Pittman & Pittman

[2010] FamCAFC 30

FAMILY COURT OF AUSTRALIA

PITTMAN & PITTMAN [2010] FamCAFC 30

FAMILY LAW - APPEAL – PROPERTY SETTLEMENT – Family trust - value of property - where the trial judge did not include the husband’s interest in a family trust in the property pool – whether the trial judge erred in her calculation of the value of the parties’ property – whether the trial judge erred in failing to treat the husband’s interest in the family trust as property – where the husband was found to have an irrevocable entitlement to both the income of the trust and to a share in the capital distribution on the vesting date – where it was found that the husband’s interest in the family trust was property capable of division between the parties – appeal allowed – orders set aside – matter remitted for rehearing by another judge.  

FAMILY LAW - APPEAL – PROPERTY SETTLEMENT – Contributions – whether the trial judge erred in her assessment of the wife’s contributions and the adjustment in favour of the wife on account of s 75(2) factors – where Senior Counsel for the wife submitted that the appeal against the percentage distributions of the trial judge would not be pursued if they were applied to a pool including the husband’s interest in the family trust – where it was found that the trial judge’s property divisions were applied to an erroneous pool - the Court found that it would not be just and equitable to apply the trial judge’s contribution assessment and s 75(2) adjustment to the enlarged property pool without a recalculation of such assessment and adjustment – matter remitted for rehearing by another judge.

FAMILY LAW - APPEAL – PROPERTY SETTLEMENT – Adjournment of proceedings – ground of appeal not pursued.

FAMILY LAW - CROSS-APPEAL – PROPERTY SETTLEMENT – Contributions – whether the trial judge erred in her assessment of the husband’s contributions to the parties’ property – where the trial judge divided the assets 60 per cent to the husband and 40 per cent to the wife – where the husband sought 80 per cent - whether the trial judge erred in making an adjustment of 40 per cent to the wife for s 75(2) matters – where property divisions were found to be directed to an erroneous pool – cross-appeal allowed – orders set aside – matter remitted for rehearing by another judge.

FAMILY LAW - COSTS – orders made for written submissions in relation to the costs of the appeal and the cross-appeal.

Family Law Act 1975 (Cth) ss 4, 75(2), 79, 79(4), 79(5)

Best and Best (1993) FLC 92-418
Duff and Duff (1977) FLC 92-762
Figgins and Figgins (2002) FLC 92-762
Gabel v Yardley (2008) FLC 93-386
Hurst & Weber [2009] FamCAFC 137
Kelly & Kelly (No.2) (1981) FLC 91-108
Kennon v Spry [2008] 251 ALR 257
Stephens & Stephens & Ors (2007) FLC 93-336

APPELLANT: Mrs Pittman

RESPONDENT: Mr Pittman

FILE NUMBER: PTW 578 of 2003

APPEAL NUMBER: WA 28 of 2008

DATE DELIVERED: 5 March 2010

PLACE DELIVERED: Canberra

PLACE HEARD: Perth

JUDGMENT OF: Bryant CJ, Finn and Thackray JJ

HEARING DATE: 29 June 2009

LOWER COURT JURISDICTION: Family Court of Western Australia

LOWER COURT JUDGMENT DATE: 16 October 2008

LOWER COURT MNC: [2008] FCWA 114

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Wilson SC & Dr Ingleby

SOLICITOR FOR THE APPELLANT: O’Sullivan Davies

COUNSEL FOR THE RESPONDENT: Mr Castiglione QC & Mr Moser

SOLICITOR FOR THE RESPONDENT: Hudson Henning & Goodman

Orders

1. That the appeal be allowed.

2. That the cross-appeal be allowed.

3. That Orders 2 and 5 of the orders made by the Honourable Justice Crisford on 16 October 2008 be set aside.

4. That the applications heard by the Honourable Justice Crisford on 21 to 25 and 28 July 2008 be remitted for rehearing by a judge other than the                Honourable Justice Crisford.

5. That each party be at liberty to file and serve any written submissions in relation to the costs of the appeal and the costs of the cross-appeal within               28 days of the date hereof.

6. That each party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party.

7. That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 28 of 2008
File Number: PTW 578 of 2003

Mrs Pittman

Appellant

And

Mr Pittman

Respondent

REASONS FOR JUDGMENT

introduction

1. This is an appeal by the wife and a cross-appeal by the husband against an order (Order 2) made in property and spousal maintenance proceedings by Crisford J on 16 October 2008 which required that the husband pay the wife the sum of $4,842,837 (by way of three instalments as specified in the order).

