees (if any) textbooks and University course material (but for the avoidance of doubt, the husband will not meet the tertiary fees themselves, whether described as tuition fees or HELP/HECS liability for said tertiary institutions).

Child Maintenance

That pursuant to s 66G of the Family Law Act 1975 (Cth), that in relation to M born … 1999, the husband shall pay:

a.$500 per week, said amount to be adjusted annually from 1 January 2015 in accordance with the CPI figure for Brisbane, such adjustment to occur on 1 January each year by comparing the CPI for the quarter ended 30 December immediately prior thereto, with the CPI for the quarter ended 31 December 12 months prior;

b. the following as and when they fall due:

i.         tuition fees for secondary education;
ii.        text books;
iii.      school and sports uniforms;
iv.       reasonable and prior agreed extra-curricular activities;
v.        domestic school excursions, on the basis that they are reasonable                  and prior agreed;
vi.       private health insurance; and
vii.     all gap medical expenses not covered by Medicare or private   health insurance.

In the event the wife pays any of these expenses directly, then the wife will be reimbursed by the husband forthwith upon being provided with a copy of the relevant tax invoice/receipt.

General

That the interim Orders dated 2 August 2012 continue to be in force up until 15 September 2014 but on and from that date, be discharged.

In the event that the husband fails to obtain employment after 30 September 2014 or obtains employment after 30 September 2014 or becomes a member of a firm at a remuneration package less than he enjoyed whilst posted to Asian city 2 with Firm K, then either party shall have liberty to apply to vary the Orders with respect to adult child maintenance and child maintenance if they are otherwise unable to agree to any proposed variation.

That in the event that a party refuses or neglects to sign any document, instrument or deed required to give effect to any of these Orders within fourteen (14) days of receipt of a request to sign the documents, instrument or deed the other party may apply pursuant to s 106A of the Family Law Act 1975 (Cth) to a Registrar of this Court to sign the document, instrument or deed.

NOTATION:

This Order has been amended pursuant to rule 17.02 of the Family Law Rules 2004 by the inclusion of paragraph (1) and the re-numbering of the paragraphs therein.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Marlowe-Dawson & Dawson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 53 of 2011

Ms Marlowe-Dawson

Applicant

And

Mr Dawson

Respondent

Ms Marlowe-Dawson (“the wife”) born in 1965, now aged 49 years, and Mr Dawson (“the husband”) born in 1966, soon turning 48 years of age, commenced cohabitation in 1990; married in 1991 and finally separated under the one roof on 22 October 2002 whilst they were then living in Asian City 1. Physical separation occurred when the husband vacated the parties’ Asian City 1 residence in about September 2003.
There are three children of the marriage, namely:
a)N born in 1994, now aged 20 years;
b)B born in 1996, now aged 18 years; and
c)M born in 1999, now aged 14 years.
When the parties commenced cohabitation in 1990 and when they married in 1991 the husband was a junior professional employed at Firm SS, Brisbane. The parties had minimal assets consisting of nominal savings and modest motor vehicles. They lived in the home of the wife’s parents and paid board from the time of their cohabitation until late 1994.
In August 1994 the parties and their then four month old child N relocated from Brisbane to the United Kingdom (“UK”) to enable the husband to pursue his professional career via employment with the international firm now known as Firm K, a limited liability partnership incorporated under English law. Between about 1995 and about 1997 the parties bought and sold a UK residence making a gross profit on the transaction of about £80,000.
The husband progressed in his professional career to obtaining membership as an equity partner of Firm K in 1998. Since then the husband has derived the exceedingly high level of earnings of an equity partner in Firm K.
In November 1998 the parties jointly acquired the residential property at S Street, Town P in the United Kingdom (“the S Street property”) for £636,000 and the funds for that purchase as well as an additional £250,000 expended on capital improvements to the property were obtained via mortgage.
In 2001 the family, then consisting of both parents and all three children, relocated from the United Kingdom to Asian City 1 in furtherance of the husband’s career via a secondment to the Asian City 1 office of Firm K. The S Street property was tenanted. The family were living in Asian City 1 when the parties separated under the one roof on 22 October 2002 and physically separated in September 2003.
In about September 2004 the wife and children relocated from Asia to Australia and have lived here ever since. In October 2004 the husband returned to live in the United Kingdom when his then secondment to Firm K Asian City 1 office concluded and worked in the firm’s UK office. In March 2011 the husband commenced a secondment to the Asian City 2 office of Firm K originally scheduled to last for five years.

Whilst this aspect will be further discussed, in circumstances where the wife and children have lived in Australia whilst the husband has lived either in the United Kingdom or Asia, the husband has had minimal day to day or face to face involvement with the children over many years. The husband gave evidence at trial in September 2012 to the effect that he had then not seen the children in approximately two years.
The parties divorced on 25 March 2011 and the husband married Ms A in August 2011. Their twin children H and J were born in 2010. The husband’s household includes Ms A’s niece D, now an adult.
I record that at one point of the trial an appearance was made by counsel for Ms A flagging the possibility that she might seek to intervene in the proceedings as a person affected or potentially affected by orders sought. In the event that did not ultimately occur.
An unusual feature of this case is that whilst the parties finally separated as long ago as 22 October 2002, no steps were taken by either party to formalise or finalise their financial arrangements until the wife filed her Initiating Application seeking orders under the Family Law Act 1975 (Cth) (“the Act”) for property settlement, spouse maintenance, adult child maintenance and child maintenance, which application was not filed until 19 August 2011, almost nine years after the parties’ separation.
Even more unusually, in the intervening period between the parties’ separation and the institution of these proceedings, the parties’ informal arrangement had included not only the husband’s substantial financial support of the wife and children of the marriage, as will be discussed, but also the husband’s funding of the parties’ continued ownership of the S Street property (albeit that the property was at times tenanted); plus the acquisition of, and mortgage repayments in relation to, other real property. In approximately 2002 the husband provided the funds for the wife to purchase a property in her name at Suburb U (“the U property”) two years prior to the wife and children relocating back to Australia. In 2007 the husband again provided funds and facilitated borrowings for the wife to purchase (for $1,650,000 plus stamp duty of $60,592.45) a home for herself and the children (held in the parties’ joint names) at V Street, Suburb C (“the C property”) where the wife and children have resided since. The husband also provided and facilitated payments and borrowings over the period from about May 2007 to January 2010 in a total of about $950,000 to fund substantial renovations to the C property.
The wife has not worked in any significant paid employment since the birth of the eldest child in 1994. Since separation in 2002 the husband has supported the wife and children meeting day to day living expenses, joint mortgage payments and, inter alia, property expenses for the C property; the short fall between rental income and expenses for the U property; expenses for the S Street property; and the wife’s car loan. The parties agree that up until about January 2012 the financial support provided by the husband was, remarkably, in the order of $32,000 to $35,000 per month.
The husband has also assisted the wife post-separation to fund the completion of her university degree.
In early 2012 after these proceedings were on foot the husband reduced the payments to the wife to $15,000 in January, $15,000 in February and $7,000 in March and made one other payment in July of $7,000. The wife filed an Application in a Case on 19 July 2012 seeking interim litigation funding and interim spousal, child and adult child maintenance. Whilst initially seeking to have the wife’s Application dismissed, the husband undertook on the day of the hearing to, “…use his best endeavours…” to ensure the ongoing payment of all of the parties’ mortgages and loans as well as proposing interim spousal maintenance of $500 per week and interim child and adult maintenance of $350 per week, per child.
In the event, I made orders on 2 August 2012 requiring the husband to pay two lump sums to the wife of $100,000 and $96,000 respectively by way of litigation funding; spousal maintenance in the amount of $3,600 per month as well as all mortgage and car loan repayments; child maintenance at $2,290 per month per child and adult child maintenance of $2,150 per child as well as the maintenance by the husband of private health insurance for all three children.
The trial of these proceedings proceeded over the four days 18, 19, 20 and 21 September 2012 with further written submissions being filed in November 2012.
As at that stage the husband was a member (or entitled to be re-admitted as a member) of the Firm K partnership but was on secondment to its Asian City 2 office.
As a consequence of the extent of my inordinate delay in delivering judgment to that point, as at March of this year it would have been necessary to afford the parties an opportunity, before judgment was delivered, to update their respective financial circumstances and update any relevant events occurring since late-2012. In the event, on 11 March 2014 the husband filed an Application to re-open the proceedings given changes to his financial circumstances, in particular, as to his involuntary retirement from Firm K to take effect from 30 September 2014, and the need for him to find an alternative place of employment.
Thus the proceedings were re-opened over the two days commencing 22 May 2014 with evidence, including updated valuation evidence concerning real property, being adduced.
For convenience in these reasons the trial proceedings in September 2012 will be referred to as the “first stage” of trial and the May 2014 re-opening as the “second stage” of trial.

Alteration of Property Interests

Included within the following discussion are my specific findings as to the existing legal and equitable interests of the parties in property.
Having regard to those existing interests I am satisfied that it is just and equitable, within the meaning of s 79(2) of the Act, to make property settlement orders. Each party seeks orders adjusting the parties’ property interests and by doing so acknowledge that it would be just and equitable to make orders altering the interests of the parties in property. The parties currently hold some real properties in their joint ownership and have joint mortgage debt responsibilities. As referred to by the High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at [42] these parties have ended their marital relationship by choice and thus their common use of property, and the express and implicit assumptions which underpinned their property arrangements prior to that, also then ended.
Whilst, as noted, the parties have undertaken post-separation financial transactions jointly including the substantial joint acquisition of the C property there cannot be any doubt that underpinning these was the understanding that at some point the joint aspect of their financial affairs would come to an end.
Having recorded that the just and equitable requirement in s 79(2) is readily satisfied in the circumstances of this case, in moving to the s 79(4) assessment process I propose to follow the approach taken by counsel for each party of compiling a schedule of assets, liabilities and financial resources for the purpose of that assessment. To the extent that the schedule does not include every item of existing property interests of the parties or either of them; or includes notional items (for example paid legal fees) this will be identified and distinguished from the parties’ existing property interests. The process of compiling such a schedule is simply a methodology of achieving appropriate and just and equitable orders adjusting the parties’ interests in existing property in the s 79(4) assessment, as distinct from the s 79(2) requirement. I make it clear that my finding that the s 79(2) just and equitable requirement is satisfied in the circumstances of this case is sourced to the parties’ existing property interests, rather than by reference to the schedule below to the extent that the schedule does not precisely reflect the parties’ existing property interests.
In my judgment those who would, in light of Stanford (supra) eschew the methodology of adopting such a schedule or “divisible pool” do that which Stanford mandates not be done, that is, to conflate the s 79(2) requirement with the s 79(4) assessment process. Once it is appreciated that this is a methodology for the latter, and is not the basis for the former, it is an approach consistent with long-standing authority of this Court establishing guidelines in undertaking the s 79(4) assessment and in determining appropriate orders to give effect to that assessment.

