Rushton & Rushton - [2011] FMCAfam 1259

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RUSHTON & RUSHTON

[2011] FMCAfam 1259

FAMILY LAW – Property settlement – where the husband is a [occupation omitted] in a well-established [business] – valuation of interest in [business] – whether legal fees paid should be added back into the pool of property available for distribution at trial – discussion of add backs generally – analysis of section 75(2) factors – structure of orders to be made – whether section 79(2) is a fourth substantive step in property settlement exercise – consideration of what might constitute a just and equitable "mix" of asset types for each party.

Family Law Act 1975 (Cth)
Federal Magistrates Court Rules2001
Federal Magistrates Court Regulations

B & B (2006) FamCA 883
Biltoft (1995) FLC 92-614
Brice (2007) FamCA 170

C & C (1998) FamCA 143

NHC & RCH (2004) FLC 93-204

Clauson (1995) FLC 92-595

C & C (2005) FLC 93-220
Farnell (1996) FLC 92-681

Ferraro (1993) FLC 92-335

Finlayson v Finlayson and Gillam (2002) FLC 93-121

G & G(2004) FamCA 1179

Gollings & Scott (2007) FLC 93-319
Harrington (2007) FLC 93-317
Hayton & Bendle (2010) 43 Fam LR 602
Hickey (2003) FLC 93-143
Kernahan [2007] FMCAfam 952
Kowaliw (1981) FLC 91-092

Lee-Steere (1985) FLC 91-626

M v M (2006) FLC 93-282

McMahon (1995) FLC 92-606 at 82,043
Norbis (1986) FLC 91-712
AJO v GRO (2005) FLC 93-218

Orchard (2009) FamCAFC 90

OSF & OJK (2004) FLC 93-191

Pastrikos (1977) 31 FLR 524
Pastrikos (1980) FLC 91-987
Russell (1999) FLC 92-877

Stirling & Dobson (2011) FLC 98-056
Waters & Jurek (1995) FLC 92-635

White (1995) FLC 91-648
Whitely (1996) FLC 92-684
W & T (2006) FLC 93-266

Woollams (2004) FLC 93-195

Applicant:

MS RUSHTON

Respondent:

MR RUSHTON

File Number:

MLC 672 of 2010

Judgment of:

Walters FM

Hearing dates:

11 – 15 April 2011

Date of Last Submission:

15 April 2011

Delivered at:

Melbourne

Delivered on:

29 November 2011

REPRESENTATION

Counsel for the Applicant:

Mr Spicer

Solicitors for the Applicant:

Kliger Partners

Counsel for the Respondent:

Dr Ingleby

Solicitors for the Respondent:

Kennedy Partners

ORDERS

Upon the delivery of Reasons for Judgment this day IT IS ORDERED THAT

The wife must forthwith sign and execute all such deeds and documents and do all such acts and things as shall be necessary to transfer to the husband, at the husband's expense, her share and interest in the husband's [omitted] motor vehicle.
Both parties must forthwith sign and execute all such deeds and documents and do all such acts and things as shall be necessary to effect a superannuation split of the husband’s [L] Superannuation Fund benefit or entitlements in such a manner as to allocate to the wife from the husband's said benefit or entitlements the base amount of $201,111, such allocation to occur as soon as practicable.
The net proceeds of sale of the former matrimonial home situated at and known as Property T in the State of Victoria (which property is presently on the market for sale pursuant to orders made in this Court on 13 April 2011) be paid as follows:
(a)Firstly, and as to the sum of $215,000 referred to in item 11 in paragraph 67 of the Reasons for Judgment published this day:
(i)$20,000 towards repairs to the said property, with the surplus, if any, to be divided in the proportions of 63.75% to the wife and 36.25% to the husband;
(ii)$142,000 to the Australian Taxation Office towards the husband's tax liability (or alternatively, the tax liability of [Z] Pty as trustee of the [T] Family Trust);
(iii)$33,655 to the wife; and
(iv)$19,345 to the husband.
(b)Secondly, the balance then remaining be divided between the husband and the wife in the following proportions:
(i)91.5% to the wife and
(ii)8.5% to the husband.
Each party have liberty to apply for procedural or mechanical orders for the purpose of implementing:
(a)the superannuation split referred to in paragraph 2 above; and
(b)the sale of the said former matrimonial home and the disbursement of the net proceeds of sale in accordance with the provisions of paragraph 3 above.
All extant child support applications filed in the Federal Magistrates Court be struck out.
Save as provided for in paragraph 5 above, all extant applications otherwise be dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 672 of 2010

