RAAB & RAAB

[2012] FMCAfam 1189

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RAAB & RAAB [2012] FMCAfam 1189

FAMILY LAW – Property – effect of proposed wind farm on value of rural property – effect of greater initial contributions by the husband.

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

Little and Little (1990) FLC 92-147
Phillips and Phillips (2002) FLC 93-104
Smith and Smith (1991) FLC 92-261

Applicant: MR RAAB

Respondent: MS RAAB

File Number: MLC 1585 of 2011

Judgment of: Hughes FM

Hearing date: 22, 23, 24, 28, 29 and 30 May 2012

Date of Last Submission: 30 May 2012

Delivered at: Melbourne

Delivered on: 9 November 2012

REPRESENTATION

Counsel for the Applicant: Mr Wilson

Solicitors for the Applicant: Vines Lawyers

Counsel for the Respondent: Ms Wheeler

Solicitors for the Respondent: Cahill & Rowe Family Law

ORDERS

1. The parties shall forthwith take all steps necessary to sell the two parcels of land known to the parties as the “Eastern block” (more particularly described as Lot [omitted]) and the “Corner block” (Lot [omitted]), both of which form part of the property at Property M, [G], Victoria, and for the purpose of this order:

   (a)the selling agent shall be as agreed or, failing agreement, an agent appointed by the President of the Real Estate Institute of Victoria; and

   (b)the terms and conditions of sale are to be agreed or, failing agreement, as advised by the selling agent.

2. No later than seven days after the contract for sale of each of the Eastern and Corner blocks are executed, the parties shall take all steps necessary to engage an appropriately qualified tax accountant to calculate the capital gains tax liability of the parties in relation to each block.

3. The proceeds of sale of the Eastern and Corner Blocks shall be applied as follows:

   (a)firstly, to pay any commission and costs of sale;

   (b)secondly, to repay in full the loan from the wife’s parents and  all outstanding interest on that loan; and

   (c)thirdly, the balance to the wife.

4. The capital gains tax liability in relation to the Eastern and Corner blocks shall be paid in the proportions of 54 per cent by the husband and 46 per cent by the wife.

5. Within 28 days of the settlement of the sale of the Eastern and Corner blocks (or the settlement of the last block to sell) the husband shall pay to the wife the sum of $214,654.

6. Contemporaneously with the payment in order (5) above:

   (a)the wife shall transfer to the husband at the husband’s expense all of her right, title and interest in the remaining parcels of land at Property M, [G], Victoria (more particularly described as Folios [omitted]), which are collectively known to the parties as the “Southern block”; and

   (b)the husband shall indemnify the wife and keep her indemnified in relation to any and all outgoings in relation to the Southern block, including any and all future capital gains tax.

7. Pending the transfer of the Southern block in accordance with order (6) above, the husband shall have sole right to occupy that property and shall be solely responsible for all rates, charges and other outgoings in relation to it.

8. The husband may, up to 28 days after the settlement of the sale of the Eastern and Corner blocks (or the settlement of the last of those blocks to sell), elect to sell the Southern block.

9. In the event the husband fails to make the payment to the wife in accordance with order (5) above or elects to sell the Southern block in accordance with order (8) above:

   (a)the parties shall forthwith take all steps necessary to sell the Southern Block;

   (b)the selling agent shall be as agreed or, failing agreement, an agent appointed by the President of the Real Estate Institute of Victoria;

   (c)the terms and conditions of sale are to be agreed or, failing agreement, as advised by the selling agent;

   (d)the parties shall, no later than seven days after the contract for sale is executed, take all steps necessary to engage an appropriately qualified tax accountant to calculate the capital gains tax liability of the parties in relation to the Southern block; and

   (e)The proceeds of sale of the Southern block shall be applied as follows:

   (i)firstly, to pay any commission and costs of sale;

   (ii)secondly, an amount equivalent to the estimated capital gains tax liability in relation to the block to be held by the wife’s solicitors in an interest bearing account on trust for both parties and ultimately for payment of the capital gains tax liability; and

   (iii)thirdly, the balance to be divided between the parties in such a way as to achieve an overall distribution of all non-superannuation property between the parties in the proportions 54 per cent to the husband and 46 per cent to the wife, taking into account the division of non-land assets and any funds received or due to be received by the wife for the sale of the Eastern or Corner blocks.

10. The capital gains tax liability in relation to the Southern block shall be paid in the proportions of 54 per cent by the husband and 46 per cent by the wife.

11. In the event of any shortfall in the monies set aside to pay the capital gains tax on the sale of the Sothern block, the parties shall pay the shortfall in the proportions of 46 per cent by the wife and 54 per cent by the husband and any excess funds or interest earned on the funds set aside shall be distributed to the parties in the same proportions.

12. The husband shall, within 28 days of the date of these orders, pay to the wife the sum of $15,211 to equalise the value of their respective superannuation interests.

13. Within seven days of the date of these orders, the husband shall select six pieces of timber from the collection of milled redwood timber which remained on the property at Property M, [G] after the separation of the parties, and shall keep the six pieces separate from the rest of the timber.

14. Apart from the husband’s six pieces, the wife is declared to be the sole owner of the milled redwood timber and is at liberty to sell or dispose of it and retain any proceeds, provided that the sale or disposal occurs within 18 months of the date of these orders.

15. The husband shall fully co-operate with and facilitate any reasonable arrangements made by the wife for the sale or disposal of the timber.

16. In the event the wife has failed to sell or dispose of all of the timber within 18 months of the date of these orders, any timber remaining at that point shall be deemed to be the property of the husband.

17. Except as otherwise provided in these orders, each party is declared to be the sole owner to the exclusion of the other of all property in their possession or control at the date of these orders.

18. Each party is declared to have no interest in the superannuation interests of the other.

19. The parties have liberty to apply in relation to the form, particulars or implementation of these orders.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 1585 of 2011

MR RAAB

Applicant

And

MS RAAB

Respondent

REASONS FOR JUDGMENT

1. These are property proceedings in which the major issue is the valuation of three blocks of rural land owned by the parties in the [E] area, on which they operated a farming business.  The parties have agreed to sell two of the blocks.  The husband would like to retain the third block and continue living in the former matrimonial home which the parties built on it.  He would also like to continue operating the farming business.   

2. Determining the value of the land is complicated by the fact that a wind farm is proposed to be built close to the western edge of the property.  There has been vigorous opposition to the wind farm project by the parties and others in the area.  The expert valuation of the three blocks of land varies significantly depending on whether or not it is assumed the proposed wind farm will go ahead. 

3. Another significant area of dispute in the proceedings is the extent to which the parties benefited by obtaining finance from the wife’s parents to purchase the land, rather than utilising a commercial loan from a bank. 

Background

1. The applicant husband is 47 years of age.  He is a [omitted] by trade.  The respondent wife is 41.  She has formal qualifications as a [omitted] but works as a [omitted] in [E].

2. There is disagreement about precisely when the parties started living together.  The wife said that the parties commenced a relationship in 1990 and began living together in [E] in February 1991. She said they separated in early 1992 and reconciled later that year but did not live together again until 1999 when they were married.  During 1998, however, the wife lived with the husband’s parents and the husband lived in a caravan on the same property.  The husband, therefore, regards 1998 as the commencement of cohabitation.  The disagreement about this issue is not material to the determination of the case, especially as the parties agree that their financial relationship began in 1996 when they bought their first block of land together.

3. The parties were married [in] 1999. They have three children: [X], born [in] 2001, who is now aged eleven, and twins, [Y] and [Z], born [in] 2003, who are now aged nine.

4. The parties separated under the one roof in September 2010.  The wife and children left the former matrimonial home on 4 February 2011. They lived with friends and relatives for six weeks and then moved into their current rental property in [E].  The husband has continued to live in the former matrimonial home on the property.

5. After separation the children spent time with the husband every second weekend from after school on Friday until the following Monday, and overnight on Wednesday in the alternate week.

6. The husband commenced proceedings in the [E] Magistrates Court in February 2011 and the proceedings were transferred to this Court.  Final parenting orders were made on 15 November 2011.  In summary, those orders provide for the children to live with the wife and spend time with the husband every second week from after school on Thursday until the commencement of school on the following Monday and, in the alternate week, from after school on Thursday until the commencement of school on Friday, plus half of all school holidays and extra time on special days.

7. The parties also reached agreement about the property issues on 15 November 2011 but the agreement involved a superannuation split and procedural fairness had not been accorded to the trustees of the husband’s superannuation fund. The proceedings were adjourned to allow that to occur. Unfortunately, during the adjournment period, the agreement between the parties fell apart and the matter then needed to be heard. The trial ran for three days of fairly restricted time in the [E] circuit from 22 May 2012. It ran for a further three days in Melbourne, concluding on 30 May 2012.

The parties’ land at [G]

1. The first parcel of land was purchased by the parties in 1996. It comprised 212 hectares of land at Property M in [G], held in four titles.  They bought it for $260,000 utilising a loan of $160,000 from the wife’s parents. 

2. At the time of the purchase, both parties were working full time. They engaged an architect to draw plans for a house and, once approval was granted, built the house in which the husband has continued to live.  The parties were able to pay for the house using their own savings and income.  They provided significant labour themselves. They also engaged in bartering with various contractors in order to reduce the costs. For example, the husband did work for various trades people who, in return, worked on the house and the wife did [occupation omitted] for a tiler in return for his work.  The parties moved into the property shortly after they married in April 1999.

3. In 2002 the parties purchased an adjoining block of land of 77 hectares.  According to the affidavit evidence of the wife[1] they paid $190,000, of which $171,000 was borrowed from the wife’s parents. According to a schedule tendered as exhibit W7 on 28 May 2012, however, it appears the parties borrowed $181,000 from the parents which increased their overall indebtedness to the wife’s parents at that time to $280,000.

   [1] Affidavit of wife filed 10 November 2011, paragraph 56

4. The total land holdings of the parties are technically held in five titles but have consistently been treated by them as three separate blocks of land.  The “southern block” is higher than the other two and is the block on which the parties built their home. This is the block the husband seeks to retain as part of the property distribution.  The other two blocks are known by the parties as the “corner block” and the “eastern block” respectively.  Both the corner block and the eastern block adjoin the southern block but are separated from each other by a small distance.  The corner block is closer to the proposed wind farm than the eastern block and is, therefore, more affected by it.

