NEIL & NEIL

FAMILY COURT OF AUSTRALIA

NEIL & NEIL

[2011] FamCA 492

FAMILY LAW - PROPERTY SETTLEMENT – Determining matrimonial asset pool – superannuation interests treated as property

FAMILY LAW - PROPERTY SETTLEMENT – Contributions – husband is primary income earner – wife is primary carer for the children and primarily responsible for domestic duties – capital sum provided by the husband’s parents is treated as contribution made by or on behalf of the husband – wife’s agreement to husband’s use of the former matrimonial home to raise funds for the purchase of his business is treated as a contribution by the wife – husband’s investment skill – substantial funds from wife’s inheritance contributed to matrimonial assets and expenses – husband made post-separation contributions towards expenses – finding that wife’s contributions are greater than the husband’s

FAMILY LAW - PROPERTY SETTLEMENT – Adjustments – wife’s income earning capacity inferior to husband’s – wife’s superannuation interests less than the husband’s – wife is older than husband – residue of deceased estate is not a financial resource for the wife – adjustment of 3% in favour of the wife

FAMILY LAW - PROPERTY SETTLEMENT –Just and equitable orders – wife has inhabited former matrimonial home since separation – husband intends to work and live in geographical area away from the former matrimonial home – wife is sole legal and beneficial owner of former matrimonial home

FAMILY LAW - PROPERTY – Spousal maintenance – application considered in light of adjustment of property interests – mortgage repayments on investment property is not cost reasonably incurred to maintain the wife – husband shall continue to pay spousal maintenance until property settlement orders implemented or until wife acquires greater income earning capacity

Family Law Act 1975 (Cth), ss 75(2), 79(4)

Brodie v Brodie (2009) 41 Fam LR 18
Calverley v Green (1984) 155 CLR 242
Coghlan & Coghlan (2003) FLC 93-220
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Marriage of Kessey (1994) FLC 92-495
Omacini v Omacini (2005) FLC 93-218
Pierce v Pierce (1999) FLC 92-844

APPLICANT:

Ms Neil

RESPONDENT:

Mr Neil

FILE NUMBER:

NCC

633

2010

DATE DELIVERED:

27 June 2011

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Newcastle

JUDGMENT OF:

Austin J

HEARING DATE:

1, 2 & 3 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Graham

SOLICITOR FOR THE APPLICANT:

Mullane & Lindsay

COUNSEL FOR THE RESPONDENT:

Mr Bateman

SOLICITOR FOR THE RESPONDENT:

Manning Valley Legal & Conveyancing

Orders

The wife is declared the sole legal and beneficial owner (as between the parties) of the following real properties and improvements (“the properties”) and the husband shall forthwith do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in the properties to the wife:

(a)The real property comprising Folio Identifier …, being more commonly known as … A Street, Newcastle Suburb 1, NSW; and

(b)The real property comprising Folio Identifier …, being more commonly known as … S Street, Town 1, NSW.

The husband shall pay to the wife the sum of $311,377 within 4 months of the date of these orders.

Subject to compliance with Orders 1 and 2 hereof, and in consideration of those transfers and payment, the wife shall indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the properties.

Subject to compliance with Orders 1 and 2 hereof, the husband is declared the sole legal and beneficial owner (as between the parties) of:

(a)His interest in Neil Pty Ltd; and

(b)His interest in the Neil Service Trust.

Subject to compliance with Orders 1 and 2 hereof, the husband is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as … N Street, Newcastle Suburb 2, NSW (“the Newcastle Suburb 2 property”), and the wife shall do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in the property to the husband contemporaneously with her receipt of payment pursuant to Order 2 hereof.

In consideration of the transfer pursuant to Order 5 hereof, the husband shall indemnify and keep indemnified the wife against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the Newcastle Suburb 2 property.

In default of compliance with Order 2 hereof, the wife is declared the sole legal and beneficial owner (as between the parties) of all assets held by the parties jointly in the Neil Family Trust, including the Newcastle Suburb 2 property, float shares, trading shares, and managed funds, and the husband shall forthwith do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in such assets to the wife.

In default of compliance with Order 2 hereof, leave is granted to the wife to re-list the matter before the Court on or before 16 December 2011 on 7 days notice to seek further enforcement orders relating to the property of the parties, including but not limited to:

(a)The husband’s interest in Neil Pty Ltd; and

(b)The husband’s interest in the Neil Service Trust.

The wife is declared the sole legal and beneficial owner (as between the parties) of the following items of personal property and the husband shall forthwith do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in such property to the wife:

(a)Mitsubishi motor vehicle; and

(b)Furniture and personal effects in the possession of the wife.

Subject to compliance with Orders 1 and 2 hereof, the husband is declared the sole legal and beneficial owner (as between the parties) of the following items of personal property and the wife shall forthwith do all such things and sign all such documents as may be necessary to transfer all her right, title, and interest in such property to the husband:

(a)All assets other than real property held by the parties jointly in the N Family Trust, including float shares, trading shares, and managed funds;

(b)The W investments;

(c)Daimler motor vehicle;

(d)Type 1 boat; and

(e)Furniture and personal effects in the possession of the husband.

Subject to compliance with Orders 1 and 2 hereof, the wife shall forthwith do all such things and sign all such documents as may be necessary to resign or relinquish her trusteeship of the Neil Family Trust.

Each party shall forthwith do all acts and things and sign all such documents as may be necessary so as to direct L Pty Ltd, pursuant to Part 7A of the Superannuation Industry (Supervision) Regulations 1994, to roll-over or transfer the superannuation interest of the wife in the Neil Superannuation Fund to another regulated superannuation fund, approved deposit fund, exempt public sector superannuation scheme, or retirement savings account, as nominated by the wife in writing.

Upon compliance with Order 12 hereof:

(a)The husband is declared the sole legal and beneficial owner (as between the parties) of the shares in L Pty Ltd and the wife shall forthwith transfer to the husband all her right, title, and interest in such shares; and

(b)The wife shall forthwith resign any office she holds in L Pty Ltd.

The husband shall indemnify and keep indemnified the wife against any and all liability arising from:

(a)Her holding office in L Pty Ltd;

(b)Her shareholding in L Pty Ltd; and

(c)Her trusteeship of the Neil Family Trust.

The wife shall indemnify and keep indemnified the husband against any and all liability arising in relation to the administration of the deceased estate of the late Mr D pursuant to letters of administration granted to the wife on 27 September 2006, and the use of the assets of that deceased estate.

Unless otherwise provided:

(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these Orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder, investment accounts are deemed in the possession of the named investor, and superannuation entitlements are deemed in the possession of the superannuant.

(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession, and any debts in their respective sole names, including any individual liability for capital gains tax arising out of the sale by either of the parties of real or personal property pursuant to these Orders.

Orders 1.1, 1.2, and 1.3 made on 20 April 2010 are discharged.
The husband shall pay to the wife the sum of $550 per week by way of spousal maintenance upon the following conditions:
(a)The first payment is due 7 days from the date of these orders;
(b)Payments shall be made by way of direct deposit to the wife’s account held with the St George Bank, being BSB number … and account number …;
(c)This order terminates upon whichever of the following events occurs first:
(i)The husband complies with Order 2 hereof;
(ii)The wife graduates from the course in which she is currently enrolled at … University;
(iii)31 December 2012 is reached.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these Orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s 106A of the Family Law Act 1975.
Any and all outstanding applications are dismissed.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 633 of 2010

Ms Neil

Applicant

And

Mr Neil

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant wife and respondent husband in these proceedings have endured a protracted dispute over the division of their property interests consequent upon the breakdown of their marriage several years ago.
The reality is that their dispute ought not have been as broad nor as virulent as it was. The parties adopted quite polarised views about the outcome of the proceedings, and it was not until final submissions that each was impelled to make concessions that really could and should have been made much earlier.
These reasons explain the orders quelling the controversy over both the division of the parties’ property interests and the wife’s application for the payment to her of spousal maintenance.

