Milankov & Milankov - [2002] FamCA 195

[2002] FamCA 195

FAMILY LAW ACT 1975

IN THE FULL COURT

OF THE FAMILY COURT OF AUSTRALIA Appeal No WA7 of 2001
AT PERTH File No PT4685 OF 1997

BETWEEN:

GEORGE LAZO MILANKOV
Appellant Husband
- and -

CHRISTINE MILANKOV
Respondent Wife

REASONS FOR JUDGMENT OF THE FULL COURT

CORAM:  Nicholson CJ, Buckley and Kay JJ
DATE OF HEARING:                 12 November 2001
DATE OF JUDGMENT:             22 March 2002

APPEARANCES: Dr Dickey, QC, instructed by Paterson and Dowding, Solicitors, 2^nd Floor, BGC Centre, 28 The Esplanade, Perth WA 6000 appeared on behalf of the Appellant Husband.

Ms G Braddock, SC with Ms E Hynes, instructed by DCH Legal Group, 15 Hay Street, Subiaco, WA 6008, appeared on behalf of the Respondent Wife.

MILANKOV

WA 7 of 2001
Coram: Nicholson CJ, Buckley and Kay JJ
Date of hearing: 12 November 2001
Date of judgment: 22 March 2002

MAINTENANCE– Lump sum – distinction between order for lump sum maintenance and retrospective order for payment of maintenance in arrears.

PROPERTY- Value of property – doubtful debt – open to trial Judge to value debt at face value where party has failed to lead evidence as to realistic value.

PROPERTY SETTLEMENT – pool of assets –legal costs expended added back into pool - effect of order dividing notional pool was to award property exceeding value of actual pool – power of Full Court to draw inferences of fact regarding subsequent financial affairs of parties –legal expenditure treated as premature distribution of property.

PROPERTY SETTLEMENT – Just and equitable –– s75(2) factors – whether finding that husband would control his father’s property after the father’s death open on the evidence.

The parties married in December 1981 and separated in March 1997. There were two children born of the marriage in September 1982 and in June 1988.

The parties had been in business together with the husband’s parents. The proceedings substantially involved the inter-relationship between the financial affairs of the husband and those of his parents. The husband's father was an intervener in the proceedings, the wife having sought relief which involved orders being made against property owned by the husband's father or entities controlled by him.

The various business activities of the parties and the husband’s parents were run through a structure of trusts. The husband and his father controlled the trusts. In breach of injunctions of the Court, the husband transferred control of the trusts to his father. At trial the wife attempted to establish that the husband nevertheless had a legal or equitable property interest in the assets of the trusts, but did not succeed. This finding was not challenged during the appeal.

The husband’s father also made a will leaving his entire property to his wife, who had not made a will at the time of hearing. The husband had three sisters and the four siblings would have shared equally in any inheritance from the mother if no will were to be made.

The parties had a notional pool of net marital assets amounting to $864,810. This amount included legal expenses added back amounting to $97,467 for the husband and $5,639 for the wife. Additionally, her Honour found that the husband had an expectation of inheriting at least $2.8 million on the death of his father. The evidence was that the father had assets in his own name of $2.9 million, and the trust structure had further assets of $2.8 million. Her Honour found that upon his father’s death it would be ensured that the husband would take control of the assets of the trust.

Penny J. ordered that the wife receive 90% of the total property pool, 50% for contributions and 40% for s 75(2) factors. In addition, her Honour determined that the husband should have paid weekly spousal maintenance from May 1998 and that the arrears of $31,100 created by the retrospective order should be paid within 90 days of 15 February 2001.

The husband appealed, on grounds that can be summarised as follows:

That the orders granting the wife 90% of the notional pool of assets (which included legal costs already paid by the parties) had the real effect of giving the wife more than the available assets. Such orders were in breach of the firmly established principle that a court exercising power under s 79 of the Family Law Act 1975 can only alter the parties' interest in their property and cannot make orders that would exceed the extent of that property.

That the adjustment of 40% of the pool of assets based on s 75(2) factors was made upon propositions which were unsupportable on the evidence, namely that upon the father’s death the husband would take control of the assets of the Milankov Family Trust, and that if he did, he would be able to utilise those assets as though they were his own.

That the trial Judge should not have included at full value an amount of $59,000 owing from a trade debtor.

That no order should have been made for the payment of lump sum maintenance without identifying a source of funds that would have been available to meet that order.

Held: in dismissing the appeal

(per Nicholson CJ, Buckley and Kay JJ)

Her Honour’s orders did not require a payment of lump sum maintenance. Rather, periodic maintenance had been ordered retrospectively, and the payment required was for arrears of that maintenance. Therefore her Honour did not need to look at the husband’s current ability to pay but rather at his ability to pay over the period for which the maintenance had been ordered.

It was open to the trial Judge to include the $59,000 debt at full value. While the husband had given evidence that there was some doubt about the likelihood of recovery of the debt, he had chosen not to provide any evidence that would have enabled her Honour to assess the likelihood of recovery. He had also not attempted to lead further evidence on the issue before the Full Court.

The propositions regarding the family trust were open on the evidence. Her Honour had rejected the veracity of the husband, his father and their accountant in respect of dealings with property at various times during the parties’ relationship. Her finding that the husband would again obtain control of the trust was open to her. In the light of that finding it was clear that the terms of the trust meant that the husband would have full control of the assets of the trust and the ability to distribute them all to himself if he saw fit.

(per Nicholson CJ and Buckley J, Kay J disagreeing)

In the factual circumstances of this case, the husband received a premature distribution of property as discussed in Townsend and Townsend (1995) FLC ¶92-569 and it therefore cannot be said that the pool was limited to the funds actually available at trial.

The husband having acceded to the inclusion of the legal costs paid back into the pool of assets, he could not now argue that her Honour should have made findings as to the size of the pool of assets that was any different to the concession made: Vakauta v Kelly (1989) 167 CLR 568 applied.

(per Kay J)

An order cannot be made under section 79 that extends beyond the limits of the pool of assets available at trial where those limits are clearly identifiable. Absent any order under s 106B to bring back in to the pool moneys which had been already expended by the parties, the limit of her Honour’s power to make orders for alteration of property interests in this case was to the extent of that pool of assets.

(per Nicholson CJ and Buckley J, Kay J agreeing)

The Full Court having the power to draw further inferences of fact under section 93A(2), in circumstances of an unchallenged finding of an income of the husband of $150,000 per year, and no application to admit evidence of a change in financial circumstances, it would be artificial for the Court to assume that the husband lacks the capacity to pay the amount of $11,000 which was in question in the point regarding the size of the overall pool.

Further, applying the de minimis principle, in the context of this case that amount of $11,000 was not sufficient to attract the interference of the Court: Hirst and Rosen (1982) FLC 91-230 distinguished.

APPEAL DISMISSED
COSTS SUBMISSIONS CALLED FOR
REPORTABLE

NICHOLSON CJ AND BUCKLEY J

Introduction

This is an appeal by the husband against property and maintenance orders made by Penny J on 15 February 2001. Her Honour's orders were a decree of the Family Court of Western Australia exercising original jurisdiction under the Family Law Act 1975 ("the Act"). Pursuant to s 94(1) of the Act, an appeal lies to this Court.

We have had the benefit of reading Kay J's reasons for judgment in draft form and we adopt his Honour's account of the facts and arguments.

We would further note that at the hearing before us, the appellant husband sought orders which would exclude the debts of the husband's business. It was further sought by the husband that of that pool less legal expenses and debtors amounts which we were informed would then amount to $702,704, the wife should receive 73%, a sum in the amount of $513,000.

Kay J's reasons for judgment also conveniently summarise the grounds of appeal. We are in agreement with his Honour's reasons and conclusions in respect of the following three of the grounds of appeal:

§ That the adjustment of 40% of the pool of assets based on s 75(2) factors was made upon propositions which were unsupportable on the evidence, namely that upon Lazo's death the husband would take control of the assets of the Milankov Family Trust, and that if he did, he would be able to utilise those assets as though they were his own.

§ That the trial Judge should not have included at full value as an asset of the parties an amount of $59,000 owing to Milankov Holdings Pty Ltd from a trade debtor.

§ That no order should have been made for the payment of lump sum maintenance without identifying a source of funds that would have been available to meet that order.

Although this Court is agreed that the remaining ground of appeal should also be dismissed, we have approached the issue in a different manner. The remaining ground of appeal was summarised by Kay J as being:

§ That the orders granting the wife 90% of the notional pool of assets (which included legal costs already paid by the parties) had the real effect of giving the wife more than the available assets. He considered that such orders were in breach of the firmly established principle that a court exercising power under s 79 of the Family Law Act 1975 can only alter the parties' interest in their property and cannot make orders that would exceed the extent of that property.