5. During the marriage the parties earned income from farming, supplemented by off-farm income earned by both of them.

The loans from the wife’s parents

1. To facilitate the initial purchase of the [G] property in 1996 the parties borrowed $160,000 from the wife’s parents.  The wife asserted that borrowing the money from her parents resulted in a significant financial advantage to the parties.  She said that she and the husband would not have qualified for finance from a commercial lending institution and that, even if they were eligible to borrow money, the interest rate was about 10 per cent per annum whereas her parents lent the parties the money at 9.5 per cent per annum.  This was disputed by the husband. He asserted the parties could have borrowed the money from the Commonwealth Bank at 9.45 per cent interest.  He relied on a letter from the Commonwealth Bank dated 16 January 1996 and addressed to the parties which became exhibit W9 in the proceedings.  The body of the letter reads as follows:

   We are pleased to inform you that the Bank has approved a Loan of $160000 to assist you purchase rural property situated at Property G, [G].

   The enclosed attachment to this letter provides you with some important details of the approval while the enclosed booklet provides you with the Bank’s Usual Terms and Conditions which relate to the loan. Please read these documents carefully.

   A non-refundable Loan Establishment Fee of $800 is now due and will be debited to your account (to be advised).

   The enclosed repayment schedule provide you with a guide as to the principal instalments (if applicable) and interest payments required during the fixed interest rate period chosen, and are based on the indicative interest rate (as at the date of this letter) set out in the attached Schedule. These amounts can change once the firm interest rate is provided and the schedule is completed by the Bank and signed by you.

   Please contact Andrew [details omitted] if you wish to discuss any aspects of the approval.

   We are pleased to have been able to assist you with this finance.  The Commonwealth Bank has a wide range of services available for both personal and business requirements.  We would welcome the opportunity to discuss any of these services with you.

   Yours sincerely.

2. The letter had an attachment and two schedules.  One schedule was relied upon by the husband to prove the loan offer was genuine. It is headed “Particulars of Agreement for Fixed Rate Term Advance between Commonwealth Bank of Australia and the Borrower described below”. The document then set out the parties’ names and address, the amount of the loan, being $160,000, and the term of the loan which was stated to be for 10 years, maturing on 19 March 2006.  The date of funding was said to be 19 March 1996 which is the date of settlement of the purchase of the [G] property. The rate of interest in the schedule is 9.45 per cent. The loan was to be an interest only loan for the first two years.

3. The second schedule is a detailed repayment schedule for the first two years of the loan. 

4. The wife said that the letter was not a genuine loan offer. She said that she was working at the time as a [omitted] for a company which had a lot of dealings with various financial institutions.  She said she knew that she and the husband would not be eligible for a home loan because there was no residential property on the land to secure the loan.  She said that, as a personal favour to her, Mr C, who signed the letter from the Commonwealth Bank, prepared the loan approval to assist her in working out how a loan from her parents could be structured.  She relied upon a particular paragraph on the first page of the attachment to the letter to prove the document was not an approval or even a firm offer of finance. That paragraph reads as follows:

   The firm fixed interest rate remains to be agreed and this will be included in the new Schedule. The other Items which are currently uncompleted will be completed when the conditions precedent referred to in clause 3 of the Usual Terms and Conditions are satisfied and you are ready to draw the funds. The fixed interest rate period will commence the day the Schedule is signed.

5. I agree it does lend weight to the wife’s evidence that the document is not a formal approval because important details such as the interest rate had not been set. On the other hand, the third page of the schedule notes that the security is the rural land at [G]. This suggests a building on the land was not required for security. However, the wife insisted that the document was only a mock up because the Bank did not offer any product reflected in the document, namely, the provision of funds at home loan rates secured only by rural land.

6. Although I found the wife’s evidence quite persuasive, I am unable to make any clear finding about whether or not the Commonwealth Bank was prepared to lend the parties the funds to buy the land in accordance with the document. At the end of the day, whether or not the letter from the Bank represented a genuine approval, it is a fact that the parties borrowed the money from the wife’s parents at a rate of 9.5 per cent per annum. The wife said that the arrangement represented a significant advantage for the parties because her parents only wanted to earn the same interest they could achieve on a term deposit, which was approximately 5 per cent.  She said they agreed to “gift back” to the parties the balance of all repayments above 5 per cent.  This allowed the parties to claim the 9.5 per cent interest as a tax deduction and then receive the benefit of cash sums gifted back to them. 

7. The husband said he knew nothing of the wife’s parents making gifts of cash to the parties. He said the first he heard of it was in the wife’s affidavit. It is clear, however, that he left the management of the family finances to the wife, so his lack of knowledge about them is not as weighty as it might otherwise be. On the other hand, there is reason to be cautious about the wife’s evidence about the cash gifts from her parents. The wife said in her affidavit filed on 10 November 2011 that the parties had received five annual payments of $5,000 in the form of funds gifted back by her parents.  In her oral evidence the wife sought to correct that evidence and said that, as a result of a conversation with her father, she now believes there were six such payments.[2]  As a result of further exploration during her oral evidence, however, it became clear that there was never any single payment of $5,000.  The wife said her mother gave her various amounts of cash over the first six years of the loan, the largest of which was approximately $1,400.  The wife did not keep a record of the amounts but assumed they amounted to $5,000 each year. She made that assumption, firstly, because $5,000 was the largest amount her parents could gift each year without attracting some sort of duty; secondly, because her parents wanted to return as much money as possible to assist the parties; and, thirdly, because her mother is very particular and kept an accurate account of the money she gave them. This last point implies the wife was also relying on what her mother had told her had been returned.  Given the loan continued for six years, the wife assumed there had been $5,000 returned to the parties in each of the six years.

   [2] Transcript 23 May 2012, page 58

1. The wife’s mother was in Court for the first few days of the trial.  She could have given evidence if, indeed, she had kept a precise record of the amounts of money gifted to the parties.  It was asserted by counsel for the wife that the wife could not call her mother precisely because she had been sitting in Court for the first few days. However, no application to do so was made.  Counsel for the husband urged me to draw an inference that any evidence which might have been given by the wife’s mother would not have assisted her case.  I am not prepared to draw the inference. I am satisfied that counsel for the wife genuinely believed it was not appropriate to call the wife’s mother given she had spent so much time in Court.  However, I am not persuaded by the wife’s confidence that her mother gifted to the parties $5,000 per annum for six years.  The wife kept no track of it, the husband said he was unaware of the payments, and there is no independent evidence about it.  Ultimately, I am satisfied that some monies were returned to the parties between 1996 and 2002 which benefited the parties but am not prepared to find it was as much as $30,000.

2. When the parties bought the last block of land in March 2002 they borrowed further money from the parents at 5 per cent interest per annum, consolidating the previously outstanding amount of $99,000 owing on the first loan. 

3. In order to assess the benefit (or otherwise) of the interest rate charged by the wife’s parents, counsel for the husband prepared a set of spreadsheets to compare the rate of interest paid by the parties to the wife’s parents with the interest they might have paid to a commercial lending institution.  The commercial rates used for the comparison were historical interest rates obtained from the Reserve Bank of Australia website. No issue was taken with their accuracy. One spreadsheet which became exhibit H12 in the proceedings, compared the total interest paid to the wife’s parents and the hypothetical interest payable had the parties used the Commonwealth Bank rate of 9.45 per cent for the first three years of the loan and, thereafter, a fixed rate of interest determined by reference to the Reserve Bank figures.  On that scenario, the parties would have paid interest of $78,708 to a commercial lender between 1996 and 2002. This is $11,200 less than the $89,909 paid in interest to the wife’s parents. 

4. The second spreadsheet which became exhibit H13, used the Commonwealth Bank rate of 9.45 per cent for the first three years and, thereafter, a standard variable rate chosen by reference to the historical market interest rates.  According to that schedule, the amount payable to a commercial institution would have been $78,160, which is $11,749.04 less than the interest paid to the wife’s parents. 

5. Counsel for the husband used these schedules to argue that the loan from the wife’s parents was, in fact, more expensive than if the parties had borrowed from a bank. The wife argued that this was not so because of the cash that came back to the parties over those first 6 years. She said that, beside the fact that the relevant lending product did not exist at that time and/or the parties would not have been eligible for it, there were establishment and other fees associated with a commercial loan which were not payable by the parties to her parents, nor was there any fee payable whenever a reduction in principal was made which would have been the case under a commercial loan. The schedule attached to the purported loan offer which became exhibit W9 in the proceedings does certainly set out a range of fees and charges associated with the loan from the Commonwealth Bank. It includes a loan establishment fee of $800, an administrative fee of $300 in the event of any full or partial pre-payment of the capital, loan service fees and a range of other bank and non-bank fees.

6. I am unable to make precise findings of facts on the state of the evidence but I am satisfied that some money was gifted back to the parties and I accept that there would have been establishment and other administrative fees if the parties had utilised a commercial loan.  I am prepared to find that the loan from the wife’s parents did facilitate the purchase of the land and was at least neutral for the first six years, meaning that it cost no more than a commercial loan because of the amounts gifted back and the saving on fees and charges.

7. When the parties borrowed further money from the wife’s parents in March 2002, the rate charged by them was 5 per cent per annum. The Reserve Bank three year fixed rate fluctuated over the period between 7.8 per cent and 9.7 per cent per annum.  The savings to the parties from the interest rate offered by the wife’s parents can be seen from the spreadsheet H12 to be $34,530 over the ten year period between 15 March 2002 and 15 March 2012. 

8. When compared to the Reserve Bank standard variable rates for the same period, the advantage to the parties of the loan provided by the wife’s parents amounts to $23,455. I am satisfied, therefore, that the benefit to the parties of having the second loan from the wife’s parents falls somewhere in the range of $23,455 to $34,530 over the ten year period. 

9. In about 2004 or 2005 the parties received a bequest from the will of Mr G in the sum of $20,000 which was used to reduce the parties’ loan to the wife’s parents. According to the schedule which became exhibit W7, this appears to have been in August 2004. 

10. In approximately 2006 or 2007, the husband was injured at work.[3]  He received Work Cover payments and was put on light duties.  In 2010 he received a redundancy package from [A] in the sum of $37,000.  That money was used to pay off some extra money borrowed from the wife’s parents for the purchase of a tractor. At the time of the trial the husband was due to receive a compensation payment of $98,000.

