MUIR & ROYSTON - [2010] FamCA 374

FAMILY COURT OF AUSTRALIA

MUIR & ROYSTON

[2010] FamCA 374

FAMILY LAW - PROPERTY – Contribution – Global approach or asset by asset – Modified asset by asset approach – Grouping of net assets into three categories having regard to the discrete sources of assets – Section 75(2) factors – Just and equitable considerations – Net assets overall 55% to husband and 45% to wife

Family Law Act 1975 (Cth) ss 79, 75(2)

Billington & Billington (No 3) [2007] FamCA 1465
Campbell v Kusky (1998) FLC 92-795
Coghlan & Coghlan (2005) FLC 93-220
Dawes & Dawes (1990) FLC 92-108
Farmer and Bramley (2000) FLC 93-060
Ferraro and Ferraro (1993) FLC 92-335
Figgins and Figgins (2002) FLC 93-122
Gorton v Federal Commissioner of Taxation (1965) 113 CLR 604
Gosper and Gosper (1987) FLC 91-818
Kessey and Kessey (1994) FLC 92-495
Lee Steere and Lee Steere (1985) FLC 91-626
L and L (unreported) Appeal No EA47 of 2004
Mallet v Mallet (1984) FLC 91-507
Norbis & Norbis (1986) FLC 91-712
Omacini & Omacini (2005) FLC 93-218
Pellegrino and Pellegrino (1997) FLC 92-789
Phillips and Phillips (2002) FLC 93-104
Pierce and Pierce (1999) FLC 92-844
Rosati & Rosati (1998) FLC 92-804

APPLICANT:

Mr Muir

RESPONDENT:

Ms Royston

FILE NUMBER:

SYC

2780

2009

DATE DELIVERED:

19 March 2010

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Sydney and Brisbane

JUDGMENT OF:

O'Reilly J

HEARING DATE:

6-9 September and 14 October 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Kearney

SOLICITOR FOR THE APPLICANT:

Newnhams Solicitors

COUNSEL FOR THE RESPONDENT:

Mr Foster

SOLICITOR FOR THE RESPONDENT:

Watts McCray Lawyers

Order

Pursuant to s79 of the Family Law Act 1975 (Cth) the property and assets of the parties or either of them be divided in accordance with the following order so as to provide 55% to the husband and 45% to the wife:

The husband have:
(a)the property, assets and liabilities described in the reasons for judgment as category 1, valued at $2,484,579;
(b)NAB account, valued at $139;
(c)AMP whole of life policy, valued at $150,199;
(d)2001 Toyota Avalon motor vehicle, valued at $17,800;
(e)interest in DDT, valued at $1,000;
(f)loan account Muir Family Trust, valued at $38,919;
(g)computer IT equipment, valued at $500;
(h)rental bond, valued at $4,200;
(i)add back: paid fees and disbursements, valued at $109,324;
(j)his member’s account Muir Superannuation Fund, valued at $821,359.
Total value:              $3,628,019
and be solely responsible for the following other liabilities:
(k)NAB overdraft, valued at $10,044;
(l)CBA Mastercard, valued at $11,699;
(m)NAB Mastercard, valued at $166;
(n)tax 30 June 2009 year – marital, valued at $29,735;
(o)tax accrued to 31 July 2009 and unpaid – marital, valued at $4,000.
Total other liabilities:      $55,644
Total net value:       $3,572,375.
The wife have:
(a)the property, assets and liabilities described in the reasons for judgment as category 2, valued at $43,748;
(b)The property at M, free of encumbrances, valued at $2,200,000
(c)Citroen motor vehicle, valued at $27,500;
(d)CBA bank accounts … 3079 and … 6702, valued at $70,107;
(e)CBA bank account … 5584, valued at $20,288;
(f)computer, valued at $500;
(g)her tax refund, valued at $2,519;
(h)add back: paid fees and disbursements, valued at $180,203;
(i)her member’s account Muir Superannuation Fund, valued at $609,968.
Total value:              $3,154,833
and be solely responsible for the following other liabilities
(j)income tax 30 June 2009 year, valued at $15,980;
(k)her CBA Mastercard, valued at $21,526;
Total other liabilities:      $37,506
Total net value:       $3,117,327.
The property at B be sold by public auction with the following applying:
(a)the real estate selling agent, unless otherwise agreed between the parties, be as nominated by the President of the Real Estate Institute of New South Wales or his or her delegate appointed for that purpose;
(b)the reserve, unless otherwise agreed between the parties, be $790,000;
(c)the advertising program, auction date and similar matters, unless otherwise agreed between the parties, be as determined by the selling agent;
(d)either party may bid at the auction by himself, herself or agent appointed by him or her.
If the parties should agree, the B property, before being listed for auction, may be listed for sale for a 60 day listing period, with such advertising program as they may agree at such price as they may agree, provided that if there be no signed contract of sale within such 60 day listing period, or any extension of such agreed by the parties in writing, the parties proceed to auction in accordance with paragraph 3.
The proceeds of sale of the B property be applied in the following manner and priority:
(a)any unpaid outgoings in relation to the property between the date of judgment and the date of sale to be paid at settlement;
(b)the costs of sale including commission, to be paid at settlement;
(c)the payment of any capital gains tax payable in respect of the sale, the estimated amount to be held in the husband’s or the wife’s solicitors trust account pending assessment;
(d)the balance to the parties, having regard to the values in paragraphs 1 and 2, to effect an overall distribution of 55% to the husband and 45% to the wife;
(e)after payment of the capital gains tax, the balance in (c) on the same basis as (d), provided that if there should be a shortfall in the amount required to pay the capital gains tax the parties be liable to pay one half each of the shortfall.
Any accretions in the parties’ members accounts in the Muir Superannuation Fund after 31 July 2009 not be taken into account for the purpose of paragraph 5(d).
The contents of the properties at M and B be divided in accordance with the minute of orders signed by the parties on 24 November 2009, a copy of which is attached.
The wife provide to the husband all documents in her possession or at M property of the husband, the Muir Family Trust, T Firm and/or clients of T Firm and any copies of such documents, at times to be arranged by the parties by their solicitors.
The wife resign as a director of and relinquish all shares in the “entities” as defined in paragraph 10 of exhibit 2.
The husband indemnify and keep indemnified the wife from and against all actions, claims, suits or demands by any person, body or institution in relation to or arising out of the Muir Family Trust and the other “entities” as defined in paragraph 10 of exhibit 2.
The wife arrange for her member’s account in the Muir Superannuation Fund to be transferred to a superannuation fund nominated by her, or alternatively, if she be eligible, and should she so choose, to be paid to her by way of benefit.
The husband, as early as may be practicable, lodge his personal income tax returns for the years ending 30 June 2010 and 30 June 2011, and upon the issue of assessments for those years:
(a)pay to the wife an amount equal to 45% of the amount by which in the year ended 30 June 2010 the assessment is less than $27,414 relating to the winding up of A Holdings Pty Limited;
(b)pay to the wife an amount equal to 45% of the amount by which in the year ended 30 June 2011 the assessment is less than $27,513 relating to the winding up of A Holdings Pty Limited.
Otherwise, the parties are to retain all assets, liabilities and financial resources in their respective name or possession.
Unless otherwise specified in this order:
(a)each party is solely entitled to the exclusion of the other to all property and assets (including choses in action) in the possession of that party as at the date of this order;
(b)each party is solely entitled to the credit of any moneys in any bank accounts in his or her name;
(c)each party is to forego any claim he or she may have to any superannuation benefits belonging to or earned by the other;
(d)each party is to be solely liable for and to indemnify the other against any liabilities encumbering any item of property or any asset to which that party is entitled pursuant to this order.
The parties are to sign all documents necessary to give effect to this order and in default a Registrar is empowered to sign all such documents.
The parties have liberty to apply, on short notice, by arrangement with the Associate:
(a)under the slip rule;
(b)if I should have made any calculation errors in the reasons for judgment or this order;
(c)if the parties, by their solicitors, should be unable to agree the calculations required by this order;
(d)if any further machinery or other orders may be necessary to carry out this order or to give effect to the decision; or
(e)if clarification of any part of the decision or order should be required.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 2780 of 2007

MR MUIR

Applicant

And

MS ROYSTON

Respondent

REASONS FOR JUDGMENT

The parties and their applications

The parties each seek a just and equitable property settlement by way of order under s79 of the Family Law Act 1975 (Cth).
The husband, Mr Muir, seeks that on the contribution basis the parties’ assets be regarded as three pools, that he have 100% of pool 1, the wife 100% of pool 2 and pool 3 be divided 55% to himself and 45% to the wife and there be no s75(2) adjustments. Globally, this would reflect about 70% overall to the husband and 30% to the wife.
To effect this, he seeks an order comprising the terms of ex 1, save in relation to chattels, which division is now agreed, and par 11, in relation to a contingent debt not now pressed.
The wife, Ms Royston, seeks that on the contribution basis the parties’ assets be regarded as one pool, that she have 47.5% and the husband 52.5% (initially 45%/55%) and that she have a s75(2) adjustment of not less than 5% (initially at least 10%) so that the pool be divided ultimately 52.5% to herself and 47.5% to the husband.
To effect this, she seeks an order comprising the terms of ex 2, save in relation to chattels, which division is now agreed, and save as modified slightly in final submissions.
It is common ground that the parties’ agreed chattel division has no impact on the property division otherwise to be made.

Relevant background facts

The parties married in 1979, having commenced cohabitation in January of that year. They separated in June 2006. The period of time of their cohabitation and marriage thus was a little over 27 years. The parties have not divorced. Neither has repartnered.
They have two children, a son of 28 years and a daughter of 26 years who are independent.
At the time of the trial the husband was 68 years and the wife 58 years.

Nature and value of asset pool

The parties largely were able to agree the nature and value of the asset pool as set out in a joint balance sheet provided and reproduced below. Save for a typographical correction in the date appearing at item 39 (31/3/09 corrected to 31/7/09) the format and content are taken from the husband’s written submissions, but were subject to argument by him on some matters. The wife agreed with the format and content, but raised argument also as to some matters. It was contended that some of the items included are not pool items and ought be excluded. These matters required determination.