The nature of an appeal brought pursuant to section 94 of the Act

Section 93A of the Act provides inter alia that the Family Court has jurisdiction with respect to matters arising under the Act in respect of which appeals referred to in section 94 are instituted. Section 93A(2) of the Act relevantly provides:

"Subject to section 96, in an appeal the Family Court shall have regard to the evidence given in the proceedings out of which the appeal arose and has power to draw inferences of fact and, in its discretion, to receive further evidence upon questions of fact, which evidence may be given by affidavit, by oral examination before the Family Court or a Judge or in such other manner as the Family Court may direct." (emphasis added)

In CDJ v VAJ (1998) 197 CLR 172, an appeal in respect of parenting orders, the High Court considered appeals to which s. 94 applies and the associated provision of s. 93A(2). A majority of the Court (McHugh, Gummow and Callinan JJ) held at paragraph 111:

"No doubt it is true that, because the appeal is by way of rehearing, the Full Court's jurisdiction is neither purely appellate nor purely original. In Attorney-General v Sillem, Lord Westbury LC pointed out that "[a]n appeal is the right of entering a superior Court, and invoking its aid and interposition to redress the error of the Court below." Appellate jurisdiction in the strict sense is jurisdiction to determine whether the order of the court below was correct on the evidence and in accordance with the law then applicable. In contrast, the Full Court of the Family Court must decide the rights of the parties upon the facts and in accordance with the law as it exists at the time of hearing the appeal." (footnotes omitted)

In a separate judgment, Kirby J observed at paragraph 185:

"Because appeal was unknown to the common law and derives wholly from statute, the incidence and operation of particular appellate procedures depend, ultimately, on the legislative provisions which give birth to them. So it is in relation to the facility to receive evidence in an appeal afforded by the Parliament to the Full Court of the Family Court. Textually, there are several points that must be noted about s 93A (2) of the Act which founds the power of the Full Court in question here. First, the facility appears in the Act and in the context of the Family Court. This brings with it all of the peculiar reasons for accuracy, caution and infinite pains to which reference has already been made. Secondly, the facility exists within a procedure described as an ‘appeal’. That it is not intended that the ‘appeal’ should be by way of complete rehearing is made plain by the words of the sub-section which follow. Ordinarily, it is clear that the Full Court must decide an appeal by having regard to the evidence given ‘in the proceedings out of which the appeal arose’. But that Court is not hostage to the trial evidence as some procedures called ‘appeal’ require. It is expressly empowered "to draw inferences of fact". This it may do although the primary judge has made no findings or conflicting findings. It is also empowered ‘to receive further evidence upon questions of fact’. " (footnotes omitted)

As will be seen later in these reasons, we consider section 93A(2) and these dicta to be pertinent to the treatment of this ground of appeal. It is convenient to first deal with the main issues.

The Property Pool

10. Although it might be said that the apparent effect of the orders was to grant the wife approximately $11,000 more than 100% of the pool of assets as at the date of trial, we do not consider that this is correct.

11. First, we do not consider it to be correct that the property pool was exceeded. The husband had received the monies expended by him on legal costs and at trial at least, he very properly conceded that he had done so and that the monies should be included in the pool.

12. It is apparent that he had treated legal costs in this manner since 2 November 1999 on which day he filed the document titled "Husband's Papers for Judge at Trial". In the table headed "Husband's List of Relevant Assets & Liabilities" both the husband's and the wife's legal costs appeared as an "add back" on that page in the following way:

"Legal costs paid are added back:
Wife net (between gross paid and borrowings) $ 5,639.80
Husband (total shown because consequences of payment
are already reflected in his asset/liability positions) $68,964.92"

13. It is also noteworthy that on 23 March 2000, Penny J asked counsel for the husband to provide her with a figure for the amount that the husband had paid in legal fees up until that point. At the commencement of proceedings the following day, counsel for the husband advised that the amount was $97,467, the figure upon which her Honour relied in her reasons for judgment.

14. In the factual circumstances of this case, the husband received a premature distribution of property as discussed in Townsend and Townsend (1995) FLC ¶92-569 and in our view, it therefore cannot be said that the pool was limited to the funds actually available at trial.

15. Secondly, we consider it important to note that in property proceedings of this kind, it is convenient to make a finding as to the assets and liabilities of the parties as at a particular point in time, which is usually the date of the trial. This is in a sense a fiction, albeit a convenient one. It is a fiction because the parties' financial affairs obviously vary from day to day, week to week and month to month.

16. No doubt by the time judgment is given after one or two months, the size of the pool will have altered, although not usually significantly enough to in the overall scheme of things to warrant an application to reopen the case.

17. It is important to remember that a fiction is involved however when it becomes necessary to consider the issues raised by this ground of appeal and we will to this further subsequently in considering the de minimis issue. For the present it suffices to say that orders under this Act should not be approached with the degree of mathematical precision raised by this ground. We turn now to the issue of the husband's concession during the trial.

The Husband's Concession

18. It was submitted on behalf of the respondent wife that the appellant husband had acceded at trial to the inclusion of the legal costs paid back into the pool of assets (a submission with which we agree for reasons given above) and that he could not now argue that her Honour should have made findings as to the size of the pool of assets that was any different to the concession made. This submission was based upon Vakauta v Kelly (1989) 167 CLR 568.

19. The appellant husband's answer to this argument is essentially reflected in the view that has been taken in the reasons of Kay J dealing with this ground of appeal. In our view, even if we are wrong in taking the view that the pool was not limited to the available assets, this concession provides an unanswerable argument to the husband's contention on appeal.

20. This was a hard fought case where the parties were represented by very competent counsel. The subject of the concession was a minor issue in the case. It must have been obvious to all concerned that if the wife were to fail in her principal contention as to the extent of the husband's assets, she would be likely to recover most if not all of the available assets. In making concessions as to the extent of the assets, counsel for the husband would have been well aware of this fact and would surely have offered a reservation to any concession that he made as to the size of the pool had he wished to do so.

21. It is also to be noted that on 6 February 2001 after her Honour had delivered judgment, counsel for the wife handed up a proposed minute of orders which was the subject of discussion (AB20 page 4168). Counsel for the husband described the proposal as having "a certain appeal" (AB20 page 4186) but sought a week in which to see the husband and determine a response. The matter in fact came back before her Honour on 15 February 2001 at which time counsel for the husband agreed with her Honour that the period in which to effect property settlement should be 90 days and said that such a time period "is acceptable" (AB20 page 4199). Again, no submission was made concerning the actual size of the property pool at this time of determining the form of orders.

22. We conclude that counsel was given ample opportunity to seek to revisit the concession and was perfectly content to make the concession that he did and, as we have said, we further consider that it was a proper concession, since the husband had in fact expended what were clearly assets from the pool on his legal costs.

23. We consider that it would make a mockery of property proceedings in this Court if parties were able to approbate and reprobate as the husband seeks to do here, after the event having freely conceded a fact situation before the trial Judge.

Did the trial Judge err in law?

24. Kay J's reasons for judgment seek support in the Full Court decisions of Walters v Walters (1986) FLC 91-733, 10 Fam LR 1006; Evans v Public Trustee (1991) FLC 92-223, 14 Fam LR 646; and Grace v Grace (1998) FLC 92-792, 22 Fam LR 442. It is convenient to now turn to these authorities which we do not consider to be relevant to this case.

25. In our opinion, Walters and Evans reflect the longstanding difficulties associated with the treatment of unvested interests in superannuation as a financial resource rather than as property available for settlement by way of order under section 79 of the Act. Grace dealt with a similar circumstance where the financial resource was the husband's unvested interest in a family trust.

26. In these decisions, the value of the unvested interest did not enter the pool of property available for settlement pursuant to an application under section 79 of the Act. In the present case, there was no dispute that there was an advance distribution from a pool of “property” in the correct legal sense of the term. As we have said, we do not think that this makes any difference.

27. One aspect of Evans that may appear to come closer to present factual situation is that it was also argued there before the Full Court that the trial Judge could have made orders for settlement which included a lump sum which, it was submitted, the husband had the capacity to borrow for that purpose. Lindenmayer J with whom Joske and Gun JJ agreed said (at FLC 75,344):

"In relation to the borrowing capacity of the husband it was, I think, found by his Honour that the husband at that time was really stretched to the limit of his resources, but the effect of his Honour's orders for the sale of the Southport unit, once carried into operation, would be that the husband would be relieved of an obligation to pay the differences between the net rents received by him in respect of that property and the mortgage instalments, or rather the interest payments due under the mortgage. In effect, he would be then relieved of an obligation of the order of $340 per month, and it was, in effect, submitted that upon the sale of the Southport unit the husband would have the capacity to borrow a sum which could be repaid by payments of at least that magnitude, that is $340 per month.
In support of his submissions in relation to this aspect of the appeal, counsel for the wife referred to and relied upon certain passages from the judgment of the Full Court, constituted by Asche, Fogarty and McGovern JJ., in the case of Collins and Collins (1977) FLC ¶90-286 at pp. 76,536 and 76,539 . I have read those passages and indeed other passages in that judgment, and in my opinion none of those passages assist counsel for the wife's argument in this case. Those passages do not assert, nor is there any other authority, of which I am aware, which so asserts that this Court in exercising its power under sec. 79 of the Family Law Act has power to make an order for the payment of a lump sum when there is neither property available from which such a sum could be raised, either by sale, mortgage or otherwise, nor any fund of money existing from which it could be paid, but only a capacity to borrow in the future. A capacity to borrow money is not property and counsel for the wife did not submit to the contrary.
Whilst it is certainly stated in that case, relying upon a statement by former Chief Justice Barwick in Sanders v. Sanders (1967) 116 C.L.R. 366 at p. 375 that the power of the Court under sec. 79 is ''extensive and flexible'' , in my opinion there is no power to convert a capacity to borrow money into property. The simple fact of the matter is that his Honour's orders had the effect of transferring to the wife the only property of the parties that there was and is in existence. The fact that the husband may have a capacity to borrow money does not assist, in my opinion, in the making of an order under sec. 79.
The wording of sec. 79(1), itself, in my opinion clearly limits the application of the Court's power to property existing at the time of the hearing. That section provides as follows:
"In proceedings with respect to the property of the parties to a marriage or either of them, the court may make such order as it thinks fit altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either or both of the parties to make, for the benefit of either or both of the parties or a child of the marriage, such settlement or transfer of property as the court determines. ''

In my opinion, that does not give the Court a power to order a settlement out of property which does not exist and could only be brought into existence by the exercise of an alleged borrowing capacity."