    [3] The husband said at paragraph 22 of his affidavit filed on 9 November 2011 that the injury occurred “in or about 2007” but it appears from other material, including medical evidence, that it occurred no later than February 2006.

The share farming agreement

1. On 30 May 2008 the parties entered into a share farming agreement with their neighbours, Mr H and Ms H. The agreement was to grow crops on the land owned by the husband and wife. Pursuant to the agreement the husband and wife would supply the land, and Mr and

   
   

   Ms H would supply machinery, fuel costs and the labour needed to cultivate, tend and harvest the crop. Mr & Ms H were also responsible for managing the marketing, insurance and other logistical requirements.  Other costs including for seed, fertiliser, cartage and insurance were to be shared on an equal basis. The net sale proceeds were to be split equally between the two couples.  Either couple could decline to renew the agreement at the conclusion of each twelve month period.  The agreement noted that the landholders reserved the right to graze the cropping area once the harvest was complete, prior to the commencement of planting for the new cropping season.

2. The share farming agreement was signed by Mr H and Ms H on 2 June 2008 and both signatures were witnessed. The agreement was signed by the husband and wife on 4 June 2008 and both of their signatures were witnessed.  The cultivation of crops continued in accordance with the agreement until the physical separation of the parties in early 2011.

3. As mentioned earlier, on 15 November 2011 when the parties agreed to final parenting orders, they also signed a document headed “Terms of Settlement” which represented their agreement to resolve the property proceedings.  The document is probably more accurately described as “Heads of Agreement” as, although it was comprehensive, it needed to be converted into a more particularised set of orders.  Neither party sought to keep the agreement confidential. It was annexed to the wife’s affidavit filed on 21 May 2012 and no objection was made to it. 

4. The agreement between the parties provided for the husband to keep the southern block and for the wife to have the eastern and corner blocks, which she planned to sell. The parties agreed to share the capital gains tax liability payable on the sale by the wife of the eastern and corner blocks.  According to the agreement, the partnership between the husband and wife was to be treated as having been dissolved retrospectively as at 26 September 2010. 

5. Not long after the signing of the agreement in November 2011, the wife became aware that crops had been planted on the eastern and corner blocks without her knowledge.  She saw Mr H’s vehicle on one of the blocks and confronted him.  Verbal and written communication then ensued between the solicitors for the parties.  It was asserted on the part of the husband that he had entered into a new share cropping agreement with Mr H.  The wife had not been told about that and did not believe any such agreement existed. In a letter to the husband’s solicitors dated 22 November 2011, the wife’s solicitors asked for a copy of the agreement.  They also asserted that, given the wife was to take the corner and eastern blocks in their entirety, she was also entitled to the crops which had been planted on them. 

6. The husband through his solicitors proposed that, once the crops were harvested from all three blocks, Mr H be paid his one half-share in accordance with the new share farming agreement; the husband be reimbursed $20,000.00 for inputs; and the balance be divided between the husband and wife. 

7. The wife’s solicitors responded on 30 November 2011, saying that the wife considered that the husband had, by his actions, repudiated the entire property settlement agreement.  It was pointed out that, even if some agreement about the crops could be reached, the lack of consultation with the wife gave her no confidence that she would get a full accounting for any crops that had already been removed from the property. The wife gave notice that she now wished to sell all three blocks as she could not be confident that the value of the southern block could be adequately ascertained in any event.

8. During the trial the husband and Mr H both gave evidence about their new share cropping agreement and a copy of it was produced. It is a simple document. It is not dated but the body of the agreement states that the term of the agreement is for 12 months commencing on 1 April 2011. It sets out the responsibilities of each party to provide certain inputs and for them to share other costs on an equal basis. The agreement is signed by both the husband and Mr H. Contrary to the earlier agreement, neither signature is dated and neither is witnessed by a third party. Neither the husband nor Mr H explained why their wives were not involved in the agreement.

9. Mr H said he knew the wife had left the farm in early 2011. He said that it was his understanding that the husband would continue to work the farm.  It was put to him in cross-examination that he must have asked the husband about what would happen in relation to the previous share farming agreement that had been operating until then.  He said he did ask. He said that was what led to him and the husband entering into the new share farming agreement.  He said he couldn’t remember precisely when the document was signed but he believed it was in early April 2011 because the agreement was stated to commence on 1 April 2011.  It was suggested to both the husband and Mr H that the written agreement was hastily prepared after the wife confronted Mr H late that year.  Both denied that was the case. 

10. Mr H was cross examined about the conversation he had with the wife when she confronted him.  He said he remembers feeling bewildered about the proposition that, because of an agreement reached between the parties in November 2011, the two blocks now retrospectively belonged to the wife.  It was put to him that, during his conversation with the wife that day, the wife said to him something like “You say there is no agreement but, if there is, I need you to provide information about the terms of it by close of business tomorrow”. Mr H agreed the wife had said that.  It is hard to imagine any explanation for such a statement other than that Mr H had told her there was no agreement.

11. The husband said that he did not recall when he signed the second share farming agreement. He said he thought it might have been when Mr H got nervous after a phone call from the wife.  The evidence of the wife, the husband and Mr H all lead me to believe that the agreement was signed late in 2011. I infer that the signatures were not dated in an effort to create the impression the agreement was entered into earlier than it was.

12. The deception extended much further than the hasty preparation of the document. Mr H said that the planting of the crops went ahead as usual in 2011 except that he kept all of the net proceeds of sale. He said the husband asked him to do so because the wife was taking half of all farm income out of the account and he wanted to make sure there was enough money to buy seed to plant crops the following year.  Mr H co-operated in the deception by keeping the husband’s share in his own account. He did, however, keep a record of what was owing to the husband.  He agreed that, as at about February 2011, when the wife and children left the farm, he was holding $9,000.00 for the husband. 

Credit issues

1. The husband generally appeared to be an honest witness. There were, however, a number of matters which undermined his credibility. He was quite vague about various aspects of his financial arrangements. His evidence that the share cropping agreement with Mr H was entered into in April 2011 was not convincing and reflected poorly on both him and Mr H. 

2. Similarly, the husband’s actions in having Mr H deposit all of the proceeds of the sale of crops into Mr H’s bank account did not reflect well on the husband.  His explanation to Mr H that the wife was taking 50 per cent of all farm income from the business account was incorrect and unfair.  The only money the wife took from the business account was to pay business bills which she had always done.  If the husband was concerned about having enough money to plant the following year’s crops he should at least have given a full accounting to the wife of the monies held by Mr H and an explanation for how those funds were to be used.  His deception in failing to advise the wife about what was going on justifies her distrust of him.

3. The major criticism of the husband was that he failed to make full financial disclosure until 15 May 2012, less than one week prior to the commencement of the trial.  Documents that were provided on that day were voluminous, unsorted and incomplete.  Even the bank statements provided were not in chronological order and were not a complete set.  The husband said he found many of the documents in a shipping container on the property which was used for storage by the parties.  That means he had access to those documents all along and ought to have produced them in a timely manner.  An invoice book he used to record off-farm income was not produced until late on the first day of the trial. He was rightly criticised for his failure to comply with orders for discovery. The very late provision of the documents lengthened the trial, as many factual matters were ultimately agreed and could have been agreed well before the trial began. It resulted in both parties incurring greater costs. 

4. The wife was generally very clear and precise in her evidence.  She is obviously an intelligent person and was able to explain herself well.  She was criticised for understating the husband’s contributions at the beginning of the relationship.  However, a statement prepared by her setting out the start up capital contributed by both parties (which I will come to in more detail later in these reasons) was in the shipping container on the farm and had not been discovered by the husband.  She can hardly be blamed for that. Until it was provided she was doing the best she could from her memory.

5. The wife was also criticised for overestimating the cost of borrowing funds from a commercial lending institution for the purchase of the land but I am not persuaded the wife was dishonest in that regard. I accept her evidence that she genuinely believed parties would have had to pay close to 10 per cent interest from a commercial lender.  She adjusted her calculation of the benefit as more information became available to her during the trial, as did counsel for the husband.  I am satisfied she is an honest witness.  She can however be criticised for failing to provide the husband with information held by her which was necessary for the husband’s accountant to complete his tax returns for 2010 and 2011.The wife agreed she was aware of the husband’s request for those documents and that she failed to provide them.  When asked why, she said it was because the husband had failed to comply with her requests for the provision furniture and personal items. Clearly her refusal to provide the documents was a form of retribution for the husband. It caused him to incur fines.  That behaviour did not reflect well on her. 

6. Other than those comments, I do not make any adverse findings about the credit of either party. 

The law in relation to property

1. Section 79 of the Family Law Act 1975 empowers the Court to make orders altering the property interests of the parties. In making a determination about the issue, the Court is required to undertake a four step process as follows: [4]

   a)Firstly, the Court is required to identify the net assets or property available for distribution at the date of hearing.

   b)Secondly, the Court must assess the contributions of the parties to the acquisition, conservation or improvement of the property as provided in subsections 79(4)(a),(b) and (c) of the Act.  Contributions include financial and non-financial contributions, direct and indirect contributions and contributions made to the welfare of the family in the capacity of homemaker or parent. 

   c)Thirdly, the Court must consider the matters set out in the remaining paragraphs of sub-section 79(4) which incorporate section 75(2) of the Act. These matters broadly require a consideration of the financial position and resources of each of the parties, their age and state of health, their necessary commitments in supporting themselves or any other person, the effect of the marriage on the earning capacity of either party and the effect of any proposed order on the earning capacity of either of them.

   d)Fourthly, the Court is required to determine, in light of the findings arising from the first three steps, what order is just and equitable in the particular circumstances of the case.

   [4] Hickey and Hickey (2003) FLC 93-143 at 78,386

The property pool

1. The major issue in determining the size of the pool is determining the value of the land owned by the parties at [G]. 

2. The parties jointly appointed an expert to value the land.  The report of the valuation dated 1 February 2011 is annexed to an affidavit of the valuer, Mr S, filed on 10 November 2011.  Mr S described the property as follows:

   – Attractive farming property on [omitted] approximately 24 kms west of central [E]

   – Substantial modern residence on elevated south eastern part of property with expansive rural views in a northerly direction and well developed grounds

   – Property is of sufficient and Title configuration to enable sale in three separate parcels as rural lifestyle properties

   – Current planning permit issued August 2009 for a fourteen turbine “wind farm” on land adjacent to the west of the subject property.