2. This order gave effect to her Honour’s determination that a pool of assets valued at $8,638,079 should be divided in the proportions of 80 per cent to the wife ($6,910,463) and 20 per cent to the husband ($1,727,616).

3. By her appeal the wife challenges her Honour’s calculation of the value of the parties’ property, in particular her failure to include as part of that property the husband’s interest (valued at $62,750,000) in a trust known as the Pittman Family Trust (the “PFT”), and her assessment of the wife’s contributions. In addition the wife challenges the overall justice and equity of her Honour’s determination, as well as the adequacy of her reasons for that determination. Further, the wife challenges her Honour’s refusal to adjourn the property proceedings pursuant to s 79(5) of the Family Law Act 1975 (Cth) (“the Act”).

4. By his cross-appeal the husband challenges her Honour’s assessment of his contributions and also the adjustment which her Honour made in favour of the wife on account of the matters in s 75(2) of the Act.

5. An order made by her Honour for spousal maintenance (Order 5) was also challenged by both the notice of appeal (in its original and amended form) and the notice of cross-appeal. However, no ground of the appeal nor of the cross appeal, nor any submission on behalf of either party was directed to that order.

the background history as found by the trial judge

1. In the course of her reasons for judgment in relation to her orders of   16 October 2008, Crisford J made the following findings concerning the history of the parties’ marriage. We do not understand any of these findings to be controversial.  

2. After their marriage in mid 1982 until late 1992 the parties had resided abroad, mainly in the United States of America. They were both in employment until the birth of their only child, a daughter, in late 1989. Following the child’s birth the wife was primarily engaged in her care while the husband continued to be in employment.

3. From late 1992 the family lived in Perth in Western Australia, where the husband worked in his family business which was identified by her Honour as “the [Pittman] Group”. Her Honour found (at paragraph 127 of her reasons) that the husband “provided financially for the family through his work with the [Pittman] Group and also from trust distributions he received”, and that the wife was “fully involved in caring for [the child] and maintaining the home.” The “trust distributions” referred to by her Honour were from the PFT, which had been established by the husband’s father in 1977 and about which more will be said later.

4. On 1 April 2001 the wife and child left Perth to live in the United States where the wife bought a home apparently with trust funds. The husband did not join them as had been originally intended, and thus the parties separated. (It is common ground on the material before us that the separation date was         April 2002.)

5. Her Honour found that since separation the husband had not been “involved in gainful employment” and had relied on the PFT for his income. However, with that income and with capital distributions from the PFT he had been able to acquire assets and had few liabilities.

6. As to the wife’s position, her Honour found that at least since early 2006 she had not earned income and had been “totally dependent on the husband for all her living expenses”. However since 2002 she had been the sole carer for the parties’ child, who had not had contact with the husband since mid 2003 although he had paid child support.

the applications before the trial judge

1. In the proceedings before Crisford J, and as recorded by her Honour (at paragraphs 4 to 7 of her reasons), the wife sought “a partial property settlement which would give her 60% of the parties’ present assets...[which] would involve a cash payment to her of $4.5 million.” She also sought that the proceedings be adjourned pursuant to s 79(5) of the Act “until either the vesting of the [PFT], until she receives a further $25 million or she receives 33.3% of the husband’s entitlements to the [PFT]”, and that until such time she sought one half of any capital payment made to the husband by the PFT until a total of $25 million had been received. Further, the wife sought 33.3 per cent of the total net profit distributions made to the husband by the PFT, as well as spousal maintenance of $2,000 per week and adult child maintenance of $1,730 per month together with the costs of the child’s tertiary education.

2. For his part, and again as recorded by her Honour, the husband sought that by way of final property settlement the wife receive a payment from him of $1,432,360 and that she retain the proceeds of sale of her home in the United States. It was apparently the husband’s case that the wife had already received a partial property settlement of $1,319,017.

3. Her Honour observed at the commencement of her reasons (at paragraph 3) that the “central issue for determination” in the proceedings before her was “how the Court should categorise and deal with any entitlements [which the husband] has as a beneficiary of the [PFT]."

