MILNE & JOYCE - [2016] FamCAFC 125

FAMILY COURT OF AUSTRALIA

MILNE & JOYCE

[2016] FamCAFC 125

FAMILY LAW – APPEAL – PROPERTY – The trial judge did not err in his treatment of “add backs” – The trial judge did not double count particular assets or treat particular assets inconsistently – The trial judge did not err in failing to include some minor chattels in the pool – Appeal dismissed – Order for the appellant to pay the respondent’s costs.

FAMILY LAW – APPEAL – APPLICATION TO ADDUCE FURTHER EVIDENCE – There was a delay of over two years in the delivery of judgment – The appellant claims that the values of assets and liabilities changed in this time – The onus was on the appellant to seek to reopen the trial – Application dismissed.

Family Law Act 1975 (Cth)

Abdo and Abdo (1989) FLC 92-013

APPELLANT:

Mr Milne

RESPONDENT:

Ms Joyce

FILE NUMBER:

NCC

624

2008

APPEAL NUMBER:

2014

DATE DELIVERED:

15 July 2016

PLACE DELIVERED:

Perth

PLACE HEARD:

Sydney

JUDGMENT OF:

Thackray, Strickland & Ainslie-Wallace JJ

HEARING DATE:

23 May 2016

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

13 December 2013

LOWER COURT MNC:

[2013] FCCA 2131

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Beck

SOLICITOR FOR THE APPELLANT:

Leckie Law

COUNSEL FOR THE RESPONDENT:

Mr Rugendyke

SOLICITOR FOR THE RESPONDENT:

Byrnes & Cox Lawyers

Orders

The appellant have leave to rely on the amended summary of argument filed on 20 May 2016.
The applications in an appeal be dismissed.
The appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 19 of 2014
File Number: NCC 624 of 2008

Mr Milne

Appellant

And

Ms Joyce

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Milne (“the husband”) appeals property orders made by Judge Coakes on 13 December 2013. The appeal is opposed by Ms Joyce (“the wife”).
The appeal relates entirely to findings made by the trial judge concerning the composition and value of the parties’ assets.

Background

Given the scope of the appeal, only limited background is needed to provide context to the husband’s complaints.
The parties were married in 1988 and separated in 2005.
During the marriage, the husband and wife ran a business, initially in partnership but subsequently through a company, M Pty Ltd (“the company”). In 2009, in controversial circumstances, the company was liquidated. The unsecured creditors were not paid in full.
The parties owned three pieces of real estate at the conclusion of trial. Property J had an agreed value of $220,000. Property P had an agreed value of $292,500. Property S had an agreed value of $446,000 at the start of the trial, but on the last day of the trial it was agreed that it be treated as worth $400,000 (unless it sold for less).
The parties agreed that the wife would receive Property J and Property P. It was originally agreed that the husband would receive Property S, but on the last day of trial, a consent order was made for it to be sold. At the hearing of the appeal, we were told that Property S has still not been sold, but we observe that there is no complaint about the trial judge’s decision that the husband should receive that property as part of his settlement.
The proceedings started in 2008. The trial was completed in six tranches between February 2009 and September 2011. The last submission was filed in April 2012, but judgment was not delivered until 13 December 2013.

The judgment

It is unnecessary to refer to all of the trial judge’s detailed reasons, especially as there is no attack on the decision to divide the assets equally.
Importantly for this appeal, his Honour made strong credit findings against the husband, about which no complaint is made. Conversely, his Honour found that the wife was a “much more reliable witness”, and said he would have no hesitation in preferring her evidence “where there was conflicting evidence about the same issue” (at [73]–[74]).
The assets and superannuation entitlements were found to be worth $1,263,580. His Honour included in the “pool” a variety of “add backs” – i.e. items of property that once existed but which were notionally added back into the pool in order to achieve a just and equitable outcome. The total value of the add backs was $123,735. Of this amount, $21,680 was treated as having been retained by the wife and the balance by the husband.

Further evidence

The husband foreshadowed in his Summary of Argument filed in December 2014 that he would be applying to adduce further evidence relating to changes in the value of the assets between the close of the evidence and delivery of judgment. It was claimed on his behalf that the assets had risen significantly in value, “giving a potential windfall to the wife”.
The husband did not seek to file his application to introduce further evidence until 13 May 2016. The relevant rule of court provides that an application to adduce further evidence must be filed at least 14 days before the commencement of the appeal sittings, and thus the application was not received for filing. The husband seeks an extension of time, but in reality his application is not to adduce further evidence. Rather, he seeks to require the wife to make her properties available for inspection to allow valuations to occur, and for the wife to provide financial documents, including documents relating to the amounts owing on the mortgages on her properties.
In the meantime, on 6 May 2016, the wife filed her own application to introduce further evidence. She did not serve the application, which was intended only as a shield against the husband’s foreshadowed application. The wife said that if she were unsuccessful in opposing the husband’s application to introduce further evidence, she would want to rely upon retrospective valuations she had obtained. These indicated that Property J was worth $185,000 at the time of judgment (rather than $220,000 as found by the trial judge) and Property P was valued at $240,000 at the time of judgment (rather than $292,500 as found by the trial judge).
We do not propose to accede to the husband’s application. If he considered there had been a variation in values prior to the delivery of judgment, the onus was on him to apply to reopen the proceedings to adduce evidence to that effect: Abdo and Abdo (1989) FLC 92-013. Furthermore, we were told that the valuations that have now been obtained by the wife would be disputed. Such a controversy would require the matter to be remitted to the court below. Given that the proceedings have been on foot for over eight years, the interests of justice clearly weigh heavily against any further delay.
The husband’s application for an extension of time will therefore be dismissed, as will the wife’s application, since it was predicated on the success of the husband’s application.