3. The impact of the proposed wind farm is apparent from the valuation report. Mr S valued the property on the basis that the wind farm would not proceed and on the basis that it would.  He also assessed the value on the basis of all three properties being sold together and on the basis them being sold individually.  He ascribed a value of $4.44 million to the three properties sold together in the event the wind farm did not proceed and $3.55 million if it did - a drop in value of $890,000. The individual values in each scenario are set out in the following table:

No wind farm	Wind farm
Eastern Block	$1,080,000	$  970,000
Corner Block	$1,310,000	$  850,000
Southern Block (with residence)	$2,250,000	$1,680,000
Three blocks sold together	$4,440,000	$3,550,000

1. The wife was not satisfied with the valuations by Mr S and engaged another certified practising valuer, Mr D, to carry out the same exercise.  His report was prepared a year after that of Mr S.  Mr D’s report dated 22 February 2012 is annexed to his affidavit filed on 27 February 2012.  

2. Notwithstanding the gap of 12 months between the valuations of Mr S and Mr D, both valuers used sales data for seven properties sold between May 2009 and September 2010 because of the lack of comparable sales in the area since then. They had two properties in common.

3. Mr D assessed the market value of all three properties sold together as being $3 million dollars in the event the wind farm did not proceed and $2.475 million if it did - a drop in value of $525,000.  His individual assessments in each scenario are set out in the following table:

No wind farm	Wind farm
Eastern Block	$620,000	$500,000
Corner Block	$830,000	$550,000
Southern Block (with residence)	$1,750,000	$1,475,000
Three blocks sold together	$3,000,000	$2,475,000

1. Clearly, there was a significant difference of opinion about the value of the property in each scenario.

2. The two valuers had a discussion on 27 February 2012 after which

   
   

   Mr S prepared a letter, an unsigned copy of which came into evidence as exhibit W15. In that letter Mr S explained that, as a result of his investigation and discussions with agents “active in this sector of the market”, he had concluded that the value of the property owned by the parties had deteriorated by between 20 and 25 per cent over the 12 months since he carried out his valuation in February 2011. However, notwithstanding that adjustment in his valuation, the two valuers still did not agree. Mr S set out the areas of dispute and explained why he disagreed with Mr D. Ultimately, the essence of the disagreement is contained in the following sentence on page 2 of the letter:

   The differences in the values of the property assuming the wind farm was to proceed lies in our interpretation as to the effect of the wind farm on the various parts of the property and the property as a whole.

3. Orders were made by consent on 28 February 2012 requiring the valuers to formally meet and prepare a joint statement setting out the matters on which they agree and disagree.  That joint statement is dated 24 April 2012 and is attached to the husband’s outline of case document filed on 21 May 2012. 

4. According to the joint statement, during their conference the valuers discussed sales data for the region, the costs of providing electricity to the eastern and corner blocks and the fact that information obtained by the husband’s lawyers from the [omitted] Shire Planning Department significantly increased the likelihood of success of an application for a planning permit to erect a home on the eastern block.  Mr D had not previously seen that information.

5. Both valuers agreed that the market conditions in the relevant sector of the rural property market had “eased considerably” over the preceding 12 months and that there had been no recent sales of similar properties “at figures above market expectations”.  It was noted that, although there had been a slight improvement in the general economic outlook, that had not yet been reflected in the local property market.  Neither the eastern block nor the corner block had electricity connected.  The estimated cost of connection, which was $65,000 per block, was seen as being in the mid to upper range of what prospective purchasers might expect to pay for the connection.

6. During the conference, both valuers made some adjustment to their valuations.  Mr S made allowances “for the higher than expected cost of supplying electricity and for the continued softening of market conditions”. Mr D reduced his previous estimate of the cost of supplying electricity to the corner and eastern blocks and agreed that “the possibility of obtaining a planning permit to erect a single dwelling on the eastern block is considerably stronger based than first thought.”

7. The valuers agreed that the difference between them still simply came down to a difference in the subjective assessment of the impact of the proposed wind farm:

   We have agreed there is insufficient sales information currently available from which to ascertain the level of reduction in value applicable to rural properties in close proximity to Wind Turbine facilities. The matter is therefore largely subjective however our opinion in relation to this subject property is not significantly different.

8. The valuers were ultimately unable to agree on the value of all three blocks either in the event the wind farm proceeded or in the event it did not. The joint report contains a number of tables which enable an easy comparison of the values attributed by each expert to the individual blocks of land and to the three blocks if sold together in each scenario. 

9. The first two tables set out the position of each valuer at the commencement of the conference.  The values attributed by Mr S to each of the individual blocks and the three if sold together are lower than in his valuation of February 2011 but he had previously explained that that was because of the deterioration in the market during the period since his first assessment.  The tables are as follows:

   Assuming the wind farm does not proceed:

Mr S	Mr D
Overall Property	$3,350,000	$3,000,000
Eastern Block	$810,000	$620,000
Corner Block	$980,000	$830,000
Southern Block	$1,780,000	$1,750,000

Assuming the wind farm proceeds:

Mr S	Mr D
Overall Property	$2,680,000	$2,475,000
Eastern Block	$690,000	$500,000
Corner Block	$640,000	$550,000
Southern Block	$1,425,000	$1,475,000

1. The third and fourth tables set out the relative positions of each valuer at the conclusion of the conference as follows:

Assuming wind farm does not proceed:

Mr S	Mr D
Eastern block	$750,000	$750,000
Corner Block	$920,000	$870,000
Southern Block	$1,780,000	$1,750,000
Overall Property	$3,200,000	$3,135,000

Assuming wind farm proceeds:

Mr S	Mr D
Eastern block	$640,000	$600,000
Corner Block	$600,000	$580,000
Southern Block	$1,425,000	$1,475,000
Overall Property	$2,600,000	$2,600,000

1. As can be seen from the tables, the valuers agreed on the value of the Eastern block at $750,000 if the wind farm does not proceed. They are $50,000.00 apart in their valuation of the corner block in that scenario and $30,000.00 apart in the valuation of the southern block, with Mr S attributing a higher value to each block. Mr S also valued the three blocks sold together at $65,000 higher than Mr D.

2. Although there is strenuous opposition from the local community to the wind farm, there is no way for me to assess the likely success or otherwise of the campaign to stop the project. Given the planning permit for the wind farm has already been granted, it seems reasonable to assume the wind farm is more likely than not to go ahead. It is hard to imagine any prospective buyer ignoring that issue. Accordingly, I have decided to work only on the basis of the expert opinions as to the value of the land in the scenario in which the wind farm will proceed.

3. The difference in the valuations in that scenario is $40,000.00 for the eastern block, $20,000.00 for the corner block and $50,000.00 for the southern block. Mr D valued the eastern and corner blocks lower than Mr S and the southern block higher. Both valuers agreed the three blocks sold together had a value of $2.6 million.

4. There is no real problem in valuing the eastern block and corner blocks as both parties agree those blocks should be sold. The impact of the proposed wind farm will presumably be built in to the price ultimately paid by a successful purchaser of each of those blocks. The valuation of the southern block, however, is difficult.

5. Given the valuers were unable to reach agreement, the wife’s position was that the only way to obtain a fair market value of the three blocks was for all of them to be sold. She suggested the husband could bid for the southern block at auction.  She relied on the evidence of a real estate agent, [name omitted], who recommended that all three blocks be auctioned on the one day, commencing with the southern block because the purchaser of that block may then be interested in the eastern and/or corner blocks, both of which adjoin the southern block. This would, he suggested, increase the pool of prospective purchasers of the corner and eastern blocks. Mr S said that he would agree with that approach under normal market conditions but, because of market conditions it would be equally valid to market all three blocks privately to assess what potential buyers there are before committing to a particular marketing strategy.[5]

   [5] Transcript 29 May 2012, page 105

6. Selling the southern block first would create a particular problem for the husband because, before he could bid at an auction for that block, he would need to know how much he can spend which, in turn, depends on how much the parties obtain from the sale of the other two blocks. 

Case law

1. Counsel for the wife relied on a line of authority in support of a proposition that where the valuation of an asset is particularly difficult, the only appropriate course may be to sell the asset.  The first case relied upon in support of that proposition is Little and Little (1990) FLC 92-147. In that case, there were three pieces of land in dispute. The trial judge accepted the evidence of the husband’s valuer in relation to the value of one property but was not satisfied with the evidence of either valuer in relation to two other properties. Accordingly, he ordered a sale of the two properties. On appeal, the husband argued that the trial judge had an obligation to determine the value of each property and should not have ordered the sale. In rejecting that argument, the Full Court of the Family Court in a joint judgment said the following:

   Whilst a trial judge should determine a disputed issue of valuation where the evidence enables him to do so, we do not accept that there is an obligation cast upon him to determine such a disputed issue irrespective of the state of the evidence. It may be such that a determination is not possible. In such a case, as in a case where there is a very considerable disparity in the valuation evidence and other evidence indicates that the actual ascertainment of the true value is difficult and complex, the proper solution as between the parties may be to order a sale.[6]

   [6] At page 78,020

2. Counsel for the husband argued that Little and Little can be distinguished on the basis that, in that case, the husband had the capacity to attend the auction sale of the property and to bid for it.  In the current case however it would be very difficult for the husband to bid for the property as, until the corner and eastern block are sold, he will not know how much money he has to apply to the purchase of the southern block.

3. Counsel for the wife also relied on the case of Smith and Smith (1991) FLC 92-261 in which there was a great disparity in the evidence of the experts about the value of a service station owned by the parties. The wife’s valuer put the value at $1.14 million. The husband’s valuer said it was worth $500,000.00. Each party sought the transfer of that property to them. The appeal was ultimately successful because, after apparently rejecting the evidence of one of the valuers, the trial judge ultimately accepted it. In the joint judgment of the Full Court, their Honours said the following:

   More relevantly here, where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to the specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces. The proceeds of sale are then divided in appropriate proportions between the parties.

4. The Full Court noted that, even where neither party seeks a sale, it may be appropriate to take that course when the value is otherwise unable to be ascertained. I note that in Smith and Smith the difference in the valuations was $514,000 (in 1991) whereas, in this case it is $50,000. The disparity in the valuations in this case is far less significant.