MS RUSHTON

Applicant

And

MR RUSHTON

Respondent

REASONS FOR JUDGMENT

Introduction

Two broad issues were presented to the Court for determination in these proceedings, although the relevance to those issues of much of the filed material, and some of the oral evidence, was not always apparent. The issues comprised property settlement and child support.
The parties are intelligent, well-educated professionals – and neither can be regarded as commercially naïve. Even so, it was perfectly apparent that neither had been prepared to take a realistic or commercially practical approach to their competing applications prior to the commencement of the trial itself, and neither had made a genuine effort to focus in a mature and responsible manner on the real issues that the Court would ultimately have to determine.
On many occasions during the hearing I warned the parties, through their counsel, that the child support aspect of the proceedings was poorly prepared and inadequately defined. I foreshadowed that I would not be able to separate the wheat from the chaff (as it were), and that I would find myself unable to resolve this aspect of the dispute. As matters have transpired, I have indeed found myself unable to resolve the child support issues for the benefit of the parties. I have concluded that I have no alternative but to strike out all applications dealing with child support, and to refer the parties back to the processes available to them through the Child Support Agency.
Legal practitioners act on instructions, and the parties in this case are able people with strong personalities who are more than capable of providing such instructions. Whether they were capable of listening to and accepting the advice of the legal practitioners acting for them, or willing to do so, is another matter.
Although the parties are the authors of their own misfortune in so far as the Court's inability to deal with the child support aspect of the dispute is concerned, their advisers should perhaps be reminded of the comments made by Muirhead J over 30 years ago when speaking of the obligations of legal practitioners in the family law jurisdiction:[1]
The philosophies of (the Family Law Act) are clear and should be borne in mind not only by judges but by counsel and solicitors. It is true that the adversary system remains in the processes of determining contested issues. But the legal profession act as advisers, they are more than mouthpieces, more than puppets reacting to instructions. In this jurisdiction, the functions of this Court are not often understood by parties in dispute. A bit of sound common sense and dispassionate legal advice will often go a long way in solving the issues confronted by people who have temporarily lost their sense of proportion ...
[1] See Pastrikos (1977) 31 FLR 524 at 526, cited in White (1995) FLC 91-648, at page 82,558
The parties in this case have certainly lost their sense of proportion.
Although I could not resolve the child support issues presented to me for determination, I have dealt with the property aspect of the proceedings.

