Pickle and Pickle - [2010] FMCAfam 1181

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PICKLE & PICKLE

[2010] FMCAfam 1181

FAMILY LAW – Property – long marriage – family trust – contributions – financial resource.

Family Law Act 1975, ss.75(2), 79, 85A

C & C [1998] FamCA 143
Re NHC & RCH (2004) FLC93-204
Essex & Essex [2009] FamCAFC 236
Kennon v Spry (2008) 238 CLR 366
Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) [2003] FLC 93-143
In the Marriage of Ashton (1986) 11 FamLR 457
In the Marriage of Goodwin (1990) 101 FLR 386
M & M [1998] FamCA 42
AJO v GRO (2005) FLC 93-218
Weir & Weir (1993) FLC 92-338

Applicant:

MS PICKLE

Respondent:

MR PICKLE

File Number:

BRC 8335 of 2008

Judgment of:

Howard FM

Hearing dates:

15, 16, 17 March and 21 May 2010

Date of Last Submission:

24 August 2010

Delivered at:

Brisbane

Delivered on:

3 November 2010

REPRESENTATION

Counsel for the Applicant:

Mr Baston

Solicitors for the Applicant:

K L King & Associates

Counsel for the Respondent:

Mr Hackett

Solicitors for the Respondent:

Hirst & Co

ORDERS

Within fourteen days the parties are to submit orders to the Court to reflect the Reasons for Judgment.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRC 8335 of 2008

MS PICKLE

Applicant

And

MR PICKLE

Respondent

REASONS FOR JUDGMENT

Background

The Applicant wife in this case was born [in] 1956.
The Respondent husband was born [in] 1956.
The parties were married in New Zealand [in] 1982 and migrated to Australia in October 1996. The parties separated in March 2008. I accept the wife’s evidence in that regard. The parties were divorced on 17 May 2009.
There are two adult children of the marriage, [X], born [in] 1986 and [Y], born [in] 1990.
The parties have not been able to agree on a division of property.

The four step process

In Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 the Full Court of the Family Court of Australia set out the four step process that the Court should adopt in dealing with property settlement proceedings pursuant to section 79 of the Family Law Act 1975. Those four steps are as follows:-
a)ascertain the net property pool of the parties;
b)consider the contributions made by the parties to the pool and also consider the contributions made by the parties to the welfare of the family;
c)consider the parties’ needs both now and in the future (the so called section 75(2) matters);
d)a requirement that the order made be just and equitable.

The Property Pool

Various issues were raised in relation to the property pool and I will deal with each issue below under separate headings.

Property V

That property had been listed for sale for more than six months as at the date of the hearing. The list price had been $728,000 and no offers had been received. Eventually a contract of sale was signed and the sale price was $692,000.00. The completion of the sale was to take place on or before 7 June 2010. The parties appear to be in general agreement that the property should be included in the pool at the sale price less a realistic amount for real estate agent’s commission, selling and advertising costs and legal fees. A figure was adopted of $673,000.00 by counsel for the husband, Mr Hackett. Counsel for the wife, Mr Baston, was in general agreement with this approach.

Business loan secured on Property R

It seems to have been acknowledged by the parties that the business loan secured on the Property R property should be included in the pool in the sum of $259,119.00 as a matrimonial liability.

Mr P Family Trust

The Mr P Family Trust (“the trust”) was created by the husband’s father, Mr P on 7 July 1997.
The sole asset settled upon the trust at the time of the creation of the trust was a house situated at Property N, New Zealand. That house was then registered in the sole name of the husband’s father – the settlor.
The trustees of the trust were Mr P (the husband’s father) and the husband (Mr Pickle).
Mr P died [in] 1997.
It is apparent therefore that Mr P established the trust approximately five months prior to his demise.
The original appointor of the trust was Mr P.
The trust is a discretionary trust.
The beneficiaries of the trust are Mr P and Mrs Z (the husband’s parents), the children and remoter issue of Mr P and Mrs Z, the spouses of the children and remoter issue of Mr P and Mrs Z. The “Final Beneficiaries” are the settlor’s sons, Mr Pickle, Mr N and Mr T.
Upon the death of Mr P [in] 1997 the husband’s mother, Mrs Z became the appointor pursuant to the express terms of the trust deed.
Between 25 December 1997 and 16 May 2000 the husband was the sole trustee of the trust.
On 16 May 2000 two additional “new” trustees were appointed, namely Mrs Z (the widow of the settlor) and Mr N (the husband’s brother). The husband’s mother died [in] 2002.
The husband, along with his two brothers – Mr N and Mr T were appointed as executors of her will. Mrs Z’s Will also appointed her executors as trustees of the trust. Mr T did not accept either appointment. The net effect was that the husband and his brother, Mr N – who were already trustees of the trust – merely continued in that role as trustees following the death of their mother.
The husband retired as a trustee on 26 January 2005. Mr N remained as a trustee. A family friend, Mr C was appointed as an additional trustee.
The trust was resettled by the trustees (Mr N and Mr C) on 23 June 2008. The resettlement was based upon legal advice and was performed to effect the removal of Mr T (Mr T) as a final beneficiary.
The trustees of the resettled trust are Mr N and Mr C.
The husband and Mr N became the appointors of the resettled trust.
The discretionary beneficiaries of the resettled trust are the husband, Mr N, their children and remoter issue along with, “any spouse, defacto spouse, widow or widower” of those stated persons.
The children of the husband and the children of Mr N are the “Final Beneficiaries” on the vesting date of the resettled trust. The vesting date of the resettled trust remained the same as the original trust – mainly 5 July 2007.
The husband relinquished his position as a joint appointor of the resettled Trust on 17 March 2009. I will refer to that evidence later in these reasons.

Kennon v Spry

In Kennon v Spry (2008) 238 CLR366 the High Court considered discretionary trusts in s.79 property proceedings under the Family Law Act 1975. French CJ formed part of the majority. Gummow Hayne JJ delivered a joint judgment and also formed part of the majority. Kiefel J delivered a separate judgment but still formed part of the majority. Heydon J delivered a dissenting judgment.