Does s 79 provide power to make “the 25 per cent orders” sought by the Wife?

It is convenient, before dealing otherwise with the parties’ existing legal and equitable interests in property, to deal with the orders sought by the wife framed as, and contended to be, orders for property division, directed to the wife receiving 25 per cent of the net (after tax) monthly income of the husband derived over a future 10 year period (these orders are, for convenience, referred to as “the 25 per cent orders”).
As already noted, in March 2011 the husband took up a secondment to the Asian City 2 office of Firm K. That secondment involved the husband being employed by an entity controlled and associated with Firm K based in Asian City 2. That secondment was originally slated to last for five years.
As the husband was an equity partner in Firm K at the time of his secondment, the husband was then holding various classes of shares in Firm K, described as “A”, “B” and “F” classes respectively; carrying the respective rights conferred by such classes of shareholding.
Upon his secondment to the Asian City 2 office, the contractual arrangements between the husband and Firm K effected the position, in summary, that:
a)the husband became known as a “nominal partner” in Firm K such that he could hold himself out as a partner in the firm but he was no longer technically an equity partner and had no partnership voting rights;
b)aside from specific allowances applicable because he was seconded to Asian City 2, the husband was entitled to the same remuneration as if he continued in his equity partnership;
c)the husband was entitled to re-admission to the Firm K partnership at the conclusion of his Asian City 2 secondment; and
d)the husband was repaid the value of his shareholding in Firm K in exchange for interest-free loans made by the husband to the Asian City 2 entity to be repaid to the husband at the end of the husband’s secondment.
The husband’s capital loans thus reflected the classes of shares the husband previously held in Firm K. The loans as at trial comprised:
a)“A” Class capital loan of £250,000;
b)“B” Class capital loan of £409,872; and
c)“F” Class capital loan of £19,550.
The “A” Class capital loan is funded by a loan to the husband from Barclays Bank in the same amount so the husband holds no equity in that loan.
The “B” Class capital loan is comprised of accrued retained profits in Firm K and is payable to the husband six months after his retirement from Firm K.
The “F” Class capital loan is repayable to the husband 12 months following his retirement from Firm K.
The nature and value of the husband’s shareholding/loan capital interests, as property interests, were not in dispute.
However, Mr Kirk of Queen’s Counsel for the wife, in support of the 25 per cent orders, submitted as to the “combined operation” of the husband’s Partnership Agreement with Firm K; and the documents governing his Asian City 2 secondment; and his interests overall in Firm K as constituting a bundle or basket of rights of property in the future profits of the Firm K partnership.
The essential contention propounded by Mr Kirk for the wife at the first stage of trial was that the husband’s shareholding, or its value, and the capital loans, or their value, do not reflect the “true value” of the husband’s Firm K interest.
Mr Kirk, by reference to the exceedingly high level of earnings/profits historically derived by the husband via his partnership interests in Firm K (Mr Kirk specifically referred to, in Australian dollar equivalent terms, the husband’s earnings of $2.7 million or $1.4 million after tax, using the 2011 tax year) contended that the “true value” of the husband’s Firm K interest was not reflected in the value of his shareholdings or loan capital.
No alternative “true value” of the husband’s interest in Firm K was contended for by Mr Kirk. Nor did the wife seek that the husband transfer to her any part of his capital loans to Firm K, it being conceded that such loans were non-transferable; nor was any order sought to the effect that the husband make some cash payment to the wife in lieu of transferring any identified underlying interest held by him in Firm K. What was contended was that the, accepted as arbitrary, selection of 10 years over which “the 25 per cent orders” were to operate would ensure the wife received an “appropriate share” of such “true value” of the husband’s Firm K interest.
Mr Kirk thus contended that, as orders for property division under s 79 of the Act, orders could legitimately be made for the wife to receive 25 per cent of the husband’s after tax income (via “salary, wages, bonuses, dividends, loans, allowances or other payments whatsoever”) “from [Firm K] or its related entities” for a period of 10 years.
Notwithstanding the evidence in the re-opening of the case, including the evidence of the husband’s involuntary retirement from Firm K and what he had negotiated with Firm K as to his entitlements, there was no abandonment of the wife’s contentions regarding “the 25 per cent orders”. Indeed they were extended to refer not only to Firm K but to “any replacement partnership, corporation or employment”.
Mr Richardson of Senior Counsel for the husband submitted that whilst the husband’s capital loans to the Asian City 2 entity of Firm K constituted property in a similar manner to shares held in a publicly traded company (albeit different due to their inalienability), the income generated as a result of the husband’s personal endeavours and as a result of those loans were not “property” within the meaning of the Act.
In summary, it was contended on behalf of the husband that “the 25 per cent orders” both in their first iteration as at the first stage of the trial and as finally expressed at the second stage of the trial, were directed to income, not “property” within the meaning of the Act, and that s 79 does not provide power for the Court to make such orders.
An alternate contention advanced on behalf of the wife was that “the 25 per cent orders” could be made as spouse maintenance orders, which contention will be dealt with later in these reasons. For present purposes the issue to be determined is whether “the 25 per cent orders” are open to be made pursuant to s 79 of the Act. Whilst Mr Kirk also made reference to s 80 it is well settled that s 80 is an enabling provision rather than an independent source of jurisdiction (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 and the authorities cited at [103]).
For reasons which follow I am of the view that s 79 of the Act does not provide power for the Court to make “the 25 per cent orders” sought by the wife. In my judgment the subject of “the 25 per cent orders” is not “property” within the meaning of the Act; nor do “the 25 per cent orders” either as these were iterated at the first stage of trial or as iterated ultimately, effect an alteration of interests in existing property, as the s 79 power is confined to.
The definition of the term “property” importantly delineates the limits of the power under s 79. Section 4(1)(a) of the Act defines the term “property” as follows:
in relation to the parties to a marriage or either of them – means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion…
(Emphasis added)
In Stanford (supra) the plurality of the High Court observed at [1] of their judgment, reading s 79(1)(a) with the definition of “property” in s 4(1), that s 79 “provides for a court exercising jurisdiction under the Act to make an order altering the interests of parties to a marriage in property to which one or both of those parties is or are entitled.” (Emphasis added). It was in that context that the plurality then expressed (at [37]) the necessity to begin “by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.” (Emphasis in original).
Whilst “property” may denote the right of a person or an object itself (Pacific Film Laboratories Pty Ltd v Commissioner of Taxation(Cth) (1970) 121 CLR 154 at 168 per Windeyer J) self-evidently the definition in s 4 by its terms renders the conclusion that the party must have a present entitlement to such right or object for that right or object to constitute “property” within the meaning of the Act.
The distinction between a presently existing entitlement, on the one hand, and a future and/or contingent and/or potential interest on the other, is the point of reconciliation of the authorities as to what has, or has not, been held to be “property” within the meaning of the Act and which may be subject to the Court’s jurisdiction to alter the interests of the parties in “property”.
Thus, for example:
a)vested rights of superannuation, redundancy and long service leave entitlements have been held to be property (In the Marriage of Woolley(No 2) (1981) FLC 91-011; Burke & Burke (1993) FLC 92-356) whilst a future or non-vested entitlement to long service leave has been held not to constitute property (Whitehead & Whitehead (1979) FLC 90-673 per Baker J; Nolan & Ingram (1984) FLC 91-585);
b)funds paid into Court to be invested by the Senior Master on behalf of a successful claimant in a personal injuries action were held to be property (Holmes & Holmes (1988) FLC 91-944; see also Williams &Williams (1984) FLC 91-541) but an action for an unliquidated claim in tort for personal injuries has been held not to constitute property (see Saba & Saba (1984) FLC 91-579; Palmer & Palmer (1985) FLC 91-606; Pleym & Pleym (1986) FLC 91-762; Zorbas & Zorbas (1990) FLC 92-160);
c)the interests in trust assets of a party whose control over those assets is such that they can deal with the assets as they please has rendered the conclusion that trust assets are “property” as compared with those cases involving trust assets where such powers of disposition do not exist (R v Dovey; Ex parte Ross (1979) 141 CLR 526; Tiley & Tiley (1980) FLC 90-898; Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; In the Marriage of Bowman (1984) FLC 91-574; In the Marriage of Stein (1986) FLC 91-779; Ashton & Ashton (1986) FLC 91-777; In theMarriage of Goodwin and Goodwin Alpe (1991) FLC 92-192; Davidson & Davidson (1991) FLC 92-197; In the Marriage of Harris (1991) FLC 92-254; Wunderwald & Wunderwald (1992) FLC 92-315; Pritchard & Pritchard (1988) FLC 91-929; Toohey & Toohey (1991) FLC 92-244; JEL v DDF (2001) FLC 93-075; Stephens & Stephens & Ors (2007) FLC 93-336).
In W & W (1980) FLC 90-872 Nygh J considered whether work in progress of a legal partnership constituted assets of the partnership for the purposes of s 79 of the Act. In that context and rejecting the proposition that work in progress was property Nygh J observed (at pages 75,523):
‘Property’ even in the wide definition adopted by the Full Court in Duff and Duff (1977) FLC 90-217, at page 76, 133 must still indicate some present right of value which the law will enforce. An expectation, however real or imminent, of future income or gain is not ‘property’: see Crapp and Crapp (1979) FLC 90-615.