The appeal

There were five grounds of appeal. An attempt to add a sixth at the hearing of the appeal was properly abandoned.

Ground 1 – Adequacy of reasons and treatment of add backs

Ground 1 asserts that the trial judge “erred in failing to give reasons or adequate reasons for the inclusion and non-inclusion of addbacks in the pool of assets”. The complaint was particularised by reference to examples in the various sub-paragraphs of the ground, the last four of which were abandoned.

The husband’s entitlements

The first part of the complaint relates to the adding back of $26,622.85 in “entitlements” the husband took from the company prior to its liquidation. The wife disputed his entitlement to this money.
His Honour’s reasons for accepting the wife’s argument were shortly stated (footnote omitted):
256.The wife asserts that the husband received an amount of $26,622.85 in excess of the amount to which he was properly entitled for long service leave, superannuation, annual leave and other entitlements.
257.Whilst the husband asserts that the total amount paid to him of $53,002.19 was calculated correctly and confirmed with the company accountant [Mr [C]], the wife produced compelling evidence that the calculations she performed were in accordance with the relevant legislation. I find that such evidence was uncontradicted by the conclusion of the hearing and is to be preferred over that of the husband.
258. It is therefore appropriate to add back the amount of $26,622.85.
In considering the evidence relevant to this complaint, it is important to recall that the trial was drawn out over a period of some two and a half years. The wife first gave evidence about the overpayment in her affidavit of 18 December 2008:
99.My role was to continue to look after all of the administrative aspects of the business including ordering of stock, compiling financial records (which I would take to our company accountant at the appropriate time), monitoring and overseeing the staff’s pay and generally looking after all of the financial aspects of the business.
…
290.In about March 2008 the Respondent paid himself a gross payment of $30,265.55 plus superannuation of $2,813.58 from [the company]. I understand that the abovementioned payment was purportedly for long service leave which the Respondent claimed he was entitled to.
291.I do not believe the Respondent was entitled to those payments. On 16 April 2008 I spoke to [Mr [C], the company accountant] in relation to that payment. I was advised that long service leave could only be paid on the Respondent resigning. Alternatively the Respondent could have physically taken long service leave and been paid during the period of his leave. I do not believe that the Respondent could have simply paid himself an amount of money for long service leave and continued to work.
The wife was represented at trial by Mr Byrnes, and the husband by Mr Davies. When she was being examined by Mr Byrnes on the second day of trial, the wife said (transcript, 26 February 2009, p 132 et seq):
MR BYRNES: Now, the next item in that list is long service leave $30,265.55. Do you understand that?---Yes.
When - was it - when you were employed at [by the company] did any of your task relate to the calculation of payments to employees?---Yes.
All right. Now, what do you say - so there’s no issue, as I understand it, that [the husband] made this payment to himself at $30,265.55?---That’s correct.
There’s no - if you accept that there is no issue in relation to that, what do you say about that payment?---I say that firstly according to the contracts we’re employed under, [the husband] is employed under, the [Industry Award]. That Award states you cannot take a long service leave payment unless you actually physically take the leave.
MR DAVIES: I object, your Honour. The witness is giving a legal opinion. She’s not entitled to do so.
[HIS HONOUR]: Well, I’m not sure about that, Mr Davies. Mr Byrnes went in to qualify her as to the provisions of a piece of legislation which forms part of the operations of the company and as employer and director and secretary of the company, because she asserts she still has that position. She’d ordinarily be required by law to be familiar. So if she’s recounting legislation she’s entitled to do that subject to that qualification I think.
MR DAVIES: Your Honour, rather than have the witness recount the legislation, it should be produced to your Honour - the Award.
MR BYRNES: I’ll do that.
MR DAVIES: It speaks for itself.
MR BYRNES: So - I’ll try to cut this short - - -
[HIS HONOUR]: But there’s no reason why this witness shouldn’t give her own summary of how she does it.
MR DAVIES: Yes, well. Perhaps, that will assist the Court.
[HIS HONOUR]: Yes.
MR BYRNES: We’ll tender that Award in due course. But you say that you understand that you and [the husband] were employed pursuant to a particular Award?---Yes.
And you were telling us what you understood one of the provisions of that award was in relation to long service leave. Is that correct?---Yes.
And what was your understanding of that Award?---That you had to have been employed for 15 years service.
Before?---Before you were entitled to long service leave.
And?---You could have your long service leave paid out prior to that on resignation or death.
Right. And after 15 years?---Well, then you were entitled to have time off to have long service leave.
Right. And do you understand that the award says that you can take the money but not take time off?---Say that again, sorry?
Okay. Are you able to take the money but not have time off?
[HIS HONOUR]: In other words, if I’m still employed – let’s do it this way?---Yes.
If I’m still employed by [the company] - - - ?---Yes.
- - - and I’m going on being employed - - - ?---Yes.
- - - and I’ve accrued 15 years long service leave - - - ?---Yes.
- - - I’ve not been fired or retiring through illness, can I take the money and still go on working? That’s Mr Byrnes’s question?---No, sorry.
MR BYRNES: You can’t?---No.
[HIS HONOUR]: So I’d have to take leave and not the money?---Yes, you get paid - - -
The paid leave?---Yes, you get paid while you’re on leave, yes.
Okay?---Yes, paid leave, yes.
All right. Yes?