French CJ

French CJ provided the following background information:-
“INTRODUCTION
1. Ian Charles Fowell Spry is a retired barrister and Queen’s Counsel in the State of Victoria. He was born on 17 January 1940. In 1968 he created by parol a trust called the ICF Spry Trust of which he was settlor and trustee (“the Trust”). Its terms were reflected in an instrument made in October 1981 (“the 1981 Instrument”). The beneficiaries were himself and his siblings, his and their issue, and the spouses of all of them. On 29 December 1978 he married Helen Marie Spry who was born on 20 August 1956. There were four children of the marriage:
1. Elizabeth, born 23 September 1980.
2. Catharine, born 18 August 1982.
3. Caroline, born 25 October 1984.
4. Penelope, born 3 November 1987.
By a deed varying the Trust in 1983 (“the 1983 Deed”), Dr Spry excluded himself as a beneficiary. He appointed his wife to be trustee on his death or resignation and his daughter Elizabeth to succeed her upon her death or resignation.
2. In December 1998, at a time when his marriage was in difficulty, Dr Spry made a further variation to the Trust excluding himself and his wife as capital beneficiaries (“the 1998 Instrument”). On 30 October 2001 he and his wife separated. Subsequently she applied to dissolve the marriage. In January 2002 Dr Spry established trusts in favour of his four children (“the Children’s Trusts”) and applied to them one quarter each of all of the capital and income of the Trust (“the 18 January 2002 Dispositions). On 20 January 2002 Dr Spry conveyed to the four children shares held by him beneficially (“the 20 January 2002 Dispositions”). On 20 May 2002 he appointed Mr Edwin Kennon as joint trustee with him of each of the Children’s Trusts from 1 July 2002. The marriage was dissolved when the decree nisi became absolute on 17 February 2003.
3. In April 2002, Mrs Spry filed an application in the Family Court of Australia seeking orders for property settlement and maintenance. The application relevant to these proceedings was a second amended version of that application. In particular she sought orders under s 106B of the Family Law Act 1975 (Cth) (“the Family Law Act”) setting aside the 1998 Instrument, the instruments creating the Children’s Trusts and the 18 January 2002 Dispositions. She asked for an order that her husband pay her, inter alia, 50% of the assets and resources held in their individual or joint names, the Trust and the Children’s Trusts.
4. Following procedural steps, which are not material for present purposes, Carter J made orders on 30 October 2003 granting leave to the three adult children, Elizabeth, Catharine and Caroline Spry, to intervene and be made parties to the proceeding. On 10 November 2003 Carter J also gave leave to Penelope Spry to intervene by a next friend.
5. After a hearing extending over five days in August 2005 in the Family Court at Melbourne, Strickland J delivered judgment on 30 November 2005. His Honour set aside the 1998 Instrument. He also set aside the 18 January 2002 Dispositions and ordered that on or before 28 February 2006 Dr Spry pay his wife the sum of $2,182,302.
6. Dr Spry appealed against the decision. Dr Spry and Mr Kennon cross-appealed jointly in their capacities as trustees of the Catharine Spry Trust, the Caroline Spry Trust and the Penelope Spry Trust. Dr Spry cross-appealed jointly with his daughter Elizabeth in their capacity as trustees of the Elizabeth Spry Trust. On 13 July 2007 the Full Court of the Family Court (Bryant CJ and Warnick J, Finn J dissenting) dismissed the appeal and cross-appeal and ordered the appellant and cross-appellants jointly to pay Mrs Spry’s costs of and incidental to the appeal and cross-appeal.
7. On 7 March 2008 special leave to appeal to this Court from the decision of the Full Court of the Family Court was granted to the joint trustees of the Children’s Trusts in matter No M25 of 2008 and to Dr Spry in matter No M26 of 2008.
8. For the reasons that follow I would dismiss the appeals with costs in favour of Mrs Spry but not the other respondents. I would also dismiss Mrs Spry’s applications for special leave to cross-appeal with no order as to costs. The relevant provisions of the Family Law Act are set out in the joint judgment of Gummow and Hayne JJ.”
French CJ described the trust in more detail later in his judgment. From paragraph 46 His Honour noted:-
“The Trust
46. Dr Spry created the Trust. He was the settlor. He so designated himself in cl 1 of the 1981 Instrument. He appointed himself as trustee. He assumed the power to appoint and remove further trustees. He did so, according to the terms of the 1981 Instrument, in his personal capacity. The power to vary the Trust he conferred upon himself personally as “the settlor”. That power was not constrained by fiduciary duties (On the other hand a trustee exercising such a power would owe a fiduciary duty to the beneficiaries: Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 609 per Waddell CJ in Eq). It was, however, limited so as not to authorise an increase in his rights to the beneficial enjoyment of the fund. Under the terms of the Trust neither he nor any of the other “beneficiaries” had any rights to the beneficial enjoyment of the fund or any portion of it except upon his decision as trustee to apply all or any of it to himself or one or more of the other beneficiaries pursuant to cl 6. While the character of the Trust remained unchanged and Dr Spry remained as trustee there was, as counsel for Mrs Spry submitted, no beneficial interest in possession in any of the objects of the Trust including Dr Spry.
47. The Trust fell within the genus of “discretionary trust”, a term which has “no fixed meaning and is used to describe particular features of certain express trusts” (Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 234 [8]; [1998] HCA 4). Absent an obligation on the part of the trustee to apply any of the income or capital of the Trust to any of the beneficiaries at any time it answered the description “purely discretionary” (Federal Commissioner of Taxation v Vegners (1989)90 ALR 547 at 552) or “non-exhaustive” (Thomas and Hudson, The Law of Trusts, (2004) at 184). The class of beneficiaries was “open”. It extended to the spouses from time to time of the issue of Charles Chambers Fowell Spry and further issue of that issue, including persons unborn when the Trust was created, and their spouses from time to time.
48. As sole trustee of the Trust Dr Spry had the legal title. He was the only person entitled in possession to the assets. His power as trustee to apply the income or capital under the terms of the Trust was not a species of property according to the general law (O’Grady v Wilmot [1916] 2 AC 231 at 270) but his legal title was.”
French CJ then considered whether or not the assets of the trust could be treated as “property” for the purposes of s.79 of the Family Law Act. His Honour noted from paragraph 53:-
“53. Section 79(1) of the Family Law Act and the non-exhaustive definition of “property” in s 4(1) of the Act had their antecedent in s 86(1) of the Matrimonial Causes Act 1959 (Cth). The collocation “property to which the parties are, or either of them is, entitled (whether in possession or reversion)” can be traced back to its gendered ancestor in s 45 of the Matrimonial Causes Act 1857 (UK) which applied to the property of an adulterous wife.
54. Section 79 confers a wide discretionary power to vary the legal interests in any property of the parties to a marriage or either of them and to make orders for a settlement of property in substitution for any interest in the property. It is subject to the limitation that it validly applies only with respect to a claim based on circumstances arising out of the marriage relationship. (Dougherty v Dougherty (1987) 163 CLR 278 at 286 per Mason CJ, Wilson and Dawson JJ; [1987] HCA 33). The word “property”, appearing in the section, construed by reference to its ancestry in matrimonial causes statutes, has been given a wide meaning. In 1977 the Full Court of the Family Court said (In the Marriage of Duff (1977) 15 ALR 476 at 484):
‘The word has also been comprehensively defined in statutes both State and Imperial relating to married women’s property. We do not propose to instance those definitions here, but in Jones v Skinner ((1835) 5 LJ Ch 87 at 90) Langdale MR said: ‘Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.’ This is a definition which commends itself to us as being descriptive of the nature of the concept of ‘property’ to which it is intended that the Family Law Act 1975 should relate and over which the Family Court of Australia should have jurisdiction to intervene when disputes arise in relation to the property of spouses as between themselves or when the court is asked to exercise the powers conferred upon it under Pt VIII or its injunctive powers under s 114 so far as they are expressed to relate to a property of the party to a marriage.’
55. In Kelly (No 2) (In the Marriage of Kelly (No 2) (1981) 7 Fam LR 762) the Full Court of the Family Court did not think the word wide enough to cover the assets of a trust in which the relevant party to the marriage was neither settlor nor appointor nor beneficiary and over which he or she had no control. ((1981) 7 Fam LR 762, 768). The Court was concerned, inter alia, with the assets of a family company and family trust which were under the “de facto control” of the husband. The assets could be taken into consideration as a “financial resource” of the husband within the meaning of s 75(2)(b) of the Family Law Act. The trust assets, however, did not fall within the description of the “property” of the husband for the purposes of s 79 because “the husband could not assert any legal or equitable right in respect of them” ((1981) 7 Fam LR 762 at 768). That was a case in which the husband had neither a legal nor a beneficial interest.
56. In Ashton (In the Marriage of Ashton (1986) 11 Fam LR 457) a husband who had been the trustee of a family trust replaced himself as trustee with a company but continued as sole appointor. He was not a beneficiary but received income from the trust. It was conceded that he was “in full control of the assets of the trust” ((1986) 11 Fam LR 457 at 461). The evidence made clear that he applied the assets and income from them as he wished and for his own benefit ((1986) 11 Fam LR 457 at 461). The Full Court held that “[n]o person other than the husband has any real interest in the property or income of the trust except at the will of the husband” ((1986) 11 Fam LR 457 at 462). Special leave to appeal from that decision was refused by the High Court on 5 December 1986 (Gibbs CJ, Wilson and Brennan JJ) (See also In Marriage of Davidson (No 2) (1990) 101 FLR 373 for a similar conclusion on a similar trust deed).
57. Where the husband was not entitled to be a trustee but was sole appointor and also a beneficiary, the Full Court of the Family Court in Goodwin upheld a finding that “the trust property was, in reality, the property of the husband” (In Marriage of Goodwin (1990) 101 FLR 386 at 392) and in doing so applied as a statement of principle the perhaps unremarkable proposition that ((1990) 101 FLR 386 at 392):
‘[T]he question whether the property of the trust is, in reality, the property of the parties or one of them… is a matter dependent upon the facts and circumstances of each particular case including the terms of the relevant trust deed.’
In that case the husband had the sole power of appointment of the trustee which was a creature under his control and he was a beneficiary to whom the trustee could make payments exclusive of other beneficiaries as the husband saw fit ((1990) 101 FLR 386 at 392).
58. Although a settlor is taken to transfer to the trustee the property in respect of which he or she creates a trust, there may be retained a right to take a benefit under it. Prior to the 1983 Deed Dr Spry as sole trustee had the “absolute discretion” to apply all or any part of the income and/or capital of the fund to himself as one of the “beneficiaries”. On the basis of that power, and consistently with authority including the decisions of the Full Court referred to above, the assets of the Trust would properly have been regarded as his property as a party to the marriage for the purposes of s 79. But the coexistence of the power together with Dr Spry’s status as a beneficiary does not define a necessary condition of that conclusion.”
At paragraphs 64 and 65 of the judgment French CJ concluded;
“64. The word “property” in s 79 is to be read as part of the collocation “property of the parties to the marriage”. It is to be read widely and conformably with the purposes of the Family Law Act. In the case of a non-exhaustive discretionary trust with an open class of beneficiaries, there is no obligation to apply the assets or income of the trust to anyone. Their application may serve a wide range of purposes. In the present case, prior to the 1998 Instrument those purposes could have included the maintenance or enrichment of Mrs Spry.
65. Where property is held under such a trust by a party to a marriage and the property has been acquired by or through the efforts of that party or his or her spouse, whether before or during the marriage, it does not, in my opinion, necessarily lose its character as “property of the parties to the marriage” because the party has declared a trust of which he or she is trustee and can, under the terms of that trust, give the property away to other family or extended family members at his or her discretion.” (Underlining added)
66. For so long as Dr Spry retained the legal title to the Trust fund coupled with the power to appoint the whole of the fund to his wife and her equitable right, it remained, in my opinion, property of the parties to the marriage for the purposes of the power conferred on the Family Court by s 79. The assets would have been unarguably property of the marriage absent subjection to the Trust.