It would seem to be well-settled that “property” for the purposes of the Act does not include contingent interests as appears from the following well known statement of Fogarty J in Crapp and Crapp (1979) FLC 90-615 at 78,176 as follows:
An order can only be made…under s 79 where a party has a present or future interest in a particular item of property. Clearly where a party has a present interest no difficulties arise, and by “future interest” in the above sense, I take it to mean a situation where a party has an established interest in an item of property but the date of receipt is postponed to some future time. That is different from the case where a party may become entitled to an interest in property in the future, provided that certain events occur and/or that certain disqualifying events do not occur in the meantime…
In Perrett & Perrett (1990) FLC 92-101 (“Perrett”) the Full Court of this Court held that a right to future payments of a weekly pension which could not be capitalised or transferred, and the payment of which was dependent upon the husband surviving from week to week, could not be termed property within the meaning of s 79(1)(a) (despite the money constituting property once it had been paid into the hands of the husband).
In this case not only is the husband’s income the subject of “the 25 per cent orders” dependent upon the husband’s survival for the 10 year period identified; it is also dependent upon a number of other contingencies including the husband’s ability, including health wise, to continue working in an equivalent position to a partner at Firm K and the willingness of other partners or directors in any “replacement” firm or corporate position to continue to have the husband as a partner of their firm or as an employee. Thus the future income to which “the 25 per cent orders” are directed is far more contingent then the real and imminent prospect of the “work in progress” of the solicitor in W & W (supra) or the pension entitlement of the husband in Perrett (supra).
The husband has no presently existing entitlement, in the sense of any present right of value the law will enforce, in the income he may earn in the next 10 years.
Whilst Mr Kirk referred to the decision of the High Court in Kennon v Spry (2008) 238 CLR 366 in seeking to emphasise the wide meaning given, or which ought be given, to “property” within the meaning of the Act, there is in my judgment nothing flowing from that decision to disturb the conclusion that it is only a present right or entitlement which can constitute property for the purposes of the Act. In Kennon v Spry (supra) each of French CJ, Gummow and Hayne JJ accepted that once a number of dispositions and instruments were set aside, the husband’s power as trustee to apply the assets of a discretionary trust of which the wife was a discretionary beneficiary, to the wife, was sufficient for the assets of the trust to constitute “property” within the meaning of the Act. However, whilst the assets of the trust had not vested in the wife, and could only do so in the future upon the happening of further events, the “property” constituted by the assets of the trust were in existence. Mr Kirk’s submissions overlook the distinction between the position if the wife in Kennon v Spry (supra) had no more than a mere expectancy and right to due administration of the trust as compared with the husband having the legal ability to vest trust property, then in existence, in the wife for the conclusions reached in that case that the whole of the assets of the trust were to be included as property of the parties or either of them.
In Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12 the Privy Council, on appeal from the High Court of Australia, rejected the proposition that a residuary beneficiary of an un-administered estate had any beneficial “interest” in any property of the estate, though having a chose in action, capable of being invoked for any purpose connected with the due administration of the estate of which she was a beneficiary.
In contrast a vested interest in an estate, even though postponed during a life interest, is an existing entitlement and thus property within the meaning of the Act. (See White and White (1979) FLC 90-682; Rickaby and Rickaby (1995) FLC 92-642).
It may readily be accepted, as stated by Gummow and Hayne JJ at page 83,035-6 in Kennon v Spry (supra) referred to by Mr Kirk in his submissions that the phrase in s 4(ca) of the definition of “matrimonial cause” – “with respect to the property of the parties to the marriage” ought be “read in a fashion which advances rather than constrains the subject, scope and purpose of the legislation…”. However, it does not follow that a future contingent interest or expectation ought be treated in the context of the Act as property. The Act by its express terms maintains clear distinctions between “property”, “income” and “financial resources”.
Thus in Grace v Grace (1998) FLC 92-792 at 84,888 the Full Court observed:
The Act draws a distinction between ‘property’ and ‘financial resources’. The Court is able to make orders that settle the property of the parties but not their financial resources. Thus, in making orders that settle property, the Court is required to have regard to each party’s financial resources but can only settle the property of the parties, which is in existence… (Emphasis added).
In my judgment as at the first stage of the trial “the 25 per cent orders” as then iterated and framed as property orders suffered the impediment that under the guise of an asserted valuation issue of the husband’s existing interest in property, these orders conflated the husband’s existing entitlement to his loan capital in Firm K with a contingent future interest or a contingent entitlement that did not presently exist, that is, the income the husband may derive in future by his exercise, in future and over a 10 year period, of his earning capacity. As at the second stage of the trial the re-formulated form of “the 25 per cent orders” in the context of the husband’s retirement from Firm K and the submissions in support of them removed that guise and plainly revealed that it is the husband’s earning capacity that is the focus of “the 25 per cent orders”.
Mr Kirk submitted, by reference to Kennon v Spry (supra) “there is a wide range of rights that might constitute property including (we would submit) rights under a partnership agreement, employment agreement or even the practising certificates held by barristers and solicitors.” Whilst there is nothing contentious in the proposition that the interests of a partner in a partnership may constitute property (Best & Best (1993) FLC 92-418) Mr Kirk’s written submissions at the second stage of the trial (given then the husband’s retirement from Firm K) made plain the contention that “the 25 per cent orders” were “by way of property division” directed to the husband’s earning capacity or the income derived from its future exercise.
Mr Kirk did not refer to any authority where it has been held that earning capacity per se is, or “practising certificates held by barristers or solicitors” are, property. Whilst Mr Kirk referred to two English cases (Parlour v Parlour (2004) 3 All ER 921 and McFarlane v McFarlane (2006) UKHL 24) those cases were decided under statutes of the United Kingdom and neither are authority for the proposition that earning capacity per se is property; rather those English authorities are simply examples of the jurisdiction under the applicable English statutes for orders to be made directed to financial resources, including income earned in future.
In Clyne v NSW Bar Association (1960) 104 CLR 186 the High Court considered, by reference to the provisions of the Judiciary Act 1903 (Cth) governing rights of appeal, whether an order striking the name of the appellant from the role of barristers involved property or a civil right to a value prescribed in that legislation. There was evidence that the appellant had earned, for some years, and would if permitted to practice as a barrister in future earn, in excess of the value prescribed in the provisions. In the unanimous judgment of the five members of the High Court it was held “there is no “property” that can be said to be involved, and no civil right capable of being valued.”
In Dorman v Rodgers & Ors (1982) 148 CLR 365 the High Court considered the relevant provisions of the Judiciary Act 1903 (Cth) in the context of an appeal by a medical practitioner against the removal of his name from the register of practitioners. For an appeal to be as of right the legislative prescription was that the proceedings involved “directly or indirectly a claim, demand or question to or respecting any property or any civil right amounting to or of the value of” the amount then specified in the provision. Again, there was evidence that the medical practitioner’s salary exceeded the specified value in the legislation and he thus contended that the proceedings involved a right of practice of a value to him exceeding the prescribed amount. Gibbs CJ, Aickin and Wilson JJ rejected that contention on the ground that the right to practice as a medical practitioner was not capable of being valued for the purposes of the provision; and Stephen, Mason and Brennan JJ rejected the contention on the ground that the proceedings did not involve a question respecting any right, civil or otherwise.
It would seem to follow that for a right (as distinct from an object) to constitute “property” the right must be recognised by, and be enforceable at, law; be legally capable of ownership; and have a value not personal to the individual (see also Doodeward v Spence (1908) 6 CLR 406 at 411-12, 414-15, 416; Commissioner of Stamp Duties (Qld) v Donaldson (1927) 39 CLR 539 at 550; Milirrpum v Nabalco Pty Ltd (Gove Land Rights Case) (1971) 17 FLR 141). Earning capacity, per se, or the right to its exercise (even if the right derives from registration or certification in the chosen profession) does not meet these criteria.
It was not in issue at the first stage of trial that the husband’s “A”, “B” and “F” capital loans were property within the meaning of that term as defined in the Act. It was also not in issue that the husband is not permitted to transfer any part of any of the capital loans to the wife as part of any property settlement. However, as Mr Richardson for the husband emphasised, at no point did “the 25 per cent orders” in either iteration alter any interest in property. As Mr Richardson observed “the 25 per cent orders” impose only an obligation upon the husband, of a personal nature, to pay a periodic sum annually by reference to identified future events which have nothing to do with any present finding as to the identity or value of property. That is, the proposed orders do not alter existing interests in property, either legal or equitable. As Mr Richardson emphasised the s 79 power of adjustment is to adjust rights of a proprietary nature, not a mere personal right. The husband has no presently existing proprietary right in relation to his future income. He has only a contingent personal right to receive remuneration which is contingent upon his attending to his employment and fulfilling the obligations of employment whether as a member of a firm other than Firm K post-retirement from that firm or in an employed position. Reference was made to the observations of the High Court in Mullane v Mullane (1983) 158 CLR 436 where at 445 the High Court said:
In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right: Stow v. Mineral Holdings (Aust.) Pty Ltd (1977) 51 ALJR 672 at p. 679; Ex parte Meneling Station Pty Ltd.
Mr Richardson referred to Perrett (supra) for the proposition that whilst in the future the husband may have a series of choses in action, which will arise to enforce his periodic entitlement to salary as and when due, that cannot constitute a property interest now. I accept that submission. Section 79 provides power to adjust interests in presently existing property, not property which a party may become entitled to in future.
Mr Richardson submitted that it was particularly apposite to the wife’s contention that in Perrett (supra) the Full Court at 77,658 approved of a statement of Buckley J in Martin v Martin (1986) FLC 91-706 in rejecting an argument that a Defence Force retirement benefit pension entitlement was a chose in action and therefore property stating:
Where a party has a right to a fixed fortnightly sum but is precluded from capitalising it, assigning it, or otherwise dealing with it, it is straining the language to call such a payment property, rather than what it really is, namely, income.
In my judgment the husband’s income alone, separate from any underlying partnership interest which generates it, cannot constitute property for the purposes of the Act. In Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at 450 Barwick CJ and Stephen, Mason and Wilson JJ observed at 450:
The fundamental consideration, as we see it, is that the partner’s fractional interest is an entire chose in action; it is capable of division by assignment into further fractions, but it is not capable of division by assignment so that the right to participate in partnership profits which is inherent in the interest is hived off from the rest of that interest. Consequently, a partner’s entitlement to participate in profits is not separate and severable from the interest of the partner.
In my judgment “the 25 per cent orders” are directed to the husband’s earning capacity and his personal right of exercise of his earning capacity which is not a right constituting “property” within the meaning of s 79. Consequently there is no jurisdictional basis under s 79 to make “the 25 per cent orders” sought by the wife.