SCHEDULE

ASSETS	Title	Husband	Wife	A/D
1	M property	J	$2,200,000	$2,200,000	A
2	B property	W	790,000	790,000	A
3	NAB account	H	139	139	A
4	AMP Whole of Life Insurance Policy	H	150,199	150,199	A
5	2001 Toyota Avalon	H	17,800	17,800	A
6	2006 Citroen	W	27,500	27,500	A
7	Interest in T Firm	J	1,000	1,000	A
8	Contents - both properties	J	0	0	A
9	Loan a/c Muir Family Trust	H	38,919	38,919	A
10	Loan to parties’ daughter	H	0	0	A
11	Computer IT equipment	H	500	500	A
12	Rental bond	H	4,200	4,200	A
13	Loan to parties’ son	H	0	0	A
14	CBA a/c … 3079 & … 6702	W	70,107	70,107	A
15	CBA a/c … 5584	W	20,288	20,288	A
16	Muir Family Trust	H	1,493,244	1,493,244	A
17	Computer	W	500	500	A
18	Loan a/c Muir Family Trust	W	9,324	9,324	A
19	Tax refund	W	2,519	0	D
20	T Firm pension	H	0	0	A
21	Add-back: superannuation	H	0	236,000	D
22	Add-back: paid fees and disbursements	W	180,203	180,203	A
23	Add back: paid fees and disbursements	H	109,324	109,324	A
24	TOTAL	$5,115,766	$5,349,247

LIABILITIES	Husband	Wife
25	NAB overdraft	H	$10,044	$10,044	A
26	CBA MasterCard	H	11,699	11,699	A
27	NAB MasterCard	H	166	166	A
28	T Firm	H	73,115	0	D
29	Symmetry	W	0	0	A
30	Tax 30/6/09 year marital	H	29,735	0	D
31	Tax accrued to 31/7/09 and unpaid - marital	H	4,000	0	D
32	Tax 30/6/09 inherited	H	17,947	0	D
33	Tax accrued to 31/7/09 and unpaid - inherited	H	1,041	0	D
34	Tax on winding up of A Holdings	H	54,927	0	D
35	Tax 30/6/09 year	W	15,980	15,980	A
36	CBA MasterCard 25/5/09	W	0	21,526	D
37	Total	$218,654	$59,415

SUPERANNUATION	Husband	Wife
38	Muir Superannuation Fund (31/7/09)	H	$821,359	$821,359	A
39	Muir Superannuation Fund (31/7/09)	W	$609,968	$609,968	A
40	The S Super Fund	H	1,058,097	1,058,097	A
41	Total	$2,489,424	$2,489,424

FINANCIAL RESOURCES	Husband	Wife
42	Estate A Muir	H	6,153	6,153	A
43	Estate Commission - Claim net of tax	H	1,000	1,000	A
44	Estate A Royston (estimate)	W	34,424	34,424	A
45	Total	$41,577	$41,577

SUMMARY	Husband	Wife
24	Gross assets	$5,115,766	$5,349,247
37	Gross liabilities	(218,654)	(59,415)
46	NET ASSETS	$4,897,112	$5,289,832
41	Total superannuation	2,489,424	2,489,424
47	Net assets and superannuation	$7,386,536	$7,779,256
45	Total financial resources	41,577	41,577
48	Net assets, superannuation and financial resources	$7,428,113	$7,820,833

I turn then to the pool matters requiring determination.

Pool matters requiring determination

Mr Foster, for the wife, contended that items 19, 28, 30-33 and 34 should not be pool items.
Mr Kearney, for the husband, contended that items 21 and 36 should not be pool items.

General observations

The parties agreed that their superannuation interests, items 38-40, should be included in the pool “as if property”. In Coghlan & Coghlan (2005) FLC 93-220, the Full Court described superannuation interests as “another species of asset in relation to which orders can be made (at [53]); and said that a trial judge has a discretion as to how superannuation interests will be treated in a particular case (at [65]). The parties each seek that items 38-40 be treated as “pool” assets. I am satisfied, having regard to the parties’ ages and the circumstances of the case that such is appropriate.
The parties agreed also that the items described as financial resources, items 42-44, should be regarded “as if property” having regard to the circumstance that each is represented by lump sum cash either received or soon to be received.
The parties agreed also that having regard to the particular exigencies of the case, to which I need not presently refer, the parties’ liabilities items 25-36 (subject to determination as to the disputed liability items, that is, items 28, 30-33, 34 and 36) should be brought to account as pool items, although several, if not all, were incurred or accrued post separation.
I turn then to determination of the disputed items. It is convenient to deal first with the items disputed by the wife, and then the items disputed by the husband.

Item 19

There is no dispute that the wife will, upon submission of her tax return for the year ended 30 June 2007, receive a refund of $2,519. The wife contends that the refund is a portion of her post separation income and as such should not be included in the pool as capital. The husband contends that during the year ended 30 June 2007 the wife’s income derived from the Muir Family Trust (the trust), and that the refund arises as a consequence of franking rebates available to the wife through the trust and PAYE payments made by the trust on her behalf during that year.
The husband contends that the characterisation of funds as “post separation income” does not, in this case, result in exclusion of the refund for the reasons set out in Mr Kearney’s written submissions, par 5.4. In particular, the income to which the refund relates did not result from personal exertion by the wife post separation, but represented trust distribution, the refund arising in the circumstances described. Further, if the wife had lodged her taxation return for the year ended 30 June 2007 in the usual course, and actually received the refund, then according to the way the parties have structured their asset schedule, that is, largely to include their post separation dealings, the amount would have formed part of the net asset pool directly or indirectly.
I accept Mr Kearney’s submissions.
Item 19 thus will remain as a pool item.

Item 28

The husband, post separation, has been engaged as a consultant with T Firm, the firm of which he was a partner between 1993 and 2000, when he retired from the partnership.
The amount of $73,115 related to a post separation consultancy fee dispute leading to a contingent liability of the husband to repay the amount to the firm. By letter dated 18 November 2009 to the Associate the husband’s solicitors notified that the dispute has been resolved with effect that the husband now does not have the liability. Item 28 thus will be excluded.

Items 30-33

These items are grouped for convenience.
Items 30 and 32 relate to tax liability as at 30 June 2009. Items 31 and 33 bring in further tax accrued for one further month, that is, as at 31 July 2009. Items 30 and 31 are included in the schedule with the description “marital”, whereas items 32 and 33 have the description “inherited”. This description is relevant to a central argument of the husband relevant to contribution. It is not, however, relevant to whether the four liabilities should be included as “pool” liabilities.
Mr Foster, for the wife, contends that all four liabilities should be excluded as being characterised as “the husband’s post separation income tax liabilities” on the basis that he has had the benefit of “his post separation income which has not been included in the pool”: written submissions, p17, footnotes 3-6. Orally, Mr Foster put that “no one knows, effectively, what portion of income was spent by the husband on joint expenses, and what was spent on himself”, and that there was “some 400 odd thousand withdrawn from super”, so that “it is not a liability that he can say should be brought into consideration.”
Mr Kearney however, for the husband, drew attention to the circumstance that pursuant to an order made on 1 June 2009 the net assets of the parties are to be determined as at 30 July 2009, the parties subsequently by agreement adopting 31 July 2009, with effect that, for consistency, the schedule includes all assets and liabilities as at that date being the parties’ chosen balance date for the purpose of a s79 order.

Thus, he submitted (written submissions):
5.14Consequently the table set out above includes values as at that date and, relevantly, value the interest of the parties in bank accounts, the [Muir] Family Trust and the Superannuation Funds as at that date. In combination:
5.14.1each of those items and the values ascribed to them; and,
5.14.2the funds which the Wife has had the benefit of following separation [H#73];
reflect inclusion in the net assests identified, or in the funds expended by the parties, of the income earned by the Husband up to 31 July 2009.
5.15It is submitted that it is thus appropriate to include in the liabilities the taxation payable by the Husband in respect of the funds so included and applied. To adopt the course proposed by the Wife could only result in an injustice, as it would recognise fully the benefits of the income earned without recognising the statutory impost to be met on that income.
Further, Mr Kearney pointed to the inclusion at item 35 of the wife’s estimated tax liability for the year ended 30 June 2009 which can only consistently be justified by similar recognition of the husband’s tax liabilities. (In argument, Mr Kearney made clear that the husband’s agreement as to the inclusion of item 35 was conditional upon the inclusion of the husband’s liabilities items 30-33).
I accept Mr Kearney’s submissions.
In short, there would be inconsistency if the husband’s income earned in the post separation period until 31 July 2009, to the extent that it is now reflected in net assets in the schedule (that is, to the extent not expended as described in the husband’s affidavit material) but not the taxation liability in relation to such income. As to Mr Foster’s contention that “no one knows what amount was spent by the husband on joint expenses, and what was spent on himself”, there is no reason to think that the husband’s account of his income and expenditure, in evidence, is untruthful or inaccurate, nor indeed to doubt that the husband has given a true account of his income and its use between the parties’ separation and 31 July 2009, nor, as is implicit in the contention, to think that the husband has failed to disclose assets or bank accounts representing further income earned by him between the parties’ separation and 31 July 2009. See the husband’s affidavit filed 1 July 2009, pars 68-74, in particular pars 69 and 72. Notably, par 69 refers to superannuation drawdowns amounting to $470,000 to meet necessary expenditure, which presumably is the source of the reference by Mr Foster to “some 400 odd thousand withdrawn from super”; and further, par 71 refers to a shortfall of income to meet expenditure such that there was recourse to the parties’ superannuation interests and capital. These paragraphs of the husband’s evidence, which I accept, have effect also that Mr Foster’s submission that the husband’s post separation income “has not been included in the pool” is misdirected. In short, as I find, the husband has accounted for his post separation income in a way which, having regard to the parties’ choice of balance date 31 July 2009, would cause injustice to him if his taxation liabilities items 30-33 were excluded.
Items 30-33 thus will remain in the pool.