French CJ continued at paragraphs 70;
“70. The characterisation of the assets of the Trust, coupled with Dr Spry’s power to appoint them to his wife and her equitable right to due consideration, as property of the parties to the marriage is supported by particular factors. It is supported by his legal title to the assets, the origins of their greater part as property acquired during the marriage, the absence of any equitable interest in them in any other party, the absence of any obligation on his part to apply all or any of the assets to any beneficiary and the contingent character of the interest of those who might be entitled to take upon a default distribution at the distribution date.” (Underlining added)
French CJ also considered the rights of a beneficiary to due consideration and due administration. His Honour stated:-
“The rights to due consideration and due administration as “property”.
“74. Each of the beneficiaries had the right to compel the trustee to consider whether or not to make a distribution to him or her and a right to the proper administration of the Trust. (Gartside v Inland Revenue Commissioners [1968] AC 553 at 617). In Garstide v Inland Revenue Commissioners, Lord Wilberforce put it thus ([1968] AC 553 at 617-618; see also Sainsbury v Inland Revenue Commissioners [1970] Ch 712 at 725):
‘No doubt in a certain sense a beneficiary under a discretionary trust has an ‘interest’: the nature of it may, sufficiently for the purpose, be spelt out by saying that he has a right to be considered as a potential recipient of benefit by the trustees and a right to have his interest protected by a court of equity. Certainly that is so, and when it is said he has a right to have the trustees exercise their discretion ‘fairly’ or ‘reasonably’ or ‘properly’ that indicates clearly enough that some objective consideration (not stated explicitly in declaring the discretionary trust, but latent in it) must be applied by the trustees and that the right is more than a mere spes. But that does not mean that he has an interest which is capable of being taxed by reference to its extent in the trust fund’s income: it may be a right, with some degree of concreteness or solidity, one which attracts the protection of a court of equity, yet it may still lack the necessary quality of definable extent which must exist before it can be taxed.’
75. The rights to consideration and to due administration are in the nature of equitable choses in action…
76. In Evans (In Marriage of Evans (1991) 104 FLR 130) the majority in the Full Court of the Family Court found that consideration of the right to due administration of a superannuation fund offered “no solution as to how realistically to make practical orders under s 79 about that ‘property’ until it is in fact received” ((1991) 104 FLR 130 at 139). The case concerned a future entitlement to benefits from a superannuation fund. Nygh J drew the analogy between the unvested interest in a superannuation fund protected by a right of due administration and “the interest which a potential beneficiary has in the proper administration of a trust” ((1991) 104 FLR 130 at 144).
77. The beneficiary of a non-exhaustive discretionary trust who does not control the trustee directly or indirectly has a right to due consideration and to due administration of the trust but it is difficult to value those rights when the beneficiary has no present entitlement to any part of the income or capital of the trust.
78. Gummow and Hayne JJ, in their joint reasons, characterise Mrs Spry’s right with respect to the due administration of the Trust as part of her property for the purposes of the Family Law Act. I respectfully agree with their Honours that prior to the 1998 Instrument the equitable right to due administration of the Trust fund could be taken into account as part of the property of Mrs Spry as a party to the marriage. So too could her equitable entitlement to due consideration in relation to the application of the income and capital. In so agreeing, however, I acknowledge, consistently with the observations of the Full Court in Hauff and Evans, that it is difficult to put a value on either of these rights though a valuation might not be beyond the actuarial arts in relation to the right to due consideration.”
French CJ concluded at paragraph 81:-
“Conclusions
81. The assets of the Trust, coupled with Dr Spry’s power to appoint them to his wife and her right to due consideration, were, until the 1998 Instrument, the property of the parties to the marriage for the purposes of s 79. The fact that Dr Spry removed himself as a beneficiary by the 1983 Deed does not affect that conclusion. Because the 1998 Instrument effectively disposed of Mrs Spry’s equitable right to be considered in the application of the Trust fund, and having regard to the trial judge’s conclusions about the purpose of the instrument, the order setting it aside was an appropriate exercise of the Family Court’s power under s 106B. Mrs Spry’s equitable right could then be considered as part of the property of the parties to the marriage. The setting aside of the 18 January 2002 Dispositions was also appropriate. The ancillary order that Dr Spry pay his wife the sum of $2,182,302 was appropriate for the reasons stated by Gummow and Hayne JJ in their joint judgment.”