Background and preliminary observations

In these Reasons, and unless otherwise indicated, all statements of fact comprise findings of fact.
The husband was born in 1965, and the wife in 1965. They married (and commenced cohabitation) [in] 1989. They separated on 26 March 2009.
There are two children of the marriage. [X] was born in 1997, and is now 14. [Y] was born [in] 1999 and is now 12.
[X] attends [omitted] School. [Y] attends.[school omitted].
The husband is a [occupation omitted]. He is one of four [occupation omitted] in the [business] of [M] ("[M]"). The wife is employed by [omitted].
The four partners of [M] are corporate trustees in their capacity as trustees of trusts associated with the four [occupation omitted] of the [business]. In the husband's case, the relevant partner is [Z] Pty Ltd ("[Z]") in its capacity as trustee of the [T] Trust ("[T]"). It was not in dispute that [Z] is the husband's alter ego, and that he controls both it and [T] in every relevant sense.
Each of the partners of [M] has a 25% interest in the [business]. It follows that the husband, through [Z] as trustee for [T], has a 25% interest in the [business].
The rights and obligations of the partners of [M] are set out in a Partnership and Succession Agreement (" the partnership agreement"). Although [M] is an old and well-established [business] in Melbourne, the current partnership commenced on 1 July 2007. It was on that date that the husband became a [occupation omitted] of the [business].
At the time of the commencement of the partnership (being 1 July 2007) each partner was required to make a capital contribution of $175,000 to the [business]. The partnership agreement refers to this capital contribution as a "working capital contribution".
I shall deal with the husband's interest in [M] in more detail later in these Reasons.
[X] and [Y] live with the wife. Their relationship with the husband is strained. Indeed, they have not spent time with him since mid February 2011. In his trial affidavit, the husband blames the wife for the deterioration in his relationship with the children. Among other things, he said that the wife:
a)controlled the amount of time that the children spent with him after separation;
b)only permitted him to see the children for brief periods of time;
c)behaved in an erratic and abusive manner (during family relationship counselling);
d)directed [X]’s School not to disclose any material about [X] to the husband;
e)does not inform him of the children's activities outside of what he learns from the schools or other external sources;
f)effectively alienated the children from him, and caused or permitted the children to become enmeshed in the dispute between the husband and the wife, and aligned to the wife's position;
g)involved the children in the financial dispute between the parties since separation;
h)refused to allow the children to bring any items from home when they visited the husband; and
i)failed or refused to attend further sessions with a family therapist, in spite of being requested to do so.
Given that the only issues between the parties at trial were financial issues, it was unnecessary and unhelpful for the husband to make these allegations against the wife. For her part, the wife denied the allegations and provided plausible explanations for her behaviour. Not surprisingly, given the irrelevance of the majority of the husband's accusations, the wife was not cross examined on her version of events.
These were not the only criticisms that the husband made of the wife in his trial affidavit. For example, the husband also asserted that the wife:
a)overspent during the marriage, including spending a disproportionate share of household income on "her own expenses for her own benefit" (such as beauty treatments, waxing, hairdressing, nail treatments, laser hair removal, plastic surgery, skin treatments, mole removal, name brand clothing and jewellery);
b)demonstrated a “severe disposition” to expending all available funds and relying upon credit to meet ordinary household expenses during the marriage (to the extent that it became necessary for him to "quarantine" cash distributions from [M] from the wife during the last six months of 2008 so that there would be funds available to meet taxation liabilities);
c)was dissatisfied with his income and lack of ambition and was prepared, as a result, to belittle him in front of friends, family and colleagues for not earning "a decent income";
d)was extremely jealous of other mothers at the children's schools who did not work and drove more prestigious cars than she did;
e)wanted a Mercedes to drive and her spending power enhanced;
f)was unduly critical of expenditure undertaken by [M] when it relocated its offices in early 2008, and was penny pinching in her attitude to such expenditure;
g)wasted the parties’ funds on plastic surgery (which he implied was cosmetic and unnecessary);
h)humiliated him at work on the date of separation;
i)subjected him to emotional and physical abuse over many years, often in the presence of the children;
j)screamed abuse and ridicule at him in the presence of the children (often using extremely vulgar and denigrating language), over many years;
k)effectively reneged on an agreement reached in relation to child support issues at court on 15 July 2010; and
l)refused to allow him to collect his personal items (including items that he had owned since childhood) from the former matrimonial home.