5. Next, counsel relied on the case of Phillips and Phillips (2002) FLC 93-104 in which the trial judge found there was insufficient evidence to prefer the opinion of one valuer over the other and ordered a sale of the property. On appeal the Full Court of the Family Court found no error in the trial judge being unable to ascertain the value but upheld the appeal on the basis that the order for the sale of the property resulted in an outcome which was not just and equitable in the circumstances of the case. The overall difference in the valuation of the former matrimonial home in that case was only $30,000.00 once the costs of sale were taken into account. The wife wanted to continue to live with the children in the property. She had paid over $7,000.00 towards the mortgage since separation, enabling the property to be retained. Their Honours said at paragraph 66 of the judgment the following:

   The obligation of a trial Judge in dealing with an application pursuant to s 79 of the Act is to make an order that is just and equitable in all the circumstances having regard to the matters of contribution and the other factors, including the matters in s75(2) of the Act. A trial Judge must identify and value the assets of the parties, identify and assess the matters of contribution and identify and assess the relevant other factors. It is also necessary, having undertaken these tasks, to be satisfied that the proposed outcome is just and equitable.

6. The Full Court went on to say at paragraph 68 the following:

   …In our view, this is a case where what was a just and equitable outcome had to be considered not in percentage terms, but rather in terms of the assets that the parties would ultimately hold, even though there was a dispute as to the value of the principal asset and the valuations were not very dissimilar. If his Honour had considered the real impact of the orders he proposed, and in particular the order for a sale of the Buderim property, it would have been apparent that the result was not just and equitable.

7. This decision is particularly apposite to the current case. Not surprisingly, counsel for the husband relied heavily on it to argue that a great injustice would be done to the husband if, because of the discrepancy in the valuations by the two experts, the southern block was to be sold.  The husband had proposed that he would bear all of the capital gains tax liability on the southern block if it were to be sold in the future. Counsel argued that his preparedness to do so was a significant matter to be taken into account, especially when he was going to pay more than half of the capital gains tax on the other two blocks when they were sold.  This was because the parties had agreed to pay capital gains tax in the same proportions as the overall property adjustment which is likely to favour the husband. 

8. The fact that there are serious difficulties in accurately valuing the southern block makes the sale of the block an easy resolution to a difficult problem. However I am not persuaded that that is, in fact, a reasonable course to take.  The wife has a secure future with good, marketable, professional qualifications.  She is unlikely to ever have difficulty finding paid employment.  The husband, on the other hand, is barely literate.  Each of his affidavits had to be read to him before swearing to the truth of them.  He will be significantly dependent on his capacity for physical work to earn an income.  His capacity to earn a reasonable income is, therefore, dependent on him being in good health.  He has already had a major shoulder injury and an operation on his back.  Retaining the farm (or part of it) will allow him to continue earning an income from it.  If the southern block is sold he will have to start again by buying or leasing another property.  Counsel for the wife pointed out that the compensation payment the husband was about to receive would be sufficient for him to lease a property or put a deposit on the purchase of another property.  That is true but the husband may then have to develop the property from scratch, including installing fencing which would be difficult for him given his physical limitations.  The current property has already been set up to suit him. Retaining the southern block will allow him to continue to make an income, albeit reduced as a result of the sale of the eastern and corner blocks.

9. If the husband has to buy another property he will also have costs of that purchase, including stamp duty, although the wife will have those costs in any event.

10. This is not a situation in which the property has been in the family for generations but the husband has been farming it 16 years and has an emotional attachment to it (as, no doubt, did the wife).  The southern block includes the home which was built by the parties.  Although both parties helped build it, the husband did the bulk of the physical work himself.  He would also like to retain it because the house is familiar to the children, being their only home until February 2011. 

11. Auctioning the southern block on the basis that the husband could then bid for it would involve significant extra costs to the parties in the form of marketing, auction costs and the commission to be paid to the selling agent. It would trigger the capital gains tax liability on the property.  This will reduce the net pool of property to be distributed between them. There is also a risk that the husband would not be the successful bidder and would then lose the opportunity to continue his farming business uninterrupted. During cross-examination, Mr S agreed that the husband’s anxiety to retain the property could well drive up the price and take it outside the definition of fair market value (being the amount likely to be paid by an informed and prudent arms-length purchaser). On the other hand, it may reveal the property’s true value to the husband which is also a valid basis on which to assess the value. 

12. For all of these reasons I am satisfied that some effort should be made to assess whether or not it is possible to achieve a fair division of property between the parties which will allow the husband to retain the southern block.

13. To carry out that exercise, a definite value needs to be ascribed to each of the three blocks. Given the discrepancy between the valuers, counsel for the husband urged me to adopt the valuations provided by Mr S rather than those of Mr D. He suggested a number of reasons for doing so. Firstly, Mr S was the agreed jointly appointed valuer and is therefore, arguably, neutral whereas Mr D is a partisan witness for the wife. Secondly, both valuers agreed the current market was “soft”. Counsel for the husband argued that this meant that the lower value for the southern block was more likely to be accurate. This, however, does not account for Mr S’s higher value for the other two blocks. Thirdly, counsel argued that Mr S was more reliable as he was much more thorough and comprehensive in his initial assessment and, although he adjusted his valuations in the joint conference “in the spirit of conciliation”, those adjustments were reasonably modest. He reduced his valuation of the eastern block by 7.2 per cent and the corner block by 6.25 per cent. He made no change at all in his valuation of the southern block. He reduced his valuation of all three blocks sold together by only 2.9 per cent. By comparison, Mr D increased his assessed value of the eastern block by 20 per cent as a result of the joint conference. This can be explained by the fact that when he did his first assessment, he over-estimated the cost of supplying electricity to the block and did not have the information about the likely success of a building permit for it. He increased his valuation of the corner block by 5.45 per cent. Like Mr S, he did not change his assessment of the value of the southern block.  He increased his valuation of the three blocks, if sold together, by 5 per cent.

1. I did not find any of the arguments for preferring Mr S’s valuations over Mr D’s persuasive. Both valuers are certified practicing valuers and no challenge was made to the qualifications or experience of either of them. Both valuers adopted the same valuation methodology and attempted to assess the market value of the three blocks assuming the property was to be put to its “highest and best use”.  I accept the evidence of both valuers that the differences reflect their purely subjective assessments of the impact of the proposed wind farm in circumstances in which there have been almost no sales of comparable properties for some years.

2. To resolve the difficulty, the husband’s counsel proposed a formula method of valuing the southern block. The formula is calculated by reference to Mr S’s valuations for the 3 blocks assuming the wind farm is to proceed. According to those valuations, the value of the southern block alone represents 115 per cent of the combined value of the eastern and corner blocks. Counsel for the husband proposed that, once the eastern and corner blocks are sold, a value can be attributed to the southern block which equates to 115 per cent of the combined sale price of the other two blocks.  I note that if Mr D’s figures were used, the southern block would have a value equal to 125 per cent of the combined value of the other two blocks.

3. Using such a formula was initially very attractive as the impact of the wind farm and of the market conditions generally ought to be reflected in the value of all three blocks. However, neither valuer agreed that the proposed method was a reasonable way of assessing the value of the southern block. Mr S said very clearly and simply that it was not possible to compare the eastern and corner blocks to the southern block in that way. He said that the southern block is a premium block in a high position with good views across the region. It has a large, well presented house with a swimming pool. He said that, even disregarding the house, the blocks are not comparable because of the size, amenity and improvements to the land comprising the southern block. He said the market for that property is quite different to the market for the other two blocks which have a lower position, are not connected to water and electricity supplies and do not have improvements, other than a shed on one of the blocks. He said that, given the market for the blocks is so different, it is not possible to infer the true market value of the southern block from the sale price of the other two other blocks.

4. Mr D agreed in cross-examination that the price achieved for the corner and eastern blocks would give some small indication of how the market was factoring in the proposed wind farm. He emphasised, however, that it would really only be indicative in relation to vacant land and would not be a reliable indicator in relation to the southern block.

5. Both valuers agreed that the proposed wind farm is likely to have a greater deleterious impact on the value of “lifestyle” properties such as the southern block than on land intended only for agricultural use.

6. It is apparent on the evidence that the husband is so keen to keep the southern block that he is willing to pay a premium for it. He is willing to bear the entire capital gains tax liability on the property in the event he sells it in the future, rather than having that capital gains tax borne by both parties which would happen if it is sold now. He is also content to share the capital gains tax liability on the corner and eastern blocks in the same percentage as any ultimate distribution of property which means he will bear a greater share.

7. The difference in value attributed to the southern block by the two valuers is $50,000. This is less than 2 per cent of what they agreed was the combined value of the three blocks. Orders which enable the husband to retain the southern block will save the parties the cost of sale including the commission. If the costs of sale are approximately 2.75 per cent of the value of the block,[7] they will amount to between approximately $39,188 and $40,563, depending on whether Mr S’s or Mr D’s values are adopted. The selling costs alone, therefore, are equivalent to around 80 per cent of the difference in the value attributed by the two valuers.

   [7] The parties agreed to this as a working figure for the purpose of the discussion in the absence of any precise evidence of the likely costs.

8. If the husband retains the southern block, the wife will take the net proceeds of sale of the eastern and corner blocks which, on the lowest of the values of the two experts (Mr D’s), will have a combined value of $1,147,550.00 after the costs of sale are deducted.  Capital gains tax would be payable on the blocks. There was no evidence from either party about what that was likely to be but, as already noted, the husband will pay a greater share of it than the wife. In my view, the combined effect of the wife taking the net proceeds of the sale of the eastern and corner blocks and an additional cash payment from the husband to account for her share of all three blocks, plus the saving of the sales costs of the southern block and the husband taking a greater share of the capital gains tax are sufficient to offset any potential prejudice to the wife, especially when measured against the potential for prejudice to the husband in the event that all blocks are sold.

9. Accordingly, I have decided to give the husband the opportunity to retain the southern block. I have also decided to adopt the value attributed by Mr D for it. Although this is $50,000.00 higher than

   
   

   Mr S’s valuation, using the higher value will minimise the risk that the husband obtains an unfair advantage by avoiding a market testing of the value. It is also reasonable given the various intangible benefits which will flow to the husband from not having to start his farm all over again and given that it will mean that he will be able to avoid the costs of stamp duty and relocation if he had to buy a different property, whereas the wife will not be able to avoid those costs. I am reasonably confident that the value ascribed by Mr D would, in fact, reflect the value of the block to the husband. If I am wrong about that or if the husband feels aggrieved or prejudiced by this approach, the southern block can be sold and the proceeds distributed in the same manner as the other two blocks. I will give him that option.