The joint judgment of Gummow and Hayne JJ

The crux of the joint judgment of Gummow and Hayne JJ can be found in paragraph 137:-
“137. The conclusion reached by the trial judge (erroneously) that the husband could have applied the whole or part of the Trust fund to or for his own benefit is inconclusive of the outcome. The jurisdiction being exercised by the Family Court was, as earlier indicated, jurisdiction over “proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them” (Section 4(I) definition of “matrimonial cause”, par (ca)) (emphasis added). What matters in this case is that once the 1998 Instrument and the 2002 Instrument were set aside by the s 106B orders, the property of the parties to the marriage or either of them was to be identified as including the right of the wife to due administration of the Trust, accompanied by the fiduciary duty of the husband, as trustee, to consider whether and in what way the power should be exercised. And because, during the marriage, the husband could have appointed the whole of the Trust fund to the wife, the potential enjoyment of the whole of that fund was “property of the parties to the marriage or either of them”. Furthermore, because the relevant power permitted appointment of the whole of the Trust fund to the wife absolutely, the value of that property was the value of the assets of the Trust. In deciding what orders should be made under ss79 and 80 of the Act, the value of that property was properly taken into account. Wrongly attributing its value to the husband is irrelevant to the ultimate orders made.”

Kiefel J

The last of the member of the majority, Kiefel J dismissed the appeal by reference to s.85(A) of the Act. That section states:-
“Section 85 ANTE-NUPTIAL AND POST-NUPTIAL SETTLEMENTS
85A(1) The court may, in proceedings under this Act, make such order as the court considers just and equitable with respect to the application, for the benefit of all or any of the parties to, and the children of, the marriage, of the whole or part of property dealt with by ante‑nuptial or post‑nuptial settlements made in relation to the marriage.
(2) In considering what order (if any) should be made under subsection (1), the court shall take into account the matters referred to in subsection 79(4) so far as they are relevant.
(3) A court cannot make an order under this section in respect of matters that are included in a financial agreement.”
From paragraph 225 Her Honour noted:-
“225. Each of the features necessary to render the property of the Trust settled property within the purview of s 85A is present in this case. In reaching this conclusion, one must look to the individual words of the section in light of their context and purpose. “Settlement” is to be given a broad meaning consonant with the intention of s 85A to bring discretionary family trusts within the ambit of the Act. “Property” is to be read as including those assets to which the parties have contributed throughout the course of their marriage and which are held for their use and benefit. The Trust assets constitute property, much of which was obtained by way of the parties’ contributions to the marriage. (Underlining added) The assets therefore attract the operation of s 85A. Further, as shall become clear, on each occasion that property was transferred to the Trust, the parties “dealt with” their property, and effected settlements within the meaning of s 85A. The Trust property represents contributions of the parties and is held on terms of a settlement. It is “property dealt with by…settlements”.
226. The settlement in this case may also be regarded as having the requisite nuptial element. The approach for which the trustees contend, which would deny the application of the section to the Trust as an ante nuptial settlement, is one which has regard to the situation at the time the Trust was made. At that point it could not have been referable to the marriage. Such an approach is literal and emphasises the words “ante nuptial…settlements” and “made in relation to the marriage”. It may assume importance where the settlor’s intention is relevant, but no such issue arises here. It could hardly be said that the settlor’s intentions here were unfulfilled. A preferable approach is one which gives effect to the purposes of the section. If necessary, particular words in the section should be adjusted to that end (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [70] per McHugh, Gummow, Kirby and Hayne JJ).
227. Section 85A (1) is intended to have a wide operation, to property held for the benefit of the parties on a settlement and to which they have contributed. It is intended to apply to settlements whether they occur before or during marriage. The essential requirement of the section is that there be a sufficient association between the property the subject of a settlement and the marriage the subject of proceedings. It does not require that a settlement made prior to marriage be directed to the particular marriage at the point it is made. It is sufficient for the purposes of the section that the association of which it speaks (“made in relation to”) be present when the Court comes to determine the application of the property settled under s 85A(1). In the present case the Trust was used to hold property for the benefit of the parties to the marriage upon the terms of the Trust. It thereby acquired the nuptial element. Section 85A(1) applies.” (Underlining added).
Kiefel J was the only member of the Court to base her decision on s.85(A) of the Act. I have underlined three separate segments from paragraphs 225 and 227 of the judgment of Kiefel J. Those segments that have been underlined lead me to conclude that s.85(A) can only apply in a case (on Kiefel J’s reasoning) where there are assets held in a trust for the benefit of the parties to the marriage (or one of them) and they are assets “to which the parties have contributed throughout the course of their marriage and which are held for their use and benefit”.
A consideration is therefore required of that specific point – have the parties in this case “contributed” to the assets held in the trust?
What is called for is a closer consideration of the reasoning of the majority in Kennon v Spry – and an application of that reasoning to the facts of the case currently before the Court.

French CJ

Looking at paragraphs 65 and 66 in the decision of French CJ:-
a)the property held in the Mr P Family Trust was held under a discretionary trust.
b)The property was “held” under the trust “by a party to the marriage” – in particular the husband was a trustee of the trust from 7 July 1997 until 26 January 2005. Between 7 July 1997 and 25 December 1997 the husband was a trustee jointly with his father, Mr P. Between 25 December 1997 and 16 May 2000 the husband was the sole trustee of the trust. Between 16 May 2000 and 13 January 2002 the husband was a trustee – along with his mother (Mrs Z) and his brother (Mr N). Between 13 January 2002 and 26 January 2005 the husband was a trustee of the Trust – jointly with his brother, Mr N. During those periods of time that the husband was a joint trustee along with other persons – the husband held the legal title to the assets in the trust – jointly as trustee with his other family members as stated. For approximately two and half years – after the death of his father – the husband had legal title to the assets in the trusts as the sole trustee. The husband was (during that period of time) the only person entitled to possession of the assets in the trust.
c)it is clear from paragraph 65 of the judgment of French CJ that he includes a requirement that the property held under such a trust must have been acquired by or through the efforts of one of the parties to the marriage – either before the marriage or during the marriage.
d)The property held under the Mr P Family Trust was not acquired by or through the efforts of the husband or the wife in this case. The only asset of the trust – between the time it was created on 7 July 1997 and the date of the husband’s mothers death – [omitted] 2002 – was the former residence of the husband’s mother and father, namely the property situated at Property N, New Zealand.
e)
It is apparent from the evidence that since the death of Mrs Z the trust has accumulated other properties. Neither the husband nor the wife in this case contributed financially in any way to the acquisition of any of the assets held in the trust. Furthermore,