Item 34

A Holdings Pty Limited (A Holdings) was established in 1959 by the husband’s parents. For present purposes, it is sufficient to observe that presently the husband and his sister, through respective trust interests, own 50% each of A Holdings, the husband’s interest being held by the trust and reflected in item 16.
There is no dispute that the husband and his sister have commenced and are in the process of winding up A Holdings, and that there is to be tax payable as a consequence. The husband’s evidence (affidavit filed 1 September 2009, par 3b, and annexures D and E) include his own calculation of $27,414 in the year ended 30 June 2010 and $27,513 in the year ended 30 June 2011, totalling $54,927, which calculations he proposes to use for the purpose of the relevant taxation returns for each of those years.
Mr Kearney submitted, based upon the recognised principles in Rosati & Rosati (1998) FLC 92-804 that the prospective liabilities should be included, particularly as the winding up process has commenced and is in process and there can be thus no dispute as to the likely incidence of the taxation.
Mr Foster submitted that there is no independent expert evidence supporting the husband’s calculations and that thus they are speculative and “subject to changes in his [the husband’s] personal circumstances”: written submissions, p17, footnote 7; such that this issue is “simply one for the Court to assess in weighing up s75(2) factors”.
Against this proposition, Mr Kearney relied on Campbell v Kusky (1998) FLC 92-795.
Further, the husband proposed that the s79 order include a provision to ensure that there be no prejudice to the wife by inclusion of the prospective liability based on the husband’s calculations, such that upon the issue of his taxation assessments for the years 2010 and 2011 he pay to the wife 30% of the amount by which the 2010 assessment may be less than $27,414 and 30% of the amount by which the 2011 assessment may be less than $27,513 (30% being based upon a 70%/30% division overall as contended by him, but implicitly, to be pro-rata as to any percentage division ordered overall).
Whilst the husband’s calculations are not supported by independent expert evidence, the husband himself is a chartered accountant and impressed me as a person who has given detailed and precise consideration to all financial matters in issue. Thus, I have no reason to doubt that his calculations presently are honest and accurate, and there is no basis to find that his calculations are speculative, in the sense of not having a genuine foundation. Moreover, his proposed reconciliation provision for payment to the wife in the circumstances outlined will ensure that he does not receive any unintended windfall.
I accept Mr Kearney’s submissions, based upon the husband’s evidence, and Mr Kearney’s reliance upon the principles in Rosati and Campbell v Kusky and determine accordingly that item 34 should be included but that there also be provision in the s79 order as proposed by the husband. Such provision in my view is sufficient to allay Mr Foster’s concern that the calculations as to taxation liability concerning the winding up of A Holdings may be subject to change having regard to the husband’s personal circumstances.
I am mindful of the requirement in s81 of the Act to, as far as practicable, make an order as finally will determine the financial relationship between the parties and avoid further proceedings between them. However, the circumstance deposed by the husband of the structured winding up of A Holdings is one which genuinely entails a future event.
Item 34 thus will remain as a pool item, and the order will reflect the provision proposed by the husband. Such will not have the effect of putting an immediate end to the financial relations between the parties and no doubt will require the husband to provide evidence to the wife in the future of the precise taxation liability incurred in relation to the winding up of A Holdings. However, that is the best that can be done, having regard to the planned winding up program and the inclusion at item 16 of the trust’s value as at 31 July 2009 inclusive of the husband’s interest in A Holdings.
To avoid further litigation costs, it will be up to the husband, by his lawyers, to keep the wife informed, by her lawyers, as to the precise taxation liability incurred and thus operation of the reconciliation provision.

Item 21

The genesis of this item is that in the post separation period the husband, in paying some of the parties’ post separation expenses, used $236,000 from the wife’s member’s account in the Muir Superannuation Fund (see items 38 and 39 in the schedule; and see the husband’s affidavit filed 1 July 2009, par 71, column headed “Wife”).
In the same period, however, and for the same purpose, the husband used $234,000 from his member’s account in the Muir Superannuation Fund (see the husband’s affidavit filed 1 July 2009, par 71, column headed “Husband”).
The parties agreed, by their respective Counsel, that nothing lies in the difference ($234,000; $236,000) for present purposes.
Mr Foster conceded, correctly, that item 21 is misconceived as a claimed “add back” against the husband, and should be excluded from the schedule on the basis that if there be such “add back”, the wife commensurately would have a liability to the pool in the same amount such that the “bottom line” of the division of the parties’ net assets would not be different.
He contended, however, and there is much evidence to support the contention, and as also was admitted by the husband during cross examination, that the wife at no stage authorised the withdrawal of $236,000 from her member’s account ($65,000 in 2007, $130,000 in 2008 and $41,000 in 2009). Initially, there was suggestion at the trial that such unauthorised withdrawal may have been illegal so as to have placed the Muir Superannuation Fund into “non-complying” status, with possible consequent penal effect. However, subsequently it was clarified that matters will be corrected “so it will be a compliant fund”: T314-5.
Mr Foster contended further that the effect of the husband’s unauthorised withdrawal of $236,000 from the wife’s member’s account has had the effect that she has been and in the future will or may be deprived of the benefit of pro-rata accretion on the amount withdrawn so that in the s79 property order she wants the amount “replenished”, not so as to increase her percentage distribution, but earmarked as a discrete amount which then she would be able to rollover to a new superannuation fund she proposes to establish so that instead of $609,968 (item 39), with the replenishment $236,000 she would have $845,968, or in any event the discrete amount of $236,000 to reinvest as she may be advised (par 5 of the orders proposed, ex 2).
There are several difficulties with the wife’s argument that the amount of $236,000 be an “add back”, as readily conceded by Mr Foster, the foremost of which, as mentioned already, is that commensurately the wife would have a liability to the pool in the same amount. This arises because, as explained, Mr Foster did not seek that the discrete amount be over and above her determined percentage division of assets. Further, Mr Kearney referred to the circumstance that both of the amounts of $234,000 and $236,000 meet the test in Omacini & Omacini (2005) FLC 93-218 as moneys reasonably disposed of for legitimate expenses: see, again, the husband’s affidavit filed 1 July 2009, pars 68-74. In my view, having regard to the husband’s evidence, this test is met. Further, it is not as if the husband treated the wife’s member’s account discriminately, in that an almost identical amount was drawn from his own member’s account in the same superannuation fund for the same purpose so that no injustice would arise to the wife if her amount not be replenished.
Thus, in relation to the schedule, it is plain that item 21 should be excluded as an “add back”, and I will exclude it.
I will deal below, at step four, with the wife’s claim to have $236,000 “earmarked” as a discrete amount to be replenished to her.

Item 36

In his written submissions provided to the Court before oral argument on 14 October 2009, Mr Kearney submitted that the wife’s post separation CBA credit card debt $21,526 should not be included in the schedule because the evidence disclosed that this amount includes legal fees not included in item 22, expenditure for which the wife assumed responsibility pursuant to orders made on 18 February 2009 and personal discretionary expenditure: written submissions, par 5.23, which referred to ex 26 and T208ff.
The wife’s legal fees add back component at item 22 (an agreed figure) is $180,203.
The wife’s CBA credit card statements for the period 3 April 2009 to 5 August 2009 comprise ex 26. The statements include items totalling $36,488.83 paid to Watts McCray between 6 May 2009 and 29 July 2009 and one amount of $1,012 paid to C Accountants on 22 June 2009. (See also T208;213/20).
The May statement shows payment in full of the April statement. The June statement shows payment in full of the May statement. The July statement shows payment in full of the June statement.
The husband’s affidavit filed 1 July 2009, pars 68-74, especially at pars 70, 72 and 73d indicates, as was the financial arrangement between the parties, that these amounts were paid by the husband (see especially at par 73d) and, presumably, the legal fee components included at item 22. If such be correct (as to which the evidence is uncertain), it is only the legal fees on the July statement which need to be addressed. These total $17,414.16.
At first blush, if the July statement amount also had been paid by the husband, this amount, it would appear, is likely to have been included at item 22 so as to increase the wife’s add back amount for legal fees. (Indeed, if my analysis be incorrect, then such would apply to the full amount of $36,488.83, that is, to increase item 22 by that amount now).
However, the matter is not as simple as that. There are two complicating factors. First, the parties themselves agreed that for the purpose of the proceedings their net assets be determined as at 31 July 2009. Secondly, as pointed out by Mr Foster, for the wife, the schedule includes post separation credit card debts of the husband at items 25 and 26, $10,044 and $11,699 totalling $21,743, being an amount roughly equivalent to the wife’s post separation credit card debt at item 36 of $21,526.
On 10 September 2009, during the wife’s cross examination, argument ensued as to whether, if item 36 be “ruled out”, items 25 and 26 similarly should be “ruled out”, to neutralise the position: T210-212. However, the argument was left open. Then, on 14 October 2009, further argument ensued: T320-325. On that date, Mr Kearney conceded that there is no evidence as to the make up of the husband’s post separation credit card debts at items 25 and 26: T322/5; 322/40; 323/18. He resisted however that there was any onus on the husband to prove the components of those debts in order to satisfy me that properly they should be included in the pool, as the party propounding such. However, ultimately he agreed, as I understood his position, that the state of the evidence is such that it is open to me equally to leave in both the husband’s and the wife’s post separation credit card debts (items 25 and 26 husband and item 36 wife) or exclude them. See at T324/5-25. As I understood Mr Kearney’s submission at this part, such is open having regard to the “post separation circumstances of the parties”, in particular, that by agreement the husband received and managed all income and paid all of the parties’ expenses, including their personal expenses, with the agreed “cut off” date 31 July 2009, beyond which date the parties’ liabilities, in whatever category, were to be to their own account. (As has been noted already, in relation to legal fess the last debit on the wife’s credit card statement is 29 July 2009).
If I should be wrong in my understanding of Mr Kearney’s ultimate position on this issue as at 14 October 2009, however, then nothing turns on that because, independently, I am satisfied that the evidence as to the parties’ financial arrangement post separation until 31 July 2009 has the effect that the only just and equitable result is that items 25, 26 and 36 all remain in, or are all excluded, regardless of their constituent components, as being the only result consistent also with the parties’ intentions and the only result consistent with the circumstance that there is no evidence, as conceded by Mr Kearney, as to the composition of the husband’s credit card debts items 25 and 26. This accords with Mr Foster’s submissions on the point, which I accept (although he favoured simply excluding items 25, 26 and 36: T322/30). In particular, it is awkward that the evidence, by ex 26, shows the composition of the wife’s debt but there is no evidence as to the composition of the husband’s debt so that to include the husband’s but exclude the wife’s potentially would lead to an unfair result, especially in the circumstance that it is the husband who has not particularised the components of his debt (the wife’s, though, it must be said, emerged only in cross examination and the tendering, in that process, of ex 26).
Further, as seemed to be accepted by My Kearney (T324/8) whilst not necessarily de minimus the matter in the scale of things is “not a huge issue.”
The above analysis has the effect that I need not concern myself with two other aspects of Mr Kearney’s initial written submissions, namely that apart from legal fees the wife’s credit card amount at item 36 comprises expenditure for which the wife assumed responsibility under the orders made on 18 February 2009 and personal discretionary expenditure. However, for the sake of completeness, I will address them. The aspect of the wife’s personal discretionary expenditure has been dealt with sufficiently. See again the husband’s affidavit filed 1 July 2009, par 73d. The parties’ arrangement included that the husband meet such from his income until 31 July 2009. As to the orders made on 18 February 2009, par 6 had the effect that the wife was to be responsible for the payment of the utility accounts in respect of the parties’ properties at M and B (items 1 and 2 in the schedule). However, par 2.1 of the same orders provided that the husband was to pay to the wife $1300 weekly commencing on 26 February 2009, with par 2.4 providing that the characterisation of such be reserved to the trial judge. (Such characterisation at the trial ultimately was not sought by the parties, and thus was implicitly regarded by them as proper interim spousal maintenance). The wife’s evidence however was that, at least in May 2009, the husband made unilateral deductions from at least one of those amounts, related to the utilities: wife’s affidavit filed 23 June 2009, par 98 and annexure K; T209-210. However, even if, as plainly is the case by reference to ex 26, there are utility expenses included in item 36, a cursory glance at ex 26 shows these to be minor in aggregate amount, about $3000. Moreover, there is the circumstance, as explained, that there is no evidence as to the husband’s expenditure in items 25 and 26.
I am satisfied in all of the circumstances that it is both open to me and appropriate to determine that items 25, 26 and 36 either remain in or be excluded and that it is immaterial which of those choices obtains.
However, as the genesis of the argument was directed to the exclusion of item 36, which argument I have rejected (whether or not I may have misunderstood Mr Kearney’s position), it is more appropriate, despite Mr Foster’s position to exclude the three items (T322/30), simply to determine that item 36 remain in.
Item 36 thus will remain in the pool.