4. This issue was also the principal focus of the appeal, and is the issue to which we now turn.

the history of the pft

1. Also in the course of her reasons for judgment, Crisford J made the following findings concerning the history of, and present arrangements in relation to, the PFT. Again we do not understand any of these findings to be controversial; in fact we note that they correspond with the contents of a schedule of “Significant Events” for PFT provided at the hearing before us by Senior Counsel for the appellant wife, and also with the more detailed “Summary of Main Provisions of Deeds” annexed to the written summary of argument of Senior Counsel for the respondent husband.   

2. The PFT was established by Deed of Settlement dated 15 August 1977. Pursuant to the terms of the deed the husband was both a general and specified beneficiary, together with his father, his mother, his brother, his half brothers, and a Mr NK. The trustee was B Ltd. The distribution date for the trust was             8 December 2056.

3. On 12 June 1995 B Ltd was replaced as trustee by W Pty Ltd. The current directors of W Pty Ltd are the husband’s brother Mr M and the accountant for the Pittman Group, Mr KC. The current shareholders in that company are the husband, his mother, and his brothers Mr M and Mr S.

4. By Deed of Amendment dated 29 June 1995 the wife was added as an additional member of the class of general beneficiaries.

5. On 4 July 1998, the husband’s father (who had become the appointor and guardian of the trust on 8 July 1997) nominated his wife and stepson Mr M, and his sons, being Mr S and the husband, as appointors and guardians after his death. The husband’s father died in July 1998.

6. By a Deed of Appointment and Variation dated 30 June 2001 the trust was amended to include as nominated beneficiaries the husband, his mother, Mr M and Mr S. There was to be no future right to appoint any further appointors or guardians. The present appointors and guardians needed to act unanimously to effect a change in trustee. Pursuant to the Deed, the whole of the trust fund was revocably appointed in favour of the nominated beneficiaries in equal shares, and the net income of the trust was irrevocably appointed in their favour in equal shares. The vesting date was amended to be the first to occur of: (i) the date when any two of the nominated beneficiaries have died; (ii) such date being earlier than the date determined under (i) as the trustee may, in its absolute discretion appoint, a vesting day; (iii) the date of expiry of the perpetuity period.

7. The vesting date was then again amended on 28 November 2002 to be, and irrevocably, to be the day immediately preceding the date of the first to die of Mr M, Mr S or the husband. On the same day the trustee irrevocably appointed the husband, his mother, Mr M and Mr S as are living on the vesting date as the beneficiaries for whom the trust fund will be held absolutely, and if more than one, in equal shares.

the trial judge’s approach to the pft interest when calculating the property pool

1. When, in her reasons for judgment, her Honour commenced her consideration of the composition of the asset pool, she explained (at paragraphs 12 to 23) that the husband sought that the court should adopt an asset by asset approach, with the categories of assets being (A) assets and liabilities at the date of separation (April 2002); (B) assets received by the husband since that date; and possibly (C) present and future entitlements to distributions from the PFT.

2. Her Honour further explained that the basis for these categories rested on the husband’s position that any entitlements he has had to the PFT assets since separation should not be included in the asset pool as the wife has made no contribution to them.

3. The wife’s case, as explained by her Honour, was that a global approach was appropriate, and thus as her Honour further explained, the value of all assets “and in particular the [PFT] – past, present and future” should constitute one pool.

4. Her Honour then said that she proposed two categories, which she described as follows:

   (i) the assets to the date of trial, and

   (ii) the PFT (from the date of trial).

5. Her Honour gave no explanation at this stage for these proposed categories other than to note:

   23. …that although the [PFT] is to be dealt with separately, this is not for the purpose of quarantining it from the pool but simply for ease of reference given such matters as timing. It acknowledges that the contributions to it are likely to be of a different nature to the first category I have identified despite the fact that there are aspects of the [PFT] in the first category.

6. At this point in her reasons, her Honour turned to resolve an entirely different issue which concerned the value to be attributed to the wife’s residence in the United States. Having determined that matter, her Honour returned to the issue of the PFT.

7. She first made findings concerning the history of, and present arrangements in relation to, the trust, largely in the terms which we have set out at paragraphs 17 to 22 above. She then made the following findings in relation to distributions received by the husband from, and his present entitlements under, the trust – again we do not understand these findings to be controversial:

   54.Currently, pursuant to the Trust the husband receives two types of distributions, capital or corpus payments, and income or net profit payments. To date he has received significant distributions from the Trust. In respect of capital payments this has occurred since 1998 and in respect of income distributions since 2001. The income payments are currently made on a quarterly basis.