Mr N has never contributed financially towards the acquisition or accumulation of assets held in the trust. In the three year period – after the death of Mrs Z and up to the time of the husband’s retirement as a trustee – the husband did provide advice in his role as a trustee and in consultation with his joint trustee (Mr N) to assist the trust in acquiring additional assets. Indeed, it is probably the case that, from time to time since he ceased his role as a trustee, the husband has (when asked by his brother, Mr N) freely given advice concerning real estate investment to Mr N – for the benefit of the trust. Furthermore, during that period of time when he was a trustee, the husband – as necessary – signed loan documents to enable funding to be secured which enabled the acquisition of further assets which were then also held under the trust.
f)Looking at the facts of this particular case – in particular, the advice given by the husband in relation to real estate acquisition and his joint signing of loan documents with his brother (as trustees) to enable the trust to purchase more property – I consider that those actions by the husband are materially different to the actions of Dr Spry who, through his work as a Barrister and Queen’s Counsel generated the income used to purchase the properties that were then held in his family trust. The husband in the present case did not contribute any income or capital to the Mr P Family Trust. Neither did the wife.
g)The assets that were acquired by the trustees and held under the trust – were not assets that could have just as easily been acquired and held by the husband either in his own name or in the name of the wife. I infer from the evidence that it was the property that was initially settled into the trust – namely Property N – which essentially acted as an anchor or a base. It provided to the trust both a capital base and an income stream (by way of rent). This gave to the trust – and the trustees – the necessary springboard to assist with the acquisition of further properties. I infer from the evidence that the husband was not in a strong enough financial position (in terms of capital or income) to enable him to personally acquire the properties that the trust was able to acquire. This is not a case – like Spry – where the assets held under a trust could just have easily have been held by one of the parties in their own name (or by a private company controlled by a party to the marriage). The properties acquired by the trust in this case could not have just as easily been acquired by the husband and held by him or by the wife in their own personal capacity.
h)My view in this regard is strengthened by further comments made by French CJ in Kennon v Spry at paragraph 69. His Honour stated that:-
“69. The preceding conclusion does not involve some general extension of s 79 which would require that it be hedged about with protective discretions of uncertain application to prevent its intrusion into trust arrangements affecting assets foreign or extraneous to those acquired by the parties to the marriage in their own right. So if the husband were trustee of a charitable trust or executor of the will of a friend or client the mere legal title to the assets of such trusts, because of their origins and character, could not be regarded as part of the husband’s property as a party to the marriage within the meaning of the Family Law Act.” (Underlining added).
i)Because of the “origins and character” of the assets held by the Mr P Family Trust I have concluded that such assets cannot “be regarded as part of the husband’s property as a party to the marriage within the meaning of the Family Law Act”.

Kiefel J

Kiefel J relied upon s.85(A) of the Act.
The assets held under the Mr P Family Trust are not “assets to which the parties have contributed throughout the course of their marriage…”. Furthermore, the trust assets in the present case were not “obtained by way of the parties’ contributions to the marriage”. I have reached these conclusions on the basis of the same reasoning referred to earlier herein in paragraph number 43.
In my view the decision of Kiefel J does not assist the wife in this case to bring the assets held under the Mr P Family Trust (or any of them) into the matrimonial property pool. Section 85(A) does not assist the wife in this particular case.

Gummow and Hayne JJ

The husband was a trustee of the trust between 25 December 1997 and 26 January 2005. For approximately seven years the husband acted as trustee. He was a sole trustee for approximately two years and six months between 25 December 1997 and 16 May 2000. The wife was, of course, a beneficiary.
During the time that the husband was a joint trustee with other persons (relevantly his father, mother and/or brother) I have concluded that there was no chance whatsoever that the husband could have appointed the whole of the trust fund to the wife. Quite simply – I have concluded that there was no chance that Mr P (the husband’s father), Mrs Z (the husband’s mother) or Mr N (the husband’s brother) would ever have contemplated (let alone agreed) to allow the husband to appoint the whole of the trust fund to the wife.
There is, of course, that period of time (approximately two years and six months) when the husband was a sole trustee. During that period of time the husband – in theory - could have appointed the whole of the trust fund to the wife. Does that mean (noting the decision of Gummow and Hayne JJ) that the assets within the trust should be seen as “property of the parties to the marriage or either of them”? In my view it does not. At that point in time the only asset in the trust was the former home of Mr P. Neither the husband nor the wife in this present case had made any contribution whatsoever to the asset that was held in the trust at that time. To my mind – the ratio of the decision in Spry’s case needs to be discerned by reference to the Reasons of Gummow and Hayne JJ and the Reasons of French CJ. On this particular point, I note paragraph 70 where French CJ stated:-
“70. The characterisation of the assets of the trust, coupled with Dr Spry’s power to appoint them to his wife and her equitable right to due consideration, as property of the parties to the marriage is supported by particular factors. It is supported by his legal title to the assets, the origins of their greater part as property acquired during the marriage, the absence of any equitable interest in them in any other party, the absence of any obligation on his part to apply all or any of the assets to any beneficiary and the contingent character of the interest of those who might be entitled to take upon a default distribution at the distribution date.” [1] (Underlining added)
[1] That the ratio of the decision in Spry needs to be considered in the light of the Reasons French CJ and the joint Reasons of Gummow and Hayne JJ was discussed further in an article prepared by Justin Gleeson SC entitled, “Spry’s case – exploring the limits of discretionary trusts”. Mr Gleeson appeared as counsel for the wife in Spry in the High Court.

In paragraph 137 of the decision Gummow and Hayne JJ stated, inter alia:-
“And because, during the marriage, the husband could have appointed the whole of the Trust fund to the wife, the potential enjoyment of the whole of that fund was ‘property of the parties to the marriage or either of them’. Furthermore, because the relevant power permitted appointment of the whole of the Trust fund to the wife absolutely, the value of that property was the value of the assets of the Trust.”
In discerning the ratio in Spry it seems to me that those Reasons quoted above from paragraph 137 of the joint Judgment have to be read in conjunction with the Reasons of French CJ in paragraph 70 quoted above. In the present case the husband was the sole trustee between 25 December 1997 and 16 May 2000. The wife was a beneficiary during that time. However, the “origin” of the property in the trust during the relevant period was the former home of the husband’s father. It was not property “acquired during the marriage”. The parties to this marriage made no contribution towards that property. Furthermore, in the case currently before the Court the husband’s brother (Mr N) and his family clearly had an equitable interest in the property of the trust during the relevant period.
For the Reasons stated above, I do not consider that the joint Judgment of Gummow and Hayne JJ in Spry’s case assists the wife in her attempt to have the assets held under the Mr P Family Trust (or part of them) considered as part of the property pool.

Control

I have also had regard to the earlier cases decided by the Full Court of the Family Court (as referred to by French CJ in Spry). In particular the decisions in In the Marriage of Ashton (1986) 11 FamLR 457 and In the Marriage of Goodwin (1990) 101 FLR 386. In those cases the Full Court of the Family Court looked at the question of “control”. In Ashton and in Goodwin the husband was the sole appointor. The Court concluded in those cases that the assets held under the relevant trusts were property for the purposes of proceedings pursuant to s.79 of the Act.
Upon the resettlement of the trust deed on 23 June 2008 the husband became an appointor along with his brother, Mr N. (In the document itself the word used is, “Appointer”). The husband resigned as an appointor on 17 March 2009. At no time was the husband a sole appointor. I note in particular paragraph 8.2 of Schedule 1 of the resettlement trust deed (dated 23 June 2008). It seems that even if the husband had wanted to act in a sole capacity (i.e. without the joint agreement of his brother Mr N) then the husband did have the power to appoint one trustee and also had the power to remove any trustee appointed by him. Apart from that it seems that the husband could only have acted jointly with his brother to appoint or remove trustees. The husband was not an appointor pursuant to the terms of the original trust deed and only became an appointor at the time of the resettlement trust deed. I accept the husband’s evidence that he did not ask to be made an appointor. I also accept that when it was drawn to the husband’s attention that he was in fact an appointor he told his brother, Mr N, that he no longer wanted to be an appointor and consequently resigned as an appointor by notice to the trustees dated 17 March 2009.
Having regard to the earlier authorities of the Full Court of the Family Court and looking in particular at the issue of “control” in relation to assets held under a trust – I have concluded that, on the particular facts of this case currently before the Court, the husband did not have and does not have the “control” of the trust as that word is used in the earlier Full Court authorities.
There is no evidence that the parties’ marriage was in any difficulty at the time the husband retired as a trustee on 26 January 2005. The only evidence concerning difficulties within the marriage leads me to conclude that the difficulties did not arise until much closer to the time of separation.
I accept the evidence of the husband, and his brother, Mr N, concerning their explanations as to why the husband retired as a trustee, why there was a need for the resettlement of the trust and why the husband resigned as an appointor.