MR BYRNES: The other - so you say that that wasn’t permissible what happened?---When I went to the [business] in April and checked over the books, I found various pay cheques and after investigations with the accountant and things being fixed, there was a long service leave payment of around $30,000 gross paid to a - on I think, 28 February, I think from memory.
Which year?---2008.
MR BYRNES: 2008. So you say that that wasn’t permissible, is that right?---Not as far as I’m aware under the legislation that I run the wage system by.
…
MR BYRNES: Now, what do you say about the quantum of $30,265.55?---To have - for [the husband] to have been - being paid that amount of long service leave in dollars, it would have had to have been May 2018.
Hang on. Explain - you mean he would have had to have been employed until May 2018 to have received that quantum of long service leave, is that what you’re saying?---Yes.
In other words he was paid more than he should have been paid, is that correct?---Yes.
And you say, in effect, eight years extra?---10 years extra.
10 years extra, I’m sorry. Okay. Now, the - - -
[HIS HONOUR]: Well, just a minute, there’s a lacuna there. Ma’am, what was the basis then of your calculation that he would have had to work until May 2018 to receive that amount of long service leave?---We’re members of the [Association], so - and the [Industrial Relations website that we subscribe to]
Yes?---Incorporated in that system is a long service leave calculator.
Yes?---When I saw the amount of long service leave that was taken I kept punching in dates and figures to show me the year that it would have been 2018 for [the husband] to have been entitled to receive $30,000 worth of long service leave.
Is the value of long service leave calculated in part or in whole on salary?---There - there are three ways to calculate long service leave. On top of my head I can think of two. It is the average of your last five years earnings, or if you have the same weekly wage every week it’s based on that, I think. I’d actually - would have to look at something to quantify that, but there are three separate ways - - -
All right?--- - - - and I think you have to take - I couldn’t tell you for sure, it’s the lesser or the more - I would have to look at - - -
So which one did you use to put into the program to end up with May 2018 for that amount of money?---Can I refer to my documents? Because – it’s not a simple system, and I did this a year ago (indistinct) and having said that and I can’t just rattle - sorry, rattle, rattle off the top of my head - - -
MR DAVIES: It’s not a memory test, I have no objection to that, your Honour, to assist the Court.
[HIS HONOUR]: I need to know the basis of the calculation. I don’t have them at this stage.
MR BYRNES: No, I think - - -
[HS HONOUR]: Because the husband’s - the husband’s then financial benefit is critical in the calculation it seems.
MR BYRNES: Does your Honour want to keep going? I can get my client to look at it overnight and produce it tomorrow or - - -
[HIS HONOUR]: Subject to any personal requirements, I plan to sit until 5. Because this case is going to take some time it seems to me, a number of days.
MR DAVIES: Your Honour, in light of the evidence that’s coming from this witness, it’s clear in our submission, that Mr [C] is going to have to be called.
[HIS HONOUR]: It may well be but I’ve got to get this evidence first.
Later on the same day, the following exchange occurred while the wife was under cross-examination (transcript, 26 February 2009, pp 140, 146–147):
[MR DAVIES:] You were shown a document, dated today, from [Mr [C]], who was the company account? [sic] ---Yes.
Correct. He’s been the accountant for the company for how long?---Many years - 10, 15 years.
And he was the joint valuer by both yourself and of the respondent of the value of the business? Correct?---Yes.
Now, you were - when you were shown that document you made a phone call and spoke with [Mr [C]], did you not?---Yes.
…
In relation to the long service leave. Now, you’ve told us that you’ve looked at the aware [sic, semble “award”] and your solicitor has indicated that it will be tendered to his Honour tomorrow. Again, in the document that’s under the hand [Mr [C]], dated today that you saw, you spoke to him about that as well, did you not?---Yes.
And in the document, did he say that the long service leave - was covered by industrial laws prevailing at the time which allowed the respondent to cash in his long service leave?---Yes, he did say that, yes.
And did he also tell you that he did the calculations which arrived at quantum?---No.
Is it your understanding though, as the accountant, that is something that he ordinarily would be involved in?---No.
Did you actually with him, or did he confirm his assertion that it was okay to make that cash payment by way of long service leave to his understanding?---Today he did, yes.
But you don’t accept that?---I accept that today, yes.
So are you no longer then asserting that the long service leave and the superannuation is now an add back that needs to be added back into the pool? Are you accepting Mr [C’s] advice?---No. The amount of the long service leave is grossly incorrect.
So what you’re saying is that there is an entitlement to cash in some long service leave, but you’re saying that the amount that, in fact, has been taken out is far too much?---Yes.
Is that your assertion?---Yes.
Thank you.
[HIS HONOUR]: Well, ma’am, then what do you say, given your evidence just now, about the conversation with Mr [C], and you’re no longer asserting a component of the long service leave has been paid improperly, what component should be added back because it was paid improperly?--- I would have to look at the calculation sheet that I calculated as to what the long service leave would be according to the [Industrial website] (indistinct) calculation.
MR BYRNES: It’s actually in my car, your Honour, but I was going to go to it overnight.
[HIS HONOUR]: Overnight.
WITNESS: At the time - it would have to be on pro rata basis because [the husband] had not been employed by the company for 15 years. And so as such until you’re employed by 15 years under the award, you’re not entitled to long service leave - - -
[HIS HONOUR]: That’s all right. So overnight you’ll be able to look at that program and then tell me tomorrow what amount you now say was improperly – that’s my word - - - ?---Yes.
- - - paid to the husband?---Yes.