To the extent that the husband’s evidence (whether oral or affidavit) suggested that the wife was vindictive, inappropriately aggressive, demanding or assertive, uncooperative, uncaring, selfish, self-centred or vain, manipulative, controlling, wasteful, greedy or financially irresponsible, I am not prepared to find that she is any of those things. I find, instead, that the husband’s criticisms of the wife were spiteful and unwarranted.
I accept that the wife also raised criticisms of the husband in her affidavit. For example, she asserted that the husband:
a)planned the separation that occurred on 26 March 2009 (and structured his financial affairs in contemplation of the separation);
b)planned to hide funds from her and create a misleading impression to the effect that [M] was "not travelling well" when that was not the case;
c)failed to comply with an agreement to pay the entirety of his 2009 tax refund into the variable mortgage account; and
d)did not properly care for the children during the 2010/11 summer school holiday period, thereby causing or allowing the children to suffer minor medical ailments.
These criticisms of the husband are relatively minor in comparison to the criticisms that he made of her. For what it is worth, I find that the husband probably did plan his separation from the wife (he conceded that he "quarantined" funds from the wife during the second half of 2008, shortly before separation), but that he did not fail to properly care for the children during the 2010/11 summer school holiday period.
Although the wife's criticisms of the husband were neither necessary nor helpful, I am not prepared to find that they were spiteful. In her affidavit material, the wife was prepared to focus on what she perceived were the real issues in dispute between the parties in a way that the husband, in his affidavit material, seemed unable to do.
Without wishing to spend time unnecessarily on issues that did not have, and never could have had, any discernible impact on the outcome of the proceedings, I am prepared to make the following brief observations:
a)I do not know who is to "blame" for the children's current attitude to the husband. Perhaps no one is to blame, and there can be no doubt that any attempted attribution of blame is unlikely to ameliorate the current situation. In my opinion, however, the husband acted unwisely when he asked the children to bring their own spending money when they travelled with him to Canberra in September 2010, and when he put a bar on his landline telephone for mobile calls. The likely effect of such actions should have been apparent to him. In a sense, he was endeavouring to "point score" by demonstrating to the children that he was under some financial pressure. As a consequence, he indirectly involved the children in his financial dispute with the wife. His actions did nothing to improve his deteriorating relationship with the children.
b)That [Y] invited his uncle instead of the husband to attend a weekend school camp in March 2011 indicates that [Y]’s relationship with the husband was clearly under significant strain at that time. Given that the wife has provided no or no clear explanation as to why the children’s relationship the husband has progressively deteriorated, and why they now judge him so harshly that they are not prepared to spend any time whatsoever with him, it seems to me that the wife acted unwisely in allowing [Y] to attend the camp if he was not prepared to invite his father to go with him. The wife must have been aware that [Y]’s decision would be upsetting for the husband, and that he was likely to feel hurt and rejected. In my opinion, the wife could have done more – on that occasion – to promote and facilitate a close, continuing and meaningful relationship between [Y] and the husband. [Y] was only 11 years old at the time of the camp, and the wife could have and should have ensured that he understood that his decision was disrespectful and unnecessarily hurtful to his father.
c)I accept unreservedly the wife's explanation for the cosmetic and other correction surgery which she had after the husband became the [occupation omitted] of [M]. Among other reasons, she underwent the surgery in order to deal with certain gynaecological problems that she was experiencing and, as she described it, "to assist with (her) well-being".[2] I also accept the wife's evidence in relation to her other cosmetic treatments or procedures. Not surprisingly, the wife was not cross examined in relation to these matters, and as I said during the course of the trial the husband's carping about them says more about him than it says about the wife.
d)In many ways, the parties were entitled to celebrate the husband's elevation to [occupation omitted] status at [M]. Both of them had worked long and hard over many years for the husband to achieve such a position, and there can be no doubt that it brought significant financial benefits to them. They, like many in their position, were entitled to expect that their family’s financial situation would continue to improve and that some of the financial pressures that they had experienced in the past would dissipate. Within two years of the husband becoming a [occupation omitted], however, the parties had separated ─ and I do not think that it is inappropriate for me to take judicial notice of the fact that over the same period the general economic climate in Australia and elsewhere had begun to deteriorate.
[2] See the wife's affidavit, paragraph 57