Proposals and evidence of the parties

The wife proposed the orders set out within her Amended Initiating Application filed on 14 May 2010, in support of which she relied upon:
a)Her affidavit filed on 5 May 2011;
b)Her Further Updated Financial Statement filed on 5 May 2011; and
c)The affidavit of Dr M filed 5 May 2011.
The husband abandoned reliance upon his Amended Response filed on 25 June 2010 and instead proposed the orders set out within a Minute of Orders that he tendered.[1] In support of those orders the husband relied upon:
a)His affidavit filed on 4 May 2011; and
b)His Amended Financial Statement filed on 4 May 2011.
[1] Exhibit H4
Although the husband filed other affidavits by other deponents, albeit not in accordance with earlier procedural orders, the husband ultimately elected not to rely upon that evidence. The husband chose not to rely upon the affidavit of his mother filed on 16 May 2011, since he decided not to contend in the proceedings that he still owed a debt to his mother, and he conceded that her evidence was only relevant to that issue. The husband chose not to rely upon the evidence of Mr F because, following some debate, the husband acknowledged that the evidence would not materially advance his case.
Large tranches of the evidence adduced by each party were inadmissible and did not survive objection.
The parties also adduced the following single experts’ evidence:
a)The affidavit of Mr Z filed on 27 May 2011;
b)The affidavit of Ms B filed on 20 January 2011; and
c)The affidavit of Mr C filed on 24 May 2011.
The evidence of Mr Z was not the subject of challenge by either party.

Background

The following facts are uncontroversial.
The parties began their cohabitation towards the end of 1979 and were married in 1982.
During their marriage the parties had four children, namely:
a)Twins, E and C, born in July 1983;
b)P, born in January 1985; and
c)T, born in March 1988.
As will be noted from their dates of birth, the children are now all adults.
The parties moved their residence from Sydney to Newcastle in 1985. They initially lived in rented accommodation but purchased and began living in the former matrimonial home at Newcastle Suburb 1 in early 1986. That property remained the family home until the parties’ separation in April 2008.
In September 1996, the husband acquired a half share in a professional practice in Town 2, some hours drive from Newcastle. From that time on the husband worked away from home at Town 2, where he stayed with his mother, for at least part of each week.
In June 1998 the husband acquired sole proprietorship of the Town 2 professional practice. From that time on the husband would ordinarily leave for Town 2 early on Monday mornings and return to the family home in Newcastle late on Thursday evenings, or on rare occasions, Fridays.
At some point after 1998 another person bought a share of the professional practice from the husband, but that did not alter the husband’s work practices.
During the marriage the parties created a number of legal entities and embarked upon a number of investment projects.
The entities created by the parties include:
a)Neil Pty Ltd and the Neil Service Trust, in which entities the husband and his business partner have equal stakes. The company controls the operation of the Town 2 professional practice, and employs the husband;
b)The Neil Family Trust (“NFT”), of which the parties are the trustees, and which is the vehicle for investment of funds in real property, stocks and other financial products; and
c)The Neil Superannuation Fund, the trustee of which is L Pty Ltd. The parties are the directors of the trustee company and members of the superannuation fund.
The investment projects undertaken by the parties included development of real property in and around Newcastle at:
a)W St, Newcastle Suburb 1;
b)D St, Newcastle Suburb 3;
c)N St, Newcastle Suburb 2; and
d)S St, Town 1.
After separation the husband created the B Superannuation Fund, the trustee of which is B Pty Ltd.[2] The husband and his new partner are the directors of the trustee company. The husband caused $80,000 from his member account in the Neil Superannuation Fund to be rolled out into the B Superannuation Fund just prior to the end of the 2009 financial year.
[2] Husband’s affidavit, par 148

Determining property adjustment orders

In determining the property adjustment orders that should be made between spouses, the Court follows a recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]):
a)Firstly, the Court should identify and value the matrimonial pool of property, comprised of assets, liabilities and financial resources at the date of the hearing.
b)Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a)-(c) of the Act, and determine the contribution based entitlements of each party as a percentage of the matrimonial pool of assets.
c)Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), and s 75(2), and determine the adjustment, if any, that should be made to the contribution based entitlements of the parties.
d)Finally, the Court should consider the effect of those findings and resolve what order is just and equitable in all the circumstances of the case.

Matrimonial pool of property and resources

Procedural orders were made on 24 March 2011 to ensure the readiness of the proceedings for trial. One such order required the parties to file a joint balance sheet by 29 April 2011.[3] The parties did not comply with that order.
[3] Order 9 made on 24 March 2011
Even at the commencement of the trial on 1 June 2011 the parties were unable to comply with that order. It was not until the second day of trial that the parties collaboratively prepared a balance sheet, intending to identify the areas of agreement and disagreement concerning the extent of the matrimonial pool of property and resources. That document was tendered,[4] but the evidence adduced in the trial revealed that it was far from accurate or comprehensive.
[4] Exhibit A
The parties remained at odds about a large number of items included in, and even omitted from, the balance sheet. The following reasons represent analysis of those contested issues.

Balance sheet – item 1

The property situated at A Street, Newcastle Suburb 1 (“the former matrimonial home”) was valued by the single expert, Mr C, at $420,000. The wife adopted that value, whereas the husband wanted a much higher value adopted because of the alleged redevelopment potential of the property. The husband alleged its value at $1,050,000.
The husband asserted that the evidence as to value of the property at $1,050,000 was found in an affidavit previously sworn and filed by the wife in the proceedings on 11 March 2011, and was therefore probative as an admission by the wife. The relevant portion of that affidavit was tendered.[5]
[5] Exhibit H1
In that affidavit the wife deposed to the annexure of a flowchart of entities and assets in which the parties had an interest, which she said was “prepared by an accountant engaged by my lawyers to review the financial statement of the [husband’s] [professional] practice”. The annexed flowchart disclosed the value of the former matrimonial home at $1,050,000.
I reject the submission that I should accept that valuation, as an admission by the wife, in preference to the valuation evidence of the single expert. The representation by the wife in her former affidavit may well constitute an “admission” within the meaning of the Evidence Act 1995 (Cth), assuming that the affidavit also meets the definition of a “previous representation” despite the affidavit being sworn as evidence in these proceedings, but it is not an admission in which I repose much weight.
I am not satisfied that the inclusion of the former matrimonial home on the flowchart, ascribing it with a value of $1,050,000, represents a genuine concession or assertion by the wife that such a sum was the true value of the former matrimonial home, even though the wife annexed the flowchart to her own affidavit.
It seems reasonably clear that the husband, pursuant to his obligation of disclosure under the Family Law Rules, provided a quantity of documents to the wife’s solicitors who then used those documents to seek independent advice from an accountancy firm on behalf of the wife. The wife’s solicitors wrote to that accountancy firm on 18 September 2009 enclosing an “Arch lever file containing the documents provided by [Mr Neil] to date”.[6] In his cross examination the husband confirmed that the flowchart annexed to the wife’s affidavit had likely been prepared by some person on the wife’s behalf using source documents provided by him.
[6] Exhibit W1