   …

   56.The husband’s entitlement to the income and the capital of the Trust is fixed. As a consequence of amendments to the Trust deed in 2001 he is irrevocably entitled to receive income from the Trust, and revocably entitled to receive his share of the capital of the Trust upon vesting. On 28 November 2002 he was irrevocably appointed as an equal beneficiary, along with his mother and two brothers, to the whole of the Trust fund on its vesting day.

   57.The Trust has been established for a long period of time, and the arrangement for the husband to be a nominated beneficiary to the capital of the Trust was put into place prior to the date of separation in April 2002. The most recent amendments were made after that in November 2002 however, there was an indication of intention through a memorandum from the [Pittman] Group’s accountant [Mr C] to the nominated beneficiaries dated 1 June 2001 seeking to ensure that the corpus and income of the Trust be distributed in a fixed way between the four nominated beneficiaries.

8. Her Honour next outlined (in paragraphs 55, and 58 to 61) each party’s case before her as to how she should treat the husband’s interest or entitlement in the PFT: the wife’s case being that there was sufficient certainty regarding the husband’s entitlements to enable his interest to be considered as property which has a present value; and the husband’s case being that while his right to receive income was irrevocable (and thus could be taken into account under s 75(2)), his entitlement to capital is uncertain and so could not be regarded as property or even as a financial resource.

9. She then observed (at paragraph 62) that there were “three avenues available to the Court in classifying the husband’s interest in the Trust”, being property which could be the subject of a direct order under s 79, a financial resource to be taken into account under s 75(2), or “a mere expectancy” which could not be “bought into account with any precision.”

10. Her Honour then considered a number of authorities in which the meaning of “property” for purposes of s 79 of the Act has been considered (in particular Duff and Duff (1977) FLC 92-762; Kelly & Kelly (No.2) (1981) FLC 91-108; Best and Best (1993) FLC 92-418; and the Full Court decision in Stephens & Stephens & Ors (2007) FLC 93-336 then the subject of a pending High Court appeal). Her Honour concluded (in paragraph 72) that before a determination could be made as to whether the husband’s interest in the trust was property within the meaning of the Act, it was necessary to examine the nature and terms of the Trust Deed (or Deeds). Apparently in light of such an examination, her Honour then made (or in some instances, repeated) the following findings (at paragraphs 73 to 75):

    ·The evidence is the [PFT] presently exists for the benefit of the husband, his mother, [Mr S] and [Mr M]. The history of the trust and the subsequent amendments since the death of the husband’s father confirm this intention.

    ·After the father’s death, the four family members were made irrevocable appointors and guardians. They became equal shareholders in the trustee company.

    ·In 2001 amendments were made to ensure the four family members received income and capital from the trust, and then in 2002 the trust was amended, ostensibly to ensure that the four family members received their entitlement sooner rather than later by amending the vesting date to be immediately following the death of one of the three brothers.

    ·This is not a case where the husband is a beneficiary under a family trust without any level of control or expectation of receiving his entitlement. It is clear that the husband’s father intended the four family members to be in control of the trust to the extent of their personal entitlement.

    ·On the wording of the trust the husband is an irrevocable beneficiary of income, and a revocable beneficiary of the capital of the trust.

    ·There is no current evidence to suggest any other beneficiaries are likely to receive an ongoing entitlement under this trust.

    ·At least in so far as the corpus is concerned, pursuant to the terms of the Deed it is open to the trustees to add beneficiaries. Despite this, it is clear the husband will receive something. Adding beneficiaries will water down his entitlement, not extinguish it. There have been no appointments to date. No existing nominated beneficiary can be removed.

1. Her Honour then made reference to the position of the husband’s brother, Mr D (who, although a specified beneficiary, has not been included as a nominated beneficiary, and who receives no distributions from the trust), apparently for the purpose of demonstrating that the intentions of the husband’s father are being respected, with the result that it is unlikely that the husband’s entitlement would be reduced.

2. Her Honour then summarised her findings regarding the husband’s position in relation to the trust in the following way:

   81.It may well be difficult to categorise the exact nature of this Trust Deed. The husband certainly does not have the fullest power of disposition over either the property and income of the Trust. He has a fixed entitlement to the profits and a right to the corpus.  