28. Although Walters might seem similar to the present case there is, in our view a critical difference. In the present case, it is common ground that the $97,467.00 expended by the appellant husband and the $5,639.00 expended by the respondent wife in legal costs were taken from the pool and then added back for the purposes of constituting the property pool in the proceedings before the trial Judge. This is a fact that is quite aside from the question of how this Court should treat the concession at trial on behalf of the husband to which we have referred above.

29. Had those legal expenses not been paid prior to her Honour making the order that she did, the husband would have been required to satisfy the debt subsequent to the making of the orders. In this regard, it is pertinent to recall what her Honour said of the husband at paragraph 156 of the trial judgment:

“156. Looking at the history of George’s earning ability, he has the ability to earn a significant income of at least $150,000 per year. I have no doubt that since separation George has not earned as much as he could. He himself admitted that the ‘juices’ were not flowing as they had prior to the separation. I am quite sure that the juices were not flowing as he did not wish to accumulate assets which may be taken into account in these proceedings.” (emphasis added)

30. Her Honour made further remarks concerning the husband’s earning capacity in paragraph 175 of the trial judgment when she considered his income following the separation of the parties in early 1997 in the context of the wife’s maintenance application. Penny J there said:

“175. I do not believe George has access to a lump sum to pay maintenance. The sum claimed by Christine in 1997 of $300 for her own maintenance is not excessive. I believe George has had the means to afford to pay this maintenance since 1998. In 1997, after adding back depreciation, salaries and superannuation, George earned $184,000 per year. In 1998 it was $177,000. In 1999, when he was not working to his capacity, it was $75,000. I also believe George’s standard of living during this period was vastly superior to Christine’s. George’s only significant commitments after leaving the former matrimonial home were the cost of his car repayments and child support. He has been living with his parents and has not had any rental cost. I have state previously that I believe he has a present earning capacity of $150,000 per annum.”

31. As pointed out in Kay J’s reasons for judgment, it was unchallenged before us that her Honour found that the husband had had the means to afford to pay maintenance since 1998 and that the wife had established a need for such maintenance. Although her Honour specifically rejected the wife's claim for lump sum maintenance, she did however create a retrospective liability which had the effect of creating arrears as at the date of the order. The $300 level of weekly maintenance which her Honour determined was, in the circumstances of this case, appropriate, but in our view, modest.

32. Having regard to this factual context, we consider that any inability the husband had at the time of judgment to meet the orders made by her Honour was a direct consequence of his receipt of a pre-hearing distribution to meet his legal expenses. He has had the benefit of discharging the debt while enjoying a high income and “vastly superior” standard of living since early 1997. In our opinion, an order that these financial advantages should flow to the husband at the wife’s expense would not meet the requirement of section 79(2) - that "in all the circumstances, it is just and equitable to make the order.".

33. It is also our view for the reasons given above, that the authorities do not demonstrate an error by the trial Judge that this Court is required to correct. As we have pointed out, those cases were not concerned with a property pool which comprises, in part, notional property that has been enjoyed by the party claiming that the actual pool prescribes the limit upon which a trial judge may exercise her or his discretion.

34. Further, before us, there is no suggestion nor was it put, that the husband would have been required to borrow to satisfy the order. Rather, the husband sought to rely upon the fiction of the assets at the date of the trial to justify his position.

35. It follows therefore, that Penny J had the discretion to make the order that she did and on the facts of the case, we consider that her discretion did not miscarry, particularly having regard to the concession on behalf of the husband. It also follows that we agree that the respondent wife is entitled to rely upon that concession in seeking dismissal of this ground of appeal and that, in our view, this ground fails.

Further inferences of fact

36. If it were necessary, we would also rely upon the power to draw inferences of fact which is granted by section 93A(2) of the Act to this Court in rejecting the ground of appeal.

37. Some nine months elapsed between the date of her Honour’s orders and the hearing of this appeal. On the basis of the unchallenged findings by the trial Judge, the husband has an earning capacity of $150,000 per year. In circumstances where there was no application by the appellant husband to admit evidence of a change in his financial circumstances, we think it would be artificial in the extreme for this Court to assume that the husband lacks the capacity to pay the disputed amount of $11,000 to the wife.

38. Seen in this light, and in circumstances where the trial Judge was entitled in our view to exercise her discretion on the notional pool, we think that a further reason arises for dismissing this ground of appeal.

de minimis non curat lex

39. Osborn's Concise Law Dictionary (7^th Edition) translates this maxim to mean "the law does not concern itself with trifles". To our knowledge, the only reported discussion of the principle in relation to property proceedings under the Family Law Act was that of Nygh J in Hirst and Rosen (1982) FLC 91-230.

40. Hirst and Rosen concerned cross applications for property settlement following a marriage of less than two years during which the parties maintained an independent financial lifestyle and made an equal contribution to household expenses. The wife's assets were worth approximately $458,000 and the husband's were worth $60,000.

41. His Honour was required to determine whether the husband made a contribution over and above the sharing of household expenses and found that he had done so in the sum of $2,167. His Honour then turned to consider whether he should apply the principle of de minimis non curat lex:

"Counsel for the wife has urged upon me that this is a claim of ridiculous proportions which should not have been litigated in the Court. In my view, these considerations are not relevant to the making of a property order but are relevant to costs. Application was made in relation to costs and I will deal with those matters under that heading.
I do no (sic) reject the proposition that the de minimis principle should in a proper case be applied by this Court and, had I come to the conclusion that the husband was entitled to no more than $50, the de minimis rule might well have become applicable. However, I cannot even in this age of inflation describe $2,617 as so minimal as to be unworthy of the jurisdiction of this Court particularly having regard to the provisions of sec. 46(1)(b) which requires a court of summary jurisdiction to transfer to this Court any disputed claim concerning property of a value exceeding $1,000. This Court has been given exclusive jurisdiction in respect of contested property claims exceeding $1,000 and, consequently, I cannot describe such a claim as being de minimis." (at 77,252-3)

42. We agree with Nygh J that the de minimis principle is applicable to financial claims under the Act.

43. It is unnecessary to express a view as to Nygh J’s conclusion on the facts of that case or to enter into a general discussion of when the principle should be brought to bear. For present purposes it is sufficient to observe two points of distinction between that case the matter before us. To the extent that it is relevant, section 46(1)(b) of the Act now speaks of property of a value exceeding $20,000. Secondly, the overall sums involved here are very substantial indeed.

44. In our opinion, and having regard to the facts we have highlighted and our foregoing reasons, we find that these considerations would warrant the application of the de minimis principle by this Court in the context of the present dispute over approximately a sum of $11,000. The principle must always be applied in the context of the case in question and in the context of this case we regard the sum of $11,000 as negligible.

45. In so finding, it should not be thought that we under-estimate the value of the sum in dispute. In other factual circumstances, such as where the assets and income earning capacity of the party claimed against was less it would be unjust to invoke the de minimis principle, even in appeal proceedings. The disputed amount must be also examined, as we have done, with regard to the factual context surrounding the claim.

Conclusion

46. We agree with the orders proposed by Kay J.

KAY J

47. In this matter the husband appealed against property and maintenance orders made by Penny J on 15 February 2001. This appeal concerns itself with the division of the property pool and the payment of outstanding arrears for spousal maintenance.

48. Her Honour's orders had the effect of dividing a pool of assets said to be worth $864,810 as to 90% in favour of the wife and 10% in favour of the husband. In addition, her Honour determined that the husband should have paid weekly spousal maintenance from May 1998 and that the arrears of $31,100, created by making a retrospective order, should be paid within 90 days of 15 February 2001. Her Honour further ordered ongoing spousal maintenance for a period from February 2001 to March 2002. She also made orders in respect of child support.

49. By his Notice of Appeal the husband seeks that the wife's entitlement be reduced to $533,193, being 70% of the total net assets as found by the trial Judge, less legal expenses notionally added back.

Background

50. The husband (referred to by Penny J as "George") was born in July 1958 and the wife (referred to by Penny J as "Christine") was born in January 1961. They married in December 1981 and separated in March 1997. There are two children born of the marriage, the elder daughter being born in September 1982 and the younger daughter being born in June 1988.

51. The proceedings substantially involved the inter-relationship between the financial affairs of the husband and those of his parents. The husband's father was an intervener in the proceedings, the wife having sought relief which involved orders being made against property owned by the husband's father or entities controlled by him.

52. The trial lasted 33 sitting days, most of which revolved around the issue of the inter-relationship between the husband’s and his father's financial affairs.

53. The husband's father Lazo was born in Greece in 1928. He migrated to Australia in 1953 where he married his wife Vasiliki in 1956. The husband was the eldest of their four children, there also being three daughters, Stella, Eugene (Jenny) and Paraskevi (Penny).

54. Between 1964 and 1983 Lazo, Vasiliki and their children lived on a property at Gribble Road, Gwelup in Western Australia. They earned income from a market garden that traded under the name "L and V Milankov" and from the sale of pickled vegetables that traded under the name of "General European Pickles". The pickling business was a partnership established between Lazo, Vasiliki and the husband. However, the husband never received any income from the partnership.

55. In 1981 Lazo purchased a property in his name at Morley Drive, Dianella, where the husband and wife resided after their marriage. The property was partly funded by a mortgage in the name of Lazo and the husband and the repayments were made by the husband and the wife.

56. In 1983 the West Australian Metropolitan Regional Planning Authority sought to compulsorily acquire part of the Gribble Road property to make way for the Mitchell Freeway extension. The husband and his father were both involved in negotiations that saw the Authority pay $210,000 for two acres of land. This left the Gribble Road property divided into two remaining lots, described in these proceedings as "Ledgar 1" and "Ledgar 2".

57. From 1982 the husband and the wife became more involved in helping to manage the business affairs of Lazo and Vasiliki.