Existing Legal and Equitable Interests – Items in Dispute

As will be reflected in the schedule appearing later in these Reasons, many of the items of existing property, liabilities, or financial resources of the parties or either of them were not in dispute. That is, in many respects the parties’ existing legal and equitable interests in property and the value of each was not in issue. It is convenient to now deal with those items which were in dispute; and items constituting notional adjustments in the terms earlier discussed.

Husband’s Terms of Retirement from Firm K

The parties were in agreement as to the amounts to be included, as items of property, with respect to the repayments to the husband of his loan capital with Firm K upon his retirement.
Whilst there was no issue as to the other amounts the husband was to receive consequent upon his retirement, identified as follows, there was an issue as to whether these constituted property or were more properly identified or characterised as financial resources of the husband:
a)retirement payout of £419,593 payable on 30 September 2015;
b)relocation allowance of £20,000;
c)bonus due June 2014 of £138,056;
d)bonus due September 2014 of £229,929; and
e)other payments due 31 October 2014 to 15 December 2015 totalling £545,791.
The wife sought that all of these items be included for consideration and treated as property interests of the husband.
Mr Richardson for the husband contended that, for a number of reasons, these amounts were properly identified or characterised as financial resources, rather than items of property.
The first reason initially advanced by Mr Richardson for that contention was that the sums are not the subject of a present entitlement of the husband. However, during submissions Mr Richardson acknowledged that by reference to the terms of retirement dated 26 March 2014, (which the husband had negotiated with Firm K pursuant to which these sums are to be paid) the husband has an existing or present entitlement to the payments albeit that they are respectively to be made on the respective dates agreed for payment.
The further reason submitted by Mr Richardson was that each of these payments fall into the character of part of the husband’s “ordinary income” or part of his “ordinary income stream” or stand “as proxy for his income” from which the husband discharges his obligations under the 2 August 2012 orders; and from which he supports his current wife and children. Mr Richardson emphasised the potential adverse consequences for the husband if he did not secure immediate alternative employment when his retirement from Firm K takes effect, or there is any substantial gap between those events.
The retirement payout (item (a) above) was submitted by Mr Richardson to be, by its nature, a payment by Firm K in the nature of providing the husband with some level of compensation in the expectation of some period of time where the husband has no income from Firm K whilst he finds an alternative position.
The relocation allowance was submitted to be a payment intended for a specific purpose, that is, the husband’s relocation from Asian City 2 to the United Kingdom which allowance will be used for that purpose.
It was the husband’s contention that all of these items be treated as financial resources, rather than property, and in the alternative if treated as property items they ought be placed in a separate “pool” of property and not be the subject of division, on the basis that these provide an income stream if the husband is not working.
By reference to the reasoning outlined above with respect to “the 25 per cent orders” which will not be repeated here, I find that the items referred to are “property” within the meaning of the Act. The husband and Firm K have settled and agreed upon the terms of the husband’s retirement referred to under which these payments are to be made as documented in the terms of retirement dated 26 March 2014. Thus the husband has a present vested right of value which the law will enforce. The payments are not subject to any relevant contingencies albeit that they are payable at various dates or times in future.
That noted, whether all of the payments are included, and included in a single “pool” of property items for division to achieve appropriate and just and equitable orders for property division in the s 79(4) assessment process, is a different question. That is, given their nature, form and characteristics and the husband’s access or need to access them to meet ongoing liabilities, a separate consideration arises.
I do not accept that the retirement payout of £419,593 payable on 30 September 2015 can properly be characterised in the manner contended for by Mr Richardson. As referred to by the husband in paragraph 31(f) of his affidavit filed 15 April 2014 this lump sum payment is referrable, in part, to the number of years that the husband has been a partner in Firm K. It therefore commenced to accrue, or is calculated by reference to events, as long ago as 1998 when the husband became an equity partner. In circumstances where the payment is not due to be paid until 30 September 2015 it would not seem to be in the nature of any provision for the husband’s non-employment after he retires a year earlier, on 30 September 2014. It is payable regardless of the husband having obtained an alternative position in the meantime and is not subject to any contingency. It is an existing entitlement of the husband arising from the contractually agreed and enforceable terms of his retirement as negotiated in the document referred to, following upon the years of the husband’s engagement with Firm K.
In relation to the relocation allowance I accept that this is paid for the specific purpose of enabling the husband to relocate his family from Asian City 2 to the United Kingdom and that if this item is included without an associated liability the husband will incur to facilitate that relocation, a distortion would be produced. In other words I am satisfied on the husband’s evidence that it is more likely than not that the husband’s expenses of relocation will equate to the allowance paid to facilitate that relocation. Rather than adding in the allowance and an equivalent liability amount, the same overall outcome is achieved by leaving the allowance out of a schedule of property items for division, albeit that on the same basis discussed it is an item of property as the entitlement to that payment has crystallised in the agreement referred to.

To similar effect I accept that if the bonus that was due to be paid in June 2014 of £138,056 were to be included there would be a range of additional liabilities likewise to be accounted for. Moreover, whilst this will be discussed further below, notwithstanding a finding that it is more likely than not that the husband will achieve alternative employment commensurate with the position he has held in Firm K, there is at least some uncertainty as to when that will be achieved and uncertainty as to the precise level of remuneration.
In my judgment if the June bonus were included at its full amount that would necessarily dictate allowances being made for these offsetting considerations in any percentage division. In my judgment a just and equitable outcome is achieved by leaving that payment out of the schedule of assets to be considered for division; albeit recognising that the entitlement to that item is property.
Plainly it is a valuable item. On the currently applicable exchange rate £138,056 converts to AUD $249,649.18.
As already noted the parties were in agreement as to items and amounts pertaining to the husband’s interest in Firm K and his retirement entitlements. The parties agreed that for the purpose of conversion to Australian dollars I ought adopt the exchange rate published by the Reserve Bank of Australia on the Monday of the week in which Judgment was to be delivered. As of Monday 28 July 2014 the rate so published was 1AUD = 0.5530 GBP.
I adopt for the purpose of compiling a schedule of this property to be considered in the s 79(4) assessment process the following items and figures:
HUSBAND’S FIRM K INTERESTS
AND RETIREMENT BENEFITS
(Applying the Exchange Rate of 1AUD = 0.5530 GBP)
ASSETS:  VALUE
“A” Class capital - £250,000  $452,080
“B” loan capital. Total of £409,872 (not paid
until six months post retirement)  $741,179
“F” Class capital loan of £19,550 payable one year
after retirement  $ 35,353
Husband’s entitlements (all after tax) to:
·    retirement payout (payable
30 September 2015)  £419,593                  $758,758
·bonus due 15 September 2014      £229,929                  $415,785
·    other payments due 31 October
2014 to 15 December 2015           £545,791                  $986,964
LIABILITIES:
Barclays Offset Loan – “A” Class capital in
Firm K Partnership (£250,000)  ($452,080)
Loans from Firm K:
·         for husband’s legal costs   (£35,000 O/S)          ($ 63,291)
·         for wife’s legal costs                 (£150,000)               ($271,248)
·         for reopening   (£90,000)                  ($162,749)
NET:  $2,440,751
It is to be noted that as provided for in Appendix 6 to the Firm K letter of 26 March 2014 annexed to the husband’s affidavit recording the husband’s entitlements there is an agreed schedule for repayment of the Firm K loans referred to above. In summary, the £35,000 loan is to be repaid from the September 2014 payment; the £150,000 loan is to be repaid from the September 2015 “retirement payout”; and whilst it is not entirely clear on the husband’s evidence when the £90,000 loan is to be repaid I infer from paragraph 51 of the husband’s affidavit that it will be paid from the September 2014 payment.
I am mindful of the features that in terms of present values payments not to be received until various future dates extending out until 15 December 2015; and liabilities not payable immediately; would not have a present value in the amounts nominated, and that between now and payment there may be fluctuations in exchange rates. These features will need to be accounted for in the just and equitable orders to be made.