The result of these determinations

The result of these determinations is that items 21 and 28 will be excluded from the pool.
Item 24, total assets, is thus $5,115,766 (as contended by the husband, by the exclusion of item 21).
Item 37, total liabilities, is thus $167,065 (by the exclusion of item 28, and the inclusion of items 30-33, 34 and 36 – husband’s total $218,654, less $73,115, plus $21,526).
The summary, as so adjusted, appears as follows:

SUMMARY

24

Gross assets

$5,115,766

37

Gross liabilities

(167,065)

46

NET ASSETS

$4,948,701

41

Total superannuation

2,489,424

47

Net assets and superannuation

$7,438,125

45

Total financial resources

41,577

48

Net assets, superannuation and financial resources

$7,479,702

Contribution

Overview

Mr Kearney submitted that the assets be regarded as three pools (written submissions, par 6.44) as follows:
Pool one: Property that exists today which can be identified as being sourced directly by gifts from the husband’s parents (including through various entities) to which the husband contends the wife made no contribution, plus inheritance from [A Muir], his uncle.
Pool two: Property that exists today which can be identified as sourced directly from the wife’s inheritances, to which the husband made no contribution.
Pool three: Property that exists today which can be identified as reflecting the disparate contributions of the parties over the course of the relationship.
The husband claims 100% as pool one, submits that the wife should have 100% of pool two and that pool three should be assessed 55% husband 45% wife.
It is useful to set out the following from Mr Kearney’s written submissions, as to the item groupings based upon his submissions.
Category “1”
Assets
#16 Muir Family Trust  1,493,244
Total assets  $1,493,244
Liabilities
#32 Tax 30.06.2009 inherited  17,947
#33 Tax accrued to 31.07.2009   1,041
and unpaid – inherited
#34 Tax on winding up A Holdings  54,927
Total liabilities  $ (73,915)
Superannuation
#40 The S Super Fund              $1,058,097
Financial resources
#42 Estate A Muir  6, 153
#43 Estate Commission – claim net of tax              1, 000
$ 7, 153
Net assets and financial resources  $2,484,579
Category “2”
Financial Resources
#18 Loan a/c Muir Family Trust  $       9,324
#44 Estate A Royston  34,424
Net assets and financial resources  $43,748
Category “3”
#1 M property  $2,200,000
#2 B property   790,000
#4 AMP Whole of Life Policy   150,199
#9 Loan account Muir Family Trust (H)                38,919
Motor vehicles and bank accounts (3,5,6,14,15)       135,834
Paid fees and disbursements (22,23)  289,527
Total assets  $3,604,479
Muir Superannuation Fund (38,39)   1,431,327
Other items (net) (7,11,12,17,19,25,26,27,28,30,31,35,36)             (84,431)
Net assets and financial resources  $4,951,375
It is noted that item 21, which has been excluded, is not included in any of the categories.
Category 1 contained a typographical $20 error in relation to item 16 ($1,493,224 instead of $1,493,244) which I have corrected in the table. This has the effect of category 1 totalling $2,484,579 (not $2,484,559), which I have also corrected.
Category 3 under “Other items”, included item 28, subsequently excluded, and did not include the calculation for item 36 (although item 36 is listed). The amount against “Other items” I have thus changed from (136,020) to (84,431) and the net amount for category 3 I have thus changed from $4,899,786 to $4,951,375.
With those minor changes, the aggregate of Mr Kearney’s three pools equates to the adjusted schedule aggregate at item 48, $7,479,702.
Mr Foster submitted that throughout the marriage there had been such “inextricable mixing” of the parties’ finances that a global approach is warranted, citing Norbis & Norbis (1986) FLC 91-712.
In essence, Mr Foster described Mr Kearney’s three pool approach as “artificial” and “lacking any rational basis”. To demonstrate his contention of “inextricable mixing”, Mr Foster provided an extensive Chronology of Factual Assertions in Part A of his written submissions, the chronology comprising 14 pages, cross referenced to the evidence, of the history of the parties’ financial dealings, to which I would refer without setting out.
Mr Kearney, by annexure D to his written submissions, traversed Mr Foster’s Chronology of Factual Assertions to the extent not already specifically addressed in his written submissions.
The key factual issue, as the evidence progressed, and which became a central focus during Counsels’ oral submissions on 14 October 2009, was whether the items the husband seeks to have “quarantined” in category 1 were the subject of discrete or mixed accounting by him and in particular whether any “matrimonial” income as opposed to income derived from assets sourced from his parents found its way into the assets now represented by those described in Mr Kearney’s category 1.
Thus, Mr Kearney urged that:
6.6The Husband contends that in the circumstances of this case, the differing contributions of the parties fall to be most readily recognised and assessed by adoption of a modified ‘asset by asset’ approach. Whilst no different result should be arrived at from application of a ‘global’ approach, the approach urged by the Husband provides a means by which the contributions from his parents and the significance of those contributions can properly be assessed.
I accept this submission, and find it convenient to adopt the structure of the husband’s approach, but bearing in mind it is only a structure, on the basis that there is no other sensible way adequately to deal with Mr Kearney’s submissions as to why category 1, at least, should be viewed differently from category 3. In this sense, as I understand the parties’ joint position, there is no contest that category 2, as described by Mr Kearney, was solely a contribution on behalf of the wife (item 18 being sourced by an inheritance from an uncle of the wife’s, and item 44 being sourced by an inheritance from the wife’s mother).
Further, in relation to category 3, early in the trial Counsel stated the following agreed position:
The parties agree that for the purposes of contribution assessment during the marriage their contributions in the general realm of breadwinner, homemaker and parent are not such as to lead to the conclusion that for the purpose of these proceedings those aspects should be regarded as other than equal contribution.
Although Mr Kearney’s category 3 covers expressly the disparate contributions by the parties “over the course of the relationship”, the stated agreed position thus covers financial and non financial contribution during the marriage, thus including what might be described as “matrimonial income”, so that again the structure suggested by Mr Kearney is convenient to determine the central question whether the wife did, as contended by Mr Foster, or did not, as contended by Mr Kearney, contribute to the assets which Mr Kearney has grouped as category 1.
I prefer, therefore, not to approach the question of contribution to the parties’ net assets, $7,479,702, on the global basis, but on the “modified” asset by asset basis suggested by Mr Kearney, in order properly to deal with his contention that the wife made no contribution to the assets in Mr Kearney’s category 1.
Moreover, as the authorities make clear, either approach is legitimate, that is, global or asset by asset (and, implicitly, “modified” asset by asset, or “categorised” assets) provided that the task undertaken by the trial judge demonstrates that relevant contributions are identified and assessed.
It is convenient now to turn to the authorities relevant to the assessment of contribution, and in relation to gifts from a spouse relative.
It is necessary, however, in this context, to observe a further agreed position as stated by Counsel that there is “no Kessey issue” in the proceedings, in that Mr Foster did not contend that any gifts from the husband’s parents were to both the husband and the wife, but rather were contributions “on behalf of the husband” at the time of their receipt by the husband, so that this much is common ground: T268.
Counsels’ agreed position in this regard is consistent with the authorities, to which I will refer below.
However, as Mr Foster made clear (T267-8), and Mr Kearney acknowledged (T269/1), the concession by Mr Foster does not affect his central argument concerning the gifts from the husband’s parents, as reflected now in category 1, of significant indirect contribution by the wife to their management and accretion in value during the parties’ marriage by an “increased” homemaker role of the wife while the husband attended to the asset management of the gifts from his parents and having regard also to “myriad” other things that happened: T267/1-269/1.
Mr Kearney suggested at one point (T269) that the parties’ earlier stated agreed position as to equal contribution during the marriage “in the general realm of breadwinner, homemaker and parent” was inconsistent with Mr Foster’s contention as to an “increased” homemaker role of the wife, by describing that earlier statement or concession, as “a concession to the quality of contribution but for certain things” which “cuts across the face in so far as the wife might otherwise have been thought to maintain” (also at T269). However, I do not regard the terms of the earlier stated agreed position, or “concession” as “cutting across” Mr Foster’s clearly stated position at the outset of the trial and consistently maintained throughout that the wife made significant contribution to the assets which Mr Kearney seeks to quarantine in category 1 as one to which, the husband contends, the wife made no contribution. As I observed during argument (T267/35-40) Mr Foster “never desisted from his case” as to the wife’s indirect contribution to those assets “because of the husband’s time spent on the accounts of his parents’ matters, and the management role, and he is using family time to do it, the wife contributed indirectly to any accretion, by her, as it were, increased homemaker role.” Further, lest there be any doubt, the earlier concession expressly was couched as one of equal contribution “in the general realm” of breadwinner, homemaker and parent. Thus, such does not “cut across” any specific further role of “increased” homemaker of the wife in the manner consistently made clear by Mr Foster throughout the whole of the trial.
I turn then to the principles relevant to the assessment of contribution, and in relation to gifts from a spouse relative.