58. In 1987, acting on the instructions of the husband, Mallesons Solicitors established a discretionary trust known as the Milankov Family Trust, the trustee being Milankov Nominees Pty Ltd. The directors were the husband and Lazo. The appointor of the trust was Lazo, and upon his death the husband was to be the succeeding appointor. The primary beneficiaries were the husband, the wife, Lazo and Vasiliki. The general beneficiaries were the primary beneficiaries and any lineal descendants of Lazo. The Ledgar 1 property was then transferred to the Milankov Family Trust. Finance was raised and a warehouse and showrooms were built on that property in 1988 that was then leased.

59. In 1989 the husband organised the construction of a warehouse on Ledgar 2 financed by a loan from R & I Bank and then leased the property to Brambles Limited.

60. In May 1990 the husband and the wife purchased a block of land at Manakoora Rise, Sorrento and built a home on it using funds from the sale of the Morley Drive property. They occupied the Sorrento home until separation. As at the time of the trial the wife and the children of the marriage continued to reside there.

61. In June 1994 the husband purchased an office in his own name at Hassler Road, Herdsman for $164,200. He worked at that office as an architectural draftsman.

62. In 1996 the G & C Family Trust was established by the husband. The trustee was Milankov Holdings Pty Ltd and the husband was the guardian and appointor of the trust. In July 1996 the G & C Family Trust purchased an adjoining unit at Hassler Road, Herdsman for $117,950.

63. In July 1996 the V J Property Trust was established, its units being entirely owned by the Milankov Superannuation Fund, a vehicle established for the purpose of controlling superannuation contributions made by the husband and the wife.

64. Early in 1997 Lazo and Milankov Nominees purchased a property known as the Morley Gateway site. A tavern on the site was then demolished and the site was redeveloped by the construction of showrooms and other amenities.

65. At about that time the parties separated and on 21 August 1997 the wife commenced proceedings in the Family Court of Western Australia seeking orders for alteration of property interests. On 20 March 1988 the wife filed a minute at the court seeking a declaration that the husband had an interest in Ledgar 1, Ledgar 2 and the Morley Gateway properties.

66. On 24 August 1998 a Deed of Variation of the Milankov Family Trust was prepared. The parties to the document were Lazo and Milankov Nominees Pty Ltd. The effect of the variation was to remove Milankov Nominees Pty Ltd as the trustee and to replace it with a company known as Gateway Liquor Pty Ltd. The resolution of the directors of Milankov Nominees, the Deed of Resignation of Milankov Nominees and the appointment of Gateway Liquor as trustee of the Milankov Family Trust were signed by the husband on 24 August 1998 in breach of injunctions which had been put in place before that date.

67. On 10 October 1997 the husband's solicitors in these proceedings, Paterson & Dowding, prepared wills on behalf of the husband and Lazo. The effect of the husband's will was to leave all his property, other than an interest in a life insurance policy, to his parents. Lazo's will left all of his property to Vasiliki. The executor of both wills was Lazo's accountant Peter Popov.

68. On 1 September 1998 Milankov Nominees' interest in Ledgar 1 and its 50% of the Morley Gateway property were transferred to Gateway Liquor.

69. On 8 September 1998 a Deed of Novation was executed by Milankov Nominees and signed by the husband, Lazo, Vasiliki and Gateway Liquor. This document provided a substitute borrower and substitute guarantor for financing with Bank West. The husband and the wife were retired as guarantors for the debt relating to the development of the Morley Gateway site.

70. The effect of these transactions in August and September 1998 was that

the Morley Gateway site became registered as to 50% in the name of Lazo and 50% in the name of Gateway Liquor as trustee for the Milankov Family Trust;

Ledgar 1 became registered in the name of Gateway Liquor as trustee for the Milankov Family Trust;

Ledgar 2 became registered in the name of Lazo; and

Lazo remained the appointor and guardian of the Milankov Family Trust but by his will Peter Popov had been appointed as succeeding appointor and guardian.

71. At trial the properties standing in the name of the Milankov Family Trust had a value of approximately $2.8 million. The properties standing in the name of Lazo had a value of approximately $2.9 million.

72. As indicated, much of the proceedings before Penny J concerned questions about whether or not the husband had any interest in the Ledgar 1, Ledgar 2 and Morley Gateway properties.

73. As to the operation of the Milankov Family Trust her Honour found:

"26. Neither George nor Christine have received any distributions of funds from [the Milankov Family Trust]. From the time the trust was set up there were distributions each year to Lazo and Vasiliki. There have been distributions to Lazo and Vasiliki’s daughters, $16,000 to Jenny in 1991, and a distribution of $17,000 to Penny in 1993. There have also been small distributions to George and Christine’s daughters. The property known as Ledgar 2 remained in Lazo’s name after the subdivision, as did the Gribble Road East. Neither George nor Christine received any income from the Ledgar 1 or 2 rentals."

The judgment

74. Most of the evidence and submissions at the trial, and much of her Honour's judgment, concerned issues raised by the wife in her endeavours to persuade the Court that the husband had an interest in Ledgar 1, Ledgar 2 and the Morley Gateway property. Her Honour's conclusions, which were not challenged before us, were that he did not have any legal or equitable interest in them.

75. Her Honour found that prior to the restructure in August 1998 it was clear that the husband would have taken control of the assets of the Milankov Family Trust upon Lazo's death. She found that both the husband and Peter Popov were well aware of the fact that the husband would effectively inherit the trust assets upon Lazo's death. She was not certain whether Lazo knew of that fact at any time.

76. She found the changes that were made to the trust to ensure that the husband was no longer a succeeding appointor would not have come about had it not been for the proceedings between the husband and the wife. She said:

"92.     ...The whole purpose of these transactions was to distance George from Lazo’s assets…
93.      ...There is no doubt that George was involved in almost every aspect of the planning, construction, tenanting and maintenance of each of the three properties….I have no doubt George had an anticipation that he effectively would inherit a considerable sum as a result of his efforts in developing these properties by way of [the Milankov Family Trust]...
94.      ...There was no falling out between Lazo and George which resulted in the change of George as the appointor of the trust, and the Will being prepared by Lazo. These changes came about only as a result Christine’s claim against Ledgar 1, Ledgar 2 and Morley Gateway. George obviously has a very close relationship with his father and mother, he now lives with them, and I do not believe the changes put in place by Lazo will be permanent and I believe that after these proceedings are completed George will inherit or gain control of the assets of the trust upon Lazo’s death.
…
112.    I have no doubt that the steps taken by Lazo to remove George as succeeding appointor and guardian of [the Milankov Family Trust], remove [Milankov Nominees] as trustee of [the Milankov Family Trust] and appoint Gateway Liquor as trustee of [the trust], were all done for the purpose of convincing the Court that George had no beneficial or equitable interest in the trust and its assets…"

77. Her Honour then declined to make any orders concerning the property standing to the name of the Milankov Family Trust or Lazo.

78. Penny J then turned to identify the assets and liabilities and financial resources of the parties. She identified the total net assets of the parties as follows:

Assets and liabilities
27 Manakoora Rise, Sorrento  $740,000.00
Less mortgage  25,985.00  714,015.00
6/5 Hassler Road, Herdsman  182,000.00
Less mortgage  170,000.00  12,000.00
Christine’s bank account  269.00
Christine’s debts   (15,505.00)
George’s bank account  (33,149.00)
George’s credit card  (860.00)
Trust account for children  3,000.00
Christine’s vehicle  21,500.00
George’s vehicle  35,000.00
Less owing  37,773.00  (2,773.00)
Christine’s furniture and chattels  23,000.00
George’s furniture and personal effects  1,000.00
Christine’s personal effects  2,500.00
[Milankov Holdings P/L] (trustee G & C Family Trust)
Goodwill and equipment  34,000.00
Bank overdraft  (91,201.00)
Debtors  65,137.00
Receivables  949.00
Cash  20.00
Creditors  (9,198.00)

4/5 Hassler Road, Herdsman  117,000.00
Less mortgage  80,000.00  37,000.00
Christine’s legal expenses added back  5,639.00
George’s legal expenses added back  97,467.00
TOTAL NET ASSETS  $864,810.00

79. In so doing she said at paragraph 120:

"The parties have agreed that I should include to be added back the sums that they have paid for legal expenses..."

80. Her Honour then identified what she perceived to be the financial resources of the parties:

"121. The Milankov Superannuation Fund through its units in the VJ Property Trust has an interest in the property at 7/5 Hassler Road, Herdsman, with a nett value of $141,148. George’s superannuation entitlements in relation to this property are approximately $112,000 and Christine’s superannuation entitlements in relation to this property are approximately $37,000. The parties are aged 42 and 40 respectively, and are unlikely to be able to become entitled to these funds for a considerable period."