No documents were ever produced to corroborate the wife’s evidence (whether in the form of an award, relevant legislation, “calculation sheet” or “program”). Nevertheless, on the next day, the wife was cross-examined briefly about the way in which husband’s entitlement to long service leave should be calculated. The cross-examination was inconclusive, and ended with counsel for the husband saying, “Perhaps it’s a question for submissions later on and I won’t take that any further” (transcript, 27 February 2009, p 167).
After this first tranche of the trial, an affidavit by the company accountant was filed. In this affidavit, sworn on 18 March 2009, Mr C said that he had been requested by the husband’s solicitors to prepare a report, inter alia concerning the husband’s “long service leave entitlement and superannuation entitlement whilst an employee of the Company”. Attached to his affidavit was his letter to the husband’s solicitors of 17 March 2009 (which was in response to a letter from them that was not in evidence).
The first two paragraphs of Mr C’s letter read:
1. Long Service Leave
Your client is an employee of [the company]. His entitlement to Long Service leave is governed by the Long Service Leave Act, [the Award that covers his industry], and the Industrial Relations Act. I am not a specialist in the area of industrial law. My understanding is that under the Work Choices legislation applicable at that time an employee had the right to cash out their leave entitlements as long as they left a balance of two weeks in untaken leave. This is the course of action taken by your client.
2. Superannuation
The right to Superannuation is governed by the Superannuation Guarantee legislation. Payment of long service leave is a payment on which the compulsory 9% contribution must be made. Please note that the 9% Superannuation Guarantee Charge is not payable on Long Service Leave or other leave entitlements paid as a lump sum on termination. ...
Mr C was not required for cross-examination on his affidavit.
The husband was cross-examined in the second tranche of the trial about having taken more entitlements than he was due, but maintained that he was entitled to the payments for long service leave or a “combination of personal and annual leave” (transcript, 17 August 2009, p 50).
This exchange occurred during his cross-examination (transcript, 17 August 2009, p 50 et seq; emphasis added):
[MR BYRNES:] And who calculated this amount of $20,000?‑‑‑It’s in the MYOB program.
Sir, who calculated it?‑‑‑My ex-wife has logged all that stuff into MYOB.
Sir, who calculated that amount?‑‑‑Who calculated that amount? I confer with my accountant and he come out and - on the long service leave. He come out to my - the premises and he actually entered it into - showed us how to enter it correctly because we weren’t quite sure.
Well, that’s in February last year, the long service leave. I’m not talking about that?‑‑‑I know, but we didn’t log it into the system for some time, which is again in your testimony there.
Sir, what you’re telling us is that in February last year you took out 30-odd thousand dollars for long service leave entitlements. Correct?‑‑‑Yes, I did.
Now, in March of this year you took out $20,000 for other entitlements. That’s what you call - - -?‑‑‑That’s correct.
I’ve asked you what those other entitlements are and you said personal - - -?‑‑‑And annual leave.
And I want to know who calculated those? Did you calculate it or did the accountant calculate it?‑‑‑The accountant helped calculate it.
Have you got any documentation from the accountant to say how those figures were calculated?‑‑‑I’m sure there’s a document there somewhere. We - I’ve got a document there I know for the entitlements pay. We only produced - we only printed that document off last week, and the long service leave one, I’m sure that’s there somewhere too because that was in the last lot of evidence.
So what you’re saying is that you think there is a document in existence produced by your accountant which confirms this holiday pay and personal entitlements. Is that what you say?‑‑‑It was produced by our office MYOB program under the guidance of our accountant.
I call for that document, your Honour.
There was then an unsuccessful hunt for the relevant document, following which the trial judge said to the husband, “Sir, what you'll need to do overnight is look for that document, or at least before we come back on the next occasion” (transcript, 17 August 2009, p 52).
To the best of our knowledge, the document was never provided. In any event, the cross-examination of the husband on 17 August 2009 then continued (transcript, p 52 et seq; emphasis added):
MR BYRNES: In any event, what you're saying, [the husband], is that since last year, since about February last year you’ve taken about 50-odd thousand dollars?‑‑‑That’s correct.
In entitlements out of the company. That’s correct?‑‑‑That’s correct.
Now, just dealing with the $20,000 that you say you took out in March, I want to suggest to you that you didn’t give [the wife] any notice that you were doing that. Do you agree with me there?‑‑‑I would agree with you there, yes.
You didn’t contact her and say, “I propose doing this”?‑‑‑No, I did not.
You didn’t seek any authorisation from her to take that money out, did you?‑‑‑I spoke to my accountant - - -
No, sir, did you seek any authorisation from [the wife] to take that money out?‑‑‑I did not.
And yet you come to Court complaining about the fact that she’s taken money out of the company’s coffers. That’s right, isn’t it?‑‑‑I am still an employee and I still have entitlements and as such she - she has taken all her entitlements when she left in 2007.
Sir, when you swore your affidavit on 27 July you didn’t say anything about taking $20,000 out for holiday and personal entitlements, did you?‑‑‑No, I probably did not.
In your three financial statements that you’ve sworn you’ve said nothing about these payments, have you?‑‑‑No, I have not.
You’ve tried to hide them from [the wife], haven’t you?‑‑‑I haven’t tried to hide them at all.
Well, sir, other than me asking you about the $20,000 today, when did you propose telling his Honour that you’d taken $20,000 out of the company’s coffers for your holiday and personal entitlements?‑‑‑It’s in my taxable income. I’ve also included it in a letter that I sent to CSA in regards to an objection I have and I’ve noted it there that I’ve included it in my income for this year.
[HIS HONOUR]: But the question is - - -?‑‑‑Yes, when I - - -
- - - when were you going to tell the Court?‑‑‑I’m sorry I didn’t put it in there.
MR BYRNES: I mean, you understand that in these proceedings you’re under the microscope. You understand that, don’t you?‑‑‑Well, I do, yes.
You wouldn’t have enjoyed on the last occasion me saying that you’d told fibs, would you?‑‑‑No, I’m not exactly in my environment, no.
Wouldn’t it have been important to you to make sure that you would have been squeaky clean, that you would have told everything about what was happening?‑‑‑Well, every major financial transaction I’ve done with the business I’ve either okayed with my accountant because we have very little contact as you’re aware, so I’ve gone and spoken with my accountant to take his guidance.
[HIS HONOUR]: Who is your accountant by the way?‑‑‑[Mr [C]].
Was he the same accountant who calculated your leave entitlements?‑‑‑Yes, he is.
Your personal annual leave entitlements?‑‑‑Yes.