Upon examination of the flowchart forming part of Exhibit H1, there is a strong inference that the husband was the source of the valuation of the former matrimonial home at $1,050,000, and that value was simply adopted as being correct without independent verification by the person preparing the flowchart for the wife. There are at least two reasons for such an inference. First, the valuation of $1,050,000 is the exact same valuation asserted for the former matrimonial home in the proceedings by the husband. Second, the flowchart also refers to an amount of $50,000 owed to “Mum” in respect of the real properties at Sydney Suburb 1 and Newcastle Suburb 1. That correlates with the husband’s evidence in these proceedings about an amount of $50,000 owed to his mother,[7] which monies comprised interest on a principal sum of $40,000 which was attributed to the purchase of the parties’ first home at Sydney Suburb 1 and then later to the purchase of the former matrimonial home at Newcastle Suburb 1.[8] The wife denied that any amount was owed to the husband’s mother, but even if an amount was owed, it was not owed to the wife’s “Mum” – it was to the husband’s. The use of the term “Mum” in the flowchart suggests that it was compiled from source documents of the husband.
[7] Husband’s affidavit, pars 32(h), 76(a); Husband’s Amended Financial Statement, par 50
[8] Husband’s affidavit, pars 49, 56, 59, 72(a)
Consequently, there is no reliable evidence that the former matrimonial home is valued at $1,050,000. Either I accept the single expert’s valuation of $420,000 or I reject it, but if that evidence is rejected there is then no alternate reliable evidence of value. In those circumstances there would be little option but to enforce the sale of the property to test its real value on the open market. However, that is not an option that either party desires. The wife wishes to retain the former matrimonial home,[9] and so does the husband.[10]
[9] Amended Application, Order 2.1
[10] Exhibit H4, Order 3
The husband’s counsel vigorously challenged the single expert about the validity of his valuation of the former matrimonial home, suggesting that the property had development potential which ensured a much greater value than $420,000. The single expert rejected the propositions put to him, stating that a “developer wouldn’t touch it”. The single expert maintained that development of the property, such as by sub-division and sale either with or without newly constructed residential units, would not be feasible in the current market conditions. He said that the house and land is presently the highest and best use of the property.
The cross examination of the single expert revealed that a property of similar dimensions nearby in the same street as the former matrimonial home had been redeveloped by demolition of the existing house, sub-division of the property, and construction of separate residential units. That development had not been investigated by the single expert as part of his research and there was no further evidence about the value of that allegedly comparable property.
Although the cross examination of the single expert led me to contemplate that the former matrimonial home might have a higher value than the $420,000 attributed to it, my doubts about the single expert’s valuation evidence were not sufficiently strong to reject his evidence. I accept it as probably accurate and therefore attribute that value to the former matrimonial home.

Balance sheet – items 2 and 19

The single expert, Mr C, valued the real property at Town 1 at $500,000. The wife adopted that value, but the husband wanted a higher value of $700,000 attributed to the property.
The husband cross examined the single expert, who adhered to his evidence. In final submissions the husband conceded that the Court had no option but to accept the valuation at $500,000.
The Town 1 property was owned in equal shares as tenants in common by the wife and her late brother, Mr D (“the deceased”).[11]
[11] Wife’s affidavit, par 44
The deceased died intestate in 2006. The parties agree that, pursuant to the provisions of NSW succession legislation, the wife and her sister Ms A are the only beneficiaries of the estate. The wife is the administrator of the estate.[12]
[12] Wife’s affidavit, Annexure F
In those circumstances, the one-half share in the Town 1 property owned by the deceased should have flowed into the deceased estate, to be shared by the wife and her sister as equal beneficiaries. The wife acknowledged that should have been the outcome, because she asserted in her Financial Statement that she only had a 75% interest in the property,[13] comprising her legal one-half interest (50%), and her one-half beneficial interest in the other one-half share owned by the deceased estate (25%). The wife also said in cross examination “[The Town 1 property] belongs to my sister as well”. Curiously though, the wife asserted that she was still liable for the entirety of the debt in the sum of $453,860 secured over the Town 1 property,[14] and not merely three-quarters of it.
[13] Wife’s Further Updated Financial Statement, par 36
[14] Wife’s Further Updated Financial Statement, par 47
For reasons which remain unexplained, neither the deceased estate nor the wife’s sister holds any legal interest in the Town 1 property. It is common ground that the property has been registered in the sole name of the wife since 12 October 2006.[15] That evidence is verified by a title search.[16]
[15] Husband’s affidavit, pars 31(b), 33(b), 225
[16] Exhibit B to husband’s affidavit
Perplexingly, the issue was not the subject of any cross examination or submission, but given the sole legal proprietorship of the wife in the Town 1 property and her admission of sole liability for the debt encumbering the property, I will attribute to the wife in the balance sheet the whole of the value in the Town 1 property and the whole of the encumbrance that affects it.

Balance sheet – item 5

The single expert, Mr C, valued the real property at Newcastle Suburb 2 at $640,000. The husband wished to adopt that value, but the wife desired a higher value of $720,000 to be attributed to the property.
The property comprises several residential units on a single title. The parties are the joint legal proprietors.[17] The single expert confirmed that, if sold under the existing single title, the property is valued at $640,000. However, the single expert confirmed that if the residential units could be sold individually, they would realise a higher collective price. He regarded a mean price of $245,000 for each unit as reasonable, meaning a total sale price of $735,000.
[17] Exhibit C to the husband’s affidavit
In order to sell the units individually it would be necessary to convert the real property from Torrens title to Strata title. The single expert was most uncertain about the overhead cost of converting the title from Torrens to Strata, but he considered that it would cost between $15,000 and $20,000 per unit at most. Assuming an average cost of $17,500 per unit, the total overhead cost of title conversion would be $52,500.
Setting off that overhead cost against the total proceeds that could be realised through individual sales yields a net value of $682,500. I adopt that figure as the proper value of the Newcastle Suburb 2 property, being the highest and best use of the property.
The wife conceded in final submissions that she could not take issue with that valuation, and although the husband pressed for adoption of the lesser figure of $640,000, he conceded that it was open to the Court to adopt the higher net valuation as the highest and best use of the property. His concession was proper and should have been made earlier, given that he asserted in his affidavit that the property had a value of $720,000.[18]
[18] Husband’s affidavit, pars 33(o), 95

Balance sheet – item 7

The value of the trading shares held by the NFT was not the subject of agreement between the parties. Notwithstanding, the issue was not mentioned once by either party in cross examination or submissions.
The wife professed no knowledge about the value of NFT,[19] and the husband asserted that the trading shares are worth $35,987.[20] The husband was not challenged about that valuation and it is the best evidence of value currently available. I therefore adopt it.
[19] Wife’s Further Updated Financial Statement, par 41
[20] Husband’s Amended Financial Statement, par 38

Balance sheet – item 10

The parties earmarked item 10 as a disputed item, despite the tendered balance sheet noting the value to be agreed at $19,000. It is the St George Bank account in which the wife previously declared an interest with a slightly higher credit balance.[21]
[21] Wife’s affidavit, par 94; Wife’s Further Updated Financial Statement, par 37B
Since the item was not debated by the parties in either cross examination or submissions, I include the item in the matrimonial pool and adopt the agreed value of $19,000.

Balance sheet – item 11

There was no expert evidence about the value of the Type 1 boat and personal effects retained by the husband.
The best evidence in respect of the Type 1 boat is the husband’s admission of its value of $5,000.[22]
[22] Husband’s Amended Financial Statement, par 43
There is no evidence at all about the value of the personal effects retained by the husband.
The wife conceded in final submissions that item 11 must be attributed with the collective value of $5,000 by the Court.

Balance sheet – item 14

The husband’s interest in the Town 2 professional practice was valued by the single expert, Ms B. That necessitated valuation of both Neil Pty Ltd and the Neil Service Trust.
The parties accept that the Neil Service Trust has no value.
The single expert valued the husband’s one-half interest in Neil Pty Ltd according to different scenarios.
The first valuation, called Scenario A, established the value of the husband’s interest on the basis of a “cents per dollar of annual fees” calculation. Using that method, the value of the husband’s interest is $562,000, which represents the underlying value of the practice in the event that the husband chooses to dispose of the asset. But the corollary of sale of his interest in the company, and hence the business conducted by it, would likely be the husband’s restraint from working in that profession and that general industry in and around Town 2 for a period of years. His income earning capacity in that geographic area would then be substantially curtailed.
The second valuation, called Scenario B, established the value of the husband’s interest using a “capitalised super profits” approach. Using that alternate method, the value of the husband’s interest is $309,500, which represents the value of the practice to the husband in the event he continues to work in the practice indefinitely.
The single expert expressed a preference for the Scenario A valuation in her report, on the basis that that value represented the highest and best use by the husband of his share in the company that operated the professional practice. Clearly, that is the value the husband’s one-half share would yield if he were minded to sell.
However, in cross examination the single expert readily conceded that either valuation method is valid and that the choice between them is a matter for the Court. The single expert said she had not inquired of the husband whether he intended to sell his share of the practice or continue to work in it indefinitely.
The husband later confirmed in cross examination that he intended to continue living and working in Town 2 indefinitely. He anticipated continuing his work within the existing professional practice until “well into [his] 60’s”.
The wife accepted the husband’s evidence about his intentions and in final submissions abandoned her contention that the husband’s interest in the professional practice ought be valued at the higher figure in expectation of a sale of his interest. She conceded that the Court ought accept the figure of $309,500 as the proper value, and I therefore do so.
The single expert divulged a typographical error in one of the tables within her report, but the error did not affect her valuation calculations or evidence. The parties accepted that evidence without equivocation.