81. As to the husband's future expectancies in relation to the assets of his father and the Milankov Family Trust, her Honour said (emphasis added):

“124.   …I have found that George does not control Lazo’s trust, and in my view, the trust assets are therefore not a financial resource of George. I will, however, take into account that George is likely to receive some benefits from the trust as he and his other family members have done in the past.
125. I now need to consider whether George’s inheritance should be considered a financial resource. Prior to the parties’ separation, Lazo and Vasiliki did not have a will. The corporate structure put in place after [Milankov Nominees] and the trust was formed would have meant that George would have inherited the trust assets and the remaining assets in Lazo’s name, being Ledgar 2 and half of Morley Gateway, would have been distributed pursuant to the provisions of the Administration Act. The result of this would have meant that George would have received a portion of these assets as well.
126.    After separation Lazo attended upon George’s solicitors who were then acting for George in relation to these proceedings against Christine, and instructed them to prepare a will for him. On 10 October 1997 a will was executed by Lazo appointing Peter Popov as his trustee and leaving his estate to Vasiliki. In that document Lazo stated that he did not wish George to be either guardian or appointor of [the Milankov Family Trust] upon his death, and appointed his wife, Vasiliki, to be guardian and appointor following his death. By the documents executed on 24 August 1998, the succeeding appointor of the trust upon Lazo’s death was to be his personal representative, who is Peter Popov. Peter Popov was also appointed a director of Gateway Liquor, which had become the trustee of [the Milankov Family Trust]. Vasiliki does not have a will. As the document stands at the present time, upon Lazo’s death the assets in his name will be inherited by Vasiliki. Peter Popov will become succeeding appointor and will have control of the trust assets. I have already stated that I believe Peter Popov and George were well aware when [Milankov Nominees] and the trust were set up that George was named as the succeeding appointor to Lazo. I have no doubt that upon Lazo’s death, Peter Popov will ensure that George would take control of the assets of the trust. The value of the trust assets, being 21-23 Ledgar Road and half of Morley Gateway, amount to $2.8m. The assets in Lazo’s name are valued at $2.9m.
127.    The evidence of Vasiliki was that it was the intention of herself and Lazo to leave their estate to all of their children. While this may be the case, I do not believe that the children will be provided for equally. Although Penny and Jenny have been helpful to Lazo and Vasiliki, George has managed the family properties and contributed to their substantial growth in value.”

82. Her Honour then discussed aspects of the law as set out in Sapir v Sapir (No. 2) (1989) FLC 92-047, 13 Fam LR 362; King v Kemp (1996) FLC 92-673, 20 Fam LR 280; White and Tulloch v White (1995) FLC 92-640, 19 Fam LR 696; and Bruce F McClaren Holdings Pty Ltd v McClaren and McClaren (2000) FLC 93-030, 26 Fam LR 294 setting out particular passages from White in support of the principle that whether a future expectancy could properly be taken into account depended upon the circumstances of the case being considered. She said:

“131. In White and Tulloch v White (1995) FLC 92-640, the Full Court of the Family Court were considering an application to set aside a subpoena issued to the wife’s mother to produce the original of her current will and testament, together with any originals or revoked wills. Certain other documents were also sought to be produced. The relevance of those documents was said to be the fact that the wife, whose mother was 81, had a close relationship with her mother and had an expectation of inheriting upon her death. The trial judge concluded that the will was relevant in that the expectancy may be a financial resource of the wife.
132. The Full Court stated at 82,459:
‘…. such an expectancy could not be said to be a financial resource, that term connoting some degree of entitlement to, control over, or relevant certainty of receipt of property.’

133. The Full Court considered the comments made by Young J in Sapir (supra) and stated that they did not believe his Honour was correct in stating that the prospect of inheritance was a financial resource. The Full Court went on to consider whether the prospect of an inheritance was a matter which could be taken into account pursuant to s 75(2)(o). The Court stated at 82,463:
‘We do not consider there is any absolute rule. The ultimate criterion is whether the evidence is, or may be, relevant to the just and equitable process under s.79. An expectancy of inheritance will not be relevant in many s.79 proceedings. In the end, relevance must depend upon the nature of the claims being put forward and the facts of the particular case. For example, if the claims were based entirely upon contributions, it could not be suggested that an issue of expectancy could be relevant because no s.79(2) factors would be involved. Where the claim includes s.75(2) factors, the nature or degree of suggested relevance between those specific claims and the expectancy in question would need to be analysed. That is to say, there must be a worthwhile connections between a specific element of the party’s case and the suggested expectancy.
This accords with what I understand to be the general practice at trials in this Court. That is, the initial relevance in the particular case needs to be established; once it is it becomes a question of weight and degree. The issue is then approached by considering it in a broad, general way, by taking into account the age of the relative or other relevant testator, state of health, some general assessment of his or her financial position and some general assessment of the suggested inheritance expectancy.’

134. The Court went on to say at 82,464:
‘It is ultimately a question of fact and degree. During the course of argument a number of obvious examples at each end of the spectrum were referred to. In a case where the testator had already made a will favourable to the party but no longer had testamentary capacity and there was evidence of his or her likely impending death in circumstances where there may be a significant estate, and where there was a connection to s.75(2) factors, it would be shutting one’s eyes to realities to treat that as irrelevant. On the other hand, the bald assertion that one of the parties has an elderly relative who has property and is or is likely to benefit that party is so speculative that it would be inappropriate to contemplate it as relevant in a s.79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way.’”

Penny J concluded that:

"135. In this matter, given the circumstances where George has spent a very considerable time managing and advancing the assets of Lazo and the trust, the fact that the corporate structure set up by them in relation to the company and the trust, would have resulted in George effectively inheriting the trust assets upon Lazo’s death, the strong family relationship which still exists, even to the present day with George living with Lazo and Vasiliki, in my view it is a matter which should be taken into account, not as a financial resource, but pursuant to s 75(2)(o).”

83. Her Honour found that pursuant to s 79(4)(a), (b) and (c) of the Family Law Act 1975 that whilst the husband had made a significantly greater contribution to the acquisition of the assets of the parties, the wife had made a very significant contribution in relation to the welfare of the family. Her overall conclusion was that the contributions should be viewed as equal.

84. Her Honour then identified the following as relevant "s 75(2) factors" (emphasis added):

"155.   Christine is aged 40 and George is aged 42. Christine says that her mental health suffered as a result of the breakdown of the marriage and she suffered from anxiety attacks and depression. She says that her emotional state is now improving. George is in good health.
156.    Looking at the history of George’s earning ability, he has the ability to earn a significant income of at least $150,000 per year. I have no doubt that since separation George has not earned as much as he could. He himself admitted that the ‘juices’ were not flowing as they had prior to the separation. I am quite sure that the juices were not flowing as he did not wish to accumulate assets which may be taken into account in these proceedings. Christine has been out of the work force, save to work for family members, since 1985. I do, however, accept that she has gained skills during the course of the marriage in administering the businesses of George and the affairs of the trust and eventually after, appropriate computer training, she should be able to obtain employment, but will earn significantly less than George. In addition, Christine has the responsibility for the two children of the marriage, now aged 18 years and 12 years. Christine wishes to have the ability to still be involved in [the younger daughter's] upbringing and only wishes to work part-time.
157.    George does not have a commitment to support anyone other than himself and pay child support for the children.
158.    George has financial resources in the form of his superannuation entitlement which is significantly higher than that of Christine. In addition, as I have stated previously, I intend to take into account, pursuant to s 75(2)(o), the fact that George will receive at least $2.8m after the death of Lazo. I will also take into account George may have to pay the amount re-assessed by the Taxation Office, however, as I have stated previously I believe he is likely to get assistance from Lazo in that regard, as he did when he invested in Infomercial."

85. Her Honour concluded that a further 40% adjustment should be made in the wife's favour saying:

"159. Taking into account all of these factors, but particularly George’s ability to earn and his potential inheritance, there should be an apportionment in favour of Christine of 40 per cent of the assets of the parties. An apportionment in this sum will result in Christine receiving the sum of $778,300 (rounded off) by way of alteration of property interests."

86. Her Honour then found that it was inappropriate to further adjourn the wife's application pending the husband's receipt of moneys from either the Milankov Family Trust or his parents' estate after their death. She said:

"167. In this case the inheritance is not a financial resource, but an expectancy. I do not know how long it is going to take for George to become entitled to inherit the assets of the trust. Lazo is now 72 years of age and not in particularly good health, but that does not mean that he could not live for many, many more years. George, Lazo and Peter Popov have already been prepared to put in place transactions, the effect of which was to attempt to mislead the Court about the true nature of George’s entitlement upon Lazo’s death. Because of these factors I have no confidence that if the matter was adjourned that George would receive his entitlement under the inheritance in such a form that it could transfer it to Christine. While the inheritance may result in a change in George’s financial circumstances, I do not believe it is appropriate in these circumstances to adjourn Christine’s application pending George’s receipt of this inheritance."

87. Her Honour next considered the claim by the wife for maintenance. She found that the wife was unable to work following upon the marriage breakdown, but that it was her intention to get a job once the trial was over. She held that the wife's claim for $300 per week for maintenance from 1997 was not excessive. She held that the husband had the means to afford to pay the maintenance since 1998 when he was earning:

“175. I do not believe George has access to a lump sum to pay maintenance. The sum claimed by Christine in 1997 of $300 for her own maintenance is not excessive. I believe George has had the means to afford to pay this maintenance since 1998. In 1997, after adding back depreciation, salaries and superannuation, George earned $184,000 per year. In 1998 it was $177,000. In 1999, when he was not working to his capacity, it was $75,000. I also believe George’s standard of living during this period was vastly superior to Christine’s. George’s only significant commitments after leaving the former matrimonial home were the cost of his car repayments and child support. He has been living with his parents and has not had any rental cost. I have state previously that I believe he has a present earning capacity of $150,000 per annum. George should contribute to Christine maintenance from 28 May 1998 until 31 December 1998 in the sum of $300 per week. Christine asserts that from January 1999 she was mentally fit enough to obtain work. From that date I believe she was able to contribute by way of part-time work the sum of $100 per week. Therefore, from 1 January 1999 until now George should pay the sum of $200 per week.

176. I believe Christine now has the ability to work part-time and make some contribution to her maintenance. I do accept that Christine is unlikely to earn a sufficient sum until she is properly qualified to maintain herself to a reasonable standard. I accept the sum Christine claims of $460 per week in expenses to support herself now is a reasonable amount. I believe she should now contribute to at least half of those expenses. I propose that George should continue to pay maintenance to Christine in the sum of $200 per week until 15 March 2002. By that time Christine should have completed her course and be able to fully support herself.
177. In making that decision I take into account the fact that as a result of this judgment Christine shall receive assets of $778,300. Most of this amount will comprise the former matrimonial home and she will have little cash to invest to use to support herself.”