The remaining assets

1. There is a reasonable degree of consensus about the value of the remaining assets of the parties. They agree that the farm machinery, equipment and the husband’s vehicle have a combined value of $118,615 and that the livestock on the property has a value of $87,100.00. They agree that the wife’s car has a value of $20,000.00. The amount of superannuation is also agreed.

2. There are a number of items the value of which is not agreed. The husband has a Yamaha 20 horse power boat motor. The wife estimates that motor to be worth $2,000.00. The husband said he no longer owns it as he traded it for a 30 horse power boat motor owned by Mr L. He said the trade occurred some years ago when he organised for some [omitted] work to be done for Mr L. He said that, as part of the arrangements, he and Mr L agreed to swap boat motors but Mr L has not yet collected the smaller motor. The explanation about the trade was not particularly convincing. Given the motor has not been collected by Mr L it seems more likely that the husband was simply given the 30 horse power motor as part of his payment for the job. There is no credible evidence that the motor is owed by Mr L. Accordingly I will include it in the pool at $2,000.

3. The wife alleged that the husband’s gun cabinet and guns collectively are worth $2,000.00. The husband said he forgot to get the valuer to value them at the time of the valuation of the property was done. He said he built the gun cabinet himself. He said he has five guns which he estimates are worth about $300.00 each. On that basis I am satisfied that the cabinet and the guns together would be worth approximately $2,000.00.

4. The parties disagreed about a new 4WD motorbike which remains at the former matrimonial home. I am satisfied on the evidence that the husband bought the motorbike for the children and that neither party intends to sell it. However, at the time of the purchase the children already had a 4WD motor bike. In circumstances in which the husband was paying no child support, it was not reasonable for him to spend $2,000 of farm income on the bike. It is a major item of discretionary expenditure without the wife’s consent. Accordingly, that item will be notionally added back to the pool and form part of the distribution to the husband.

5. The next item in contention is a 1966 Toyota Ute. [8] The husband concedes it is worth $1,000.00. This will be added to the pool.

   [8] or 1976 – the evidence varies.

6. Remaining on the southern block is a pile of redwood milled furniture timber. The timber was cut by the husband using a chain saw rig. He built a dining table from one of the larger pieces. The timber was not valued during the valuation of the property.  The husband proposed that he keep several of the larger pieces for himself and the rest can be sold by the wife. The wife agreed to that proposal and that order will be made. Given the level of animosity between the parties I intend to make a specific order requiring the husband to co-operate with any arrangements made by the wife for the sale of the timber. However, there will need to be a limit on the time the wife has to sell the timber. I was not addressed about that but 18 months seems to me to be a reasonable period.

7. It is common ground that on the parties’ property there is a two-berth Franklin caravan which the parties have used for many years. The husband said the caravan was originally owned by Mr G who gave it to the husband’s parents. Mr G was a friend of the family who died [in] 2006. He is the same person who left the husband and wife $20,000.00 in his Will. During the proceedings the husband produced a letter from a now retired solicitor who was the executor of the estate of Mr G.  The letter, dated 28 March 2007, is addressed to Vic Roads. It confirms that the caravan was given to the husband’s father by Mr G and asks that the caravan be registered in his name.  A copy of the certificate of registration in the name of Mr Raabs senior with an expiry date of 3 April 2013 was also produced. Together they formed exhibit H6 in the proceedings. I am satisfied the caravan is not owned by the husband although he has free use of it. I will not include it in the property pool.

8. The next item in dispute is an Ingle car fridge. The husband said he owns two car fridges, one of which he has had since he was 18 years old. He said he bought the second fridge for $1,678 on 11 December 2009. The husband conceded in cross-examination that he did not specifically point it out to the valuer but said it was in the vehicle which was assessed during the valuation of the business plant and equipment. I intend to include it separately in the pool. Making some allowance for the fact that it is close to three years old, I will allocate a value of $1,000.00 to it.

9. The husband agreed that, at the date of separation, there was about $2,000.00 worth of wool and about $8,460.00 worth of hay in the shed. However, he had been feeding the hay to the livestock, initially at about 2 barrels per day and then at 4 barrels per day. He said there were more than half of the barrels left at the time of the trial. Accordingly I will attribute a value of $4,200.00 to the hay.

10. The husband has retained most of the contents of the former matrimonial home. There is no valuation of those contents. I will attribute a value of $5,000.00 to the contents given it is a large house and the contents are likely to be worth at least that amount.

11. It is common ground that the wife had $15,400 cash at the time of the physical separation of the parties. The husband sought that it be notionally added back to the property pool. The husband had $18,700.00 in round terms owing to him from various farm activities at the same time. Counsel for the wife argued that the two amounts should be offset and not counted as part of the pool.[9] She also sought that an additional amount to be added to the pool to account for the sale of grain and hay after separation but there would be a risk of double counting if that occurred as the cash generated from the sale of crops was used to pay for inputs used to generate later income from the sale of crops and wool. The inclusion in the pool of an amount to account for the stock of hay at the time of the trial may already be a double counting of the $18,700 due to the husband at the time of separation. It is impossible to make accurate findings about the nature of funds in the business account at any one time because of a pervasive lack of precision in the evidence about it and a comprehensive mingling of the husband’s personal and business finances.

    [9] Transcript 30 May 2012, page 19-20

12. During his oral evidence the husband was taken through various financial documents to analyse the cash flows in and out of his account in an effort to establish his annual income.  The husband said he uses only one account which is a Westpac Agri-business cheque account into which is deposited all farm and off-farm income and from which all business and personal expenses are paid.

13. The husband agreed in cross examination that in the 14 months between 4 February 2011 when the wife left the property and 31 March 2012, the total deposits into the bank account amounted to $86,506.00.  The opening balance was $2,109.00.  The total withdrawals were $97,305.00 leaving a net deficit for that period of $8,690.00.  However it is clear from documents produced that some of the expenditure during that period was purely personal.  For example, $7,048.00 was spent on groceries and $27,725.00 on legal fees. It is also apparent that some of the other expenditure, including electricity, telephone and fuel charges, would be at least partly attributable to personal use. If the amounts spent on groceries and legal fees are disregarded, the expenditure for the 14 month period falls to $62,532.00 which would leave a positive balance of income over expenditure for the business of just over $26,000.00. This translates to an annual income of approximately $22,286, not all of which is from farming.

14. This exercise did not assist in relation to the amount said to be owing to the husband at the time of separation. I have decided not to add back the amount in the wife’s account or any amount owing to the husband at the same time. In my view any potential disadvantage to the husband in not adding back the $15,400 in the wife’s account is likely to be more than offset by the fact that the wife had to set up an entirely new household for four people because almost all of the household contents remained in the former matrimonial home.

15. Turning to the liabilities, the parties agree that $32,500.00 is the principal sum owing on the loan from the wife’s parents. They agreed that interest owing up to 18 March 2012 was $996.37. Obviously that interest has continued to grow since then. Exhibit W7 sets out the amount of interest payable each month calculated by reference to the number of days in the month. According to the schedule the interest payable fluctuates between about $124 and $138 per month, depending on the number of days of the month, so the amount owing by now would be closer to $2,000 if there have been no payments.. For the purpose of the current exercise, however, I will use the amount agreed to be owed as at 18 March 2012.

16. At the time of the trial that the husband was expecting to shortly receive compensation of $98,000 for an injury sustained by him while working at [A]. It is an “all in” settlement for pain, suffering and economic loss. The wife conceded through her counsel that, other than taking the husband to his solicitor in relation to his claim, she made no direct or indirect contribution to that entitlement and could not argue for a share of greater than five to ten per cent of it.  However it is arguable that the economic loss associated with the injury affected the wife to some extent as well as the husband.  The wife’s counsel was content to keep that item separate and not add it to the property pool. The husband proposed a slightly different arrangement which is more favourable to the wife. He suggested the damages payment be included in the asset pool but be reflected in an additional one per cent adjustment in favour of the husband. I agree that is a reasonable approach.  If the $98,000 is included in the pool, it would comprise just over three per cent of the total asset pool, including superannuation, which is $3,109,396.  An extra one per cent adjustment to the husband of the total pool (a two percent differential between the parties) would be the sum of $62,188 which translates back to a division of the $98,000 of approximately 63 percent to the husband and 47 per cent to the wife.

17. The parties agreed to treat superannuation differently to the rest of the pool. They agreed to divide it evenly through a cash adjustment, rather than a superannuation splitting order.  Given there is a difference of $30,422 between the superannuation interests of each party, this will require a cash payment from the husband to the wife in the sum of $15,211.

1. The property pool is as follows:

ASSETS:	$	$
Southern block	1,475,000
Eastern block	600,000
Corner block	580,000
Plant and Equipment	118,615
Livestock	87,105
Wife’s car	20,000
Boat motor	2,000
Guns and cabinet	2,000
1996 Toyota Ute	1,000
Ingles Fridge	1,000
Hay	4,200
Wool	2,000
Home and Content	5,000
Add back 4WD motorbike	2,000
Compensation payment	98,000
Total gross assets	2,997,920
LIABITILIES :
Costs of sale eastern block (2.75%)	16,500
Costs of sale corner block (2.75%)	15,950
Principal owed to wife’s parents	32,500
Interest to 18 March 2012	$996
CGT	Unknown
Total liabilities	65,946
NET ASSETS	2,931,974

SUPERANNUATION:
Wife	70,000
Husband	100,422
Total superannuation	170,422
TOTAL ASSETS INCLUDING SUPERANNUATION	3,109,396

Contributions

1. Both parties agreed that during the relationship their contributions, in a broad sense, were equal. 

2. It is common ground that the husband made a greater initial contribution to the property pool than that of the wife but there is a dispute about the size of that extra contribution by him.  Before the parties purchased the land at [G] in 1996 the husband was employed as a full time [omitted].  He also leased a farming property in [W] on which he ran stock, mainly cattle and sheep.  When the property at [G] was purchased the husband put a caravan on the land and lived in it.  He moved a large storage shed from the [W] property to the [G] property and progressively moved over stock and equipment to the [G] land. 

3. The husband had also owned a house at [omitted] which he rented out and which was destroyed by fire shortly prior to the purchase of the [G] land. The husband received an insurance payment of approximately $50,000.  He then sold the land for about $31,000.  He applied the $81,000 to the purchase of the [G] land. 