S Street, Town P in the United Kingdom (“the S Street property”)

Valuation issue

The parties acquired the S Street property in joint names in November 1998 for £636,000. They lived in the property from its acquisition until 2 January 2001 when they relocated to Asian City 1. Neither of them has resided in the property since then. The S Street property was the only real property held by the parties or either of them as at the time of separation.
As at the first stage of trial the S Street property had an agreed value, based upon expert evidence, of £2,500,000.
In advance of the second stage of trial the wife contended that the husband had failed to maintain the S Street property impacting adversely on its value. The wife ultimately contended that the husband ought be obliged to expend some £40,000 on what the wife characterised as repairs to the property. On that scenario and by reference to expert valuation evidence and evidence of a Mr G, a UK-based builder/contractor, it was ultimately contended that expenditure of approximately £40,000 would increase the value of the property from £2,125,000 in its present state to £2,210,000, an increase of £85,000.
Those ultimate contentions came against the background of an earlier contention advanced by the wife, albeit based on her own estimates, that the value of the property might be increased by something in the order of £300,000 if works were carried out.
There is no doubt by reference to the expert valuation evidence that the property has a value in its existing condition of £2,125,000. I am not persuaded that the speculative elements in the evidence as to the costings of the proposed alterations, which included prime cost estimates or allowances which are by their nature variable, renders as certain or necessarily probable the conclusion that expenditure of a total of £40,000 achieves completion of the identified repairs and results in a value increase of £85,000, or a net gain of £45,000. That is even before any allowance is made for the prospect of some variation, either way, in the respective “before and after” valuation figures.
Even if a gain of £40,000 might be achieved that would seem to be de minimis in the context of this case and ought not, in my judgment, disturb the conclusion that the value of this jointly owned property is to be brought to account at its present value of £2,125,000.

Notional adjustment issue

Obviously there is now a negative difference of £375,000 between the present value of the S Street property and its agreed value, based upon expert evidence, as at the first stage of trial.
It was contended on behalf of the husband that, as a notional adjustment to the pool for division, the wife ought be held accountable for that capital difference together with the total amount the husband has paid by way of outgoings or holding costs on the S Street property, including mortgage payments, property maintenance and the like since September 2012. It was thus contended that an amount translating to in excess of AUD $1 million ought be included in the schedule of assets as a notional adjustment and be adjusted as against the wife. Alternatively the husband sought that this be addressed as a relevant matter under s 75(2)(o) of the Act.
The bases for the husband’s contention is against the background that as at the first stage of trial in September 2012 it was in issue between the parties as to whether the property was to be sold (as the husband contended) or was to be received by the wife as part of her property settlement (as she then contended). The wife was cross-examined at the first stage of trial about statements she had recorded in emails during 2011. I accept that these statements constitute an acknowledgement or recognition by the wife, at that time, that the S Street property would have to be sold as part of effecting a property settlement between the parties. The husband thus contended that the wife’s conduct as at trial, in rejecting proposed orders for sale of the S Street property against that background, was unreasonable and, absent the wife’s unreasonable position, the parties would have moved to sell the property and avoided the capital loss and holding costs referred to.
I note in passing that as at the first stage of trial there was also an issue with each party advancing criticisms of the other, and attributing responsibility to the other for, the failure to lease the S Street property. Each party contended of the other, in summary, that the other’s approach to leasing requirements was unreasonable. The fact is the property remained untenanted. The wife had at one stage during the first stage of trial sought that the husband be held financially accountable for the non-tenanting of the S Street property but as at the end of the evidence that contention was not pursued.
The circumstances in which financial conduct may legitimately be considered in the manner contended for by the husband are limited. Mr Richardson agreed that to succeed in this contention it would be necessary for the wife’s conduct to be characterised as “wanton, reckless or negligent” as described by Baker J in Kowaliw v Kowaliw (1981) FLC 91-092 (“Kowaliw”) in the following oft-quoted passage at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Leaving aside that the husband’s claimed amount in respect of mortgage payments would seem to be inflated by including the approximate £120,000 by which the capital amount of the mortgage loan has been reduced (which obviously is not a loss); and the total amount claimed assumes that an immediate sale as at September 2012 at the previous valuation figure would have been effected; and that the claimed amount takes no account of the additional capital gains taxation payable on the additional £375,000; there is in my judgment some more fundamental difficulties with the husband’s contention.
It may be accepted that the above statement by Baker J in Kowaliw (supra) and subsequent cases which have considered and applied it (see, for example, Omacini & Omacini (2005) FLC 93-218; DJM & JLM (1998) FLC 92-816; Townsend & Townsend (1995) FLC 92-569; Browne & Green (1999) FLC 92-873; Chorn & Hopkins (2004) FLC 93-204; Cerini & Cerini [1998] FamCA 143; SMB & MFB [2006] FamCA 46; Polonius & York [2010] FamCAFC 228) establish guidelines for the exercise of the s 79 discretion as distinct from requiring the application of a fixed legal rule to the facts on which the operation of the rule depends. (Lovine & Connor and Anor (2012) FLC 93-515 at [101] to [103]).
However it appears clear from those authorities that in the context of a claim of reckless, negligent or wanton conduct, as advanced here, at least two elements must be fulfilled for the guidelines to have application. First, that the conduct can be so characterised and, second that there exists a direct causal connection between the conduct so characterised and the loss or reduction of value so caused.
In the course of final submissions I had this exchange with Mr Richardson for the husband on the postulated scenario had the value of the S Street property increased, rather than decreased, in the period since September 2012:
HIS HONOUR: If it had gone the other way, would you be crediting the wife with that?
MR RICHARDSON: No, we would probably credit your Honour.
That reasonable and accurate answer demonstrates the point that my inordinate delay in delivering judgment following the first stage of trial severs any direct causal connection between the wife having sought an order as at the first stage of trial for her to retain the S Street property and any loss now claimed. The wife had no control over, and bears no responsibility for, my delay.
In association with my delay it is the product of market forces that the S Street property is worth £375,000 less than it was as at September 2012. That is, there is no direct causal relationship between any conduct of the wife and that difference in value.
In these circumstances for the wife’s conduct to qualify as being “economically reckless” there would need to be evidence that the wife’s insistence on the S Street property being retained as at the first stage of the trial could be so described. However, as at the first stage of trial there was no evidentiary reason to suppose that the value of the S Street property would fall. The husband’s contention rests on the benefit of hindsight. Ironically, he now seeks that he retain the S Street property as his first proposal rather than sale in the alternative.
As at the first stage of trial the wife’s case then for retaining the property rested, at least in part, on a view to the effect that the S Street property was a valuable asset and a worthwhile investment which would become more valuable over the longer term. Whilst the wife made concessions in cross-examination that she may not, or would not, be able to retain the S Street property beyond the short or medium term her rationale for retaining it was that with repair and leasing of the property, and in the context of her receiving a property settlement, she might sustain continuing ownership at least for a period over which the value of the property might increase.
The argument that the wife had earlier acknowledged or recognised that the S Street property would have to be sold to achieve property settlement has little to do with the prospect of the value of the asset diminishing; it is directed to the mechanisms by which a division of property could be effected. That is, at that stage most of the parties’ equity was in the S Street property and it was on that basis that the husband was agitating for its sale. There was no agitation on the basis that the value of the S Street property was diminishing or would in future likely diminish.
That it so happens that if such mechanics had been put into effect the position would be different, is not a basis for characterising the wife’s conduct as wanton, reckless or negligent or “economically reckless” in the sense described by Baker J in Kowaliw (supra) and the other authorities referred to.
If the value of the S Street property had increased by £375,000 since the first stage of trial the wife could not legitimately contend that she ought be credited solely with that increase.
The delay between the first stage of trial in September 2012 (and final submissions in November 2012) and the re-opening application in March 2014 is attributable to me and not to any actions or conduct on the part of the wife.
For these reasons I decline to make the notional adjustment to the schedule of assets sought by the husband for the purpose of assessing contribution and I am not persuaded that this aspect is a s 75(2)(o) consideration. That noted, obviously the husband’s continuing maintenance of the property over the period is a contribution factor.

Taxation position re: S Street property

There was no issue as to the expert evidence provided by Ms L, a UK qualified chartered tax advisor and partner in the firm TT in the UK. Ms L’s report is attached to her affidavit filed 22 May 2014.
Whilst Ms L opines as to scenarios including the husband remaining a non-UK resident for five tax years; or remaining a non-UK resident beyond 5 April 2016, it is the husband’s evidence that he will not remain in Asian City 2 when his Firm K employment ceases and he plans to return to the UK. Thus Ms L’s opinions which are relevant are those with respect to the husband’s planned return to the UK.
In the UK the personal taxation year is from 6 April until 5 April in the subsequent year.
For reasons further outlined below I have determined that the appropriate and just and equitable orders to be made in this case include orders for sale of the S Street property.
Given that the market will dictate the actual sale price achieved for the S Street property and the actual timing of that sale; and the consequent capital gains taxation liability and costs of sale and the like will be crystallised by such a sale; the valuation figure for the S Street property and the estimated tax liabilities and costs of sale are included in the schedule below as a point of reference only for the purposes of assessment, rather than fixing upon set amounts or findings as to such amounts.
Assuming that a sale price of £2,125,000 is achieved within the current UK tax year the husband’s UK capital gains tax liability is estimated by Ms L at £121,227 and would be included in the husband’s UK tax return for 2014/2015 and would be payable on 31 January 2016. The parties were in agreement that the wife’s estimated Australian capital gains taxation liability would amount to $23,092 on such an assumed sale; and the parties were agreed as to the estimates for legal fees and selling costs applicable to such a sale.

Loan to the Wife’s Father

The husband contended that $80,000 was advanced to the wife’s father as a loan in 2002. The husband accepts the wife’s evidence that $60,000 was repaid to the wife but the husband contends that there remains, as an asset, a balance of $20,000 owing with respect to this advance.
The wife contends that the advance to her father was made in September 2005 and was in a total amount of $60,000. On that basis it is the wife’s contention that the repayment of $60,000 by her father was repayment in full.
Attached as Annexure “NMD-15” to the wife’s affidavit filed 28 March 2012 is an email from the Commonwealth Bank evidencing that a bank cheque for $60,000 was made out to “X & Y”, whom the wife deposes were the prior owners of the business her father purchased with the assistance of these loan funds. The wife also attaches copies of her bank statements evidencing the withdrawal of $60,024 for a bank cheque from the Commonwealth Bank.
As it would seem that the wife’s version is corroborated, at least in part, by the documents referred to I find that it is more probable than not that the advance originally made was, as the wife contends, in the amount of $60,000 and that it has been repaid. I note in passing that even if the husband’s version were accepted, given the historical nature of the transaction under discussion, there would appear to be significant statute of limitation problems in the wife now seeking formally to recover any outstanding balance of such a loan. (See Ogilvie v Adams [1981] VR 1041).