88. Her Honour then dealt with issues relating to why it was appropriate that the wife should retain the matrimonial home and what ought to be done with the chattels in it. She subsequently delivered a separate judgment relating to issues of child support.

The Appeal

89. The grounds of appeal as argued by Dr Dickey QC on behalf of the appellant husband can conveniently be summarised as follows:

1. That the orders granting the wife 90% of the notional pool of assets (which included legal costs already paid by the parties) had the real effect of giving the wife more than the available assets. Such orders were in breach of the firmly established principle that a court exercising power under s 79 of the Family Law Act 1975 can only alter the parties' interest in their property and cannot make orders that would exceed the extent of that property.

2. That the adjustment of 40% of the pool of assets based on s 75(2) factors was made upon propositions which were unsupportable on the evidence, namely that upon Lazo's death the husband would take control of the assets of the Milankov Family Trust, and that if he did, he would be able to utilise those assets as though they were his own.

3. That the trial Judge should not have included at full value as an asset of the parties an amount of $59,000 owing to Milankov Holdings Pty Ltd from a trade debtor.

4. That no order should have been made for the payment of lump sum maintenance without identifying a source of funds that would have been available to meet that order.

90. It is convenient to immediately deal with the last of those grounds.

Spousal maintenance

91. The formal order concerning spousal maintenance reads as follows:

"3. As and by way of spousal maintenance:-
(a)within 90 days, the husband pay to the wife the sum of $31,100 being:
(i) spousal maintenance at the rate of $300.00 per week from 28 May 1998 to 31 December 1998; and
(ii) spousal maintenance at the rate of $200.00 per week from 1 January 1999 to 2 February 2001.

(b)for the whole of the period from 3 February 2001 to 15 March 2002, the husband pay or cause to be paid to the wife the sum of $200.00 per week, with the first of such weekly payments to be made on 9 February 2001 and the final payment to be made on 15 March 2002."

92. As I have already made mention above, her Honour found that the husband had had the means to afford to pay maintenance since 1998 and that the wife had established a need for such maintenance. There was no challenge before us to those findings. Her Honour specifically rejected the wife's claim for lump sum maintenance. What her Honour did, however, was to create a retrospective liability which had the effect of creating arrears as at the date of the order.

93. Her Honour delivered judgment in this matter on 1 February 2001 and then invited the parties to make submissions as to orders that would implement her findings. There was a small dispute as to the amount of time that should be allowed for the husband to pay the arrears of spousal maintenance. The wife sought that they be paid within 35 days. The husband sought that they should be paid within 90 days or such time as may be determined by the Court pursuant to liberty to apply.

94. In discussion with counsel on 15 February 2001, her Honour indicated that she thought that 90 days should be sufficient. Mr Davis, counsel for the husband, said "90 days is acceptable".

95. In his submissions before us, Dr Dickey submitted that her Honour should have made an order for the payment of arrears by instalments. As no such application was made to her Honour, I do not see that her Honour erred in failing to make such an order. Her clear finding was that the husband had the means and ability to pay maintenance earlier but had chosen not to do so. The fact that he did not apparently have the present means and ability to meet an order for arrears of maintenance did not in my view preclude the Court from making such an order. He had a demonstrated high earning capacity.

96. The obligation to maintain is contained in s 72 of the Family Law Act:

"A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;

having regard to any relevant matter referred to in subsection 75(2)."

97. Dr Dickey submitted that an order for maintenance could not be made with retrospective effect unless it could be established that the liable spouse was presently reasonably able to meet any arrears that would be created by such retrospectivity.

98. I do not read that section as saying that at the time the Court determines the issue of capacity to pay it must be so satisfied. The statutory liability is not dependent on an order for maintenance being made. It is a continuing incident of marriage. Section 74 provides the Court with a discretion as to whether to enforce that obligation by making an order recognising the liability. In Cicoliniv Cicolini [1998] FamCA 15 (an unreported decision of the Full Court, coram Baker, Lindenmayer and O’Ryan JJ) their Honours dismissed an appeal against orders made by Moss J refusing to enforce arrears of maintenance that had accrued under an existing order. The Court recognised the clear existence of a discretion whether or not to enforce notwithstanding a present incapacity to pay. Their Honours said:

"In our opinion, the date upon which a party’s capacity to meet an order for the payment of arrears of any liability which one party may have to another must clearly be the date of the hearing. For such capacity to be determined at some other date would, in our opinion, be to produce an artificial result by ignoring the reality of what the respective parties’ financial circumstances were at the time of the determination of the matter. That is not to say, however, that in a given case other factors (such as the circumstances which have led to the present incapacity of the payer to meet the arrears) may not also be relevant to the exercise of the discretion.”

99. Similarly in Bassingthwaite v Leane (1993) FLC 92-410; 16 Fam LR 918 the Full Court observed at FLC 80,197 without comment that:

"In cases of maintenance under the Family Law Act 1975, the usual order is for prospective rather than retrospective payment of maintenance. Occasionally, orders are made that date back to the date of the application for maintenance."

In my view the power clearly exists to make a retrospective maintenance order. Whether it is appropriate to make an order will depend upon the facts presented. The making of any such order is a matter of discretion for the trial Judge and will not be interfered with by an appellate court absent some demonstrable appealable error.

In this case Penny J found that at the time the maintenance obligation arose, namely upon the breakdown of the marriage, the husband had the capacity to pay and the wife had the need. In those circumstances, the fact that the husband chose not to pay but to spend his money elsewhere did not, in her Honour's view, relieve him from the potential of an order being made at a later time, even though at that later time he may no longer have the means and ability to meet the order. I see no error in her Honour's approach.

In my view, the submissions made by Dr Dickey are predicated on a further mischaracterisation of the orders made by her Honour. They assume that her Honour was making an order for the payment of lump sum maintenance, when, as I have already indicated, her Honour was making an order for the payment of periodic maintenance retrospectively, thus creating an obligation to pay arrears. Her Honour then made an order for the payment of the arrears within 90 days and calculated the sum that was outstanding. I see no error in approach and accordingly this ground complaining of the making of the retrospective maintenance order is not established.

The inclusion of the $59,000 debt

At the trial of the proceedings the parties had prepared lists of assets and liabilities for the assistance of the trial Judge. In his "List of relevant assets and liabilities" prepared for the trial, the husband had said of the debt:

"Bad Debt.
Husband also has a debt of $59,350 being pursued by Michael Whyte and Co with prospects of success and to what extent being uncertain..."

The husband was taken to his list in his evidence in chief (Transcript 24.11.99 p 1134).

"MR DAVIS [Counsel for the husband]: ...The debts owed by your firm are the ‘Accounts to be paid’ in the debtors --? ---That's right.
-- and the money owed to your firm are the ‘Invoices outstanding’? --- Yes.
Now, the item, ‘Green Street’, under ‘Invoices outstanding’: do you have a comment to make about that? ---Yes. That has unfortunately become a bad debt, as far as our business is concerned. That's in fact a project up in Geraldton where the -- the developer is -- is sort of refusing to pay us.
Are you taking action to recover it? --- Certainly -- certainly are.
Have you included, for the purposes of these proceedings, that item as an amount outstanding? --- No.
...
And the $59,350 would be a contingent liability? --- Exactly."

Her Honour dealt with that evidence as follows:

"118. ...At trial, George provided exhibit H4, which showed the invoices outstanding at that time to be $65,137.50. George said that an account of $59,000 was unlikely to be recovered. George has issued a writ in relation to that sum through solicitors. I accept that it is unlikely George would have instructed solicitors and incurred further costs if he did not believe he was likely to recover that sum. I shall include the business debtors at $65,137."

Mr Dickey submitted that:

there was no evidence concerning the merits of the claim against the debtor;

the outcome of legal action is almost always uncertain;

even if the $59,000 was recovered in full it would prima facie be subject to an income tax liability as it would constitute business income.

On 23 March 2000 in the course of final addresses, her Honour sought to clarify whether the issue was still outstanding. Counsel for the husband indicated that the matter was still in issue as at the commencement of the trial on 8 November and that was the appropriate date for the debt to be taken into account.

The finding by the trial Judge that it was unlikely that the husband "would have instructed solicitors and incurred further costs if he did not believe he was likely to recover the amount outstanding" generously favoured the wife's case in light of the evidence of the husband that the debt arose from a developer who was "sort of refusing to pay us". However, it was open to her Honour to have rejected the husband's assertions that the debt should have been entirely written off. The husband was in the best position in these proceedings to give more expansive evidence about the likelihood of the recovery of the debt. He effectively chose to do no more than indicate that it was a doubtful debt without providing the evidence that would have enabled her Honour to further assess the likelihood of recovery. If there were any income tax ramifications as a result of the inclusion of the debt in the list of the assets and liabilities of the parties, it was up to the husband to raise those issues with her Honour and not to leave her Honour to speculate about them.

The amount in issue represented some 6.8% of the pool of assets. Once its existence was identified it was within the husband's ability to call evidence that would demonstrate why her Honour should disregard or discount the debt. The husband having failed to do any more than identify the problem, it was, in my view open to her Honour to reject any claim to discount the value of debt as an asset of the parties. Even though there would be large hurdles to overcome, it remained open to the husband to seek to lead further evidence on this issue before us (CDJ v VAJ (1998) FLC 92-828; 23 Fam LR 755). No such application was forthcoming.