Balance sheet – items 17 and 24

Item 17 on the parties’ balance sheet, contended by the husband to be an asset, was revealed to be the husband’s unilateral calculation of monies totalling $118,000 afforded to the wife by NFT during the parties’ cohabitation. The total of the advances was asserted to be a loan liability of the wife to NFT, and hence an asset of the parties jointly. Item 24 identically asserted the wife’s liability of the same amount to NFT in the balance sheet as a liability.
Self-evidently, it is double-counting to include both amounts on the balance sheet even if the liability is genuine. But it is not a genuine liability. The husband conceded that to be so in final submissions.
The money that circulated in the parties’ marriage prior to separation was money in which the parties had a joint interest. The parties themselves were the trustees of NFT and authorised, directly or indirectly, their individual and joint use of NFT funds during cohabitation.
Items 17 and 24 are excised from the balance sheet in accordance with the husband’s belated concession.

Balance sheet – item 18

Item 18 on the parties’ balance sheet was the husband’s credit card liability. The husband desired its inclusion on the balance sheet as a liability of $10,000, whereas the wife asserted that there was no liability.
Despite the dispute, neither party asked a single question in cross examination nor made a final submission about the item.
The only evidence on the issue is that adduced by the husband. His unchallenged evidence is that his credit card liability is $10,000.[23] I accept his evidence. That is the value transposed to the balance sheet.
[23] Husband’s Amended Financial Statement, par 51

Balance sheet –item 21

The parties agree that a loan encumbers the former matrimonial home, but they disagree about the debit balance of the loan.
The evidence on the issue is so confused that the husband’s counsel was impelled to concede in final submissions that he could not make any further useful submissions about the issue.
Counsel for the wife could only point to the contents of the husband’s Amended Financial Statement, because the wife did not adduce any evidence at all about any liability encumbering the former matrimonial home, of which she is the sole registered proprietor.[24]
[24] Wife’s Further Updated Financial Statement, pars 46-55
In his Amended Financial Statement the husband deposed to 3 distinct mortgage liabilities.[25] The first comprises two separate amounts owed to the Commonwealth Bank of Australia (“CBA”), being $54,777 and $5,353, without disclosure of the asset over which the liabilities are secured. The second is the loan due to the ANZ Bank, which is secured over the Newcastle Suburb 2 property. The third is another CBA loan, amounting to $118,349, which is secured over the former matrimonial home. The husband did not, however, clarify the loans secured over the former matrimonial home in his affidavit.[26]
[25] Husband’s Amended Financial Statement, par 47
[26] Husband’s affidavit, pars 32-45
The husband gave oral evidence of recently withdrawing some $50,000 against the mortgage secured over the matrimonial home to pay legal fees. I impute that withdrawal accounts for the first CBA liability of $54,777 disclosed by the husband. The second CBA liability of $5,353 disclosed by the husband is asserted by him to be his sole liability, suggesting that it is not an amount secured by the mortgage over the former matrimonial home.
Neither party could explain the origin of the figures they each proposed in the tendered balance sheet. The state of the evidence was left unsatisfactorily uncertain by the parties, but I conclude that the total liability secured over the former matrimonial home is $173,126 (= 118,349 + 54,777). That is the figure adopted for the balance sheet, and is not too dissimilar from some of the husband’s evidence.[27]

[27] Husband’s affidavit, par 338

Balance sheet – item 22

In or about June 2005 the husband used $40,000 of NFT funds to invest in W Investments.[28] The parties agreed that the value of the W Investments is now only $10,000.[29] The asset is incorporated at that value into the balance sheet.
[28] Husband’s affidavit, pars 33(dd)-33(ff)
[29] Exhibit A, item 9
Item 22 relates to the loan that the husband alleged he still owed to NFT for the funds he used to invest in W Investments at first instance.
I do not accept that the husband has any existent loan liability to NFT for $40,000, or any other amount for that matter.
There is no evidence that the parties, as trustees of NFT, intended to create a legal relationship of debtor and creditor between the husband on the one hand and the parties jointly as trustees on the other. How the husband has declared the relationship concerning his acquisition of the funds from NFT to the ATO for tax purposes is a matter for the husband. There is no evidence before the Court about that, and even if there was, the husband’s opinion would not bind the findings of this Court.
The husband’s proposition that he owes $40,000 to himself and the wife jointly, as the trustees of NFT,[30] is unsustainable, for the same reasons discussed in respect of items 17 and 24. The husband asserted the wife’s awareness of the transaction,[31] and the wife accepts that the husband unexceptionally used NFT funds for investment purposes with her knowledge and acquiescence, and did not thereby accrue a liability for himself.
[30] Husband’s Amended Financial Statement, par 50
[31] Husband’s affidavit, par 33(ee)
The balance sheet will reflect that the husband does not bear a liability to NFT.

Balance sheet – items 30 and 37

As mentioned earlier, the husband caused $80,000 from the superannuation interest in his member account in the Neil Superannuation Fund to be rolled over into the B Superannuation Fund just prior to the end of the 2009 financial year.[32] Some of those funds were used to meet the expenses incurred setting up the B Superannuation Fund, which amount the husband calculates at $9,000, since the sum of only $71,000 is now earmarked as the husband’s current superannuation interest in the B Superannuation Fund.
[32] Husband’s affidavit, par 146
The wife contended that the expenses of $9,000 which diminished the value of the husband’s rolled-out superannuation interest ought be added back to the matrimonial pool. Even if that contention is sustainable, it would be double-counting to include both items 30, at the value of $80,000, and 37, at the value of $9,000, in the final balance sheet. The money was actually expended, so the proper method to account for it would be to only notionally add it back to the balance sheet.
The wife did not articulate why the expended funds ought be added back. She simply asserted that they should be. I reject the submission. The mere fact that a party has expended money realised from assets or resources that existed at the time of separation, without more, does not justify notional add-back of the expended funds as a premature distribution or waste of assets. The reasonableness of the expenditure will bear upon the question of whether the expenditure should be notionally accounted for in the matrimonial pool under one of the recognised categories of add-back (see Omacini v Omacini (2005) FLC 93-218 at [30-42]).
The husband did not tell the wife about the roll out of $80,000 from his superannuation interest in the Neil Superannuation Fund. While it may have been courteous to have informed her, he was not obliged to do so. The funds rested within his own member account. The funds were not part of the wife’s member account. In any event, the husband asserted that the roll out was properly disclosed in the financial statements prepared for the Neil Superannuation Fund in respect of the 2009 financial year, to which the wife was privy. That evidence was not contradicted.

I find nothing inherently mischievous or reckless about the husband’s decision to roll out part of his own superannuation interest from one superannuation fund to another. The fact that the funds were rolled out into another privately constituted superannuation fund, which entailed expense to create, does not change the complexion of the transaction.
Item 30 on the balance sheet will therefore reflect the current value of the husband’s superannuation interest in the B Superannuation Fund at $71,000 and there will be no add-back of $9,000 at item 37.