Documents relied upon

The wife relied upon the following documents:
a)outline of case document filed on 8 April 2011;
b)amended initiating application filed 24 March 2011;
c)her affidavit sworn 23 March 2011;
d)her financial statement sworn 23 March 2011;
e)affidavit of Mr H sworn 24 March 2011; and
f)affidavit of Mr M sworn 24 March 2011.
Mr Spicer (who appeared for the wife) also provided to the Court a document described as an aide memoire. It lists various mortgage payments and payments in respect of school fees. I shall refer to it as "the payment schedule".
The payment schedule was handed up at the start of the trial, without objection from Dr Ingleby (who appeared for the husband).
The husband relied upon the following documents:
a)outline of case document filed 8 April 2011;
b)amended response to initiating application filed 6 April 2011;
c)his affidavit sworn 5 April 2011;
d)his amended financial statement sworn 5 April 2011;
e)affidavit of Mr R sworn 5 April 2011;
f)affidavit of Mr D sworn 5 April 2011; and
g)affidavit of Mr A sworn 8 April 2011.

On 12 April 2011 (being the second day of the trial), Mr Spicer and

Dr Ingleby handed up a document described as an "agreed balance sheet". It contains a list of agreed and disputed items of property or liabilities, and values to be attributed to those items by the husband and the wife. It also contains some brief comments. I shall refer to this document as "the agreed balance sheet".

Relevant financial and other history

In the light of the concessions that were eventually made by counsel regarding the respective contributions of the parties, I do not propose to traverse this area in detail.
The parties did not live together prior to the marriage.
At the time of the marriage, the husband was an employed [omitted] at a [business] in [G]. He was earning approximately $30,000 per annum. The wife was employed as an [omitted] earning approximately $40,000 per annum. Neither had assets of any significance.
The husband commenced employment at [M] in Melbourne in 1998. As indicated above, he became an equity partner in [M] (through [Z] as trustee of [T]) on 1 July 2007. According to the husband, he did not become an [occupation omitted] "strictly of his own choosing". He asserts that the wife "pressed for him to progress to this position".[3]
[3] see the husband's affidavit, paragraph 33
The wife worked as an [omitted] on a full-time basis until [X] was born. She then took 12 months unpaid maternity leave. After returning from leave she worked on a part time basis (three days per week). She again ceased work when [Y] was born.
In approximately January 2000, the wife returned to work on a casual or part-time basis. She began full-time employment with [omitted] at the end of that year.
The wife remained with the [omitted] until early 2005, when she resigned and commenced employment with [omitted]. She has worked with [omitted] on a full-time basis since then.
Both parties received additional benefits from their employment from time to time during the marriage. For example, the wife received eligible termination payments from certain of her employers, and the husband received a payout of his long service leave entitlement when he left the [business] in [G] and commenced employment at [M]. The husband also received a long service leave payout when he became a [occupation omitted] at [M]. Both parties deal with their respective taxable incomes during the course of the marriage in their affidavits, but nothing turns on the quantum of their earnings, or whether one party earned more than the other at any particular point in time. It was not in dispute, or not seriously in dispute, that all of the parties’ income was used for the benefit of the family.
The parties purchased their first home, in [E], in 1991. That property was sold in 1993. The parties then purchased a house in [W].
In December 1999, the [W] property was sold and the parties purchased the former matrimonial home, at Property T. Extensive renovations to the former matrimonial home were carried out in 2001 or 2002.
Moneys were borrowed by the parties to enable the purchases of these properties and to finance the renovations to the former matrimonial home. The borrowings were secured by mortgages over the properties.
Again, nothing turns on the particulars surrounding the acquisition and sale of the parties’ homes and the financing of the renovations. Both parties worked and contributed their incomes for the benefit of the family, which included the payment of the mortgages.