Husband’s UK Pension

Whilst both parties included this item under the heading “Superannuation Interests” in the joint schedules handed up during submissions it did not ultimately seem to be an issue that as a UK pension which is not splittable the husband’s F Super Fund of £17,883 is not a “superannuation interest” within the meaning of the Act and is therefore not to be treated as an item of property, but rather as a financial resource of the husband.

Husband’s Barclays Overdraft/Credit Card Debts/Loan from his Mother

Whilst the quantum of each of these liabilities of the husband was not in issue it was Mr Kirk’s contention on behalf of the wife, in summary, that because the husband has had “ample” funds available to him from his earnings in the post-separation period he ought not to have needed to resort to any of these borrowings whilst sustaining a reasonable standard of living for himself and his family as well as supporting the wife and children.
It was thus contended on behalf of the wife that it would not be just and equitable to include such items in the divisible pool because, in effect, the husband has apparently devoted so much of his income to himself, his present wife and family and his wife’s niece, as to resort to borrowing.
The thrust of these submissions appeared to be that the husband had “wasted” (in a Kowaliw (supra) sense) his significant income, and absent such waste, he would have avoided incurring such liabilities.

I take into account that the husband retains exclusively the June 2014 payment of £138,056 worth AUD $249,649.18 on current exchange rates, albeit with a range of ongoing liabilities met or to be met from that, for the reasons earlier discussed. I have also, likewise for the reasons already discussed, left the relocation payment aside. I also note that the husband has as a financial resource a modest amount in the form of his UK pension.
Balancing the competing considerations, in my judgment an adjustment to the parties’ contribution based entitlements of 50 per cent/50 per cent of 20 per cent in favour of the wife is required to produce a just and equitable outcome. I fully recognise that a 20 per cent adjustment for s 75(2) matters produces a 40 per cent disparity between the parties and on the estimated worth (in Australian dollar terms applying the current exchange rate to relevant items) of the combined pool a 40 per cent disparity represents $2,646,980.40 (adopting also estimates for the S Street property). In my judgment anything less than a 20 per cent adjustment would fail to reflect the realities in terms of the value of the existing combined pool and the value of the earning capacity the husband retains; taken into the balance with the other s 75(2) matters referred to.

Just and Equitable Property Orders

Whilst the wife sought to retain the Suburb C property with its existing mortgage debt; and the Suburb U property with its existing mortgage debt; as well as the S Street property with its existing mortgage debt; that was in the context of the wife seeking an overall 80 per cent outcome in her favour. Moreover, I am not satisfied on the wife’s evidence that even allowing for the capital she is to receive under these Orders including the share she will receive of the Firm K interests, the wife would realistically have the capacity to retain all three properties and relieve the husband of responsibility for the mortgage debts by a refinancing of those mortgages.
In any event it was clear on the wife’s evidence overall under
cross-examination that it is more likely than not that even if she received the S Street property she would be selling that property at least in the medium term, if not the short term.
I accept Mr Richardson’s submissions to the effect that there is no prejudice to the wife if the S Street property is sold and she has alternate capital to invest from her share of the sale proceeds. There are also the difficulties concerning capital gains taxation on the evidence of Ms L if the property were retained to April 2016 when the capital gains taxation regime in the UK is likely to change. The wife accepted in cross-examination the proposition that she was unlikely to have the capacity to retain the property in the long term.
Whilst the husband ultimately changed his position from earlier throughout the proceedings seeking a sale of the S Street property to a primary position of retaining that property himself, or in the alternative sale; given the outcome I have determined I propose to make orders for the sale of the property. The husband’s proposed retention of the property was against the background of his contentions that the Firm K interests should be retained exclusively by him and I have rejected that contention.
In my judgment finality is better achieved with certainty of sale of the S Street property and the crystallisation now of associated costs including capital gains taxation that both parties sought to be brought into account in any event if either party retained the property in the short to medium term. That will provide the means for the wife to address the Suburb C mortgage and free the husband from that existing liability.
On the basis that the husband hopes to achieve his ambition of returning to live in the UK and basing himself there; against a background of the parties being in conflict and not being able to negotiate arrangements for the S Street property historically; I propose to accede to the husband’s proposal that he bear primary responsibility for sale arrangements albeit with the necessary consultations and agreements with the wife that the proposed orders contemplate. I also propose to order that the husband be permitted to have sole use and occupancy of the S Street property pending its sale.
I will include a provision for expenditure by the husband on the S Street property if that is agreed to ready the property for sale with a provision for any such expenditure to be refunded out of the sale proceeds.
The parties reached agreement on the form of orders that ought be made to deal with capital gains taxation and sale cost issues in the event an order for sale of the property was made and I will incorporate those provisions in the Orders.
Leaving to one side for the moment the husband’s Firm K interests and retirement benefits itemised above; and if the items referable to the S Street property are removed from the above schedule the following is the result:
TOTAL ASSESTS
INCLUDING SUPERANNUATION:  $2,969,494
LESS TOTAL LIABILITIES:   ($2,200,697)
SUBTOTAL:  $   768,797
ADD TOTAL NOTIONAL ADJUSTMENTS:  $   723,784
TOTAL:  $1,492,581
Seventy per cent of $1,492,581 is $1,044,806.70.
Of the above total of $1,492,581 if the wife holds or retains the benefit and the burdens of the following items, as is contemplated by both parties on proposed orders, the following is the result:
Suburb C property  $2,200,000
LESS mortgage  ($1,822,418)
$    377,582
Suburb U property  $    470,000
LESS mortgage  ($   115,192)
$     354,808
Total bank accounts in wife’s sole name  $        6,941
Motor vehicle  $      12,000
Suburb C contents  $      17,650
AMP Superannuation  $             67
$     36,658
CBA Visa card  ($       3,757)
Personal UK taxation liability  ($       2,104)
Repairs to Suburb C property  ($       4,225)
CBA joint loan  ($    52,452)
($     62,538)
ADD notional adjustments  $   274,426
$     98,874
$   373,300
TOTAL:  $1,079,810
There is thus a difference of $35,003.30 (say $35,000) between the 70 per cent proportion referred to and the value of what the wife holds or retains the benefit of. That amount can be adjusted for out of the wife’s share of the S Street sale proceeds.
Otherwise if orders are made for the wife to receive 70 per cent of each payment of the Firm K payments when made, in the currency in which they are paid; and provision is made for the wife to receive 70 per cent of the net sale proceeds of the S Street property; the overall outcome of 70 per cent to the wife is achieved.
There was otherwise not much dispute between the parties as to the other orders to be made. I intend for the husband to receive or retain exclusively the benefit of joint bank accounts in circumstances where, as outlined above, he will be otherwise meeting joint liabilities, except for the CBA personal loan in joint names which will be the wife’s responsibility.
The husband will retain solely the benefit of the June 2014 payment from Firm K of GBP 138,056 (AUD equivalent $249,649.18) albeit meeting some liabilities from that. The husband will continue to receive salary payments of £10,000 on each of 24 August and 24 September (having received such like payments on 24 May and 24 June respectively).
Pursuant to the schedule of anticipated payments the following payments are due by the end of this calendar year:
15 September 2014  £229,929
(LESS Firm K loan)     (£ 35,000)
(LESS further Firm K loan)     (£ 90,000)
BALANCE:   £104,929
15 December 2014 payment  £229,929
The wife’s 70 per cent proportion of these payments will be paid in GBP currency so the Australian dollar equivalent will crystallise on the respective dates of payment. However, for the purpose of estimation on the current exchange rate the wife will receive GBP 73,450.30 on 15 September 2014 (AUD present equivalent $132,821.51) and GBP 160,950.30 (AUD present equivalent $291,049.36) on 15 December 2014. Obviously the wife will continue to receive her 70 per cent share from subsequent payments but the above is to show an estimate of what she will receive in the near future.
In light of the foregoing I will formally order that the Orders of 2 August 2012 cease to have effect and be discharged as and from 15 September 2014.
Considered below, separately, are the questions of spousal maintenance in light of the property orders proposed to be made. Moreover, separate consideration is given below to adult and child maintenance on an ongoing basis but as earlier indicated the outcome there has been taken into account in dealing with s 75(2) matters.
It is just and equitable that on and from 15 September 2014 the wife be responsible for the mortgage on the Suburb C property and the mortgage on the Suburb U property; and that she be obliged to refinance these loans, together with the CBA loan, into her own name upon her receipt of her share of the sale proceeds of the S Street property.
The corollary of that is that in circumstances where the husband is to have sole use and occupation of the S Street property given his prospective return to live in that property until it is sold that the husband ought be solely responsible for the mortgage interest and outgoings on that property pending its sale.
Given my findings and conclusions I am satisfied that the property orders proposed to be made are appropriate and just and equitable within the meaning of s 79.