Conclusion in relation to Trust Assets

I have concluded that the assets held in the Mr P Family Trust do not form part of the property pool in this case.

Credit Card Debt

The credit cards and the debt owing on each is as follows:-
a)Citibank Mastercard   $35,678.00
b)ANZ Visa Gold   $11,285.00
c)ANZ Credit card   $19,261.00
d)Amex Qantas   $14,187.00
e)Amex   $13,246.00
Total   $93,657.00
The credit cards appear to be in the husband’s name. The wife had initially sought a finding that the credit card debts were not matrimonial liabilities. I note exhibit 8. Exhibit 8 is a schedule that was tendered by consent after Court concluded on 17 March 2010. An analysis of this “agreed summary of credit card spending for period May 2008 to September 2009” shows that there was a total expenditure on credit cards over that period of $366,390.48. The majority of the expenditure was in respect of the business – [P] (76%). There were building costs of 4%. The husband was responsible for 12% of the expenditure. The wife was responsible for 7% of the expenditure and there was joint expenditure of 1%. In all the circumstances I have concluded that the credit cards were used to fund the parties’ business ([P]). Furthermore the credit cards were used to meet the parties’ living expenses. In my view they are liabilities which should be included in the matrimonial pool.

Motor vehicles

In paragraph 151 of the wife’s Affidavit I note that she has included the husband’s Toyota [vehicle omitted] in the amount of $10,000.00. In paragraph 24 of the written submissions provided on behalf of the husband the same amount is included for the husband’s motor vehicle. As to the wife’s 2005 Mitsubishi [vehicle omitted] the wife has included the same in the sum of $9,000.00. The husband has included it in the amount of $10,000.00. I will include the Mitsubishi in the sum of $9,000.00 – noting the concession made by the wife only goes to that limit.

Other items

There does not appear to be any consensus between the parties in relation to furniture and contents. In those circumstances I am not satisfied that the Court has sufficient evidence before it to make any particular findings in relation to furniture and contents and those items will not be included in the pool. It seems to me, that it is appropriate, that each party retains whatever furniture and contents they currently have in their own possession.
There are various other items included in the asset pool contained in paragraph 24 of the husband’s written submissions. Most of the other additional items are noted as “joint” ownership or they are noted as being owned by the husband. There is a bank account on behalf of the wife noting $600.00 and that is also conceded by the wife in paragraph 151 of her Affidavit. That will be included in the pool. There seems to be agreement as to other assets in the pool. In any event my conclusion in paragraph 82 should be noted.

Judgment debt in favour of Mr P Family Trust

The trust and Mrs S (Mr N’s wife) lent to the husband on 2 December 2005 the sum of NZ$468,000.00.
I have concluded that the Pickle family (the husband and his brother Mr N in particular) are a close family. The loan was not initially documented. This is because of the close family relationship. The loan was made at a time when the parties’ marriage was not in any difficulty. It is often the case in Family Law proceedings that a loan is made by one party’s family and such loan is not documented until after the marriage breaks down. That is what occurred here.
I accept the husband’s evidence in paragraph 10 of his Affidavit filed 15 February 2010. I accept that the money was borrowed by the husband to assist him with further real estate investments in Australia – on behalf of the family as constituted by the parties to the marriage (the Applicant and the Respondent). I also accept that the husband received the loan from the trust and, I infer, was then looking for a further real estate investment. I accept the husband’s evidence contained in paragraph 40 of his Affidavit filed 24 April 2009 that the purchase of Property V was funded in part by the loan from the Mr P Family Trust and Mrs S.
I also note that the trust and Mrs S themselves had to borrow the money from the ASB Bank in New Zealand to make the advance. I note and accept the evidence of Mr N in that regard.
I also note and accept the evidence as disclosed in the trust financial statements for the financial year ended 2006 (which was signed on 2 May 2007). I note that those financial statements record the loan as an asset and the terms of the loan are mentioned in the notes to the accounts as follows:-
“5. Advance to Mr Pickle
The Trust advanced to Mr Pickle $440,000.00 on 2 December 2005. This loan is to be repaid in full on demand. Interest is charged at the ASB Bank rate over the period of the loan. Interest is added to the loan principal and is payable upon demand if the Trust requires to pay interest to the ASB Bank”.
I do not accept that the amount in question was a distribution by the trust to the husband. For the Reasons stated above I consider that the amount lent by the trust and Mrs S to the husband was indeed a loan which needs to be repaid from the matrimonial pool of assets. I accept the husband’s explanation as to the difference between $468,000.00 and NZ$440,000.00.