4. On 17 October 1996 the wife prepared a summary of the start up funds contributed by each party at the time of the purchase of the land.  That document became exhibit H1 in the proceedings. It sets out the contributions made by each party to the deposit, settlement funds and charges for the purchase of the land as well as amounts paid for other things such as sheep and gypsum. According to that document, the total funds contributed by the husband were $106,099 and by the wife $28,810 in round figures.  Some of the items appear to be a summary of a number of contributions; for instance, there is one item which is simply termed “Assets” and another “Other cheque book allocations”.

1. In the document there are two separate entries for sheep.  “Sheep # 1” has a value of $2,605.70 and is recorded on the husband’s side of the ledger. “Sheep # 2” has a value of $11,000 of which $7,000 is attributed to the husband and $4,000 to the wife. Although there is no explanation, I assume this is a purchase at the time as there is no suggestion the wife owned any stock prior to the purchase of the land.

2. The husband said at paragraph 9 of his affidavit filed on 8 November 2011 that, at the time the [G] property was purchased, he already had livestock with an estimated value of $25,000 and tools and equipment with an estimated value of $30,000.  His counsel urged me to add another $25,000 to the amount recorded on the document for livestock contributed by from the [W] property, noting that he was not challenged about that evidence. I am concerned, however, that if I do so, there may be a double counting of livestock.

3. The husband said at paragraph 14 of his affidavit filed on 8 November 2011 the following:

   From my livestock accounts for that period and from my tax returns, as at June 1998 I had 427 head of sheep and 353 lambs. I had 99 head of cattle for which 68 were heifers and 31 calves. At that time also I recorded an income from the sale of sheep and cattle as I had done for a number of years prior to that time. In addition, I derived an income from the sale of crops being barley, wheat and canola which were grown on the [G] land.

4. Counsel relied on this passage to prove that the husband had cattle and sheep before and after the purchase of the [G] land, even though no cattle were recorded on the document setting out the start up capital.  However, the time referred to in the quoted passage is almost 2 years after the purchase of the land. The parties may have obtained the cattle after buying the land. The fact that he previously had cattle does not necessarily mean he contributed them to the joint venture. The husband was asked to produce the livestock records and tax returns referred to but did not do so. At the end of the day I am unable on the state of the evidence to determine whether or not the husband’s existing stock was accounted for in the document. Accordingly, I am not prepared to add another $25,000 to the pool to account for extra stock.

5. On the other hand, I do accept that the husband had tools and equipment on his leased [W] property which he retained and used on the [G] farm. There are no tools and equipment noted in the document recording the start up capital, although there is an item called “Assets” to which is attributed a value of $4,475.45. The precise sum suggests it relates to specific purchases because an agreed value of the tools and equipment owned by the husband is more likely to have been a rounded sum. Accordingly, I am prepared to allow the $30,000 that he estimated as the value for the tools and equipment and will add that amount to the total contributed by him at the beginning of the financial relationship between the parties. 

6. Accordingly, I find the total amount initially contributed by the husband was $136,909 and by the wife $28,810.  Of the total value of the start up capital of $165,719, therefore, 83 per cent in round terms was contributed by the husband and 17 per cent by the wife.

7. The land purchased in 1996 remains the most valuable asset owned by the parties. Counsel for the husband argued that great weight ought to be accorded to the husband’s initial contributions which enabled its purchase. I agree the initial contribution ought to be accorded significant weight. However, I am not persuaded that the purchase would not have occurred without the husband’s capital. The wife contributed almost $29,000 in cash which was sufficient for the deposit. Both were earning sufficient income to pay for the construction of the house from their own savings without needing to borrow more. Presumably they had the capacity to borrow more funds for the purchase if they had needed to, although that may have meant the development of the property would have been less rapid.

8. The purchase of the land was also facilitated by the loans from the wife’s parents. As indicated earlier, the benefit to the parties from obtaining the second loan from the wife’s parents rather than a bank was between $23,455 and $34,530. In addition the wife’s parents provided a short term loan which facilitated the purchase of a tractor in October 2009. [10]

   [10] Exhibit W9, page 4

9. I accept the submission of counsel for the wife that what the parties purchased in 1996 was a set of bare blocks. The parties subsequently built a house and pool, constructed fences, stock yards and sheds and, by doing so, hugely improved the capital value of the land and, in particular, the southern block. This is not a case in which the asset has remained largely unchanged and simply appreciated as a result of market forces. The asset is significantly different in nature as a result of the combined efforts of both parties. While the husband’s initial contributions are weighty, the current value of the southern block reflects the efforts of both parties over the ensuing 16 years. Together they increased their combined assets from just under $166,000 at the beginning of their partnership to approximately $3,000,000 at the time of the trial.

10. Counsel for the wife submitted that the wife made a number of post-separation contributions which were greater than the husband’s. The first was that she had been paying $350 per week in rent to house herself and the children while the husband continued to live rent free in the former matrimonial home.  As counsel for the husband pointed out, however, the husband has paid insurance on the property at $6,000 per year and rates of $5,000 per year which, together, average $211.50 per week.  The wife has paid $138.50 in rent per week over and above what the husband has paid in insurance and rates for the former matrimonial home.  Over the 62 weeks between separation and the trial, that amounts to $8,585.

11. The wife has also has borne almost the entire cost of the support of the children since separation.  This is a significant contribution by her. The husband conceded that he has paid no child support to the wife and has contributed only by purchasing two pairs of shoes for the children and one school t-shirt for one of the children.  The wife attempted to estimate the cost of providing for the children in a schedule to a letter sent to the husband by her lawyers in which they invited him to make a contribution. That letter and schedule became exhibit H8 in the proceedings.  In the schedule the wife calculated her costs of supporting the children, including an amount for electricity, gas, fuel and food for the periods she had the children in her care.  The total amount according to her figures was $28,682.15 for the period 17 January 2011 to 3 January 2012.  However, that figure included $17,150 for rent which I have already taken into account. I accept her calculation of the costs which, excluding rent, amounted to $11,532 for the 12 month period. The husband also incurred costs for the children during the period he had them but he had them for shorter periods and, in any event, ought to have been contributing to other, longer term costs such as clothing, school supplies and the like.

12. Overall, I am satisfied that the husband made a greater initial contribution than the wife but the weight of that contribution has been offset to some extent by the contributions made by the wife over the 16 year financial relationship, by the benefit derived by the parties from the finance provided by the wife’s parents, and by the greater post-separation contributions made by the wife, especially to the care and financial support of the children. 

13. In my view the husband’s extra contribution warrants a five per cent adjustment to him.  As I have added the $98,000 damages award to the property pool, I will make a further one per cent adjustment in his favour, making a total adjustment to him on contributions of six per cent.

Section 75(2) Factors

1. The applicant husband is 47 years of age.  He is generally in good health.  While working at [A] he sustained an injury to his shoulder which required surgery.  He has also had surgery on his back and said he suffers from pain in both knees. He said that all of these things restrict his capacity to work full-time as a [omitted].   

2. The husband produced a letter from his general medical practitioner, Dr M, in relation to his injured left shoulder. Dr M said his first consultation with the husband was on 31 December 2010. He said he had medical notes from the [omitted] Surgery previously attended by the husband but did not have a complete set of correspondence from the husband’s orthopaedic surgeon. He quoted from a report of an ultrasound of the husband’s shoulder carried out on 24 February 2006 as follows:

   The tendon of the long head of the biceps muscles has ruptured and the body of the muscle has retracted.  The rotator cuff is intact and there is no sign of a rotator cuff tear.  Movements appear reasonable.

   Conclusion: Rupture of the tendon of the long head of biceps muscles.

3. A report following an MRI on 19 August 2009 showed that there had been deterioration in the condition of the shoulder and that the tear had increased in size. Dr M said the husband had reported to him on 1 July 2011 that physiotherapy had been helpful to his range of movement. He said the husband told him he had done some [omitted] work the previous day and, while his shoulder was aching, he was pleased with his capacity to do the work. The doctor said the husband was keen to increase his activity and get back to work. 

4. The letter from Dr M which is dated 10 October 2011 is annexed to an affidavit sworn by him on 14 November 2011 and filed on 30 April 2012.  Dr M responded to specific questions asked by the husband’s solicitors.  Those questions and answers are set out in his letter as follows:

   Regarding your specific questions:

   (a) the diagnosis is one of a soft tissue injury to the shoulder including quite significant tears to rotator cuff, supraspinatus and subscapularis requiring repair

   (b) I am uncertain as to the specific mechanics of the injury and I am unable to say whether it is related to the stated cause.

   (c)(1) details as to what restrictions are imposed by reason of his injury, including restrictions on bending, lifting, twisting, sitting and standing. I do not believe that Mr Raab is fit for unrestricted work. Even domestic activities cause him a considerable amount of pain and discomfort. I feel that he would be able to do a considerable amount of work and is very keen to do this. However, when Mr Raaby does too much, particularly with respect to lifting or pulling or banging with his left arm and shoulder he experiences reasonably severe pain.

   (2) I do believe that he is better suited to restricted work. He is keen to do as much work as possible and I think that those hours could steadily be increased on a flexible basis up to a full working day, five days per week.  However, he will always need to be careful with the type of activities he is doing with respect to his left shoulder.

   (d) Whether the identified restrictions (including the restrictions on work capacity) are permanent? Judging from the extensive surgery that was required and as a consequence, significant scar tissue that could be found within the shoulder joint, I believe that the restrictions on his work would be permanent.

   (e) Prognosis and estimate of any future medical treatment? The surgery that has been performed has reduced significant pain that Mr Raab was experiencing and also the restriction on his range of movement. However, there is significant scar tissue that occurs as a consequence of surgery and one must always be considerably guarded regarding his future. His capacity of future medical requirements are that he would need ongoing physiotherapy as shoulders are notorious for causing scar tissue which then restricts the range of movement, if he is not careful he may get a frozen shoulder.

5. I am satisfied on this unchallenged evidence that the husband has some residual restriction as a result of his shoulder injury and subsequent operation(s).  This does not stop him from working as a [omitted] or as a farmer, although it may limit the extent to which he can work in either occupation.

6. The husband said that he could work, at most, one day per week as a [omitted].  He said that because of his physical limitations, he has to be very careful and can no longer do the more difficult jobs.  He said he finds [omitted], in particular, difficult.