Spousal Maintenance

At the conclusion of the first stage of trial it was submitted that the wife’s weekly needs totalled $1,447 per week ($75,244) per annum in after tax terms.
When the wife was cross-examined at the first stage of trial, whilst I did not discern in her any deliberate attempt to overstate or obfuscate in relation to her claimed expenses, it is fair to say that cross-examination on these and related topics produced some doubt about the reliability of a number of estimated claims. For example, it seemed to me that cross-examination demonstrated inconsistencies between such receipts as the wife had provided regarding her weekly expenses and her own estimates said to be calculated from those receipts. The wife ultimately acknowledged, during her cross-examination, that the table set out at paragraph 221 of her affidavit filed 24 February 2012 contained “errors”.
In the wife’s Financial Statement filed 19 May 2014 the wife tabulates items of expense in Part G totalling $120 (leaving aside credit card payments of $20/week) and in Part N tabulates average weekly expenses for herself totalling $442 (and not $469 appearing at the bottom of that column). It seems to me to be reasonable to conclude that the wife’s weekly expenses or needs for herself are thus in the order of about $560.
In addition to these expenses, if the wife assumes responsibility for the mortgage and outgoings on the Suburb C property and the Suburb U property, she will obviously have additional expenses. In Part F of her Financial Statement the wife identifies a total of about $1,800 per week for these two properties and in respect of her motor vehicle.
However, the single greatest expense of these is the $1,524 weekly amount attributable to the Suburb C property mortgage. Obviously that amount will be eliminated by repayment of the mortgage debt which the wife can achieve when she receives her share of the sale proceeds of the S Street property. Likewise she will have the capacity to eliminate the CBA debt referable to her motor vehicle.
Mr Kirk for the wife relied upon the cases of Best & Best (1993) FLC 92-418 (“Best’s case”) and Mitchell & Mitchell (1995) FLC 92-601 to advance the proposition that:
In simple terms, there is no warrant for giving the concept of “maintenance” a narrow scope, or limiting it to periodic living expenses. It extends, for example, to the need of a party to obtain suitable accommodation, and to repay liabilities. The maintenance power is intended to relieve economic hardship resulting from marriage or its breakdown, and is one of several devices available to achieve the equitable distribution of the financial benefits derived from the marriage.
Mr Kirk also referred to the English authorities that I have already discussed in dealing with the property aspects and the 25 per cent orders as well as the decision of Brown & Brown (2007) FLC 93-316 (“Brown’s case”).
For the reasons already discussed the English authorities are of no assistance to the determination in this case.
So far as those other authorities are concerned, the law is that s 72 of the Act establishes what is often referred to as the “threshold question” before the power in s 74 may be exercised. Section 72 of the Act is cross-referenced to s 75(2) of the Act.
Best’scase (supra) concerned a property pool of only $100,000 with the husband having a high earning capacity. Brown’scase (supra) concerned a case where the husband was in control of very substantial property in the order of $250 million.
Whilst cases lying at the extremes are often of little value to a case such as the present case, it is to be noted that in Brown’scase the lump sum maintenance of $3.75 million ordered by the trial judge was reduced to the sum of $2.25 million on appeal. Most significantly in neither of these cases was there any issue about the wife satisfying the threshold question. Those cases are more to do with the discretion and its exercise once the answer to the threshold question leads to an exercise of discretion.
Subject to the price actually achieved on the sale of the S Street property, and the associated costs of realisation including capital gains taxation; and the applicable exchange rates on relevant items; the wife’s receipt of 70 per cent of the parties’ property interests as discussed reflects her receiving or retaining the benefit of an estimated $4.632 million in property.
Even allowing for the fact that the wife’s entitlement includes the notional item of paid legal fees totalling $373,300; the contingency that the S Street property may sell for less than the valuation figure; and the delayed receipt of some of the wife’s entitlement referable to the Firm K schedule of payments and the sale of the S Street property respectively; I am unable to conclude that on any conceivable basis the wife meets the threshold requirement.
In my judgment, having regard to the outcome in terms of property orders, the wife cannot establish that she is unable to support herself adequately having regard to relevant matters in s 75(2) of the Act.
Whilst it may readily be accepted, as was observed by the Full Court in Mitchell & Mitchell (supra) that it is not necessary for an applicant for maintenance to use up all assets and capital in order to satisfy the threshold requirements to adequately support; the circumstances of the individual case dictate where the line is to be drawn in that regard.
In B and B (No 2) (2000) FLC 93-031 the line was drawn with respect to a pool of nearly $3 million with the wife receiving an overall 70 per cent outcome in circumstances where that left the wife with capital of about $2.1 million. That too was a case where it could readily be concluded that the wife had contributed to the husband’s substantial earning capacity. In re-exercising the discretion the Full Court did not disturb the apportionment of 60 per cent to the husband and 40 per cent to the wife for contributions. The Full Court increased the s 75(2) adjustment of 15 per cent made by the trial judge to 30 per cent resulting in the wife receiving 70 per cent or about $2 million. Having regard to the impact of that proposed order for property settlement and the fact that the wife would receive about $2 million the Full Court concluded that it would not be proper for an order for spousal maintenance to be made notwithstanding the evidence concerning the wife not being in employment and evidence relating to her expenses.
Even if it were concluded here that the wife was permanently incapable of any employment, regard to the capital which she will have for her future means that the wife could, despite not undertaking employment, meet her own reasonable needs from the investment of that capital. To that may be added the observation that in this case whilst there are limitations on the wife’s capacity to engage in employment on her own case that was mainly directed to her need to care on an ongoing basis for the children of the marriage. The youngest, M, is in grade 10 and whilst I have already accepted that the needs of children do not extinguish with them moving past school age there are matters of proportionality. In my judgment it could not be said that the wife is completely unemployable and indeed her own submissions at the first stage of trial were to the effect that over time, a then five year period, the wife would be engaging in pursuits to qualify herself for employment once her responsibilities for child care lessen.
In my judgment the combination of what, how and when, the wife is to receive by way of property settlement, with some allowance for her capacity over the longer term to pursue some level of employment, means that the wife does not demonstrate any incapacity to meet her own needs.
In my judgment the threshold is not satisfied in this case and the application for spousal maintenance must be dismissed on that basis.

Adult Child Maintenance

Section 66L of the Act contains the power by which the Court may make orders with respect to adult child maintenance. Section 66L(1) provides that:
A court must not make a child maintenance order in relation to a child who is 18 or over unless the court is satisfied that the provision of the maintenance is necessary:
(a) to enable the child to complete his or her education; or
(b) because of a mental or physical disability of the child.
The court may make such a child maintenance order, in relation to a child who is 17, to take effect when or after the child turns 18.
A child maintenance order will cease to have effect upon the subject child reaching 18 years of age, unless the order specifies that it is to continue after that time (s 66L(3) (see, for example, Rothstein v Child Support Registrar (1994) FLC 92-490). Pursuant to s 66VA(1) of the Act, an order for adult child maintenance made under s 66L will cease to be in force if the circumstances that gave rise to the order cease, that is, if the child to whom the order applies completes their education or ceases to have a disability.
In Cosgrove v Cosgrove (1996) FLC 92-700, at 83,387 Warnick J approved the statement of Moss J in Tynan and Tynan (1993) FLC 92-385, at 79,983 with respect to s 66H of the Act (now s 66L).
What is immediately apparent about that provision is that the making of an order, even if the terms of par (a) or (b) are met, is not mandatory, i.e. on its face, a discretion remains. This is also the view of Moss J in Tynan and Tynan (1993) FLC 92-385, at p 79,983.
It is then necessary to turn to other sections of the Act to see whether the apparent discretion is circumscribed or indeed, removed.
In determining whether an application for adult child maintenance is “necessary” as described in s 66L of the Act, the guiding principle is what, in all the circumstances, is reasonable (see Cosgrove v Cosgrove (No 2) (1996) FLC 92-701).
In Cosgrove v Cosgrove (1996) FLC 92-700, Warnick J undertook a detailed assessment of the matters likely to impact the Court’s discretion in determining whether it is necessary, in the circumstances, to make an order for adult child maintenance. At p 83,389 his Honour stated:
The word “necessary” does not mean “absolutely essential” but involves a consideration of “reasonableness”. This follows from the statements in Tuck and Tuck (1981) FLC 91-021 at p 76,227 and Henderson and Henderson; Henderson (Intervener) (1989) FLC 92-011 at p 77,303. Of the various statements in those cases, founding that deduction, I prefer that of Strauss J in Tuck’s case. About the words “necessary to enable the child to complete his education...” his Honour simply said:
“I am of opinion that in this context, provision of maintenance for a child over the age of 18 years is ‘necessary’, if the child reasonably needs support to enable the child to complete his or her education...”
The statement of the majority (Evatt CJ and Murray J) in Tuck's case that:
“‘Necessary’ in this context means that the maintenance is needed by the child and that it is reasonable to require the parent to contribute, having regard to the parties’ financial circumstances and other relevant factors.”
I respectfully suggest, taken literally, imports into the interpretation of the word “necessary”, considerations going to the general discretion whether to make an order or not.