   82.He has an irrevocable right to the income. If there is no profit then there is no distribution. However, historically he has received regular distributions. He agreed that he could confidently expect to receive ¼ share of the profit distributions of the Trust in the future. This was approximately $4.1 million in 2007/2008. He accepted the profit distributions were likely to be more substantial in the future.

   83.I am satisfied that the husband has a lawful right to benefit from the assets and income of the Trust and will continue to do so. He has some rights to benefit and he has some control. He does not have an unfettered control and his rights are truncated.

   84.Although it is clear that his interest in the Trust is a question of fact here, he has historically benefited from the capital and income of the Trust and I have no doubt that will continue.

3. No issue could, in our view, be taken with most of what her Honour found in relation to the husband’s interest in, or entitlements under, the PFT, save that she appears to have overlooked in her findings in paragraphs 73 to 75 and 81 to 84 the finding which she had previously made in paragraph 56 (see paragraph 29 of these reasons) being that on 28 November 2002 the husband was appointed an equal beneficiary (with his mother and two brothers) of the corpus of the trust. 

4. However, it is her Honour’s conclusions (or perhaps lack of firm conclusion) in the following paragraphs which are significant for the purpose of the appeal:

   85.At the very least his interest in the Trust can be taken into account as a financial resource. This does not answer the question of whether it is property. I am not convinced I have to determine that definitively in the circumstances of this case. I am satisfied he will have a secure, stable income stream from the Trust at the very least in the short to medium term.

   86.Harking back to Best, although the husband’s interest in the Trust, both as to income and capital, may in my view be capable of being called property it may not be appropriate or practical to make direct orders in relation to it. Even if I am wrong in this it is not something that will play a pivotal part in the final outcome.

5. Immediately thereafter her Honour referred to the unchallenged valuation of the PFT prepared by KPMG (as at 30 June 2007) on a pre-tax basis, saying:

   91. The KPMG report states the present value of the Trust as $251 million. The wife’s senior counsel says the husband’s fixed interest of 25% is currently $62.75 million. If the husband’s mother dies then he would receive a further 8.33% (giving him a total of 33.33%). This translates to $83.66 million.

   92.Presently, the KPMG report reveals the Trust has a total of $110,612,816 in Cash Management Accounts.

6. Her Honour then again left the topic of the PFT and considered certain other matters relating to the calculation of the pool of property and its value. Following her consideration of those matters, she set out (at paragraph 120 of her reasons) a schedule of assets and liabilities.

7. That schedule contained two asset pools being “Asset Pool A” and “Asset Pool B”. “Asset Pool B” contained only one item being the “[Pittman] Family Trust”, which was shown to be in the ownership of the husband and to have an estimated value of $62,750,000 (which figure, it will be recalled, represented 25 per cent of the unchallenged valuation of the trust referred to in paragraph 91 of her Honour’s reasons). “Asset Pool A” contained all other assets (and liabilities of the parties) and had a net value of $8,638,079. No explanation was provided by her Honour at this stage for this division of the asset pool into two pools.

8. In relation to the estimated value of the husband’s interest in the PFT as shown in her Honour’s schedule of assets and liabilities, it is unclear to us whether the KPMG report valued the husband’s interest in the trust as opposed to only valuing the trust as a whole. But for present purposes this is of no consequence because no ground of the appeal or more importantly, ground of the cross-appeal challenged the value of the husband’s interest as shown by her Honour in her schedule of assets and liabilities.

the trial judge’s assessment of contributions (including to the pft)

1. Having identified the parties’ property (albeit in two pools), her Honour then turned to consider the parties’ contributions (as required under s 79(4)(a), (b) and (c) of the Act). In so doing, she first referred to the history of the parties’ marriage (largely in the terms which we have done in paragraphs 6 to 11 above).

2. She then turned to their contributions to the PFT, saying (at paragraph 137) that it was “necessary to carefully consider the role that the parties have each played vis á vis the [PFT]”, but also saying that both parties “sought to categorise the [PFT], albeit differently.” 

3. Her Honour then explained the differences between the parties in this regard. The wife’s case was that the husband had made no financial contribution to the acquisition, conservation or improvement of the PFT, nor had he made any contribution to acquire his interest in it; rather the trust interest was a windfall in which both parties should share. The husband’s case was that he was entitled to share in the PFT “solely because he is one of the father’s sons – an accident of birth”; he did not need “to contribute to the asset”; his entitlement to the PFT “is no more than his inheritance from his father subject to the limitations of the Trust itself.”