7. It was suggested to the husband in cross examination that farming work must be just as difficult, given his physical restrictions.  He said that was not so because all of the difficult work on the farm, such as building the fences and yards, had already been done. He said the hardest work was crutching sheep and he gets a contractor to do that and only does it himself occasionally if, for instance, he comes across a fly blown sheep.

8. In cross-examination the husband agreed that he had a forklift license and a truck licence but had not done any forklift driving for many years and did not want to do any truck driving because he would find it difficult to load and unload the trucks and would be expected to do interstate runs which would take him away from the children. 

9. It is difficult to assess on the evidence what level of income the husband is likely to obtain from farming the southern block.  The wife asserted that the parties were unable to adequately support the family even utilising all three blocks and needed off-farm income to meet their everyday needs.  The husband said that he intended to change his method of farming by getting rid of the sheep and running mainly cattle on the property with some cropping. 

10. During his evidence in chief the husband produced an invoice book which he said recorded all of the work he had done as a [omitted] between 1 October 2011 and the date of trial. He said that prior to October 2011, he had not received any income from his [omitted] work since he started work for [A], which appears on the evidence to be 1998.[11]  He said that, in addition to him carrying out [omitted], he also occasionally organised [omitted] for others. He was paid for those services or bartered them as previously described.

    [11] Affidavit of wife filed10 November 2011, annexure KR6

11. The husband’s invoice book became exhibit H2 in the proceedings. The book contains carbon copies of five completed invoices. They are dated from 1 October 2011 to 14 March 2012. The original of a sixth invoice remains in the book. It is undated. It is an invoice for labour supplied for three separate sites for a total of $2,872. The husband said there were still two jobs outstanding at the time of the trial which had not yet been entered in the invoice book.  He said both jobs were done for his friend Mr B. He said Mr B’s wife writes up the invoices for him because he (the husband) has difficulties with reading and writing.  He said the two outstanding jobs would be entered in the invoice book when he gave Mr B’ wife the relevant information.  He said the actual hours worked are recorded in a diary which was currently in Mr B’s Ute because he was working with him.  For one of the outstanding jobs the husband said he had done two days work. For the other he had worked on and off for a total of probably three days.  He said he is usually paid $40.00 an hour plus GST but for one job he was paid a per metre rate and he still occasionally does bartering jobs.

12. I am satisfied on the evidence that the husband is likely to be able to support himself from the farming business, supplemented by off-farm income.  He will have an ongoing benefit of being able to reduce his taxable income to some extent through his business.  He is also able to engage in bartering with other trades people. 

13. The wife is aged 41. She is a qualified [omitted]. She worked from 1993 to 1995 as an [omitted]. She then worked for two years for [omitted]. In 1997 she began work as a full time [omitted]. She continued that work, dropping to part-time after [X] was born until she resigned in September 2002. In June 2009 she recommenced work with [omitted], taking leave without pay between July and October 2010. She now works 24 hours per week as a [omitted].  She currently works from 9.00am to 3.00pm four days each week but said, given the nature of the work, she does some overtime for no extra pay because the work needs simply needs to be done.  She has not been offered nor has she sought full-time work in her current position. Her pro-rata salary is $50,846.00 per annum for which the full-time equivalent is $90,000.00 per annum. Her current income is supplemented by Centrelink payments.

14. It was suggested to the wife that she could earn more money by working as a [omitted].  The wife said that she has not kept up her professional qualifications and, in any event, does not like travelling around doing [omitted]. She said she prefers her current job which is meaningful, familiar and flexible.  She was asked about doing private [omitted] work at home while the children are young.  She said she finds [omitted] for others very menial and time consuming and does not want to take time away from the children to do those things. 

15. It is the wife’s choice to spend more time with the children while they are young.  Given her age and the age of the children, however, she is likely to be able to increase her income as the children get older.  Given her professional qualifications, she is not ever likely to earn less than her current income.

16. Although the husband’s income will be affected by the vagaries of farming, he is a resourceful man, is keen to work and is likely to be able to do so.  I am satisfied that in a general sense the capacity of each party for appropriate gainful employment is roughly equal.

17. As a result of the final parenting orders agreed between the parties in November 2011, the children spend five nights each fortnight with their father and nine nights with their mother during school term.  School holidays are equally shared. Given this substantially shared arrangement, both parties need to provide accommodation for the children.  The day to day costs will be similar, although higher for the wife who has the children for a greater proportion of the time. The longer term costs of the children are more problematic. I am well satisfied on the evidence that since separation the wife has borne most of the costs of the children.  She asked the husband to contribute to the costs and he did not respond to that request. Two of the children require expensive orthodontic work which ought to be paid for by both parties.  The wife is understandably not optimistic about the husband contributing to those costs.

18. The husband said he has recently put in an application for child support.  Given the nature of his business and the fact that all of his personal income goes through the business accounts, it is reasonable to expect that his taxable income will be able to be minimised to some extent. The wife has no such opportunity as a wage earner. The husband also has the opportunity to receive income “in kind” through bartering with other farmers and trades people which will also help to keep his taxable income low. This, in turn, will be reflected in any child support assessment.  Although the Child Support Scheme allows either party to make an application for departure from the administrative assessment on the basis that the taxable income of the other party is not a true indicator of their true income and financial resources, producing evidence of bartering transactions is likely to be extremely difficult. In my view there should be some adjustment to take account of the fact that the wife is likely to end up bearing more of the financial costs of the children, given the history to date.

1. Neither party has re-partnered and neither party has responsibility for the support of anyone other than themselves and the children.

2. There is no evidence that the earning capacity of either party has been adversely affected by the duration of the marriage.  The wife was out of the work force for some years but has been able to find appropriate professional employment. She has chosen not to return to the full-time workforce in the short term in order to be more available to the children but is likely to do so in the longer term.

3. The husband’s income is likely to be effected to some extent by the fact that two of the three blocks of land on which he previously farmed will be sold.  The income produced by the farming business, therefore, is likely to fall fairly significantly, at least initially.

4. The wife will have the additional costs of stamp duty, relocation and the setting up of another home for her and the children when she buys another property, which the husband will be able to avoid by keeping the southern block. 

5. In my view there should be a two per cent adjustment to the wife on the s.75(2) factors to take into account the fact that the children will be living with her for greater periods than the husband, the demonstrated reticence of the husband to pay child support for the children and the fact that, although the income of the parties is likely to be fairly similar, the husband will be able to minimise his income to some extent through the business.

6. This results in an overall adjustment to the husband of four per cent. He will take 54 per cent of the asset pool and the wife 46 per cent, apart from the superannuation which will be divided equally.

Justice and equity considerations

1. If Mr D’s valuations of the blocks of land are accurate, the total non-superannuation assets have a value of $2,931,974. A 54/46 per cent division in favour of the husband means that he will take property to the value of $1,583,266 and the wife $1,348,708, a differential of $234,558. Given the distribution of other assets, if the husband keeps the southern block and the other two are sold, the division would require a cash payment from the husband to the wife of $214,654.

2. The distribution can be seen in the table below:

Husband:	$	$
Southern block	1,475,000
Plant and equipment	118,615
Livestock	87,105
Boat motor	2,000
Guns and cabinet	2,000
Ute	1,000
Ingle car fridge	1,000
Hay	4,200
Wool	2,000
Household contents	5,000
4WD motorbike	2,000
Compensation payment	98,000
Total	1,797,920
Less cash to wife	214,654
Net non super assets	1,583,266
Wife:
Eastern block	600,000
Corner block	580,000
Wife’s car	20,000
Sub-total	1,200,000
Less:
Est. costs of sale of land	32,450
Loan from wife’s parents	32,500
Interest on loan to 18 March 2012	996	65,946
Net assets	1,134,054
Plus cash from husband	214,654
Total	1,348,708

1. The figures above are, of course, imprecise. For instance, the interest owing to the wife’s parents has continued to accumulate. More significantly, the true value of the three blocks of land is unknown. The values attributed to the eastern and corner blocks are the lowest of those provided by the two valuers. If the blocks sell for more than the estimated value, the wife’s position will be better than that set out. If the estimate is accurate, she will have cash of $1.3 million (less 46 per cent of the capital gains tax liability for the two blocks). This is a reasonable amount for her to set up a new home with the children. 

2. The value attributed to the southern block to be retained by the husband is the higher of those provided by the two valuers. The difference in the value of property allocated to the parties will be reduced by the husband paying a greater percentage of the capital gains tax liability on the two blocks which are to be sold.

3. The husband will need to borrow money to pay out the wife and possibly to pay his share of the capital gains tax. However, he will have the compensation payment of $98,000 to assist. During the trial the husband through his counsel offered the wife a part payment of $25,000 from his compensation payment but that offer was not accepted. There is nothing to stop that occurring privately between the parties now with an adjustment on the settlement of the sale of one or both of the eastern and corner blocks.

4. Most of the value of the property taken by the husband is in the southern block. If he decides that the value attributed to that block is too high or that he cannot afford to keep it (for example once his capital gains tax liability for the other two blocks is known), he should have the option to sell it. I have decided to allow a period of 28 days from the settlement of the sale of the last of the two blocks to sell in which the husband may elect to do so. He will need that period to assess the impact of the capital gains tax liability on his financial position.

5. If the husband does elect to sell the southern block, all of the non-superannuation property will be divided on a 54/46 per cent basis in favour of the husband and the parties will be liable for the capital gains tax in the same proportions.  Although the wife will presumably have already received the net proceeds of sale of the other two blocks by then, given the value of the southern block is greater than the combined value of the other two blocks, the necessary adjustment will not be difficult to calculate or implement.

6. A further adjustment would need to be made to take account of the fact that the parties will already have had a distribution of the remaining (non-land) property. The total value of those other assets is $342,920.  A 54 per cent allocation to the husband would have a value of $185,177 but assets to the value of $322,920 will already have been allocated to him, necessitating a cash adjustment to the wife of $137,354.

7. The adjustment of $15,211 to equalise the superannuation would be unchanged.

8. In the event the husband wishes to keep the southern block but fails to pay the wife the required cash within the time-frame allowed (which is the same period allowed for him to elect to sell), the same provisions will apply, namely that all of the property will be divided on a 54/46 per cent basis.

9. Whether the southern block is ultimately sold or retained by the husband, I am satisfied the property division is a just and equitable settlement between the parties in the circumstances of this case.

I certify that the preceding one hundred and sixty-five (165) paragraphs are a true copy of the reasons for judgment of Hughes FM

Date:  9 November 2012