In Cosgrove v Cosgrove (No 2) (1996) FLC 92-701 at 83,395 (Nicholson CJ, Finn and Maxwell JJ), in dismissing the husband’s appeal, the Full Court observed that the principles expressed in Bevan and Bevan (1995) FLC 92-600 and Mitchell and Mitchell (1995) FLC 92-601, concerning the discretion to order spousal maintenance, are equally applicable in applications for child and adult child maintenance, with the guiding principle being what in all the circumstances is reasonable.
In Smith v Wickstein (1996) FLC 92-714, at 83,596 (Barblett DCJ, Fogarty and Finn JJ) the Full Court held that in determining an application under s 66L the remaining provisions in Division 7 of Part VII of the Act, particularly s 66K(4), are relevant. Thus, an application under s 66L for adult child maintenance is to be determined in accordance with the general provisions governing child maintenance namely ss 66H, 66J and 66K.
Section 66H of the Act provides:
In proceedings for the making of a child maintenance order in relation to a child, the court must:
(a) consider the financial support necessary for the maintenance of the child (this is expanded on in section 66J); and
(b) determine the financial contribution, or respective financial contributions, towards the financial support necessary for the maintenance of the child, that should be made by a party, or by parties, to the proceedings (this is expanded on in section 66K).
Section 66J sets out the matters to be taken into account in considering the financial support necessary for child maintenance. Section 66J provides:
(1) In considering the financial support necessary for the maintenance of a child, the court must take into account these (and no other) matters:
(a) the matters mentioned in section 66B; and
(b) the proper needs of the child (this is expanded on in subsection (2)); and
(c) the income, earning capacity, property and financial resources of the child (this is expanded on in subsection (3)).
(2) In taking into account the proper needs of the child the court:
(a) must have regard to:
(i) the age of the child; and
(ii) the manner in which the child is being, and in which the parents expected the child to be, educated or trained; and
(iii) any special needs of the child; and
(b) may have regard, to the extent to which the court considers appropriate in the circumstances of the case, to any relevant findings of published research in relation to the maintenance of children.
(3) In taking into account the income, earning capacity, property and financial resources of the child, the court must:
(a) have regard to the capacity of the child to earn or derive income, including any assets of, under the control of or held for the benefit of the child that do not produce, but are capable of producing, income; and
(b) disregard:
(i) the income, earning capacity, property and financial resources of any other person unless, in the special circumstances of the case, the court considers it appropriate to have regard to them; and
(ii) any entitlement of the child or any other person to an income tested pension, allowance or benefit.
(4) Subsections (2) and (3) do not limit, by implication, the matters to which the court may have regard in taking into account the matters referred to in subsection (1).
Section 66K of the Act lists the matters to be taken into account in determining the contribution that should be made by a party for child maintenance:
(1) In determining the financial contribution, or respective financial contributions, towards the financial support necessary for the maintenance of a child that should be made by a party, or by parties, to the proceedings, the court must take into account these (and no other) matters:
(a) the matters mentioned in sections 66B, 66C and 66D; and
(b) the income, earning capacity, property and financial resources of the party or each of those parties (this is expanded on in subsection (2)); and
(c) the commitments of the party, or each of those parties, that are necessary to enable the party to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(d) the direct and indirect costs incurred by the parent or other person with whom the child lives in providing care for the child (this is expanded on in subsection (3)); and
(e) any special circumstances which, if not taken into account in the particular case, would result in injustice or undue hardship to any person.
(2) In taking into account the income, earning capacity, property and financial resources of a party to the proceedings, the court must have regard to the capacity of the party to earn and derive income, including any assets of, under the control of or held for the benefit of the party that do not produce, but are capable of producing, income.
(3) In taking into account the direct and indirect costs incurred by the parent or other person with whom the child lives in providing care for the child, the court must have regard to the income and earning capacity forgone by the parent or other person in providing that care.
(4) In determining the financial contribution, or respective financial contributions, that should be made by a party, or by parties, to the proceedings, the court must disregard:
(a) any entitlement of the child, or the person with whom the child lives, to an income tested pension, allowance or benefit; and
(b) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or has such a duty but is not a party to the proceedings, unless, in the special circumstances of the case, the court considers it appropriate to have regard to them.
(5) In determining the financial contribution, or respective financial contributions, that should be made by a party, or by parties, to the proceedings, the court must consider the capacity of the party, or each of those parties, to provide maintenance by way of periodic payments before considering the capacity of the party, or each of those parties, to provide maintenance:
(a) by way of lump sum payment; or
(b) by way of transfer or settlement of property; or
(c) in any other way.
(6) Subsections (2) to (5) do not limit, by implication, the matters to which the court may have regard in taking into account the matters referred to in subsection (1).
In determining whether a child needs financial support, the Court will have regard to the child’s income and earning capacity, for example, part-time employment (see Mercer and Mercer (1976) FLC 90-033 at 75,131 (Watson J); Gamble and Gamble (1978) FLC 90-452).
Taken from Annexure “A” to the wife’s Outline of Case forwarded by email on 21 May 2014 the wife seeks adult child maintenance for N and B in the sum of $2,166 per month per child, being a total of $4,332 per month, together with payments in respect of tuition for the tertiary institution at which they are enrolled; books, stationery and course materials; provision of a laptop computer, Internet and required software; and payment of private health insurance (inclusive of any gap fees).
Pursuant to the husband’s proposed orders (forwarded by email on 23 May 2014) the husband seeks an order that he pay adult child maintenance for N and B, conditional upon their attending full-time tertiary education, in the sum of $200 per week, per adult child for the duration of their first under-graduate degree, as well as payments for private health insurance (inclusive of any gap fees) and the costs of compulsory student union fees (if any), textbooks and University course material. The husband has specified in his proposed orders that he will not pay for the tuition fees or HECS debt associated with such fees.
Having regard to what is set out in Part N of the wife’s Financial Statement filed 19 May 2014 in which she sets out total expenses of $482 for the “other adults” in the household, a reference to N and B, the wife’s claim does not appear to be sustainable.
N made efforts towards supporting herself in her first year at University. On the wife’s evidence, N tutored two students privately, “…on and off…” throughout the school term for $25 per hour as well as up to 14 students at her former secondary school for $22 per student per week. On the assumption that the secondary school students require N’s assistance for approximately eight weeks of each school term, that is an annual income of $9,856 from those students, and assuming that two private students require three one-hour sessions each per term, that is $600 per annum from those students, amounting to a total income of $10,456 or approximately $201 per week. The wife’s more recent evidence confirms N’s capacity to contribute to her own support by such earnings.
N has a demonstrated capacity to earn income from tutoring students. She is thus able to contribute to her own support. She is now 20 years of age and it is reasonable to expect that whilst she is undertaking tertiary study she continue to provide to some extent for her own needs. Obviously enough, aside from her own financial support N is capable of contributing to the household and to the needs of the household more generally.
The reasonable needs of N set out by the wife in her Financial Statement filed 18 May 2014 do not appear to be excessive. On the basis that N has the capacity to earn $200 per week I find that the weekly sum of $200 plus the other items the husband proposes be paid ought enable N to successfully complete her tertiary education.
Whilst the wife apparently encourages B to devote himself solely to his studies there is no reason to suppose that B ought not be capable of contributing to some extent to his own financial needs and there is also in his case capacity for him to contribute to the household given that he is now 18 years of age.
In these circumstances I propose to make orders for adult child maintenance in the terms proposed by the husband. I am satisfied that such orders are reasonable in circumstances where aside from her physical caring support on an ongoing basis to the adult children, the wife will have the financial capacity from her capital to assist in their support.

Child Maintenance

As already noted M, born in 1999, is currently 14 years of age and will soon turn 15 years of age.
As the husband has been resident in an Asian country, which is not a reciprocating jurisdiction under the Child Support (Assessment) Act 1989 (Cth) no administrative assessment of the child maintenance payable by the husband has been made. However, both parties seek that under Division 7 of Part VII of the Act that orders be made for child maintenance.
As already noted s 66G of the Act refers to maintenance orders which are “proper”. Section 66H of the Act sets out the approach to be taken in determining such maintenance orders. The two central factors are the financial support necessary for the maintenance of the child and the financial contribution towards that financial support that should be made by the parties to the proceedings as parents.
In considering the matters set out in s 66J of the Act it can be noted that M has no assets or financial resources available to him.
Neither of the parties disputes that they intended for their children to be educated at private schools and for the children to continue on to tertiary education. It does not appear, from the evidence of the parties that there was any expectation by the parties that their children would be required to pursue remunerative employment whilst they were undertaking their secondary education.
Obviously enough the costs associated with private education are not limited to tuition costs, and extend to the costs of uniforms, books, laptops, Internet access, extra-curricular activities and school camps and trips.
Teenage children also have other associated expenses, or increased expenses, particularly in the area of clothing and entertainment kinds of expenses.
Pursuant to the wife’s proposed orders (Annexure “A” to her Outline of Case forwarded by email on 21 May 2014), the wife seeks child maintenance in the sum of $3,500 per month for M together with payment of education costs (inclusive of school fees, uniforms, supplies etc.), extra-curricular activities, music lessons and private health insurance, until M reaches 18 years of age or finishes school (whichever is the latter).
Pursuant to the husband’s proposed orders (forwarded by email on 23 May 2014) the husband seeks an order that he pay child maintenance for M in the amount of $350 per week, together with payment of M’s school fees (including the cost of uniforms, books and associated materials), fees for
extra-curricular activities and private health insurance (including any gap payments).
Set out in Part N of the wife’s Financial Statement filed 19 May 2014 are claimed average weekly expenses for M totalling $1,153. These include $132 by way of education expenses which the husband agrees to pay in any event as well as $42 per week by way of medical, dental and optical expenses, which the husband also agrees to meet over and above any cash sum.
The balance of $979 includes items for food and household supplies totalling $415 per week. I do not accept that sum to be reasonable for a 14/15 year old boy. Nor do I think it reasonable that weekly telephone costs attributable to him are as high as $41 or electricity of $30. Even accepting that M attends many extra-curricular activities and the like the suggestion that petrol costs referable only to him amount to $130 per week seems exceedingly high.
In my judgment M’s reasonable weekly needs, aside from education and medical already referred to, are properly assessed at about $700.
In circumstances where the wife will have capital from which she can also make a contribution I consider that the orders sought by the husband are reasonable subject to modifying the cash amount from $350 to $500. Section 66B(2)(b) of the Act sets out as an object of the Act that parents ought share equally in the support of their children.
The husband will be paying for M’s school tuition including the additional costs referred to as well as fees for extra-curricular activities and private health insurance. If he contributes $500 per week over and above these items that appears to me to be “proper” in terms of an order for child maintenance and that is the order I will make.
The wife provides unpaid support in terms of cooking, cleaning, washing and transport including to M’s extra-curricular activities. Obviously enough that is a significant component of support in terms of assessing its value so far as support is concerned. In those circumstances I propose to increase the cash amount the husband proposed from $350 to $500 per week.

Reduction of Adult Child Maintenance and Child Maintenance whilst Husband not working

The husband proposed orders be made that in the event that he was unable to secure employment when he finishes with Firm K as at 30 September 2014 there be a 50 per cent reduction in the amounts he is required to pay with respect to adult child maintenance and child maintenance for the period he is so unemployed.
Given the schedule of Firm K payments and the husband’s share in them; the feature that the June 2014 payment has been retained by him (subject to liabilities); the prospective sale of the S Street property and the overall capital available to the husband; I am not persuaded that there ought be an automatic 50 per cent reduction of the ordered payments. Liberty to apply to vary addresses that aspect.

I certify that the preceding two hundred and ninety (290) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 4 August 2014.

Associate:

Date: 4 August 2014