Yes.
MR BYRNES: When you said that it was leave and personal entitlements, what did you mean by “personal entitlements”?‑‑‑The way it’s set up at work there’s – that’s just the way it’s set up on MYOB. Now, when [the wife] took her entitlements it included personal leave and annual leave so it would have calculated on both of those. I’ve used her guidance to calculate what my leave entitlements are.
But the word “personal entitlements”, what does that mean?‑‑‑Well, I’m not sure. It’s just there in MYOB. I’m not the bookkeeper.
On 4 February 2011 (that is, after another break in the trial of more than a year), the wife filed a further affidavit in which she said (original emphasis):
239Since I ceased employment with [the company] the Respondent has received various payments from the company which he claimed represented his proper “employee entitlements”.
240Those payments include the following:
Long service leave (April 2008)  $30,265.55
Superannuation  $2,723.90
Long service leave (February 2009)  $1,120.00
Superannuation  $100.80
Personal leave paid in lump sum (5 August 2009)   $17,080.00
Annual leave loading (5 August 2009)  $1,711.94
Total$53,002.19
241I say that the actual amounts which the Respondent was entitled to were as follows:
Long service leave due on termination  $19,815.56
Superannuation  $1,682.33
Annual leave owing  $4,881.45
Mastercard payment owing  $363.17
Total$26,379.34
242Accordingly, I say that the Respondent received an amount of $26,622.85 over and above his employee entitlements. I say that those monies are also an “add back” which need to be included in the matrimonial pool.
It is important to observe that, in these paragraphs, the wife was addressing at least two payments which had not been received by the husband at the time she first gave evidence and when she was first cross-examined on the topic – i.e. the items described as “Personal leave paid in lump sum (5 August 2009) $17,080.00” and “Annual leave loading (5 August 2009) $1,711.94”.
In any event, when the wife was being cross-examined on her updated assertion on 19 September 2011, the following exchange occurred (transcript, p 68 et seq; original emphasis):
MR DAVIES:   Now, just in relation to the entitlements of [the husband]. You take issue with those – didn’t you?
HIS HONOUR:   Well, which entitlements?
MR DAVIES:   That’s what he – the long service leave entitlements that he took?‑‑‑I do – can I please go back and clarify something about that car allowance?
Your solicitor – solicitor can do that in re-examination?‑‑‑Yes, I do. Yes.
Right. Now, you’re aware that [Mr [C]] filed an affidavit in these proceedings, sworn on 18 March 2009?‑‑‑Yes.
In annexure 3, at the back of his affidavit, there was a report prepared by [Mr [C]]. I will just turn to that. He was the company accountant, wasn’t he?‑‑‑That’s correct, yes.
And in that annexure B he refers to questions relating to the calculation and the explanation as to [the husband’s] long service leave entitlements?‑‑‑I – I would need to see what you’re referring to, please.
Yes, I will show you the ‑ ‑ ‑?‑‑‑Just that first paragraph ‑ ‑ ‑
That’s – yes?‑‑‑ ‑ ‑ ‑ about the long service leave? Yes.
Do you agree that [Mr [C]] is a person who is qualified to make a preparation of employee entitlements?
…
HIS HONOUR:   Well, I don’t know. I’m just wondering if she has the qualification to assess whether the calculation by Mr [C] was correct or not.
MR DAVIES:   All right. I won’t ask it in that form.
Can I just ask you this: Mr [C] was obviously a person that you had confidence in, as the company accountant?‑‑‑Yes, but can I say that Mr [C] didn’t work out the entitlement to the compensation – to the long service leave payment.
HIS HONOUR:   Well then who did?‑‑‑[The husband] did.
MR DAVIES:   I want to suggest to you that in fact Mr [C] did? Can I have that document ..... thanks?
HIS HONOUR:   I think Mr Davies, if there is an issue about the calculation of it, there is a – presumably it is done by a formula, based on one entitlement ..... long service leave. Two, the relevant salary or emoluments at the time that the long service leave was due, and then it’s a pretty straightforward calculation.
MR DAVIES:   Yes.
MR BYRNES:   Just in fairness your Honour, my learned friend put to [the wife], I put it to you that Mr [C] did, and I don’t know that she answered that question.
HIS HONOUR:   Well, I think she has because she said that [the husband] calculated the long service leave. Mr [C] didn’t.
MR DAVIES:   The evidence from [the husband] before this court on 17 August 2009 was there was questions as to who calculated them. The question was:
And I want to know who calculated those. Did you calculate it, or did the accountant calculate it?
And the answer was the accountant helped calculate it. Have you checked with Mr [C] personally as to whether in fact he did assist [the husband] to help calculate the entitlements?‑‑‑After the payment had been made, Mr [C] had told me that he went back and recalculated the tax that was made on the payment;   that he did not calculate the payment.
In his closing written submissions at trial, counsel for the husband argued that the letter from Mr C attached to his affidavit of 18 March 2009 “confirms that the Husband was entitled to his long service leave and superannuation as received by the Husband” and that Mr C was “the appropriate person to calculate [the husband’s] leave entitlements”. The trial judge clearly did not accept that submission, and it is now asserted on appeal that his Honour erred in failing “to give due consideration to the impartial third party expert evidence from the company accountant in relation to the correct calculations of the Husband’s employee entitlements”.
We find no merit in the husband’s assertion about the weight to be placed on Mr C’s letter for the following reasons:
·The letter was written before the husband received a significant part of his “entitlements”, namely the payments received on 5 August 2009, which totalled $18,791.94.
·The letter did not indicate, nor did Mr C’s affidavit, that the accountant had himself made the calculation of the husband’s entitlements. The accountant merely said that the husband had entitlements, which he was entitled to cash out. The wife ultimately did not dispute this proposition, but said the husband took more than he was entitled to.
·The only evidence to support the proposition that Mr C had personally made the calculation was the evidence given by the husband himself. The wife’s evidence (admittedly hearsay, but not sought to be struck out) was that the accountant had not made the calculation.
While we would respectfully disagree that the evidence was “compelling”, we nevertheless consider that given the wife’s expertise and role in the company, and his Honour’s acceptance of her credibility, there was a sufficient basis upon which his Honour could find that the husband had been overpaid. Furthermore, our examination of the record supports the finding that the “evidence was uncontradicted by the conclusion of the hearing”.
In arriving at this conclusion, we acknowledge that paragraph 241 of the wife’s affidavit of 4 February 2011 is nothing more than an assertion, but we were not told of any application for it to be struck out. Furthermore, that assertion needs to be read in conjunction with the evidence the wife gave on 26 February 2009, which the trial judge obviously accepted.