Concession regarding the parties' contributions

Dr Ingleby argued from the outset that the parties’ contributions (in all their various guises) should be treated as equal – from the commencement of cohabitation to the date of trial. Indeed, the following submission appears in the husband's case outline document:[4]
In terms of contributions, a 50-50 finding is inevitable on conventional assessments at the first stage of the court's exercise of discretion in an application for property settlement.
[4] at page 14
In my opinion, that a finding as indicated by Dr Ingleby would be made in the circumstances of this case was blindingly obvious from the outset. Notwithstanding that fact, it took Mr Spicer until his closing address to make the appropriate concession.
In the wife's case outline document, the following submissions appear:[5]
· It is submitted on behalf of the wife that the parties have made equal contributions during the marriage.
· It will be submitted on behalf of the wife that she is entitled to a further 20% of the known assets available to the parties in acknowledgement of the greater needs that she has to provide for the support of the children, together with the disparity between income and income earning capacity.
[5] at page 9
Only two issues are recorded under the heading "Issues between the Parties" in the wife's case outline document:[6]
· The husband's entitlement to receive his 25% net interest from ([M]) received by [Z] as trustee of ([T]).
· The value of the matrimonial home at Property T.
[6] at page 7
Notwithstanding the contents of the wife's case outline document,

Mr Spicer initially submitted during the course of his opening that the wife should be entitled to 70% of the property available for distribution between the parties on the basis of contribution alone. He submitted that equality of contribution should be found in relation to the period from the date of commencement of cohabitation to separation, but that a "loading" of 20% in the wife's favour is appropriate when regard is had to the parties' respective contributions between separation and trial. When it was pointed out that the wife's total claim was 70%, and that a finding of 70% on the basis of contribution alone would leave no room (as it were) for any adjustment on the basis of the section 75(2) factors, Mr Spicer adopted a form of submission to the effect that "all roads lead to Rome". In other words, Mr Spicer seemed to argue that, whatever percentages might be adopted to take account of contribution factors (on the one hand) and the section 75(2) factors (on the other), the end result should be a split of 70%/30% in the wife's favour.
In the light of the wife's case outline document (and, indeed, having regard to the evidence that was then available – being the affidavit material filed on behalf of the parties), I found Mr Spicer's opening submissions in relation to the issue of contribution confusing and inconsistent.
As indicated above, Mr Spicer abandoned his submission in relation to inequality of contribution in his closing address.[7]
[7] see 15 April 2011 transcript, page 286
It follows that it is not in dispute that the parties' contributions (in all their various guises) should be treated as equal – from the commencement of cohabitation to the date of trial.

Orders sought

As recorded above, during the course of his opening Mr Spicer submitted that the total net assets of the parties should be divided on the basis of 70% to the wife and 30% to the husband. It was difficult to follow his submissions in relation to the allowances that should be made within those proportions for the parties' contributions (in all their various guises), on the one hand, and the section 75(2) factors on the other. In his closing address, Mr Spicer still submitted that the total net assets should be divided on the basis of 70% to the wife and 30% to the husband, but he accepted that contribution should be treated as being equal. He argued that an adjustment of 20% should be made in the wife's favour to take account of the section 75(2) factors.
Dr Ingleby submitted that "a 50/50 finding is inevitable on conventional assessments" of the parties’ respective contributions. He also submitted that an adjustment for section 75(2) factors is appropriate, and should amount to 5% of the asset pool. In other words, Dr Ingleby submitted that the property should be divided on the basis of 55% to the wife and 45% to the husband.
Although the broad parameters of the parties’ dispute are reflected in the two preceding paragraphs, Dr Ingleby also argued that the husband should not be allocated his ultimate share in the form of what might be perceived as "illiquid" property – being, in this case, the husband's interest in [M] and his superannuation entitlements. Dr Ingleby argued that the husband should transfer to the wife the entirety of his present superannuation entitlements and that each party should receive cash funds (to be derived from the sale of the former matrimonial home) to the extent necessary to effect an overall division on the basis of 55% to the wife and 45% to the husband. Such an arrangement, Dr Ingleby argued, would have the effect of causing the parties to share appropriate proportions of "illiquid" and liquid property between them. Put another way –
The real argument is, should the husband leave a 20 year marriage with the totality of his entitlement in ... an illiquid, not easily realisable partnership interest and his superannuation, while the wife leaves the marriage with what is realistically $900,000 to $1 million of cash?[8]
[8] See 11 April 2011 transcript, page 22
It follows that the form or structure of the orders that the Court is to make by way of alteration of property interests is a matter in dispute.