Whilst I remain concerned about the reasons expressed by Penny J for including the debt amongst the parties' assets, given the lack of evidence as to why and to what extent the debt should be discounted, I do not feel that it is appropriate to interfere with her Honour's finding.

An order beyond the actual property of the parties

The wife's claim for alteration of property interests was brought pursuant to the provisions of s 79 of the Family Law Act 1975 which provides:

"(1) In proceedings with respect to the property of the parties to a marriage or either of them, the court may make such order as it considered appropriate altering the interests of the parties in the property, including an order for a settlement of property and substitution for any interest in the property and including an order requiring either or both of the parties to make, for the benefit of either or both of the parties or a child of the marriage, such settlement or transfer of property as the court determine."

The process to be followed in s 79 proceedings is well settled (see Pastrikos v Pastrikos (1980) FLC 90-897, 6 Fam LR 497; Lee Steere v Lee Steere (1985) FLC 91-626, 10 Fam LR 431; Ferraro v Ferraro (1993) FLC 92-335, 16 Fam LR 1; and Davut v Raif (1994) FLC 92-503, 18 Fam LR 237). It generally involves the Court first determining what the parties' property consists of before determining whether it is appropriate and just and equitable to make an order altering the parties' interest in it.

In several circumstances, well identified by the cases, this first step often involves including in the "pool of assets" items which no longer exist but which in order to do justice and equity to the parties need to be notionally considered in determining what a fair share of the existing pool of assets should be (see Kowaliw v Kowaliw (1981) FLC 91-092, 7 Fam LN 13; Townsend v Townsend (1995) FLC 92-569, 18 Fam LR 505; Farnell v Farnell (1996) FLC 92-681, 20 Fam LR 513; Cerini v Cerini (1998) Fam CA 143 unreported). Frequently this involves a notional consideration of assets which have been in the possession of one of the parties at some time after separation but which have been dispersed for that party’s own use. It often includes adding back monies that each party has spent in respect of their legal costs. Not to do so would be to offend the principles of s 117 of the Family Law Act which require that each party to proceedings should bear their own costs unless the Court otherwise orders.

The inclusion of these notional add-backs to the pool of assets ought not to be seen as a method of increasing the size of the pool but merely assists the Court in determining what should be a fair share of the pool that is available for distribution.

In my view, the law is well settled. The Court cannot make an order for the alteration of property interests that extends beyond the available assets of the parties (see Walters v Walters (1986) FLC 91-733, 10 Fam LR 1006; Evans v Public Trustee (1991) FLC 92,223, 14 Fam LR 646; and Grace v Grace (1998) FLC 92-792, 22 Fam LR 442. However, this restriction does not require the Court to be able to clearly identify those assets (see Briese v Briese (1986) FLC 91-713, 10 Fam LR 642; Weir v Weir (1993) FLC 92-338, 16 Fam LR 154; Giunti v Giunti (1986) FLC 91-759, 11 Fam LR 160; Mezzacappa v Mezzacappa (1987) FLC 91-853, 11 Fam LR 957; Black and Kellner (1992) FLC 92-287, 15 Fam LR 343; and Monte v Monte (1986) FLC 91-757).

In an appropriate case, where monies have been removed from the pool of assets by expenditure or otherwise, it may be appropriate to bring an action under s 106B of the Family Law Act (formerly s 85) in order to set aside a disposition which has the effect of defeating an order. This would have the effect of bringing the assets dealt with by that disposition back into the pool of assets to be made available for division between the parties.

In circumstances such as this, where the pool of available assets has been substantially reduced by the payment of legal costs by one or other of the parties, in order for those costs to be taken into account where the entirety of the available pool of assets does not meet a fair share of the notional pool of assets, it would be necessary for an action to be brought, on notice to the solicitors who have received the fees, to have the payment of those fees set aside on the basis that the making of the disposition, namely the payment of the fees, has had the effect of defeating an anticipated order in the proceedings.

Of course, in determining whether or not to make an order under that section, attention would have to be paid to the provisions of s 106B(3) which requires the Court to pay regard to the interests of and make any order proper for the protection of a bona fide purchaser or other interested person.

There may well be an argument to say that a solicitor in family law proceedings is in a different position to the provider of professional services generally. Such a solicitor should be attuned to the possibility that a party to family law proceedings paying their fees out of assets which may ultimately be required to be paid to the other party to the marriage may be at risk of an order being made requiring any such payment to be set aside so that the funds can be made available for distribution to the other spouse.

It was the husband's position at the commencement of the trial that the wife should receive 55% of a pool of assets ascertained by notionally including legal costs already paid by both parties. According to the "Husband's Papers for Judge at Trial" this would have seen the wife receive assets to a total value of $414,203 out of a notional pool of $753,097 and an actual pool of $678,493.

At no point in the course of the trial were any submissions sought from the parties as to whether or not it was open to her Honour to make an order for a division of the notional pool of assets which would have the effect of seeing the wife receive more than the actual pool of assets.

In response to the submissions by counsel for the appellant that it was not open for her Honour to make any such order, it was submitted on behalf of the respondent that as the appellant had acceded to the inclusion of the legal costs paid back into the pool of assets, he could not now argue that her Honour should have made findings as to the size of the pool of assets that was any different to the concession made. I perceive that these submissions misunderstand the problem. I also perceive that her Honour did not turn her mind to the problem when framing her orders. Nor did counsel identify the problem when given an opportunity to address her Honour on the form that the orders should take.

It does however seem clear that neither counsel urged her Honour to make an order that extended beyond the pool of available assets. On 23 March 2000 (Transcript p 2793) in concluding submissions there was a discussion between all counsel for the wife and the trial Judge which proceeded as follows:

"MR DAVIS [for the husband]:     She wants the lot, your Honour.
HER HONOUR:      Well, I realised that. I just hadn't seen that she wanted them free of all encumbrances.
MR WALTERS:       Well, the bottom line is, your Honour, that she can't have more than 100 per cent of whatever --
HER HONOUR:      She can't have more than the pie, can she?
MR WALTERS:       -- your Honour concludes the pie to be, except unless maintenance becomes a --
HER HONOUR:      All right. Well, let's put that aside for the minute.
MR WALTERS:       Yes.
HER HONOUR:      And that would be on top of this, in any event, if I was going to --
MR WALTERS:       On ordinary property settlement principles she can't have more.
HER HONOUR:      She can't have more, no. That's right.

MR WALTERS: Clearly not."

The failure by counsel to draw her Honour's attention to the error does not, however, in my view, assist the respondent. Her Honour's powers to alter parties' interests in their property are limited by statute. As already indicated, the issue as to the extent of those powers is well settled. An order cannot be made which extends beyond the limits of the pool of assets where those limits are clearly identifiable. Absent any order under s 106B to bring back into the pool moneys which had been already expended by the parties, the limit of her Honour's powers to make orders for alteration of property interests in this case was to the extent of the pool of assets.

That having been said, it was entirely appropriate for her Honour to measure the extent to which an order ought be just and equitable by reference to the notional pool of assets rather than to the actual pool of assets. In this case her Honour concluded that the appropriate order would represent 90% of the notional pool. When framing the order, however, her Honour was limited to implementing that order so that it did not exceed 100% of the actual pool of assets.

Her Honour's order appears to diverge from this principle to the extent of approximately $11,000. To that extent it would be necessary to vary her Honour's order so that the value of the assets transferred to the wife does not exceed $767,343 inclusive of the sum of $5,639 for legal expenses already paid by the wife. This sum represents the entire assets identified by her Honour, less the sum expended by the husband for his legal expenses notionally added back. It is to be contrasted with the amount otherwise due to the wife under her Honour's order, being 90% of $864,810 which equals $778,329.

Having reached this position, I have now had the opportunity to consider a draft of the reasons for judgment of the Chief Justice and Buckley J. Whilst I remain firm in my view that the appropriate way of returning notional capital to a pool of assets where necessary is via s 106B, I am attracted to the logic of their reasoning in paragraphs 36 through 45 (further inferences of fact and the de minimis principle). Accordingly I would dismiss the appeal in relation to that ground.

The husband's future control of the Milankov Family Trust

As already indicated, at paragraph 94 of her reasons for judgment, her Honour said:

"Even though there has been this change in the corporate structure with the effect that George can no longer 'inherit' the trust assets and that Lazo has now made a Will leaving everything to Vasiliki, I do believe that George will inevitably inherit at least half of these assets.
...
I do not believe the changes put in place by Lazo will be permanent and I believe that after these proceedings are completed George will inherit of gain control of the assets of the trust upon Lazo's death."

Then at paragraph 126 her Honour said:

"I have no doubt that upon Lazo's death, Peter Popov will ensure that George would take control of the assets of the trust. The value of the trust assets, being 21-23 Ledgar Road and half of Morley Gateway amount to $2.8m. The assets in Lazo's name are valued at $2.9m."

Whilst it is not immediately clear exactly what her Honour was making reference to in paragraph 94 when she said "I do believe that George will eventually inherit at least half of these assets", at paragraph 158 she said that the husband:

"...will receive at least $2.8m after the death of Lazo",

then at paragraph 163 she said:

"My finding has been that George will inherit from Lazo at least the assets of the trust..."..

It would seem that in some contexts her Honour talks about the "assets of the Milankov Family Trust" in a different manner to which she discusses "the assets of Lazo". In other contexts she views all of the assets as being available ultimately to pass to the next generation, which includes the husband and his sisters. In light of the ultimate finding at paragraph 158 it would seem the only sensible meaning after reading the whole of the judgment is to accept that her Honour was of the view that of the approximately $5.7m presently in the hands of the husband's parents, the husband will gain control of at least half of that amount upon the death of his parents.