The wife’s entitlements

The next part of Ground 1 deals with the claim that his Honour erred in failing to add back an amount of “$24,862.20 in entitlements plus tax of $9000” which the wife paid herself when she left the company in 2007.
His Honour’s reasons for this part of his decision were as follows:
259.The evidence establishes that the wife also became entitled to and was paid employee entitlements upon her resignation. The husband asserts that the wife took payments from the company far in excess for entitlements.
260.It is not established on the evidence that the wife either benefited from employee entitlements to which she was not entitled, or wrongfully availed herself of any excess entitlements.
261.Accordingly, this allegation is not established and is rejected.
The wife’s written evidence on this point was contained in paragraph 178 of her affidavit sworn 18 December 2008, where she simply said, “My long service leave and other entitlements on me ceasing my employment with [the company] totalled (net) $24,862.20”.
The husband’s complaint is that the amount the wife received contained a component for a car allowance and overtime to which she was not entitled, as well as a component of $3,500 for work the wife and her partner had done on Property P, which was not owned by the company.
Dealing first with the car allowance, the wife conceded that her contract of employment did not include provision for a car allowance. However, in her oral evidence (transcript, 19 September 2011, p 65 and 20 September 2011, p 41), the wife said that both she and the husband had always had such an allowance (although she accepted that there was a possibility she had ceased receiving hers at one point, even though the husband kept receiving his).
As the trial judge pointed out during the hearing, the car allowance may have been paid because there was some subsequent variation of the employment contract, which the directors were entitled to make (transcript, 19 September 2011, p 67). Furthermore, it appears not to be in dispute that no notice was given of this issue until the wife was cross-examined during the final days of the trial (transcript, 19 September 2011, p 67). Not only did the wife therefore not have an opportunity to adequately address the issue, but the quantum of the car allowance was never established.
Turning to the wife’s claim for overtime, the husband dealt with this in his affidavit of 8 January 2009 by saying:
102.[The wife] further paid herself overtime the estimated amount of $1,500. The award states that overtime is not payable unless an employee works more than a 40 hour week. [The wife] only worked a 32-35 hour week. …
To support this assertion, the husband annexed a copy of the award to his affidavit. We have examined the relevant part of the award (paragraph 12.3) and find nothing to support the proposition that an employee was entitled to overtime only if they worked more than a 40-hour week.
The only reference we can find in the transcript to the overtime claim is this solitary question asked of the wife (transcript, 19 September 2011, p 65):
Overtime of $1500?‑‑‑I think that was to do with the – probably overtime, yes.
The wife was not further challenged as to her entitlement to be paid overtime. In particular, she was not asked to explain why she had claimed overtime in circumstances where (as was pointed out in argument on the appeal) she had said in her affidavit of 18 December 2008 at paragraph 131 that she was not paid any overtime at the time of separation. The amount involved is de minimis, but we consider that the husband needed to do more in cross-examination than simply ask the wife to confirm that she had received overtime of $1,500.
Similarly, in the case of the $3,500 paid for work done at Property P, the husband’s counsel did no more than ask the wife to confirm she had been paid that amount, as this extract shows (transcript, 19 September 2011, p 65):
[MR DAVIES:] You paid yourself for time and a half for work performed at [Property P] at $3500?‑‑‑I don’t think $3500 is correct but I know I did pay myself some money but it was less than that from memory.
The wife had given evidence about this in her affidavit of 18 December 2008:
161.In September 2006 the tenants moved out of the adjoining unit at [Property P]. By that time I had commenced a relationship with my current partner [Mr L]. [Mr L] and I then carried out extensive work to fix the unit. I kept a record of the hours which we spent carrying out that work. It totalled 43 ½ hours. I took payment for some of that work in my wages from [the company]. I received payment for 21 hours work on 4 October and 11 October 2006. My partner [Mr L] did not receive any payment for that work.
The wife was not challenged as to why she was entitled to payment, and the actual amount received was never established. Even if it was as much as $3,500, it would have represented 0.27 per cent of the pool.