Principles relevant to the assessment of contribution

In Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
… In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party. (italics and bold added)
In Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881 a differently constituted Full Court (except for Baker J) said:
28.In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: … (italics and bold added)
In Farmer and Bramley (2000) FLC 93-060, Kay J clearly stated two things, namely:
The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstances (par 68); and
There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed (par 69).
In Figgins and Figgins (2002) FLC 93-122 (Full Court) Nicholson CJ and Buckley J made the timely reminder, at par 134:
134.… Marriage is and should be regarded as a genuine partnership to which each brings different gifts. …

Principles relevant to gifts from a spouse relative

In relation to gifts from a spouse relative, the following authorities are relevant.
In Gosper and Gosper (1987) FLC 91-818 at 76,163-8, Fogarty J said:
Normally, where title to a property is transferred to one or both of the parties that would be the strongest indicator of the intention of donor.
In this particular case it is clear that the gift of the land at McCrae was a gift by the wife’s father to both of the parties jointly. The evidence and the transfer into their joint names makes that clear and indeed the wife’s counsel did not really contend to the contrary.
…
Where a gift is made solely to the donor’s relative … and that spouse applies that property to the marriage, that is a direct financial contribution solely by that party and will be assessed in the ordinary way alongside other contributions by each party to the marriage. ...
…
The critical case is where a relative of one of the parties gifts property to both of the parties to that marriage. Dependent upon the circumstances of the case it is, in my view, open to the Court in such a case to look at the actuality and treat that as a “financial contribution made directly … on behalf of” the spouse relative …
In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made “because she was a daughter of that family” as was said in W’s case at p. 75,527.
…
In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them. (bold emphasis added)
In Kessey and Kessey (1994) FLC 92-495, the Full Court referred to the lack of evidence in that case to establish intention to benefit other than the donee (at 81,149-150):
In the present case the trial Judge found (as earlier quoted) that the evidence did “not clearly establish the intention of the deceased mother” and that it would not be open to him to infer what probably her intention was. We would say at this point that we were not taken to any evidence that would challenge his Honour’s finding that the evidence did not establish the intention of the deceased mother. We also agree that the trial Judge was correct in concluding that it was not open to him to infer intention on the part of the mother. (bold emphasis added)
Then, as to principle, the Full Court said (at 81,150):
… It may well be, however, that the trial Judge’s approach and our approval of it, go somewhat further than what was said by Fogarty J. in Gosper. This is because this case would establish that where there is no evidence of any intention by a parent-donor as to whether he or she wished to benefit only his or her child or also to benefit the spouse of the child as well as the child, then the fact of the parent-child relationship, especially in circumstances where that has been a relationship of support on the part of the child, will be sufficient to establish a contribution of the donation by or on behalf of the child of the parent. In other words, a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child. (original italics, bold emphasis added)
In Pellegrino and Pellegrino (1997) FLC 92-789, Chisholm J at 84,727 referred to the difficulty in applying “the qualifying paragraph” in Gosper (the paragraph commencing “In other cases …” set out above):
My task is to apply the law as formulated in the decisions to which I have referred. The critical question, I think, is whether this case falls within the following paragraph of Fogarty J’s judgment, already quoted:-
“In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them.”
For convenience, in the following discussion I will refer to this paragraph as “the qualifying paragraph”. The issue is, when does this qualifying paragraph apply? In what sort of circumstances does the evidence not justify the conclusion that the contribution was made on behalf of the spouse? This is an important issue, because parents often provide financial assistance to their married children. Often, perhaps usually, they do this in a way that benefits their child and their son or daughter in law. Often there is no specific evidence of their intention at the time. I think I can take judicial notice of the fact that frequently parents make such provision in a way that does not involve them formulating or specifically considering whether they intend to benefit their own child or both parties. They are happy to benefit both parties. The gift, as vividly illustrated by the provision of a home in this case, might inherently benefit both. Also, they will realise that their own child’s happiness is bound up with that of their son or daughter in law, so that benefiting one will benefit the other indirectly. They may also have in mind other benefits associated with an extended family, being involved with grandchildren, and enriching the complex web of obligations and attachments that characterise extended families.;
and then at 84,728 said:
I return to the question whether this case falls within that I have called the “qualifying paragraph” of the judgment by Fogarty J in Gosper, quoted earlier. My reading of the authorities is that in such cases it is normally appropriate to treat the provision as a contribution made by or on behalf of the spouse whose parents made it. I am not sure precisely what cases fall within the qualifying paragraph. An example might be, perhaps, where the parents’ gift is in recognition for some service made to them jointly by the parties. …(bold emphasis added)
In L and L (unreported) Appeal No EA47 of 2004, 5 November 2004, the Full Court said at par 31:
The correct approach to gifts coming from the family of one of the parties appears to be settled in law. In Gosper and Gosper (1987) FLC 91-818 Fogarty J concluded that such an advance ought generally be treated as being a contribution made by or on behalf of the party from whose family it came. His Honour added a rider that if there was evidence that the donor intended to benefit both spouses, such a conclusion may not be justified. In such circumstances the court may determine that it should be treated as an equal contribution by both parties to the marriage. See also Balnaves v Balnaves (1988) FLC 91-952; 12 Fam LR 488, and Kessey and Kessey (1994) FLC 92-495; 18 Fam LR 149. In Pellegrino v Pellegrino (1997) FLC 92-789; 22 Fam LR 474, Chisholm J when considering Gosper spoke of the qualification to the general proposition expounded by Fogarty J as “the qualifying paragraph. …(original italics, bold emphasis added)
In L & L, the donor expressly had acknowledged that certain gifts had been made to both a daughter and son in law. Counsel for the son in law had conceded, “correctly”, the Full Court said, that nonetheless were it not for the relationship between the donor and his daughter, the gifts would not have been made (L & L, par 32). The Full Court then (at par 33) considered what weight should be given to the gifts overall in that particular case, adding (at par 33),
… [T]hese gifts should be viewed within the matrix of the entire contributions made by or on behalf of the parties throughout their long relationship and up to the date of the hearing. …

In L & L, the gifts amounted to in excess of $250,000, progressively given during the marriage. The pool was a little less than $1,000,000. The Full Court, in re-exercising the discretion, assessed contribution on behalf of the wife having regard to the gifts as 60% in the wife’s favour and 40% in the husband’s favour (par 33).