Addbacks

Both parties sought addbacks in this case. The Full Court of the Family Court of Australia in AJO v GRO (2005) FLC 93-218 stated, inter alia, at paragraph 30:-
“30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally addback to the pool of assets, that is, assets that no longer exist. They are:
(a) where the parties have expended money on legal fees…;
(b) where there has been a premature distribution of matrimonial assets…;
(c) in the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092…”
The category identified by Baker J relates to a situation where one of the parties to the marriage has embarked upon a course of conduct to reduce the value of the assets or where one of the parties has acted “recklessly, negligently or wantonly” with matrimonial assets so as to reduce their value.
In paragraph 140 of the wife’s trial Affidavit filed 4 March 2010 it is contended that there should be an addback into the pool of some $430,737.12. The wife’s Affidavit states that these are, “transactions which have been unexplained by the Respondent” (the husband).
In Re NHC & RCH (2004) FLC 93-204 the Full Court made reference to two earlier decisions (at page 79,314) - namely the decisions of M & M [1998] FamCA 42 and C & C [1998] FamCA 143. The import of those two decisions (in relation to the question of addbacks) is that addbacks “ought to be the exception rather than the rule” (per Nicholson CJ, Ellis, Kay JJ in C & C (supra)).
In the case before the Court the wife bears the onus of proof in relation to the addbacks for which she contends. I have made reference to paragraph 140 of the wife’s Affidavit. It is apparent from the wife’s evidence given under cross examination (and appearing from page 70 of the Transcript) that:-
a)the first four lines of paragraph 140 are not the wife’s words;
b)the words used in the paragraph are the words of the wife’s solicitor. The wife seeks to adopt those words;
c)crucially, the wife did not personally check the various entries noted in the paragraph. It is apparent, therefore, that the evidence relied upon by the wife in relation to the question of the addbacks is hearsay evidence.
To my mind, it is not appropriate for a witness to rely upon hearsay in order to prove such a crucial issue such as addbacks alleged in an amount in excess of $400,000.00.
In any event I note further that the first two items included by the wife in paragraph 140 are two cheques drawn in June 2002. The total of the two cheques is $221,480.00. In cross examination it was revealed that those two amounts were not “unexplained” transactions. Those amounts were payments to the wife’s conveyancing solicitor in relation to the wife’s purchase of the Property R property at Property R, Queensland. I also note exhibits 2 and 3 in this regard.
In my view, the wife has failed to prove the addbacks contended for in paragraph 140 of her Affidavit. It is apparent that the wife was not personally familiar with the matters sworn to in paragraph 140. She is unable to confirm the accuracy of the contents of paragraph 140 of her own Affidavit.
As to the contention on behalf of the husband that there should be added back into the pool $14,559.00 in respect of monies allegedly taken by the wife from [P] I have come to the conclusion that there should be no such addback in that amount or any amount in respect of cash taken from the [business] by the wife. The wife conceded in evidence that she had taken some $9,110.00 from the [business]. The husband contended that the amount was in fact $14,559.00. In any event, to my mind the amount of cash accessed by the wife from the [P] is irrelevant. I accept the wife’s evidence contained in paragraph 66 of her Affidavit where she states:-
“I did so in circumstances where the Respondent was refusing to pay me a reasonable wage ….”.
I accept the evidence of the wife that – from time to time during the course of the marriage the husband also accessed cash from the [P] and from [B]. The use of cash from ongoing businesses seems not to be an unusual occurrence for families running small businesses. To my mind the actions of the wife were justified in the particular circumstances of this case. There should be no addback in relation to those funds.
The wife has also contended that the husband has used rental proceeds from the Property R and Property V properties and has not properly accounted for the same. I note paragraph 86 of the wife’s Affidavit filed 4 March 2010 and annexure, “WAP17”. It seems that document was prepared by the wife’s solicitor’s bookkeeper. I reiterate the comments I made earlier herein in relation to issues such as addbacks. To my mind it is not sufficient for a party to rely upon hearsay evidence to establish an addback.
Paragraph 87 of the wife’s Affidavit makes further assertions in relation to rental income apparently accessed by the husband and a failure by him to make mortgage repayments. I am not satisfied that the evidence is clear enough for the Court to make a finding that any such money should be added back into the pool. I note paragraph 27 of wife’s written submissions which indicates that the parties had agreed to divide the rental income between them. It seems unlikely that any substantial injustice to either the wife or the husband has occurred in relation to this issue. Frankly, the Court’s attention has not been drawn to any or any sufficient evidence to support the findings contended by the wife in relation to addbacks (or any other payments or monies apparently received by the husband which the wife alleges should be taken into account) in her written submissions provided to the Court.
The parties appear to accept that the legal costs should be added back into the pool. The husband’s legal fees in the amount of $98,665.69 and the wife’s legal fees in the sum of $48,084.15.

The Pool

If there are any other items in the pool to which I have not specifically referred or which are not agreed between the parties or conceded by the relevant party – I accept the husband’s submission in respect of any such item in paragraph 24 of his written submissions. I find that the property pool in this case is as follows:-

Asset/Liability	Ownership	Value ($)
[E] (Aust) Pty Ltd	Husband
• Property V (sale price)	673,000.00
• Property V mortgage	($150,000.00)
• ANZ account number [omitted]	909.00
Property R (agreed value)	Wife	900,000.00
Mortgage on Property R	Joint	(316,060.00)
Offset loan secured on Property R	Joint	(70,000.00)
Business loan secured on Property R	Joint	(259,119.00)
NZ AMP shares (at exchange of $0.78)	Joint	772.00
Bank of Qld account	Husband	1,590.00
National Bank NZ account	Husband	200.00
ANZ account	Husband	206.00
Wife’s bank accounts	Wife	600.00
2004 Toyota [vehicle omitted]	Husband	10,000.00
2005 Mitsubishi [vehicle omitted]	Wife	9,000.00
Judgment Debt in favour of Mr P Family Trust (at exchange of $0.78)	Husband	(443,740.00)
Interest owing on above Judgment Debt from 20 July 2009 to 15 March 2010 (at 7.5% p.a. pursuant to ss.11.27 and 87 Judicature Act 1908 (NZ)	Husband	(21,952.83)
Citibank Mastercard	Husband	(35,678.00)
ANZ Visa gold	Husband	(11,285.00)
ANZ credit card	Husband	(19,261.00)
AMEX Qantas	Husband	(14,187.00)
AMEX	Husband	(13,246.00)
Addback: Legal costs	Husband	98,665.69
Addback: Legal costs	Wife	48,084.15
Total	388,498.01

Disclosure issues

The Applicant wife in this case has made a submission that the disclosure by the husband was less than satisfactory. It does appear to be the case that there was delay – even some considerable delay - by the husband in providing adequate disclosure. That issue may become relevant in the event that there is an Application for costs in this case. However it does appear to be the case that the husband did, eventually, provide full disclosure of all relevant documents. My attention has not been specifically drawn to evidence which is sufficient to support a finding that the husband has failed to make full disclosure. The thrust of the argument on behalf of the wife appears merely to be that there was undue and unnecessary delay in the making of full disclosure by the husband. I note the view of the Full Court in the case of Weir & Weir (1993) FLC 92-338.
However, to my mind, the wife has not been able to identify evidence that would support a finding by the Court of “material non disclosure” by the husband.
I do not accept the submission on behalf of the wife that the husband was secretive in relation to financial matters during the course of the marriage. I note that, under cross examination, the wife conceded that she was not interested in such issues. The wife devoted most of her time to caring for the children and running the household. The husband devoted most of his time to earning income for the family.

Contributions

The parties in this case were together for 26 years from the date of marriage until final separation in March 2008. There are two children of the marriage. Throughout the course of the marriage the wife provided practically all of the home making duties. Between 2003 and 2006 the wife managed the business known as, “[B]”. Furthermore, the wife managed the business known as, “[P]” from 2006 until approximately November 2008. The husband then took over the operation of that business until its sale in October 2009.
I do accept that throughout the course of the marriage the husband provided significant financial contributions and was able to provide extensive benefits for the family as a result of his building and real estate investment activities. I do accept that the husband also assisted, on occasions, with some work at home.
After such a long marriage and noting that the initial contributions by the husband were made a considerable time ago, I have concluded that the contributions based entitlements of the parties are equal.

Section 75(2) Factors

Does the husband have a financial resource in the Mr P Family Trust?