The strong submission on behalf of the appellant husband was that there was no evidence to support the trial Judge's proposition that the husband would take control of the assets of the trust upon his father's death. In particular, our attention was drawn to passages in the cross-examination of the husband's father where he made it clear that he had never given the husband any understanding that he would receive any part of his property upon his death.

In my view, the conclusion reached by the trial Judge was clearly open to her. In the course of her lengthy judgment she had rejected the veracity of the husband, his father and their accountant Peter Popov in respect of dealings with property at various times during the parties' relationship. She identified false allegations being made by the husband in respect to ownership of the parties' first home at Dianella. She specifically rejected the evidence of the husband and Mr Popov in respect of their knowledge of the husband's potential appointment under the original trust deed of the Milankov Family Trust to be the succeeding appointor to his father. She was critical of the role of the husband and Mr Popov in respect of their attempts to distance the husband from his father's financial affairs after the separation. She made extensive findings about the role of the husband in the management of his father's investments and of his insistence that some of those investments occurred notwithstanding his father's marked reluctance.

When discussing the Morley Gateway development, her Honour said at paragraph 66:

"The evidence shows that George was very keen to have this development go ahead as he believed it would be a good investment for Lazo and for the trust. At this stage George was still succeeding appointor of the trust and would have taken control of it upon Lazo's death. It was clear that George was the driving force behind the negotiation and the planning of the Morley Gateway shopping centre."

It was her Honour's conclusion at paragraph 92 that it was:

"Highly unlikely that George would have involved himself in the development of Ledgar 1, Ledgar 2 and Morley Gateway to the extent that he did if he had not anticipated that at least upon Lazo's death he would have 'inherited' the assets of the trust."

Whilst it might well be arguable that the appellant's role in these developments would have been none the less were his anticipation to be ultimately a one quarter beneficiary in the estate of his parents rather than a more significant beneficiary, her Honour had more than ample opportunity in the course of a 33 day trial to have a feeling for the nuances and undercurrents that permeated the arrangements made by the husband's parents in respect of their financial affairs, including the arrangements which might be made in the future for the division of their estate between their various children.

In those circumstances, the question to be asked of an appellate court is whether the findings were open to her Honour on the evidence before her. It is beside the point that the members of this Court may have made different findings were they confronted with the same evidence as the trial Judge.

Her Honour concluded that the development of much of the family fortune had come about through the labours and foresight of the husband. His sisters had played little part in the development of the various assets. There was no extensive history of those assets being applied for the benefit of the sisters. There had been, prior to the breakdown of the parties' marriage, a structure in place which would have seen the husband in total control of the assets of the Milankov Family Trust upon his father's death. It is with that background that her Honour reached the conclusion that the likelihood was that after this litigation was over the husband would once again eventually obtain control of the assets of the Milankov Family Trust. Given her strong findings as to the credibility of the husband and Mr Popov in respect of their evidence on commercial matters, I do not see that the finding under challenge was not open to her Honour.

Treating the trust's assets as the husband's assets

It was strongly submitted to us that even if it was open to her Honour to find that the husband was likely to regain control of the Milankov Family Trust assets after the death of his father, that it was inappropriate to treat those assets then as the husband's own assets. It was submitted that at its strongest the husband would be in the position of a trustee of the trust and would owe fiduciary duties to the beneficiaries of the trust, who included not only himself but the other named primary and general beneficiaries.

It was submitted to us that in the cases that have so far discussed the concept of the manner in which the assets of a discretionary trust can be treated for Family Law Act purposes as the assets of a party, there had been a lengthy history in each of those cases of the appointor actually treating those assets as though they were his own (see Ashton v Ashton (1986) FLC 91-777, 11 Fam LR 457; Goodwin v Goodwin Alpe (1991) FLC 92-192, 14 Fam LR 801; Davidson v Davidson (1991) FLC 92-197, 14 Fam LR 817; and JEL v DDF (2001) FLC 93-075, 28 Fam LR 1).

Mr Dickey submitted that the appointor of a trust was subject to fiduciary duties towards the beneficiaries of the trust. He referred us to Vestey's Executors v IRC (1949) 1 All ER 1108 at 1115 per Simonds LJ, where his Lordship said:

"…this power… must be that it is a fiduciary power to be exercised with a single eye to the benefit of the beneficiaries."

He said that as there was no evidence that the husband had ever breached any fiduciary duty in respect of any trust, nor any evidence that he was likely to breach his fiduciary duties in the event that he became the appointor of the Milankov Family Trust, it was not open to her Honour to treat the assets of the trust in the hands of the husband as effectively a resource totally available to the husband.

In my view, this submission ignores the terms of the discretionary trust. It provides (inter alia):

"3.1 TRUSTS OF INCOME
THE Trustee shall in each accounting period until the Vesting Day determine to pay apply or set aside the whole or such part (if any) as he shall think fit of the net income of the Trust Fund of that accounting period to or for the benefit of or for all or such one or more exclusive of the other or others of the General Beneficiaries and for such charitable purposes in such proportions and in such manner as the Trustee in his absolute discretion (and whilst there is a Guardian in existence with the consent of the Guardian) shall think fit.

…
6.1 POWER OF ADVANCEMENT, ETC .
...
(a)at any time or times and from time to time before the Vesting Day out of the capital of the Trust Fund held on trust as aforesaid but not out of any moneys referred to in paragraph 6.2(a) raise any sum or sums and pay the same in addition to any income or share of income to which he or she may from time to time be entitled to any person being one of the General Beneficiaries for his or her own use and benefit or apply the same to or for the benefit of such person in such manner as the Trustee in his absolute discretion shall think fit;".

Once the husband becomes the appointor or trustee of the Milankov Family Trust I see no impediment in the terms of the trust deed to the husband then exercising his powers as trustee of the trust to distribute the income and/or corpus of the trust to himself. In those circumstances, I find little fault with her Honour's ultimate finding at paragraph 158 that the husband "will receive at least $2.8m after the death of Lazo".

Would the children share equally?

The present state of the parents' affairs was that Lazo had made a will leaving everything to Vasiliki and she had not made any testamentary arrangements. By operation of the provisions of s 14 of the Administration Act 1903 (WA) were that position to persist at the date of Vasiliki's death then the husband and his three sisters would all share equally in their mother's estate. The assets that would be likely to comprise the mother's estate were those assets owned by Lazo and Vasiliki that were not included in the Milankov Family Trust.

It was submitted that in light of the evidence of the mother's possible intestacy the conclusion by the trial Judge at paragraph 127 that "I do not believe the children will be provided for equally" was not reasonably open to her Honour on the evidence.

In my view that conclusion needs to be read in the light of her Honour dealing not only with the assets of the estate but with the entire assets accumulated both within the estate and within the Milankov Family Trust. When read in that context, together with her Honour's finding that the least the husband can expect to receive is half of his parents' assets, I think that ultimately nothing turns upon the fact that the husband and his three sisters will each receive an equal share of their mother's estate in the event she dies after Lazo and intestate. Such an eventuality is still consistent with her Honour's finding that as between the siblings they will not be "provided for equally" and that the husband will receive at least the equivalent of $2.8m from his parents' assets, including those owned by the Milankov Family Trust.

The 40% allowance for s 75(2) factors is too high

The final submissions made on behalf of the appellant husband were that having regard to the relative earning capacities of the parties and their superannuation entitlements, the adjustment of a further 40% of the available pool of assets in favour of the wife was too high, such adjustment failing to leave the husband with sufficient assets to rebuild his life following the breakdown of the marriage and the completion of the property proceedings.

In the written submissions counsel for the husband submitted that it could not be reasonably predicted that the assets of the father's trust would become the exclusive assets of the husband, and further in any event consistent with the trial Judge's findings that Lazo may "live for many, many more years".

That latter finding needs to be read in context. In the course of the judgment the trial Judge discussed Lazo's history of cardiac problems. Those problems had required hospitalisation. She said at paragraph 167:

"I do not know how long it is going to take for George to become entitled to inherit the assets of the trust. Lazo is now 72 years of age and not in particularly good health, but that does not mean that he could not live for many, many more years."

This was not a finding of a probability that he would live for many more years but merely a finding that it was a possibility.

Ultimately in the course of his oral submissions I understood Dr Dickey to concede that if this Court upheld the trial Judge's finding that it was probable that the husband would receive assets to the extent of $2.8m upon the demise of his parents, that the division of 90/10 in respect of the available pool of assets was within that generous ambit of discretion that vests in a trial Judge in proceedings under s 79.

As I have already indicated that I can find no appealable error by her Honour in respect of that finding, it follows that I can see no reason to interfere with her Honour's ultimate exercise of discretion.

I am conscious that this leaves the husband without any currently available capital. I am conscious that this leaves the husband with his debts relating to the arrears of maintenance, and with a considerable obligation to meet child support payments during the remaining five years of the parties' youngest daughter's dependency. However, the husband has a very significant earning capacity, and the trial Judge was of the opinion that the husband's affairs having been so intermeshed with those of his parents for so many years, and his parents having previously shown generosity towards him, that the husband would be able to restructure his affairs in such a way as to ensure that he might rebuild his life following the breakdown of the marriage.

In those circumstances I am of the view that this appeal should be dismissed.

Costs

At the conclusion of argument it was agreed that the submissions in respect of the costs of the appeal should await the outcome of the appeal itself. I propose that we make the appropriate directions.

Proposed Orders

That the appeal be dismissed.

That within 14 days the respondent file and serve submissions as to the costs of and incidental to this appeal.

That within 14 days thereafter the appellant file and serve any submissions in response to the respondent's submission.

That within 7 days thereafter the respondent file and serve any reply to the appellant’s submissions.

I certify that the 154 preceding
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

Elizabeth Hore
Associate