Contribution to Category 1

The Muir Family Trust/The S Superannuation Fund/The Estate of A Muir

In 1959, the husband’s parents established A Holdings, constituted by one A class controlling share held by the husband’s mother and two C class non voting shares held by the husband and his sister.
In 1960, the husband’s parents established J Holdings Pty Ltd (J Holdings), constituted by one A class share and one B class share which were the controlling shares held by the husband’s mother and two ordinary non voting shares held by the husband and his sister. In the same year J Holdings was allotted 1000 ordinary shares in A Holdings.
In 1968, the husband’s parents established Y Pty Ltd (Y Pty Ltd) and in 1970 K Holdings Pty Ltd (K Holdings).
In 1976, the husband’s father established two trusts, the Muir Family Trust (for the husband) and the E Family Trust (for his sister). Both trusts were and are discretionary trusts.
By steps detailed in the husband’s affidavit filed 1 July 2009, ultimately, through J Holdings, A Holdings was and is owned by the trustees of those two trusts. In respect of these matters, I would refer to the husband’s affidavit pars 5, 6, 8, 9 and 10; and the flowchart annexure B to Mr Kearney’s written submissions. In relation to the Muir Family Trust, initially C Holdings Pty Ltd was the trustee, the name subsequently being changed to L Pty Ltd. The husband was one of three directors and three shareholders of this trustee, the other two being Mr RB, the husband’s father’s accountant, deceased, subsequently being replaced by his son KB, and Mr HS, subsequently replaced by Mr CN. A Muir, the husband’s uncle, held the power of appointment until his death on 28 February 2007, upon which event the trustee L Pty Ltd held that power.
Y Pty Ltd was established for the husband’s father and K Pty Ltd was established for the husband’s mother. The husband, in his affidavit filed 1 July 2009 (par 7), described these companies as “Gorton style” companies, by which the controlling shares in Y Pty Ltd were held by the husband’s father and the controlling shares in K Pty Ltd by the husband’s mother, but the ordinary non voting shares in each were held respectively by the husband and his sister. In respect of these matters I would refer to the flowchart annexure C to Mr Kearney’s written submissions. Y Pty Ltd had an interest in a factory. K Pty Ltd owned the husband’s parents’ home.
In May 1993, the husband’s father died. The beneficiary under his Will was his wife. As a consequence, however, of the husband’s father’s death, the husband and his sister became the controllers of Y Pty Ltd which the husband said (affidavit filed 1 July 2009, par 34) held assets of approximately $1,000,000. After the husband’s father’s death, K Pty Ltd transferred the husband’s parents home into the husband’s mother’s name, by way of purchase with moneys borrowed from K Pty Ltd.
In 1995, by agreement with the husband’s mother, both Y Pty Ltd and K Pty Ltd were liquidated. In the result, upon the liquidations, the husband became the legal and beneficial owner of half of the combined former assets of Y Pty Ltd and K Pty Ltd and his sister the other half. However, as Y Pty Ltd and K Pty Ltd had been established as “Gorton style” companies, to which I will make more detailed reference below, the husband deposes that “morally” the assets were his mother’s, and to a conversation which thus he had with his mother (husband’s affidavit filed 1 July 2009, par 35):
I said:-
“Once we put the companies into liquidation I will be the owner of half of the combined assets of [Y Pty Ltd] and [K Pty Ltd], and [the husband’s sister] the other half. These assets are clearly yours and are not mine. [The husband’s sister] and I will put the money in our respective trusts for you and loan you the money you need to pay for your unit. The balance will be invested by the trusts for your benefit.”
My mother said:-
“I will not need all the income which will come to me. I’d like you and your sister to have the factory (50% interest in the factory at […]).”
At this juncture, it is necessary to make observation as to the “Gorton style” arrangement between the husband’s parents, the husband and his sister.
At the time of the establishment of Y Pty Ltd and K Pty Ltd, death duty laws applied in New South Wales. The hallmark of “Gorton style” companies was that persons, in particular parents, legitimately, without the payment of gift duty, were able to divest themselves of the legal and beneficial ownership of their assets, usually to their children, by a specific corporate structure, so as not to attract the incidence of gift duty or ultimately death duty in relation to the assets of which legal and beneficial interest had been divested, but with control, by way of a particular share structure, being retained by the donor: see Gorton v Federal Commissioner of Taxation (1975) 113 CLR 604. In essence, the structure involved a series of transactions by which ultimately the children held ordinary shares to which value attached but which were non voting shares, with the parent or parents holding preference shares to which all voting rights attached but which on a winding up carried the right to receive par value only.
Upon the liquidations of Y Pty Ltd and K Pty Ltd each of the husband and his sister, in about 1995, received about $500,000 value being about $385,000 cash, which the husband put into the Muir Family Trust, allocated to his mother, and a 25% interest in the factory, which for the husband’s 25% interest, valued at about $102,500, he transferred by way of personal contribution to the Muir Superannuation Fund. (I note that $385,000 and $102,500 do not amount neatly to $500,000, however, the husband’s evidence, which I accept, is that he and his sister each received approximately that amount in total upon the liquidations of Y Pty Ltd and K Pty Ltd). The husband said that whilst the $385,000 “belonged morally” to his mother, he regarded the 25% interest in the factory as his (his father being now deceased, and by reason of the conversation with his mother which I have set out).
The husband said in his affidavit evidence, and also in his oral evidence, upon intense cross examination, that, meticulously, in relation to the Muir Family Trust, after his father’s death and the Y Pty Ltd and K Pty Ltd liquidations, that is, from 1994, he maintained “dissected” balance sheets of the trust as to what he described as the “inherited” and the “marital” assets. See annexure JMM10 and following to his affidavit filed 1 July 2009 as representing the commencement of this exercise (husband’s book of annexures, commencing at p120).
Under cross examination by Mr Foster, whilst the husband agreed that the Muir Family Trust had not been a “quarantined trust” in relation to assets sourced from A Holdings / J Holdings / Y Pty Ltd / K Pty Ltd, in the sense that it also received income from two entities related to his partnership at T Firm (the F Trust, being a service trust, and N Pty Ltd, a T Firm internal investment vehicle) this did not have the effect of any “intermingling” of his income received from those sources, on the one hand, and the A Holdings / J Holdings interests and his mother’s interests through Y Pty Ltd / K Pty Ltd, on the other hand. He said that because meticulously he maintained “dissected” balance sheets in each year after 1994 he is able to say (without reference to source documents), that the assets now held by the Muir Family Trust solely are sourced from his parents’ gifts/assets as already detailed.
I have referred already to the matters deposed in the husband’s affidavit filed 1 July 2009, at pars 5-10. The husband said further (par 11):
11.The matters referred to in paragraphs 5-10 were done by my father at the time death duties were still in place. I executed a Will as consequence of a promise to my father whereby the shares in [J Holdings] Pty Ltd, [A Holdings] Pty Ltd, [Y] Pty Ltd, [K] Pty Ltd and [L] Pty Ltd were to pass on my death to my parents in the event that I predeceased them.
Although the original Will referred to was not put into evidence, no challenge was made by the wife’s Counsel to the husband’s evidence as to the execution of such a Will, which the husband said could not be located. The husband, however, put into evidence a later Will executed by him in October 1979, ex H to the husband’s affidavit filed 2 September 2009, clause 4 of which is consistent with his contentions:
4. I GIVE AND BEQUEATH all my shares and options over shares in [J Holdings] Pty Limited, [A Holdings] Pty Limited, [K] Pty Limited and [Y] Pty Limited and all monies owing to me by any of the said companies together with my one-twelfth interest in premises known as [1 P Street] in the said State to my said mother absolutely.
The husband (affidavit filed 1 July 2009, par 41) described the factory address as 5 P Street, in respect of which he received a 25% interest as mentioned, whereas clause 4 of the 1979 Will refers to a property at 1 P Street in which the husband refers to a one-twelfth interest as at October 1979. I do not recall specific evidence in relation to a one-twelfth interest by the husband in 1 P Street, however, it may be that it is represented in the trust, and thus already taken into account in category 1. (It is not, for the purpose of category 3, referred to by the husband as an asset owned by him for which he claims initial contribution, nor referred to in the husband’s balance sheet 30 June 1979, annexure A to his affidavit filed 1 July 2009: see also the ledgers annexure JMM8. Possibly, the street number in one or other document may be a typographical error although the reference in the Will to the husband having an interest in any property in P Street as at 1979 is not elsewhere explained. However, presently nothing turns on this. For the purpose of these proceedings I have relied on Mr Kearney’s categories 1, 2 and 3 and the husband’s evidence as to his assets at relevant times).
In relation to accounting matters, the husband said that until 1981, the trust held only J Holdings shares. Between 1981 and 1994, it held J Holdings shares, to which the husband was entitled to the income, and received the F service trust income and N Pty Ltd income. See the income and expenditure accounts and balance sheets for those years, exhibits 4-12. In 1994, he commenced the “dissected” balance sheets to which I have referred, exemplified by, as mentioned, annexure JMM10 and following in the husband’s book of annexures.
Mr Foster’s Chronology of Factual Assertions, cross referenced to the evidence, shows several examples of income from the service trust, describing it, by reference to the relevant exhibits, as “the majority” of the trust’s income in several years: see, by way of example, the entries in the chronology for 30 June 1981, 30 June 1988, 30 June 1990, 30 June 1991, 30 June 1992 and so on. The chronology shows also what appears to be investment by the husband of his own (that is “marital”) moneys: see, by way of example, the entries at 30 June 1987 and 30 June 1990.
Despite these matters, however, the husband was adamant that none of such moneys has been applied for A Holdings / J Holdings purposes, and the trust was merely a convenient vehicle (being already in existence) to receive income from F Trust and N Pty Ltd after 1981 and to hold his mother’s money (in the manner already described) after 1994 until her death in May 2006, at which time the husband then became entitled to it.
There are several difficulties, I think, for the husband in his ambition to persuade me that the trust now is “100%” sourced by his parents’ gifts.
First, Mr Kearney’s written submission, at par 6.30, is awkward:
6.30The use of the [Muir] Family Trust during the course of the marriage for the financial endeavours of the parties (including receipt and distribution of the Husband’s income from his accountancy practices) involved an activity of the Trust separate from those activities related to the Husband’s parents’ entities. The co-existence of such activities in the Trust does not lead to the necessary conclusion that there was an intermingling of those activities. Rather, acceptance of the Husband’s evidence supports the conclusion that there was a strict delineation maintained in the records and dealings at all times.
Having regard to the husband’s evidence, the reference to the “receipt and distribution of the Husband’s income from his accountancy practices” should be taken as a reference to the F Trust and N Pty Ltd income rather than the deposit of his partnership income as earned. Nonetheless, it is plain on the evidence, in particular that extracted into Mr Foster’s chronology, that significant capital amounts were invested by the husband in the trust. The husband was adamant that this did not cause “intermingling” because loan accounts were created to ensure debtor/creditor status, and that “otherwise” A Holdings relied only upon its own earned income reinvested for growth. This may be so, but A Holdings had the benefit of significant capital amounts invested from “marital” sources (that is, T Firm, and other sources), even if delineated on a strict debtor/creditor basis.
Secondly, Mr Kearney’s oral submissions included the concession, in my view on the evidence properly made, that whilst after 1994 the husband’s mother’s interest in the trust in effect can be quarantined (because of the dissected balance sheets from that year onwards) and that whilst the present value of A Holdings is about $700,000 “I accept that it is not unsullied” (T354/1-25), that is, not shown to have not been attributable at all to any loan or investment assistance sourced by F Trust income, N Pty Ltd income or, otherwise, “marital” moneys lent to the trust by the husband.
In essence, thus, the husband has insurmountable difficulty, on the evidence, of proving that the present value of the trust is “100%” sourced by his parents’ gifts and, on the evidence to which I have referred, I reject his case as to this contention.
Moreover, the husband has no source documents to support his contention. Mr Kearney asked me to rely on the husband’s evidence as that of an honest witness, and to “inferences” which he said can be drawn from, for example, the dissection of the balance sheets after 1994. However, whilst that assists the husband in relation to his mother’s money in the trust from and after 1994, it does not assist in relation to the period 1981 to 1994, which was a significant portion of the parties’ marriage. Further, the “K Pty Ltd” portion from and after 1994 is small compared with the value of the trust overall. Then, there are the examples to which I have referred in Mr Foster’s chronology of the use of F Trust, N Pty Ltd and other “marital” moneys (even if by way of loan) for A Holdings /J Holdings investment benefit. These factors have the effect not merely that the husband’s contention is not proved, or merely is improbable, but that it is an impossible contention.
Generally, as to the niceties of argument put, I would refer to the oral submissions and exchanges on 14 October 2009, T328-341. I would add, in relation to Mr Kearney’s statements at T339/20-40, concerning certain matters being dealt with by book entry, such seems contrary to the evidence. See, for example, the wife’s evidence in her affidavit filed 23 June 2009, par 77, that whilst “for years” she received distributions “on paper”, she also received actual funds paid to her which “were paid back to [the husband] at his request” (third sentence) and that there have been other entities during the marriage through which distributions were made to her “but they have always been immediately paid back to [the husband] or one of the entities at his direction” (last sentence).
Despite my inability to accept, on the evidence, that the value of the trust is “100%” sourced by the husband’s parents’ gifts, it is reasonably clear on the evidence that it is substantially so sourced so that, as put by Mr Kearney, “but for” A Holdings / J Holdings and what came in from the husband’s mother via K Pty Ltd and ultimately upon her death in May 2006, namely $342,406 (husband’s affidavit filed 1 July 2009, par 56), the trust is likely to have had much more modest value than at present.
The husband said (also par 56), the following, which in essence summarises his position in relation to the trust:
56.On […] May 2006 my mother died. Upon the death of my mother I became entitled in my own right to receive the investments of my mother in the [Muir] Family Trust which then totalled $1,588,924. From that day I treated those funds as being assets of mine held in the [Muir] Family Trust as separate funds which I labelled “inherited”. In addition to the funds held in the [Muir] Family Trust, I inherited other assets of my mother approximately $342,406 which I gifted to the “inherited” portion of the [Muir] Family Trust. I also received at that time the repayment of a loan account I had in [A Holdings] Pty Limited which had arisen from 1959 in the sum of $65,804. I gifted this amount to the “inherited” portion of the [Muir] Family Trust.
The husband thus contends that his “inherited” interest in the trust was received by him, that is, in his “own right”, very late in the parties’ 27 year marriage, indeed, only upon the death of his mother in May 2006, the parties then separating the following month, June 2006, so that on any view, at no stage realistically did any of these “inherited” or “gifted” moneys or assets comprise part of the marital assets.
The husband points also to the circumstance that, by reason of his Will made in October 1979 (clause 4 of which is earlier set out), if he had predeceased his parents, then all of the A Holdings / J Holdings / Y Pty Ltd / K Pty Ltd interests would have reverted to them, because “morally” he had no interest in them until his parents died. However, the husband did not predecease his parents, and the matter needs to be considered on the basis of what did happen, not what might have happened.
The husband’s description in par 56 of what he “inherited” in my view strains the meaning of the word. Distinction should be observed in my view between the husband’s parents’ gifts during their lifetime, although qualified and conditioned in the manner already explained, and the husband’s “true” inheritances, in the sense of gifts by Will, which comprised $342,406 from his mother in May 2006, which he paid to the trust, and in February 2007, post separation, $306,000 from his uncle, $156,000 of which he paid to “the inherited section” of the trust: husband’s affidavit filed 1 July 2009, par 59.
A matter arose during the trial in relation to the husband’s inheritance from his mother of $342,406. The husband explained in evidence that the purchase of a home unit for his mother at R was funded by each of the trust and his sister’s trust advancing the husband’s mother $200,000, which was repaid to each trust after her death and upon sale of the R unit. The question thus arose whether, of the $342,406, $200,000 should be regarded as repayment to the trust of that advance, and how that could be reconciled with certain of the evidence as to the repayment of that $200,000 and the figures in the grant of probate, ex 3. However, Counsel ultimately, in response to an email from the Associate 3 March 2010, stated a common ground position by each providing supplementary written submissions on the point on 10 March 2010, the upshot being agreement that the $342,406 was net of the $200,000 repayment such that $342,406 is the correct amount received from the husband’s mother after her death in May 2006 pursuant to her Will.