4. Having referred to certain authorities relied on by the parties in support of their cases in this regard (notably Figgins and Figgins (2002) FLC 92-792), her Honour said:

   150.It is not correct to asses [sic] the parties’ contribution to the [PFT] as equal simply because the husband is not required to make any contribution to it, or that its value increased due to property prices. However, I do not think it is correct to say that the [PFT] should be treated as solely that of the husband, with no entitlement to the wife. It is an extremely valuable interest that provided financial worth to the husband starting towards the end of the parties’ relationship. Although the wife may not have directly contributed to it to any great extent, she may, if appropriate, be entitled to a share of it based on her contributions to the relationship as a whole.

5. Thus it can be seen that her Honour did not accept either party’s case in relation to how contributions (if any) to the PFT interest should be assessed.

6. It is clear from the headings which followed in her reasons, that her Honour then turned to assess the parties’ contributions “to the date of trial”.

7. In this context her Honour first considered (in paragraph 151) the period early in the parties’ marriage when they lived in the United States. There was apparently little argument about this period, and her Honour concluded that during it, their contributions were equal.

8. Her Honour next considered (paragraphs 152 to 154) the period when the parties lived in Australia prior to their separation. Although each claimed greater contribution in that period, her Honour concluded that their contributions overall were equal.

9. Her Honour then recorded that the parties were “even more at odds” about their respective contributions between separation and trial.

10. She went on to canvass (in paragraphs 155 to 163) the husband’s financial contributions and the wife’s parenting contributions in this period, and she reached the following conclusions not only about that post separation period but about the entire period to trial:

    163.…Given the magnitude of the husband’s financial contribution not only to the present assets but to the support of the wife and their child I do consider that overall he has made a greater contribution in the past six years. In the time they lived together – 20 years I find their contributions to be equal.

    164.It is only in the past six years, overall a relatively short period of time, that the husband’s contributions have outstripped those of the wife. In that time the asset pool has increased by about $6 million. The husband has received distributions of over $10 million in total during that time.

    165.I assess contributions to the date of trial to be in his favour at 60%.

11. Then under the heading “[PFT] (from the date of trial)”, her Honour endeavoured to explain (at paragraph 166) why she had considered “the [PFT] from the date of trial onwards as a separate category”, with the explanation being that “it marks a convenient start to a different phase for both parties”. As we understand her Honour’s reasoning, it would seem that this new phase related to the child starting university and moving to live in college, with the result that the wife’s contributions (apparently both to the child and according to her Honour, to the PFT) would diminish although the husband would continue to provide for the child financially.

12. We do not understand why her Honour concerned herself with contributions to the PFT from the date of trial. Having regard to the provisions of ss 79(4) and 75(2), contributions (whether they be to property or to the welfare of the family) are usually only considered up to the time of trial. However, as it seems that her Honour’s consideration of possible contributions following trial did not impact in anyway on her 60 per cent to 40 per cent assessment of contributions in favour of the husband up to trial, we need say no more about this apparently erroneous approach.

the s 75(2) and other concluding matters in the reasons for judgment

1. So far as the s 75(2) matters were concerned, her Honour determined that there should be “a significant adjustment” in favour of the wife on account of her age, health problems, lack of employment prospects, and the standard of living which would be reasonable for her in the circumstances of this family. Having regard also for the husband’s “ongoing secure financial future”, her Honour determined on an adjustment of 40 per cent in favour of the wife. As her Honour then recognised (in paragraph 178) this adjustment resulted in an award to the wife of 80 per cent of the present asset pool.

2. Importantly for present purposes, her Honour then carried out a “cross check” against the two pools which she had earlier identified and also explained why she would not grant the wife’s application for an adjournment of the proceedings (pursuant to s 79(5)):

   182.I have identified two pools of assets. I consider it useful to cross check the outcome I have arrived at using a category of assets approach with the adoption of a global approach. The wife will receive approximately 11% of the combined pools. That is of the combined present value of the property. The wife wants the Court to take into account the likely future value of the Trust. To do this she argues an adjournment is appropriate. In his closing the wife’s senior counsel identified a number of options in this regard.

   183.I do not agree with the proposition to adjourn. The reason for that can be simply stated. Having considered the steps I must [sic] in relation to property settlement I am satisfied justice and equity can be met through the presently available assets.