To my mind, “the evidence admits a compelling inference” (to use the words used by the majority of the Full Court of the Family Court in Essex & Essex (2009) FamCAFC 236 at 172) that the husband in this particular case will receive distributions from the Mr P Family Trust at some time after the conclusion of these proceedings. I note in particular the following evidence:-
a)the ultimate beneficiaries noted in the original family trust were the three sons of Mr P namely Mr Pickle (the husband), Mr N and Mr T;
b)Mr T received a significant distribution from the trust of approximately NZ$235,000.00. (Note the evidence of Mr N at page 215 Lines 1 – 15). This is in circumstances where Mr T never provided any assistance with the operation of the trust. The husband, Mr Pickle, did provide advice over many years to assist the trust in relation to real estate investment. I find that the husband has provided advice to the trust concerning real estate investment – from the time the trust was created up until the present. At page 201 of the Transcript the following exchange occurred:-
“MR BASTON: Yes. And you have continued to speak about the trust and its investment strategy?
MR N: Not particularly, no.”
Counsel for the wife, Mr Baston, was questioning Mr N in relation to ongoing discussions between the husband and Mr N. Mr N was, I find, attempting, at that part of the evidence, to downplay the role that his brother (the husband) has played and continues to play in advising the trust in respect of real estate investment and investment strategy generally. I find that the husband does still provide advice to the trust (in particular to the trustee, Mr N) concerning real estate and investment by the trust;
c)the husband has significant expertise in relation to [omitted]. The advice that the husband provided to the trust, over many years, no doubt did assist the trust significantly in relation to the question of real estate investment;
d)the Pickle family (especially the husband, Mr Pickle and his brother Mr N) are particularly close. At page 201 of the Transcript when answering a question under cross examination by counsel for the wife, Mr Baston, Mr N stated – in relation to how often he would talk or consult with his brother – Mr N said:-
“We’re family. We talk a lot.”
Further, at page 205 of the Transcript the following exchange occurred:-
“MR BASTON: Now, each of you got as an interim distribution from your mother’s estate eleven and a half thousand dollars, or something like that, didn’t you?
MR N: It was about that. Yes.
MR BASTON: So you each got exactly the same from each of your parent’s estate?
MR N: That’s right.
MR BASTON: So why did you need to pay Mr T anything? So why did you need to pay Mr T anything?
MR N: Well, we were three brothers.
MR BASTON: Yes?
MR N: We were all family members here.
MR BASTON: Yes?
MR N: We were equal under our parents.
MR BASTON: Yes?
MR N: And my parents, I would say, would like Mr T to have something. They would have expected Mr T to have children, probably. Mr T is in his fifties now. He doesn’t have any children and is not likely to have any children.
MR BASTON: So okay, we accept that the understanding is that the trust – the Mr P Trust – as it transpired over time, up until 2008 represented interests of your family, Mr Pickle’s family and Mr T’s family. That’s correct, isn’t it?
MR N: ‑Well, we are the – we were the discretionary beneficiaries, the three of us.
MR BASTON: Yes?
MR N: Yes.
MR BASTON: And the trust, as you and Mr Pickle have operated it in the time that you had been jointly trustees, was the accumulation of wealth, assets for the benefit for each of the families?
MR N: Yes, it’s a family trust. I just looked this thing as best I can and I continue to do so.
MR BASTON: No, did you – just listen to the question. Just listen to the question. You invested in these properties through the trust – yourself and Mr Pickle – for the purpose of, and the benefit of, each of your families?
MR N: Yes, because they were – we’re all discretionary beneficiaries. I mean, the trustees have to act according to the circumstances at the time.”
The inference that I draw from the evidence including the evidence given by Mr N is that he has (as a trustee of the original trust and the resettled trust) in the past, looked out for the interests of family members and he will in the future continue to look out for the interests of family members. In particular I find, as a fact, that he will look out for the interests of the husband, his brother, Mr Pickle. I had the chance to observe both the husband and Mr N in the witness box. I find that Mr N will, as trustee of the Mr P Family Trust, be favourably disposed to assisting his brother, Mr Pickle. In particular that will occur should the husband make a request for a distribution from the trust. I find as a fact that it is highly likely that the husband will make such a request.
I am satisfied on the balance of probabilities that, at the conclusion of these proceedings, the husband is likely to receive a distribution from the Mr P Family Trust. To the extent that there is any assertion by
Mr N that the trustees will not make a distribution to the husband after the conclusion of these proceedings – I reject such evidence. It is more likely than not that the distribution will be a distribution of capital – because that is what Mr T received. I have concluded that, upon receiving a request from the husband (Mr Pickle) - that Mr N (as the trustee with, I find, effective control of the trust (see below)) will approve a distribution of capital to the husband at least equivalent to the amount paid to the third Pickle brother, Mr T. That amount was approximately NZ$235,000.00.
I also find that Mr N will not agree to allow his brother, the husband, to be reappointed as a trustee or an appointor in respect of the Mr P Family Trust. I have reached this conclusion on the basis of having observed Mr N in the witness box. It is clear to me that he is intent on retaining effective control of the trust. That is what he currently has because, I find that the co-trustee, Mr C, will effectively go along with recommendations made by Mr N. Mr C is a long term friend of Mr N.
I note that, in the past, the husband has not received any distribution from the trust. There is no evidence that the husband has made a request for a distribution. As soon as Mr T made a request to Mr N – he received a significant capital distribution from the trust. My finding is, essentially, that upon receiving such a request from Mr Pickle, the same will occur. It should also be noted that when the husband sought a substantial loan from the trust – that was forthcoming.
It may well be that Mr N, at that time, decides that he will only agree to make such a distribution if the husband agrees to essentially, be “written out” as a beneficiary in another resettlement of the trust. That is a matter for the trustees – in effect – that is a matter for Mr N.
I note that the children of the husband and the wife in this case are also still beneficiaries of the trust. I find that their interests will not be greatly adversely affected because I find that in due course, it is likely that the husband and the wife in this case will make adequate provision from their own estates for the children. In any event, I also consider that it is likely that Mr N, as a wise and loving uncle, will also look out for the interests of [X] and [Y] (the children of the parties).
I note exhibit 6. The balance sheet for the Mr P Family Trust as at 31 March 2009 shows net assets of NZ$924,381.00. Included as an asset is the “loan advance [Mr Pickle] NZ$553,859”.
Once the loan from the Mr P Family Trust is repaid from the property pool in this case, the trust will be able to repay the ASB Bank. That will mean that the net asset position of the Mr P Family Trust will remain in the vicinity of NZ$924,381.00.

Other considerations under section 75(2)

The wife was, of course, a beneficiary under the original trust and the resettled trust. The wife is no longer the “spouse” of the husband and is therefore no longer a beneficiary. If my conclusion in that regard is not correct – I find that there is no likelihood that there will be any distribution to the wife by the trustees of the Mr P Family Trust.
The husband has significant expertise in [omitted]. The husband continues as the sole director and shareholder of his company, [E] (Australia) Pty Ltd.
The wife does not have any particular expertise that would enable her to earn significant income. It is likely that the wife would be able to work as a [omitted].
It is apparent from a consideration of the evidence – both the Affidavit evidence and having observed the husband (and his brother Mr N) in the witness box that the husband has, over more than a 26 year period developed expertise and honed his skills in relation to [omitted]. I note that for a period of three years upon his arrival in Australia the husband worked [omitted].
I find that the husband has a superior earning capacity to the earning capacity of the wife. I note that the husband has not necessarily optimised his earning capacity in recent years. I conclude that he has been distracted and awaiting finalisation of the property settlement proceedings between the parties.
I note that the wife has an ongoing role in providing accommodation and support for one of the adult children of the parties.
The parties are approximately the same age. Whilst the husband may have some issue with his back that could prevent him from actually carrying out physical [omitted] work – his expertise in [omitted] is, I conclude, sufficient to enable him to earn an income superior to that of the wife. I also note that the wife has a back complaint.
Having regard to the s.75(2) factors I have concluded that there should be an adjustment in favour of the wife in this case of 17.5%.

Just and equitable

Having regard to the particular circumstances of this case I have concluded that an order whereby the wife receives 67.5% of the net pool of property and the husband receives 32.5% of the net pool is, in all the circumstances, just and equitable.

I certify that the preceding one hundred and six (106) paragraphs are a true copy of the reasons for judgment of Howard FM

Date: 3 November 2010