Shareholder loan and debtors account

This portion of the complaint relates to this part of his Honour’s reasons:
254.Whilst it was asserted that the husband had a debtors account with the company of $3,444.05, and which the husband admitted, the husband asserted that the wife had a debtors account with the company of $6,019.45 and which the wife conceded in cross examination. The husband asserted that the wife had a shareholder’s loan account with the company with a debit balance of $29,430.70.
255.Whilst it is less than clear on the evidence before me, it seems to me that on the balance of probabilities, such amounts would have been taken into account in the liquidation of the company. For that reason, it would have been inappropriate to add back such monies. The evidence falls far short of enabling me to make a finding that it would be appropriate to do so.
The husband complains that the treatment of the wife’s loan account was inconsistent with his Honour’s decision to add back various amounts totalling $42,932.65, which the trial judge found the husband had misappropriated in one form or another from the company (at [244]–[253]).
We accept the submission of counsel for the wife that there was no inconsistency as the wife’s shareholder loan account and debtors account would have been disclosed in the company accounts, whereas the amounts that were added back into the husband’s share of the pool were not recorded. Absent any evidence to the contrary, we consider it would have been proper for his Honour to infer, as he did, that the liquidator would have called in all debts that were recorded in the accounts.
In fact, there was some evidence to suggest that the liquidator had not called in the wife’s loan, since the wife said she had no recollection of the liquidator pursuing her (transcript, 19 September 2011, p 72). However, the fact his Honour may have erred in assuming the loan was called in does not establish that there was a miscarriage. In saying this, it is important to understand three things.
First, the wife’s debtors account, according to her own evidence, represented monies the company owed her (transcript, 20 September 2011, p 5–6). There was no reason for his Honour to doubt this assertion.
Second, his Honour did not find that the wife’s loan account was in an amount of $29,430.70 – this was, as his Honour said, merely the husband’s assertion. The transcript demonstrates that the wife accepted that in addition to removing $21,680 from the company, she also deposited cheques payable to the company to a value of in excess of $8,000 into a joint account she had with the husband, and then withdrew those funds. However, the wife also gave an explanation about how those additional funds were disbursed for the benefit of the husband, the company or reimbursed to the company (transcript, 19 September 2011, p 15 et seq, and exhibit W29).
Third, and most importantly, notwithstanding what his Honour said at [255], his Honour did, at [252], add back into the pool the entire amount of $21,680 which the wife accepted she had withdrawn from the company. We are not persuaded that his Honour erred in not also adding back the $8,000 worth of cheques the wife had flushed through the joint account, given the wife’s explanation for how she disbursed those funds.
As counsel for the wife said in his submissions, the apparent inconsistency between his Honour’s statement at [255] and his decision at [252] to add back the monies owed by the wife to the company might have provided a basis for a cross-appeal by the wife. No cross-appeal was pursued, and in our view properly so, since we are not convinced his Honour was right in assuming that the wife’s loan had been repaid at the time of the liquidation.
In the final analysis, there was no error.

E-trade account

The husband submits that his Honour failed to give due consideration to the evidence about the wife’s e-trade account. The husband claims that although money/shares in the e-trade account were acquired/purchased after separation, any sale proceeds / benefit from them should be included in the pool.
The wife’s evidence was that she had accumulated funds in an e-trade account after separation ($17,400 as at 15 January 2008 and $7,851.92 as at 4 February 2011). However, by the time of trial, there were no funds left in the account, the money having been expended on a jointly owned property (transcript, 19 September 2011, p 32). That evidence being uncontested, we fail to understand how his Honour erred in not including this item in the asset pool.

“IOUs” and income protection insurance premiums

Having not referred to them in the grounds, counsel for the husband sought, under the rubric of Ground 1, to attack the decision to add back $19,000 in “IOUs” to the company and some company funds expended on income protection insurance. We doubt it was permissible for these matters to be raised when they were not specifically identified in the grounds of appeal, but in any event, we accept the submission of counsel for the wife that his Honour’s treatment of these matters was unexceptionable. Once again, they were items that could not have been identified by the liquidator by reference to the accounts, and hence there was no reason to conclude they would have been dealt with in the liquidation. The husband had the benefit of them, and in the circumstances of this case, it was open to his Honour to add them back.