3. Finally her Honour considered how her award to the wife of just under          $7 million could be met by the husband, as well as the spousal and adult maintenance issues. As none of these matters is in issue in the appeal or in the cross-appeal, no further reference need be made to them.

the asserted error in failing to treat the pft interest as property

1. The principal argument advanced by Senior Counsel for the wife in support of the appeal was that the trial judge had erred in not deciding that the husband’s interest in the PFT was property in circumstances where she had correctly found at paragraph 56 of her reasons that the husband was “irrevocably entitled to receive income from the [PFT]”, and “irrevocably appointed as an equal beneficiary, along with his mother and two brothers, to the whole of the [PFT] fund on its vesting day”, and with the “vesting day” now being the day immediately preceding the date of death of the first to die of the husband or either of his brothers, Mr M and Mr S.

2. In opposition to the appeal it was argued for the husband that the husband’s interest in the PFT could not be said to be property because although the husband had an irrevocable right to an income stream from the trust, he would have no control over the capital until the vesting date, and furthermore his exact entitlement to share in the capital would remain uncertain until that date.

3. Notwithstanding the fact that her Honour included the husband’s interest in the PFT in her schedule of assets and liabilities (albeit as a separate asset pool), and also the fact that she appears to have regarded it as property to which contributions could be made (see paragraph 150 of her reasons at paragraph 44 above), or perhaps as itself constituting a contribution of property (see paragraph 163 of her reasons at paragraph 50 above), it seems clear that her Honour did not ultimately determine that the trust interest was property (see paragraphs 85 and 86 of her reasons at paragraph 36 above). Indeed to the contrary, it seems clear that her Honour decided that she did not in the circumstances of this case have to determine that question “definitively”. Her reasons for so deciding are not clear to us, but we see little point in endeavouring to speculate (as Senior Counsel for the wife did in his written submissions) what those reasons were.

4. We also do not propose to express a concluded view on the question as to whether, where there is dispute in property settlement proceedings as to whether a particular asset is property or a financial resource, the trial judge is obliged to determine “definitively” that dispute. In this regard we note the division of opinion on this question between Warnick and Boland JJ on the one hand and O’Ryan J on the other in Hurst & Weber [2009] FamCAFC 137.

5. However, as presently advised, we are of the view that the preferable approach must be that a dispute as to whether or not an asset is property or a financial resource should wherever possible be determined by a trial judge. This is because where an asset is property, proper and adequate consideration of the contributions to such property is required pursuant to s 79(4)(a) and (b), and also because where an asset is property, an order under s 79 can be made with respect to that asset. We recognise, however, that there may be cases where it is either impossible or unnecessary to determine the question of whether an asset is property or a financial resource. But if that is the situation, it should be explained by the judge in his or her reasons.

6. In this case we consider that the question of whether or not the husband’s interest in the PFT constituted property, did require to be answered (given the vast difference in the value of that interest and the value of the parties’ other assets, and thus the potential consequences for the contribution assessment and range of available orders).

7. Moreover, we consider that in this case the question required an affirmative answer. In other words, the husband’s interest in the PFT should have been held to be property.

8. We consider that the PFT interest was property because whatever the original nature of that trust and the husband’s interest in it, the various amending instruments have resulted in a situation where the husband has irrevocable entitlements not only to income, but also to a share of capital.

9. It is true that there is a possibility (perhaps best described as a theoretical possibility) that the husband’s one quarter share of the capital might ultimately be diluted by the appointment of other beneficiaries. But he would still be entitled to some share in the capital. It is only the value of his share that might change (indeed it might increase on his mother’s death). The values of all items of property which are the subject of s 79 proceedings are likely to change between the time of such proceedings and the time when such items are eventually realised. Uncertainty of ultimate value cannot provide a reason for not categorising an item as property, and the submissions of Senior Counsel for the husband to the contrary must be rejected.

10. We also reject the submissions of Senior Counsel for the husband which sought to rely on the absence of control in the husband over the trust. It is true that the husband cannot be said to have control of the trust, but that fact does not affect his irrevocable entitlements to a quarter of the income of the trust and to a share in the capital.

11. Decisions of this court such as Duff (supra) and Best (supra) have established that the definition of “property” in s 4 of the Act (as property to which a party is “entitled, whether in possession or reversion”) is capable of a wide interpretation. This position has been confirmed by the reasons for judgment of French CJ and of Gummow and Hayne JJ in Kennon v Spry [2008] 251 ALR 257.