Balance sheet – item 31

The husband contends that there should be an add-back of AMP shares at a value of $6,000 to the balance sheet, but the balance sheet tendered by the parties did not disclose whether the add-back, if it exists, should be notionally attributed to the wife or the husband.
The issue was not mentioned in either cross examination or final submissions by either party, and there is no satisfactory primary evidence of either party having had an interest in AMP shares either at the time of separation or since that date.
The deceased estate comprised some AMP shares,[33] but the wife’s interest in the deceased estate and the amounts received by her from the deceased estate is the subject of other evidence and is factored into consideration at the second stage of the property adjustment process as financial contributions by the wife. Adding back the wife’s alleged entitlement to those AMP shares, upon the assumption that she has had the sole benefit of them, would be inconsistent with the treatment of amounts received by her from the deceased estate as contributions to matrimonial finances.
[33] Wife’s affidavit, Annexure F; Husband’s affidavit, par 31(m)
Other than the AMP shares forming part of the deceased estate, the husband makes no mention of ownership of any AMP shares in his evidence about the parties’ assets at the time of separation,[34] and the only asserted add-backs to which the husband specifically refers in his affidavit do not include any reference to AMP shares.[35] The husband adduces no evidence of disposal of AMP shares,[36] and the wife makes no admission of her having had the benefit of AMP shares.[37]
[34] Husband’s affidavit, par 31
[35] Husband’s affidavit, pars 34-35
[36] Husband’s Amended Financial Statement, par 59
[37] Wife’s Further Updated Financial Statement, par 59
There is no proper basis to add back to the matrimonial pool any AMP shares at a value of $6,000.

Balance sheet – item 32

In 2009 the husband received a tax refund of $8,665, related to the 2008 financial year, which sum he used to buy shares in M Ltd. He sold the shares on 6 April 2011 and used the proceeds of sale to pay legal costs associated with these proceedings.[38] The shares were sold together with other shares but the husband did not disclose the sale proceeds attributable to the M Ltd shares in his affidavit. The husband did however attribute the value of $9,394 to those shares at item 32 of the balance sheet tendered by the parties and also in his Amended Financial Statement.[39]
[38] Husband’s affidavit, pars 34-35
[39] Husband’s Amended Financial Statement, par 59
The parties agreed that legal fees paid by the parties must be added back to the balance sheet, even though neither of them made provision for such add-backs in the balance sheet they tendered. The proceeds yielded by the sale of the M Ltd shares, which were used to pay legal fees, are taken into account at item 37(b), and so there is no add-back for that amount at item 32.

Balance sheet – item 33

The husband asserted an add-back against the wife of $19,300 for withdrawals made by her from the NFT account held with the Newcastle Permanent Building Society.
In cross examination, it was posited to the wife that she had withdrawn that total amount from the account since separation. Firstly, the wife did not concede that proposition, saying that she did not recall “specific amounts”. Secondly, the husband did not ever explain where the evidence could be found to prove that the wife had withdrawn that amount from the account. Thirdly, the wife explained that any money she withdrew from that account was used to fund the maintenance of the Town 1 property, which remains a matrimonial asset, and she was not contradicted about that evidence.
On the state of the evidence there is no basis to add back any amount to the balance sheet in respect of withdrawals from the NFT account held with the Newcastle Permanent Building Society.

Balance sheet – item 34

The husband asserted another add-back against the wife of $37,438.64 in respect of amounts allegedly paid to or on her behalf by the husband. The total amount was said to derive from evidence given by the husband in his affidavit.[40] The husband abandoned the quantum of the alleged add-back when he was forced to concede that many of the alleged payments were made during cohabitation when the parties were working together for the greater good of the family unit. The husband then asserted an add-back quantified at only $8,400, which amount catches only payments made by him post-separation.[41]
[40] Husband’s affidavit, pars 236, 239
[41] Husband’s affidavit, pars 239-240
As was pointed out by the wife in final submissions, the entirety of those payments amounting to $8,400 were paid by the husband towards expenses connected with the Town 1 property.
I accept the wife’s submission that the most appropriate manner in which to take account of those payments by the husband is as a financial contribution at the second stage of the property adjustment process, rather than factoring the payments back into the balance sheet at the first stage of the property adjustment process. Consequently, there is no add-back.

Balance sheet – item 36

This item comprises withdrawals of $400.00 per week by the wife. Due to the inadmissibility of part of the husband’s affidavit evidence,[42] the husband conceded in final submissions that there should be no add-back at item 36 of the balance sheet.
[42] Husband’s affidavit, par 165
In any event, the meagre amount of evidence about the wife’s regular weekly and monthly expenditure permitted an inference that the expenditure was directed towards her living expenses or maintenance of existing matrimonial assets, which affords no basis for any add-back.

Balance sheet – item 37(a)

The balance sheet tendered by the parties made no provision for any add-back of legal fees paid by them, even though both parties were cross examined about the payment of their legal fees, and the source of their payments.
As for the wife, she had paid costs of $25,311.39 as at 22 December 2010,[43] and she conceded in cross examination that she had more recently additionally paid approximately $19,800 towards legal fees. It was not contended by the wife that any of those payments were paid from post-separation assets or income, and the wife therefore conceded that the balance sheet could properly reflect an add-back for her of $45,111 (rounded to the nearest dollar).
[43] Exhibit H3

Balance sheet – item 37(b)

The husband conceded that his paid legal fees comprised the $9,394 yielded by sale of the M Ltd shares, together with another sum of approximately $45,000 withdrawn from the CBA account secured by mortgage over the former matrimonial home. The husband admitted paying other legal fees relating to these proceedings,[44] but the source of those extra payments were not revealed. The sums of $9,394 and $45,000 are the only amounts the evidence suggests were paid from matrimonial assets rather than from post-separation income.
[44] Exhibit W2
On the state of the evidence, the balance sheet should reflect an add-back of paid legal fees for the husband of $54,394.

Balance sheet – item 38

The husband asserted that the wife has a financial resource in the form of the residue of the deceased estate, which is yet to be distributed.
The wife adduced evidence about the amounts she has so far received from the deceased estate and contributed by her to matrimonial assets. The husband could not refute the wife’s evidence because he conceded in cross examination words to the effect “No, I wouldn’t be able to quantify the amount the wife got out of the estate”.
Such a concession is consistent with the husband’s assertion in his affidavit that “since Easter 2007 [the wife] has refused to discuss the estate with me”,[45] and his complaint that the wife has failed to provide “full and proper disclosure of all relevant estate documentation”,[46] which evidence falls under the heading of “Husband’s exclusion from the estate of [the wife’s] late brother”.[47]
[45] Husband’s affidavit, par 255
[46] Husband’s affidavit, par 270
[47] Husband’s affidavit, page 20 of 29
The wife deposed to a residue amount of $171,000 being held in an account, which is invested in the joint names of the wife and her sister, and another $29,000 held in the estate account.[48]
[48] Wife’s affidavit, par 93
It is clear from the wife’s evidence that she has received from the deceased estate amounts which exceed her legitimate one-half entitlement in the estate. Despite objecting to relevant parts of the wife’s affidavit, the husband later conceded in cross examination that the wife’s sister is dissatisfied with the amounts that have been distributed to her from the estate, and further, that there is an existing dispute about the wife’s sister’s entitlement to the residue of the estate. There may even be a claim for reimbursement against the wife by her sister. The wife’s sister has instructed a solicitor to seek from the wife full accounts of the estate in the context of that dispute.[49]
[49] Wife’s affidavit, par 92
Accordingly, it may be that the wife has no further entitlement at all to the residue of the estate. I am certainly not satisfied, as the husband asserted I should be, that the wife has a financial resource in the form of the entirety of the residue of the estate.