He urged that the parties’ contributions during the marriage “in the general realm” of breadwinner, homemaker and parent should be regarded as equal (this was the subject of the concession earlier referred to); and that whilst the wife acknowledges the gift of $45,000 from the husband’s parents to renovate the M home and later funds for painting the home this was more than 20 years ago and overall should be regarded as insignificant for contribution assessment. (As I have mentioned earlier, in relation to category 1, he said that the wife acknowledges inheritance by the husband from his mother’s estate of $342,406 but that such is “subject to the repayment of $200,000 back to the trust” (but see his supplementary submissions 10 March 2010, already referred to, agreeing that the $342,406 was net of the $200,000) and acknowledges the husband’s inheritance received from his uncle’s estate of $306,000, such that “in light of the recent inheritances” received by the husband there should be a modest adjustment in his favour not exceeding 2.5%, creating a disparity of about $375,000 between the parties which, Mr Foster submitted, would be “adequate recognition” of the inherited funds received by the husband. I have however dealt with these matters in relation to category 1).
In relation to the post separation period Mr Foster pointed to the circumstance that the husband remained in receipt of significant income to which the wife contributed indirectly because of her primary role within the home and with the children during the marriage such that by the parties’ agreement she had been out of the workforce for over 20 years thus necessarily remaining in the home and being reliant upon him for financial support such that there should be no assessment in the husband’s favour having regard to his post separation income and its use for the benefit of both parties.
Thus, overall, as referred to already, Mr Foster urged a 2.5% contribution assessment in the husband’s favour.
I have referred already to the husband’s position as to categories 1 and 2, namely that the husband have 100% of category 1, and the wife 100% of category 2. I have dealt already with these matters.
As to category 3, Mr Kearney submitted that the assessment should be 55% husband and 45% wife in order to reflect the husband’s greater contributions initially, during and following the marriage. Indeed, Mr Kearney put that the husband’s assessment be “at least” 55% of category 3.
Mr Kearney submitted further that the contribution assessments he urged in relation to categories 1, 2 and 3, if applied globally, would equate to about 70% husband and 30% wife but, as I have mentioned, he submitted that “these percentages are not static” such that if there be “a departure” from the 3 category approach there would need to be “modification” of the percentages he urged but so as to amount to “a substantial contribution finding” in the husband’s favour having regard to the circumstance that it is “strikingly clear” on the evidence that “but for” the contributions received by and on behalf of the husband over the course of the marriage the parties would not be in their present financial position, citing Billington & Billington (No 3) [2007] FamCA 1465.
On one view, it would be perfectly reasonable to assess the parties’ contributions to category 3 as equal, particularly having regard to the observation in Figgins that “Marriage is a partnership to which each brings different gifts”, and that largely, the parties by agreement during their marriage performed the roles identified in the parties’ agreed statement to which I have referred. Further, having regard to the lengthy period of the parties’ relationship and marriage, the early gifts by the husband’s parents in relation to the M property ($45,000 and later $15,000), having regard to the early time in the marriage of their receipt, conceivably would not warrant necessarily a contribution assessment in the husband’s favour. However, there are several other matters which in my view, when combined with the early gifts by the husband’s parents to which I have just referred, warrant an assessment in the husband’s favour, having regard to his initial contribution of the net proceeds of sale of his E property (about one half of the purchase price of M property), although that also was very early in the marriage, the contribution by the husband’s parents towards the children’s school and university fees of about $75,000, a not insignificant sum, and the additional funds provided by the husband’s mother of about $170,653 used for family purposes, also a not insignificant sum, whether regarded as sourced by “her portion” of the trust, or, as the wife’s Counsel acknowledged, at least a gift on behalf of the husband having regard to the source of those funds. Further, although the most significant item in category 3 is the M property, valued at $2.2 million, to which it appears the wife contributed significantly by being responsible for the renovation and gardens, category 3 contains also the Muir Superannuation Fund, valued at $1.4 million, to which, in 1995, the husband contributed his 25% interest in the factory received from his father via Y Pty Ltd.
Taking all factors into account, the matters which I have mentioned specifically would not be given sufficient weight, and unduly would be minimised, if there were not an assessment in relation to category 3 in the husband’s favour. However, having regard to the value of category 3, $4,951,375, in my view the 55% assessment sought by Mr Kearney is not warranted as such would provide to the husband (if category 3 is regarded discretely) with about $500,000 value more than the wife (55%/45%, would effect a 10% differential). However, an assessment less than 2.5% in my view would be insufficient to recognise the significance of the matters which I have mentioned, in particular the husband’s early contribution of the E property proceeds, representing half the purchase cost of the M property, the gifts from his parents towards that property, the gifts towards the children’s school and university fees and the additional funds later sourced originally from the husband’s mother, together with the husband’s interest in the factory contributed to the Muir Superannuation Fund, but all within the context of the very lengthy period of the parties’ relationship and marriage. In my view, having regard to these matters, the appropriate assessment for contribution in relation to category 3 is 52.5% husband and 47.5% wife.

Contribution overall – Categories 1, 2 and 3

Drawing categories 1, 2 and 3 together, the following contribution picture emerges:

Husband

Wife

Total net pool

$7,479,702

-

-

Category 1

$2,484,579

$1,739, 205 (70%)

$745,374 (30%)

Category 2

$43,748

$0 (0%)

$43,748 (100%)

Category 3

$4,951,375

$2,599,472 (52.5%)

$2,351,903 (47.5%)

In aggregate amount, contribution based property division would equate to the following:

Husband

Wife

$4,338,677 (58%)

$3,141,025 (42%)