12. Accordingly, the appeal must succeed on the basis of her Honour’s error in failing to treat the husband’s interest in the PFT as property of the parties which is available for division between them. The issue of how such a division is to be achieved does not prevent the interest from being categorised as property. As we have earlier, observed there was no challenge in the grounds of the appeal or of the cross-appeal to the value placed on the husband’s interest in the PFT by Crisford J in her schedule of the parties’ assets and liabilities.

other matters raised by the wife’s appeal

1. Although by her amended notice of appeal the wife challenged her Honour’s assessment of her contributions and the adjustment in her favour on account of the s 75(2) matters, the position of her Senior Counsel before us was that the percentage distributions determined upon by her Honour would not be challenged if they were to be applied to a pool which included the PFT interest. We have determined that that interest should have been included in the pool of property available for distribution, but we are certainly not persuaded that it would be just and equitable to apply her Honour’s percentage distributions to the greatly enlarged pool. In our view, the existence of that greatly enlarged pool would require a completely new assessment of the parties’ contributions and of the s 75(2) matters.

2. Such a new assessment of the parties’ contributions and of the s 75(2) matters would need to be made on the basis of findings clearly made against the background that the property available for distribution between the parties included the PFT interest. It is far from clear that her Honour’s findings on which she made her contribution assessment and her s 75(2) adjustment were based on such a property pool, and to this extent, at least, the appellant wife’s complaints regarding the adequacy of her Honour’s reasons have some substance.

3. The matters canvassed in the last two paragraphs demonstrate that it would be impossible for us to re-determine the matter as Senior Counsel for the wife requested us to do. But in any event such a course was opposed by Senior Counsel for the respondent husband who indicated that his client would want the opportunity to adduce further evidence should the matter be re-determined.

1. We were informed by Senior Counsel for the wife that the wife’s ground of appeal which challenged her Honour’s refusal to adjourn the proceedings would only be pursued if other grounds of appeal did not succeed. As the appeal is to succeed on the ground directed to her Honour’s exclusion of the PFT interest from the pool of property available for distribution between the parties, we need not consider the adjournment issue.      

the husband’s cross-appeal

1. As mentioned early in these reasons, the husband has cross-appealed on the basis that her Honour’s assessment of his contributions at 60 per cent was too low and should have been 80 per cent, and on the further basis that her Honour’s s 75(2) adjustment of 40 per cent in favour of the wife was too high and should have been 20 per cent.

2. As we have already indicated in connection with the wife’s challenge to her Honour’s percentage divisions, those divisions cannot stand because of the erroneous pool to which they were apparently directed. It must follow that the cross-appeal must also be allowed, with it being unnecessary, and indeed probably undesirable given that the proceedings are to be re-determined, for us to say more about the matters raised by the cross-appeal.

3. It may, however, be useful if we observe that while the wife’s entitlements either on account of her contributions to the welfare of the family under s 79(4)(c) or pursuant to a s 75(2) adjustment could certainly be met out of the husband’s interest in the PFT, the contributions by, or on behalf of, the husband to that interest would have to be regarded as significantly greater than those of the wife.

conclusion in relation to the appeal and the cross-appeal

1. For the reasons we have given, the appeal and the cross-appeal must both be allowed, and the applications which were before the trial judge re-determined by another judge.

2. As a consequence of allowing the appeal and the cross-appeal we will set aside both Orders 2 and 5 of the orders of 16 October 2008, both of which were the subject of the appeal and the cross-appeal. No submissions were directed to             Order 5 and no consideration given to it by us. However, it appears on its face to be related to Order 2, and thus should be set aside.

1. Orders 1, 3 and 4 of the orders of 16 October 2008 were directed to the future ownership of various items of property. But those orders were not the subject of challenge by either the appeal or the cross-appeal. We can only assume that whether or not those orders have been implemented, the parties are content with them. We will therefore not disturb them. We proceed on the basis that if either party seeks some variation of the provisions of those orders, they could seek such variation in the re-determination of the proceedings on the basis that such orders were interim orders. (See Gabel v Yardley (2008) FLC 93-386.)

costs of the appeal and the cross-appeal

1. Having regard to the submissions made at the conclusion of the hearing before us, we propose to make directions for the filing of submissions in relation to the costs of the appeal and the cross-appeal.

I certify that the preceding seventy eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate: 

Date:  5 March 2010