The matrimonial pool of property

As a consequence of those findings, the matrimonial pool of property and resources comprises the following:

No.	Assets	Party	Value	Total
1	A Street, Newcastle Suburb 1	W	420,000
2	S Street, Town 1	W	500,000
3	Mitsubishi	W	6,000
4	Daimler	H	5,000
5	N Street, Newcastle Suburb 2	Joint (NFT)	682,500
6	Float shares	Joint (NFT)	51,446
7	Trading shares	Joint (NFT)	35,987
8	Managed funds	Joint (NFT)	89,315
9	W Investments	H	10,000
10	St George Bank account	W	19,000
11	Type 1 boat & personal effects	H	5,000
12	ANZ account	H	1,882
13	ANZ account	H	21
14	Share of professional practice	H	309,500
15	Contents (Town 1 property)	W	16,000
16	Contents (Newcastle Suburb 1 property)	W	3,000
17	Loan liability of wife to NFT	joint	nil
Sub-total	2,154,651	2,154,651
Liabilities
18	Husband’s credit card	H	10,000
19	Loan encumbering Town 1 property	W	453,860
20	HECS debt	W	9,500
21	Loan encumbering Newcastle Suburb 1 property	W	173,126
22	Loan liability of husband to NFT for investment in W Investments	H	nil
23	Loan encumbering Newcastle Suburb 2 property	joint	647,000
24	Loan liability of wife to NFT	W	nil
25	[omitted]
Sub-total	1,293,486	861,165
Superannuation
26	Neil Superannuation Fund	W	97,000
27	Neil Superannuation Fund	H	81,000
28	E Superannuation Fund	W	6,000
29	S Superannuation Fund	H	96,000
30	B Superannuation Fund	H	71,000
Sub-total	351,000	1,212,165
Add-backs
31	AMP shares	?	nil
32	Proceeds of sale of M Ltd shares	H	nil
33	Withdrawals from NFT account	W	nil
34	Payments by husband for wife	W	nil
35	[omitted]
36	Withdrawals by wife	W	nil
37	Money lost in roll-over from the Neil Super Fund to B Super Fund	H	nil
37a	Paid legal fees	W	45,111
37b	Paid legal fees	H	54,394
Sub-total	99,505	1,311,670
Financial Resources
38	Residue monies in deceased estate of wife’s late brother	W	nil
Net matrimonial assets/resources	1,311,670

The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Coghlan & Coghlan (2005) FLC 93-220 at [56-68]). Neither the husband nor the wife directly addressed the issue in submissions, but based on the manner in which they compiled the balance sheet, segregating the superannuation interests from the financial resources and placing them among the assets, liabilities and add-backs, I infer both parties treat the superannuation interests as matrimonial assets. It is appropriate in the circumstances of this case to treat the superannuation entitlements of the parties as property because they represent only a modest proportion of the overall pool and the evidence does not suggest that the nature of their contributions to the accumulation of superannuation interests ought be differentiated from their contributions to other matrimonial assets.

Assessment of contributions

Neither party had any assets of real significance at the time of commencement of their cohabitation.[50] The husband itemised their respective assets,[51] but his opinion about the value of those assets was the subject of objection and rejected as inadmissible. There is consequently no evidence about the comparable value of the parties’ assets at that time.
[50] Wife’s affidavit, pars 8-9
[51] Husband’s affidavit, pars 29-30
Despite the parties’ modest financial start to their cohabitation, it is common ground that shortly afterwards the husband’s parents gave to the parties the sum of $40,000, which sum was contributed towards the purchase of the parties’ first home at Sydney Suburb 1.[52]
[52] Husband’s affidavit, par 49; Wife’s affidavit, pars 13-14
The capital sum of $40,000, in or about 1979 when the Sydney Suburb 1 property was purchased, was a large sum of money. By way of context, it was about double the wife’s then annual salary and nearly double the husband’s then annual salary.[53] The influx of that capital provided the springboard for the parties’ accumulation of property interests.
[53] Husband’s affidavit, par 27
When the parties later sold the Sydney Suburb 1 property in 1985, the sale proceeds were contributed to the purchase of the former matrimonial home at Newcastle Suburb 1.[54]
[54] Husband’s affidavit, pars 52, 59; Wife’s affidavit, par 141
Although the husband adduced evidence to the effect that the provision of $40,000 by his parents was a loan for which he was still liable,[55] the husband abandoned that contention during the trial, instead asserting that it was a financial contribution for which he should be accorded proper credit (see Marriage of Kessey (1994) FLC 92-495 at 81,149-81,150). I accept that it is a contribution which favours the husband and should be accorded appropriate weight (see Pierce v Pierce (1999) FLC 92-844 at [23-30], [40]).
[55] Husband’s affidavit, pars 49, 56, 59, 72(a), 76(a)
During the marriage the husband worked assiduously to improve his qualifications and his career prospects. He worked full-time and studied part-time from the very beginning of cohabitation. He did not complete his tertiary study until 1989. He later undertook his professional association’s studies related to being in practice between 1992 and 1994.[56]
[56] Husband’s affidavit, pars 8-15
Those qualifications armed the husband with the confidence to relinquish paid employment as a professional and buy into an established professional practice as an equal partner in 1996.[57]
[57] Husband’s affidavit, par 16
Only two years later in 1998 the husband bought out his business partner and acquired sole ownership of the professional practice.
The capital to acquire those shares of the professional practice in 1996 and 1998 was raised by borrowing funds from the CBA, which loans were secured by mortgage over the former matrimonial home,[58] of which the wife was then the sole proprietor. The wife’s acquiescence to use of the former matrimonial home as collateral in that way is properly recognised as a contribution by the wife in itself (see Calverley v Green (1984) 155 CLR 242 at 267-268).
[58] Husband’s affidavit, pars 124-126
Once the husband acquired his share of the practice at Town 2 in 1996 he committed himself to spending part of each working week in Town 2.
Between 1996 and 1998 the husband spent 3 days and 2 nights each week in Town 2, leaving Newcastle early Monday mornings and returning Wednesday afternoons.
From 1998 onwards the husband spent 4 days and 3 nights each week in Town 2, leaving Newcastle early Monday mornings and returning on Thursday evenings. That pattern continued until final separation in April 2008, when the husband moved to live in Town 2 permanently.
For all those years between 1996 and 2008 the wife was solely responsible for running the family home during the periods that the husband was absent from the household. For the period of each week that the husband was at home he assisted the wife with domestic duties and the care and supervision of the children, but I accept the wife’s evidence that she remained primarily responsible in that regard.
The burden borne by the wife as a homemaker was really a continuation of the lifestyle the parties chose from the commencement of their cohabitation, which entailed the husband spending a considerable amount of time studying at nights and on weekends, outside of the hours he devoted to his role as primary income-earner for the family.
There can be no doubt that the parties both worked very hard discharging the roles that they each consensually adopted within the family. There is nothing to distinguish the value of the contributions the parties each made in those roles, in which the husband was cast as primary income-earner and the wife as primary homemaker.
The husband asserted that his entrepreneurial skill, displayed in the successful completion of various projects, boosted the wealth of the parties and distinguishes his contributions as superior to those of the wife. In support of that contention the husband referred to the various real estate developments undertaken at Newcastle Suburb 1,[59] Newcastle Suburb 3,[60] Newcastle Suburb 2,[61] and Town 1.[62] The husband also pointed to investments he made within the NFT.[63]
[59] Husband’s affidavit, pars 79-85
[60] Husband’s affidavit, pars 86-88
[61] Husband’s affidavit, pars 89-101
[62] Husband’s affidavit, pars 215-256
[63] Husband’s affidavit, pars 102-119
The husband’s submission ignores the fact that any funds he attributed to those projects were funds for which he already derives credit for his role as the primary income-earner of the family, and that any time and labour he devoted to those projects was made possible by the wife caring for their children and taking care of affairs in the former matrimonial home.
In any event, the wife also contributed to those projects. The Newcastle Suburb 3 and Newcastle Suburb 2 projects were conducted by the NFT, of which the wife was a joint trustee with the husband. Any financial risk taken by the husband was equally taken by the wife. The NFT was created in 1984.[64]
[64] Husband’s affidavit, par 186
Moreover, the wife’s inheritance from the deceased estate provided an influx of funds for use in at least one of the development projects, and in particular, the provision of funds for investment by the NFT.
In 2007, the husband used $180,000 acquired by the wife from the deceased estate to invest in a portfolio with Financial Planners 1, which investment is held by the NFT.[65] The husband conceded in cross examination that the wife wanted to use that cash to reduce matrimonial liabilities, but that the money was invested at his insistence. It is common ground that the initial investment of $180,000 is now worth only $89,315.[66] The reduction is entirely due to devaluation, except for withdrawals totalling $18,000 made by the wife, which were identified by the husband from bank account records of NFT.
[65] Husband’s affidavit, pars 113-116
[66] Exhibit A, item 8