Ground 2 – The rent and the motorcycle

This ground asserts that his Honour “erred in duplicating the assets and addbacks in the pool of assets” by counting both the proceeds of selling a motorcycle as part of the husband’s assets, as well as $11,000 of rental income received by the husband which he had used to acquire the motorcycle.
His Honour’s findings about the rental income which was added back are set out below:
272.It is the wife’s case that from July 2008 until May 2009 the husband let the premises at [Property J] and that the husband retained the rent received from the letting and used those monies for his own purposes. The wife assess [sic] that the rent the husband received was about $11,000.00.
273.The evidence establishes that the husband let the premises for about $220.00 per week until May 2009 when all rental income was paid into an account.
274.Whilst it is less than clear in the husband’s case as to what happened to the rental income he retained, I am satisfied on the balance of probability that he applied these monies for his own purposes as opposed to joint purposes. Consequently, I am satisfied that the amount of $11,000.00 should be treated as an add back.
As these findings are unchallenged, the issue is whether the husband is correct in asserting that the rental monies in question were used to acquire his motorcycle.
The trial judge first referred to the motorcycle in these terms at [70(c)], when he was discussing credibility (emphasis added):
The husband admitted purchasing a second hand [motorcycle] in August 2008 at a cost of $10,000.00 with monies from rent the wife had paid to the husband of about $11,600.00 deposited to the husband’s bank account in about April 2007. The husband then changed his evidence to say that he bought the motor cycle in August 2007 rather than August 2008. The husband was obliged to concede that he did not include the [motorcycle] in his financial statement sworn 9 April 2008 nor his financial statement sworn 8 January 2009…
His Honour went on to say at [304]–[307] that he accepted the wife’s evidence that the “the motor cycle was purchased from rental monies to which the parties were jointly entitled” and that it should be included in the pool of assets at the figure of $12,000 for which it had been sold by the husband.
Given the husband’s evidence that the motorcycle was acquired in 2007 or at the latest August 2008, clearly the rental monies referred to at [272]–[274] of the reasons could not have been used to acquire it. His Honour was clearly referring to two different lots of rental money. We therefore accept the submission of the wife that there is no duplication.
There is no merit in this ground.

Ground 3 – Inconsistency in treatment of tools and jewellery

By this ground, the husband complains that the trial judge adopted “an inconsistent approach to the inclusion and valuation of the Husband’s tools and the Wife’s jewellery that were not formally valued”.
His Honour’s findings about the valuation of the tools are set out in the following paragraphs (footnote omitted):
245.It is established on the evidence that the husband retained tools and other items of equipment owned by the company which the wife asserts had a value of approximately $5,000.00 at the time of liquidation. The husband conceded that he retained his tools of trade and asserts the second hand value was $1,000.00 but no valuation was obtained.
246.While there is no evidence of value of such tools and equipment I prefer the wife’s assessment of value and find the husband’s assessment to be unreliable. I take into account as to making such findings that the wife worked in the company for a long period of time and acquired an intimate working knowledge of the value of the company’s tools and equipment for accounting and valuation purposes. Further, it is significant in my view that such tools and equipment continue to be used by the husband enabling him to earn an income. I find therefore the amount of $5,000.00 is to be added back by way of tools and equipment in the husband’s possession.
247.The wife asserted that the husband retained a [tool set] with a value of $2,308.95 and which the husband confirms he has retained but to which he attributes a value of $500.00. It is common ground no valuation was obtained for such tool set. For the same reasons as given above, I prefer the wife’s assessment of the valuation and find that the husband’s valuation is unreliable. The husband continues to use these tools in generating income for himself.
248. An amount of $2,308.95 is found therefore to be an amount to be added back.
The husband seeks to contrast this approach with that his Honour adopted in dealing with the wife’s jewellery (footnote omitted):
302.The husband asserts that the wife has valuable jewellery which should be included in the pool of assets. The wife asserts that she has jewellery to the value of a few hundred dollars only but somewhat ingenuously asserts that it should be offset against the value of numerous items of tools and equipment the husband retained from [the company] and which greatly exceeded the value of the jewellery.
303.There is no valuation of the jewellery. Doing the best I can, I bring it into account as an asset in the possession of the wife the value of which was not established.
His Honour had earlier constructed a table of the assets and liabilities and their values as at the conclusion of the hearing, and had noted that the value of the wife’s jewellery was “not established”. We can see no basis upon which his Honour could have done anything more in circumstances where it was not asserted that either party had any expertise in valuing jewellery.
As for the suggestion of inconsistency in the treatment of the tools, clearly there is none, since his Honour found (and the finding is not challenged) that “the wife worked in the company for a long period of time and acquired an intimate working knowledge of the value of the company’s tools and equipment for accounting and valuation purposes”. This finding is sufficient to sustain the approach adopted by the trial judge in resolving a dispute in relation to assets which, on either version, were of very little value. Although counsel for the husband submitted that “the same could be said of the husband” (i.e. that he had considerable expertise in the business), the submission overlooks the powerful credit findings made by the trial judge.
Counsel for the husband also submitted that the second consideration mentioned by the trial judge (i.e. the fact the husband was using the tools in order to earn an income) could not in any way inform a valuation of the tools. We accept that this is so, but as best we understand it, his Honour’s remark was simply designed to show that the tools were, in fact, of value to the husband.

Ground 4 – Failure to include assets in the pool

Ground 4 complains that the trial judge erred “in failing to include all of the assets at the date of the hearing in the pool of assets”.
The assets which were the subject of this ground were a pool table, a signed [football jersey] and a portrait of a rugby player. As we indicated at the hearing, we do not consider this court should expend its time in dealing with trifles.
Suffice to say, we accept the wife’s submissions and find no merit in Ground 4.

Ground 5 – Changes in value of assets

This ground depended on the introduction of the further evidence which we have refused to receive. It therefore does not require discussion.

The outcome and costs

There being no merit in any of the grounds, the appeal will be dismissed.
The wife sought an order for costs in the event the appeal was dismissed. The husband opposed an order for costs on the basis that he had already incurred significant legal costs, and that it would be “unfair” that he be required to meet costs in circumstances where his grounds of appeal were at least arguable. Reference was also made by his counsel to the husband’s difficult financial circumstances, reflected in part by the fact that he had been unable to afford to have his solicitor attend the hearing of the appeal to brief counsel.
In our view, the husband having been entirely unsuccessful in this appeal, he should meet the wife’s costs, which should be assessed if not agreed.

I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Strickland & Ainslie-Wallace JJ) delivered on 15 July 2016.

Associate:

Date: 15 July 2016