The section 75(2) factors

The wife is 58 years, and the husband 68 years.
The wife, who soon will be 60 years, has not been in the workforce since shortly after the marriage commenced, that is, for more than 20 years. She was then working with a large company as an analyst and in the early years assisted the husband with clerical and other work in his office. The wife presently does not have skills to allow her to be engaged in any professional or career role. The wife acknowledged in cross examination that since the parties’ separation she has not explored the possibility of obtaining meaningful employment or re-entering the work force. Her traditional role during the marriage and her age and circumstances now, including her station in life, are such that in my view it is not reasonable to expect that she rejoin the workforce full time, in any capacity, although it may be that she is able to obtain, from time to time, casual employment consistent with her interests and hobbies. The wife is an artistic woman, with apparent flair, I gleaned during her oral evidence, in youthful, artistic and cultural pursuits. She is, however, a troubled woman, very upset by the breakdown of her lengthy marriage, which was manifestly plain in the witness box.
The husband presented also as very troubled and upset at the breakdown of the parties’ lengthy marriage.
It is common ground however that neither party has adduced any expert evidence as to any diagnosed ill health, whether related to the breakdown of the marriage, or otherwise.
The husband retired from his career as a chartered accountant and partner in T Firm on 30 June 2002. He remained however as an employee until 30 June 2003. Presently he is engaged as a consultant with T Firm, on a fee basis. He described this as meaning that if a client of T Firm consults with him, he renders the fee to T Firm. At the time of the trial the husband was earning about $20,000 per year from this consultancy work. He said however that he does not propose to continue any consultancy work beyond about 1-2 years from the time of the trial. The husband soon will be 70 years.
The husband is in receipt of a retirement benefit from T Firm $117,560 per annum at the time of the trial ($9,796 monthly, or about $2,260 weekly), indexed and payable (subject to matters to which I will shortly refer) until 30 June 2015. Mr Foster submitted thus that the benefit to the husband over the next six financial years (the financial years ended 2010-2015 inclusive) thus may be likely to be $705,360. Continuance of the retirement benefit however is contingent upon several factors, according to the affidavit of Mr CO filed 6 August 2009, including, the pension is only paid to the extent that T Firm has sufficient cash to make the payment (to be funded out of the consolidated net profit for the corresponding year only and not reserves); the pension is subject to a cap such that if the total pension paid to retired partners exceeds 15% of consolidated net revenue then the pensions are proportionately reduced; and the pension payment is contingent upon the continued solvency of T Firm. The pension entitlement is payable to a nominated beneficiary in the event of the husband’s death before 30 June 2015, unless his death be self inflicted, in which case the pension terminates.
The wife’s spousal maintenance presently paid by the husband will not continue after judgment.
Despite the husband’s evidence that he does not propose to continue any consultancy work, seemingly, beyond about 70 years, and the circumstance of the contingency of continuance of payment of his retirement benefit, these two circumstances presently are advantages which the husband has taken out of the marriage which advantages, even if contingent, the wife does not have. Payment of the retirement benefit to the husband commenced on 1 July 2003. Since the balance date, 31 July 2009, the husband has had the use of his retirement benefit to the exclusion of the wife.
Further, the husband has money management and investment skills, proven by the growth in the trust, the S Superannuation Fund and the Muir Superannuation Fund, which skills the wife does not have, these skills also taken out of the marriage. Although it is true that when the parties met the husband was about 38 years and the wife about 28 years, such that already he was a chartered accountant, undoubtedly his skills were further developed throughout the marriage while the wife was engaged in her primary role as homemaker and parent.
The wife has continued to reside in the former matrimonial home at M in the post separation period, whereas the husband has been required to pay rental, other than for a short period after his mother’s death when he resided in her unit at R, until its sale in March 2007. The husband’s affidavit filed 1 July 2009, par 66, refers to rental of $85,618 paid by him until 31 October 2008. Presumably, there has been more rental paid by him since that date, until the balance date, 31 July 2009, and beyond. However, until the balance date, 31 July 2009, it would appear that the husband’s rental is included in the parties’ expenses, as to which I would refer to the husband’s affidavit filed 1 July 2009, pars 69-73, which expressly refers to all of the parties’ personal expenses until the balance date.
In short, the wife is in a few years to be 60 years, and the husband in a few years to be 70 years. With the exception of the husband’s present consultancy arrangement with T Firm, and his pension from T Firm, to the extent that it may continue, in the near future each will be entirely dependent upon their property and asset division (including, by agreement, the parties’ superannuation interests in the Muir Superannuation Fund and the S Superannuation Fund, to be treated as property) for the balance of their lives. Nonetheless, as mentioned, the husband has the benefit of his current income stream and pension as a benefit taken out of the marriage, whereas the wife does not have any such equivalent, and the husband also has considerable money management and investment skills, taken out of the marriage, whereas the wife does not have any such equivalent.
Mr Foster submitted that the parties’ circumstances warrant an adjustment in the wife’s favour of not less than 5%.
Mr Kearney submitted that no adjustment is indicated.
I am satisfied, however, that the wife should have a significant s75(2) adjustment in her favour.
Whilst, plainly enough, the wife is not incapable of at least casual employment at some level, I am satisfied that her station in life is such that it is not reasonable to expect that she rejoin the workforce, other than, from time to time, as mentioned, casual employment consistent with her interests and hobbies.
It is reasonable for the husband to anticipate that once he attains about 70 years, he no longer will be engaged in consultancy work, that is, about 1-2 years from the time of the trial, and it appears that the consultancy fees are relatively modest, at about $20,000 per annum. Nonetheless, in order to earn any fees at all from the consultancy work, personal exertion is required.
There are however two significant matters which in my view warrant adjustment in the wife’s favour.
The first is the husband’s retirement benefit, which presently is a significant amount. The contingencies identified by Mr CO have effect at one extreme that the pension could cease or reduce at any time. However, at the other end of the extreme if the contingencies to enliven cessation or reduction do not occur, then there is the significant amount to be received by the husband of about $705,360, as identified by Mr Foster, but with conceivably more having regard to indexation. On any view the retirement benefit, even if contingent, is taken out of the marriage, and as such contributed to by the wife while she maintained her role as homemaker and parent. The retirement benefit now, to the extent that it may continue, will be taken by the husband to the exclusion of the wife.
The second is the husband’s ability to attract consultancy work, even if that, too, is only for the short term, the ability is there, and also taken out of the marriage.
Having regard to all of these matters, and the size of the pool of property and assets to be divided, about $7.47 million, I am satisfied that a 3% adjustment for the wife is just, being a 6% differential of about $448,782 more to the wife. A 5% adjustment would see the wife having a 10% differential of about $747,970 more than the husband. In my view, such is not warranted as being more than the husband’s anticipated retirement benefit (before increase for indexation, which potentially obtains). Further, such would not allow for the contingencies identified by Mr CO. A similar exercise at 4% would see the wife having an 8% differential of $598,376, which in my view is not warranted, on similar reasoning. It may be that ultimately the husband will receive his full retirement benefit, so that ultimately there will be a significant windfall component for him. However, the nature of the evidence as to contingency of the payment of the benefit to him must be given effect in some way. Otherwise, there could not be an end put to these proceedings until 30 June 2015.
On balance, therefore, taking all relevant factors into account, I am satisfied that a 3% s75(2) adjustment in the wife’s favour is appropriate.

Percentage division before application of the fourth step

The contribution assessment which I have determined, adjusted 3% for the wife under s75(2), has the net effect that before application of “the fourth step”, of the aggregate pool of $7,479,702, the husband should have 55%, being $4,113,836 and the wife 45%, being $3,365,866.

The fourth step – just and equitable result

The wife seeks to have the property at M, being the former matrimonial home, in which she has lived now for almost 30 years, including during the post separation period, the B property, the value of her member’s account in the Muir Superannuation Fund and the discrete amount of $236,000 previously referred to by way of “replenishment” to her member’s account in the Muir Superannuation Fund.
Further, there are items in the schedule which, logically, come to the wife’s side, for example, items 18 and 44 (category 2), her add back item 22 and items of a personal nature which sensibly should be taken into account on her side, namely items 6, 14, 15, 17, 19, 35, 36 and 39.
The wife thus seeks, in terms of value, property and assets which exceed the value of her just and equitable entitlement which I have determined, namely $3,365,866.
The husband seeks the sale of both the M property and the B property and that the net proceeds of sale accumulate to the assets for division.
However, as I observed during argument, it is often the case that if one party specifically seeks to have or retain a property, and the other party does not wish to have or retain it, then whilst there is full discretion in a trial judge to order sale, it is legitimate to have regard to a party’s “wish list” if within the parameters of a just and equitable property division.
In Phillips and Phillips (2002) FLC 93-104, at 88,985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that usually adjustment for the s 75(2) factors will be assessed in the range of 10% and 20%; but that a number of cases will justify an assessment outside those parameters; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally, that in the consideration of whether the result is just and equitable, it is the justice and equity of the actual order, not of the percentage distribution, which must be considered.
In terms of a just and equitable result, as the husband plainly does not want the M property, and the wife does, there is no reason why she should not have it, at the agreed value.
The parties should each have their respective member’s entitlements in the Muir Superannuation Fund.
I reject the wife’s case that she be awarded the discrete amount of $236,000 for “replenishment” to her member’s account in the Muir Superannuation Fund, or use otherwise as she may be advised. Although such amount was used without her approval, as previously explained, the husband used an equivalent amount from his member’s entitlement so that no inequity arises in monetary terms. Further, as explained previously, the award to the wife of any “replenishment” to her of the discrete amount of $236,000 to her member’s account would be self defeating as such would create immediately a liability in her in the same amount to the pool. I leave aside, as not argued sufficiently, on the basis of any admissible evidence, the question of detriment to the wife’s member’s account by not having had accretion on that amount since its withdrawal. I would observe, however, that in relation to the particular facts of the case, the husband also has not had any such accretion in relation to the equivalent amount drawn from his member’s account. Moreover, a cursory glance at the apportionment figures and the wife’s “wish list” otherwise would indicate that there is not scope for such a discrete cash award to her.

It is logical that the husband have the items in the schedule, both as to assets and liabilities, comprising category 1, not only to effect financial separation of the parties’ respective financial interests, but also because this accords with the parties’ wishes reflected in exs 1 and 2. It is logical also that the husband have his add back item 23 and his items of a personal nature and all liabilities which he is to pay, namely items 3, 4, 5, 7, 9, 11, 12, 25, 26, 27, 30 and 31.
The result is that the B property will need to be sold, with the net proceeds applied to effect the percentage division of the parties’ property and other assets which I determine is just and equitable, namely 55% husband and 45% wife.
I am satisfied in all of the circumstances of the case that such represents a just and equitable property division and have formulated the s79 order accordingly.
If the wife wishes, if she should receive $236,000 from the sale proceeds of B property, she would be free to use such in the manner she has described, “as if” a discrete cash award to her.
I have included in the s79 order provision for each of the parties to have the opportunity to purchase B property.

Final observations

The wife, I perceive, will be disappointed in not being awarded 52.5% overall. However the husband, I perceive, also will be disappointed in not being awarded 70% overall.
However, hopefully each will accept my decision as a just and equitable result overall.
In short, the wife presented a difficult case that she should be regarded as having made an equal contribution to the category 1 assets.
Equally however, the husband presented I think an impossible case that he should be regarded as having contributed 100% to the category 1 assets.
Further, the observations which I have made in relation to s75(2), in my view, are realistic, and just.
The parties’ respective cases were well argued by their respective Counsel. I hope that, in these reasons for judgment, I have done justice to their very able presentations.

Other matters

I have included in the s79 order other paragraphs sought by the parties, or one or either of them which were not controversial, in particular, pars 7-15 which are self explanatory. Paragraph 12 reflects the husband’s position as to the orderly winding up of A Holdings, to which I have referred. Paragraph 16 is a liberty to apply provision, in the circumstances outlined in it.

____________________________________________________________________

I certify that the preceding two hundred and twenty-nine (229) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly

Associate:

Date: 19 March 2010

Husband	Wife
Total net pool	$7,479,702	-	-
Category 1	$2,484,579	$1,739, 205 (70%)	$745,374 (30%)
Category 2	$43,748	$0 (0%)	$43,748 (100%)
Category 3	$4,951,375	$2,599,472 (52.5%)	$2,351,903 (47.5%)