Similar observations about unsuccessful investment judgments may be made about the husband’s decision to use NFT funds to invest in W Investments. Despite an initial investment of $40,000 the assets are now worth only $10,000.[67]
[67] Exhibit A, item 9
Axiomatically, not all of the husband’s investment decisions have proved beneficial. His investment acumen was not infallible.
As to the remaining real estate developments, the Newcastle Suburb 2 property now has net equity of about $35,500 and the Town 1 property now has net equity of about $46,140.
Proceeds of sale from the Newcastle Suburb 1 and Newcastle Suburb 3 projects were injected into the NFT to buy float shares and trading shares,[68] but those shares held by NFT still only amount to $87,433 in value.[69]
[68] Husband’s affidavit, pars 102-107
[69] Exhibit A, items 6 and 7
The husband did demonstrate skill in undertaking and completing the various investments, but the weight attributable to his contributions of that ilk is not as pronounced as was contended by him. Some of the investments were unsuccessful, and those that were successful realised only modest profit.
The wife’s contribution to matrimonial finances of the funds received by her from the deceased estate was very significant, both because of the quantum of such amounts and the recency of their injection into the matrimonial pool. The funds began to flow to the wife, and hence into matrimonial resources, from 2006, not too long before the parties finally separated in April 2008.
The evidence adduced by the wife proves the contribution of the following amounts to the matrimonial pool from the deceased estate:[70]
a)25 October 2006  56,000.00
b)7 November 2006  470,000.00
c)22 November 2006  131,144.83
d)18 December 2006  69,499.02
e)7 September 2010     89,772.38
$816,416.23
[70] Wife’s affidavit, pars 63-70, 94, Annexures G, H; Exhibit H2; Husband’s aff, pars 262-263
The wife’s one-half entitlement in the estate was estimated at only $567,845.[71] Although that was only the estimated net value of the deceased estate, the wife concedes that she has received from the estate considerably more than her one-half share. No doubt that is why the wife’s sister is dissatisfied with the inequality of the distributions from the estate.
[71] Wife’s affidavit, pars 59-62
In any event, notwithstanding the dispute between the wife and her sister, it is clear that the parties have had the benefit of cash totalling $816,416, which flowed into matrimonial finances from the deceased estate over the last few years. Some of the cash was used to invest,[72] some was used to retire debt,[73] some was used to meet expenses,[74] and some remains in the wife’s account.[75] Neither party explains how all of the cash was utilised by them, but neither suggests that it was wasted in any material way.
[72] Husband’s affidavit, par 116
[73] Husband’s affidavit, par 117
[74] Wife’s affidavit, par 95
[75] Wife’s affidavit, par 94
The husband also paid considerable amounts of money after separation for the benefit of the wife and meeting expenses incurred on matrimonial assets.[76] Those amounts identified by the husband included the payment of $8,400 he made towards expenses incurred upon the Town 1 property.[77] Those funds were provided by the husband from his own post-separation income and therefore represent financial contributions by him.
[76] Husband’s affidavit, par 159
[77] Husband’s affidavit, pars 159(i), 239-240
The husband has also been making spousal maintenance payments to the wife of $550 per week since 20 April 2010.[78]
[78] Husband’s affidavit, par 157; Wife’s affidavit, par 136
Ultimately, the husband submitted that analysis of the parties’ contributions warranted a division of assets on a proportional basis of 56% to him and 44% to the wife. Conversely, the wife submitted that her contributions were greater and entitled her to 57% and the husband to 43% of the matrimonial pool.
Weighing the parties’ respective contributions leads to a conclusion that the wife’s were superior to the husband’s, principally because of the size of the wife’s financial contribution from the deceased estate.
I accept the wife’s submission about the correct apportionment of the matrimonial pool by reference to the parties’ contributions, which I regard as a modest and reasonable appraisal. The parties’ contribution based entitlements are therefore 57% to the wife and 43% to the husband.

Adjustment of interests

The husband is 53 years of age. He will continue living and working in Town 2 indefinitely. It is his intention to continue work in his professional practice, which he agreed in evidence was the “premier practice in [Town 2]”. The husband is justifiably proud of his career achievements.
The husband derives income from the practice, in the form of wages and drawings, totalling $3,569 gross per week.[79] The husband does not expect any regression in the success of his business. He will likely continue to earn an income of that magnitude for the remainder of his working life.
[79] Husband’s Financial Statement, pars 9, 14
The husband’s superannuation interests are currently worth $248,000. He has an abundance of time left in his working life to supplement those superannuation interests so that he is comfortable in retirement.
The husband has no dependents. The children of the marriage are all adults. The husband’s domestic partner conducts businesses of her own. In cross examination the husband said that he and his partner “effectively keep our finances separate, but we do share expenses”, from which I impute that the husband’s partner is not financially dependent upon him.
The wife is older than the husband. She is now 58 years of age. Her earning capacity is far inferior to that of the husband. She currently works part-time in the health care industry. The wife declared her current gross wages at $260 per week.[80] Although the husband disputes that figure, the tenor of the wife’s cross examination suggests that about $360 gross per week would be the zenith of her current income-earning potential.
[80] Wife’s Financial Statement, par 9
The wife enrolled at university to acquire degree qualifications in her field of employment and increase her income earning capacity. As a consequence of her depressed emotional state, for which she is medicated,[81] the wife altered her university enrolment from full-time to part-time for the 2011 academic year. I accept that it was not unreasonable for her to have done so. Consequently, the wife is not now expected to graduate until the end of the 2012 academic year, or mid 2012 at the earliest if she takes steps to re-engage her studies as a full-time student.
[81] Wife’s affidavit, par 155
Even when the wife graduates with the qualifications necessary to seek work as a degree qualified employee in her field, there is little evidence to support an inference that she will obtain such employment, or even if she does, the amount by which her income will increase. The most that can be said on the evidence is that by the end of 2012 the wife will probably have a superior income-earning capacity than she currently possesses. Nevertheless, that capacity will still be vastly inferior to that enjoyed by the husband. It should be remembered that, instead of pursuing her own vocation and improving her own income earning capacity, the wife actively supported the husband’s acquisition of career qualifications during their cohabitation by running their household and caring for their children.[82] It is those qualifications which the husband admitted “opened up doors” and increased his income earning capacity.
[82] Wife’s affidavit, pars 23-24; Husband’s affidavit, pars 199, 210, 280
The wife’s superannuation entitlements are less than the husband’s by a considerable margin. The wife will not be able to supplement her superannuation entitlements in the future to the same extent of the husband. Her income will be less and she has less time left in her career to derive income.
The existing dispute between the wife and her sister about the wife’s entitlement to any residue of the deceased estate precludes any inference that the residue of the estate remains a financial resource to the wife.
They were the only features of the evidence addressed by the parties in final submissions that were contended would influence any adjustment of the parties’ entitlements under ss 79(4)(d)-(g) of the Act.
The parties’ submissions on the issue of adjustment fluctuated. In his Case Outline document the husband submitted that an adjustment not exceeding 5% should be allowed in favour of the wife, but in final submissions he submitted that any adjustment in favour of the wife should not exceed 2%. At the commencement of the trial the wife asserted her entitlement to an adjustment of up to 7%, but in final submissions contended that the adjustment in her favour ought be 3%.
I am satisfied that the evidence comfortably justifies an adjustment of 3% in the wife’s favour, as was submitted by her.

Just and equitable orders

The net result of the conclusions reached at the second and third stage of the property adjustment process is that the wife is entitled to 60% of the matrimonial pool and the husband is entitled to 40%.
An entitlement of 60% amounts to $787,002 (rounded to the nearest dollar).
It was the wife’s expressed desire to retain the former matrimonial home at Newcastle Suburb 1 and Town 1 property, despite the dilapidation of the former matrimonial home[83] and the high cost of preserving the Town 1 property.[84]
[83] Wife’s affidavit, pars 143-144
[84] Wife’s Financial Statement, pars 21, 22, 26
It was the husband’s expressed desire in evidence to retain the property interests in his professional practice and the NFT, and also his superannuation interests. It is evident from the Minute of Orders he tendered that he also desires the former matrimonial home[85] and the wife’s superannuation interest in the Neil Superannuation Fund.[86]
[85] Exhibit H4, Orders 3-5
[86] Exhibit H4, Orders 10(i), 10A
The wife has inhabited the former matrimonial home at Newcastle Suburb 1 since separation in April 2008. She wants to continue living in the home if that is possible. She intends to remain living and working in Newcastle. The husband has lived in Town 2 since separation. He intends to continue living and working in Town 2 indefinitely. In light of those circumstances, logic dictates that the wife should retain the former matrimonial home, if her overall share of the property permits it.
Allowing for allocation of the following assets, liabilities, and resources to the wife, she would retain a net amount of $475,625:

No.	Assets	Party	Value	Total
1	A Street, Newcastle Suburb 1	W	420,000
2	S Street, Town 1	W	500,000
3	Mitsubishi	W	6,000
10	St George Bank account	W	19,000
15	Contents (Town 1 property)	W	16,000
16	Contents (Newcastle Suburb 1 property)	W	3,000
Sub-total	964,000	964,000
Liabilities
19	Loan encumbering Town 1 property	W	453,860
20	HECS debt	W	9,500
21	Loan encumbering Newcastle Suburb 1 property	W	173,126
Sub-total	636,486	327,514
Superannuation
26	Neil Superannuation Fund	W	97,000
28	E Superannuation Fund	W	6,000
Sub-total	103,000	430,514
Add-backs
37a	Paid legal fees	W	45,111	475,625
Net assets/resources	475,625

In order for the wife to receive her proper entitlement she would need to be paid an extra $311,377 (= 787,002 – 475,625).
Assuming the husband’s retention of the assets held by NFT, then the net assets, add-backs, and resources of which the husband has, or has had, the benefit amount to $836,045. But his 40% entitlement amounts to only $524,668 (rounded to the nearest dollar).
Of the assets that the husband wishes to retain, the NFT holds the Newcastle Suburb 2 property and numerous shares and managed funds. There is only $35,500 equity in the Newcastle Suburb 2 property, but the shares and managed funds under the control of NFT are collectively worth $176,748. Enforced sale of those assets to ensure payout of the wife would probably result in the crystallisation of capital gains tax for both parties, since they are both the trustees and beneficiaries of the NFT, but there is no evidence about the likely quantum of such tax.[87]
[87] Husband’s affidavit, par 354
By reference to the available evidence, the only other way in which the husband can likely raise funds to pay out the wife is by loan secured against his interest in the professional practice, or his disposal of that interest.
That said, the husband does not seem to anticipate undue difficulty in raising capital. He contemplates that he has the capacity to raise funds to make a capital payment to the wife. The orders proposed by him would require his payment of $420,000 cash to the wife in return for sole proprietorship in the encumbered former matrimonial home.[88] The current equity in that property amounts to only $246,874, but the husband made his proposal believing that the equity in the property may even be less because he believes the loans secured over the property amount to $213,000[89] instead of $173,126. The husband therefore believes that he is able to raise capital of $420,000 for payment to the wife in reliance upon security in the form of the encumbered former matrimonial home and other assets under his control.
[88] Exhibit H4, Orders 3-5
[89] Exhibit H4, Order 5
The orders require the husband’s payment of $311,377 to the wife so as to permit the parties to retain the assets they desire, subject to the wife retaining title in the former matrimonial home in preference to the husband, for reasons already explained. There is no basis for the husband to benefit from the wife’s superannuation interest in the Neil Superannuation Fund either. His interest in that superannuation interest, while not expressly stated, is inferentially only due to the fact that the Neil Superannuation Fund owns the building from which the husband’s professional practice is conducted.[90]
[90] Husbands affidavit, pars 40-42, 136
The orders allow the husband a period of months within which to marshal his affairs and raise the funds to pay to the wife. In default of payment, the orders require transfer of assets that would otherwise be retained by the husband to the wife. Leave is also granted to the wife to approach the Court, during a finite period, to seek further enforcement orders so as to enable her receipt of her full entitlement. Resort to that leave may result in enforcement orders concerning the husband’s interest in the professional practice. If that interest is divested by the husband it will presumably realise the higher value attributed to it by the single expert, rather than the lesser value at which it is presently incorporated into the matrimonial pool.
The husband proposed that he receive a series of chattels from the former matrimonial home.[91] There is no basis for such an order. There is no evidence that such chattels exist, or that they are in the possession of the wife. Not a single question was asked about those chattels in cross examination and they were not mentioned in final submissions.
[91] Exhibit H4, Order 10(ii)
The orders represent a just and equitable alteration of the parties’ interests in the matrimonial pool of assets and resources.

Spousal maintenance

The wife pressed her application for the husband’s payment to her of spousal maintenance.
Although the wife’s claim was for indefinite receipt of maintenance,[92] during the trial her counsel confirmed that the wife sought payment of maintenance only until her graduation from university. On the wife’s evidence, that will be mid 2012 at the earliest and the end of 2012 at the latest.
[92] Amended Application, Order 1
The wife’s claim for spousal maintenance was also sought by way of periodic payments in the sum of $600 per week. At the conclusion of the trial the wife’s counsel amended the application to one for payment of a capitalised sum, computed at the rate of $600 per week until the end of 2012. The capitalised amount was stated as $46,800.
The husband resisted the payment of any spousal maintenance in either form.
The wife’s claim for spousal maintenance must be considered in light of the adjustment of property interests accomplished pursuant to s 79 of the Act (see Brodie v Brodie (2009) 41 Fam LR 18 at 37-38).
If the property adjustment orders are implemented as intended, the wife will be able to use the cash payment of $311,377 to discharge the debt over the former matrimonial home and substantially reduce the debt encumbering the Town 1 property. The residual debt over the Town 1 property may then be more manageable for her. If that proves not to be the case then it will be necessary for her to sell that property and crystallise the equity in it. She has stated that she does not intend to use that property as her residence.
The cost of maintaining any continuing debt over the Town 1 property ought be ignored for the purposes of determining entitlement to spousal maintenance because that cost is not an expense reasonably incurred by the wife in maintaining herself.
Once relieved of debt over the former matrimonial home the wife’s income should be sufficient to support herself, particularly when she acquires greater income earning capacity within the next 12 to 18 months. If that is not the case then she will have to consider using her capital to supplement her living expenses.
I am not satisfied that the wife has any entitlement to spousal maintenance once the property settlement orders are implemented. However, it may take some time to implement the property settlement orders, and until that occurs the wife remains caught in the current financial predicament. Her current financial circumstances justified the husband’s payment to the wife of spousal maintenance of $550 per week. Orders to that effect were made with the husband’s consent on 20 April 2010. There is no persuasive reason why such an order should not continue to prevail until the parties implement the property settlement orders. In the event of delay, the order for spousal maintenance will continue until the wife graduates from university with her new qualifications, or the time by which the wife concedes she should have acquired those qualifications.

I certify that the preceding one hundred and eighty-eight (188) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 27 June 2011.

Associate:

Date: 27 June 2011

[2011] FamCA 492

27 June 2011

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Jurisdiction