Property Settlement – The Law[9]

[9] This generic summary of the law relating to property settlement is substantially reproduced from my decision in the matter of Kernahan [2007] FMCAfam 952

The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases.[10] The court must first identify the property of the parties. It must then attribute a value to each item of property – usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various sub-headings described in section 79(4) of the Family Law Act 1975. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
[10] See, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684
In relation to the contributions of the parties under section 79(4) generally, it has been held that a “global” approach will usually be more convenient than an “asset by asset” approach – although the application of an asset by asset approach does not (of itself) amount to an error of law.[11]
[11] See Norbis (1986) FLC 91-712
The section 75(2) factors are related to the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which cannot comfortably be described as being of financial or economic significance.[12]
[12] See McMahon (1995) FLC 92-606 at 82,043
Under section 79(2), the court is required to be satisfied that the property settlement orders that it proposes to make are just and equitable – and not simply that the underlying percentage division of the net value of the parties’ property is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution, which must be considered.[13]
[13] See Russell (1999) FLC 92-877
The overall process to be applied in property settlement cases is summarised by the Full Court in Hickey (2003) FLC 93-143, where their Honours said:[14]
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), including, because of s.79(4)(e), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…
[14] At paragraph 39
My view is that the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise.[15] In applying s.79(2), the court has power to adjust the form, structure or balance (for want of a better description) of the orders that it is minded to make in order to give effect to its conclusion as to the parties’ respective entitlements after the application of the first three steps mentioned in Hickey. In other words, the determination of the proportional or other distribution or division of the parties’ property between them must necessarily be concluded before the court considers the justice and equity of the actual orders that are to be utilised to give effect to that distribution or division.
[15] See OSF & OJK (2004) FLC 93-191
In B & B (2006) FamCA 883, Faulks DCJ said:[16]
If the judge has properly carried out his or her functions in determining the factors under section 79(4) (including those applicable factors under section 75(2)), the result overall should be just and equitable within the terms of the Family Law Act 1975. Accordingly, if a judge on reviewing his or her deliberations in relation to the first three stages concludes that the result does not appear to accord with justice and equity, then it is likely that the earlier adjustments were wrong. This fourth stage is really a description of a judicial thought process rather than a third discretionary phase. I do not accept the proposition that there is a third discretionary phase un-associated with contributions and/or the financial circumstances of the parties (or the other matters under section 79(4)) which somehow permits a judge in accordance with his or her conception of justice and equity to vary determinations otherwise properly made in accordance with the first two discretionary assessments.
I accept that in some cases there may be a minor adjustment required, for example to enable a cash-poor litigant to retain some real estate when he or she has no capacity to make any payment to the other party. For my part, it seems to me that even that sort of adjustment is more appropriately incorporated into the first two discretionary phases.
[16] In paragraphs 105 & 106
In Brice (2007) FamCA 170, however, Kay J suggested – in a passage that is clearly obiter – that section 79(2) is itself a source of substantive power. His Honour continued:[17]
If the sum of the parts created by section 79(4)(a), (b) and (c) contributions and section 79(4)(e) considerations adds up to too much or too little, then further adjustments may be made in order to meet the over-riding dictate that an order must not be made unless it is just and equitable.
[17] At paragraph 19
For the reasons that I set out in OSF & OJK (2004) FLC 93-191 (and, in particular, in paragraphs 26 to 28 thereof), I prefer the analysis of Faulks DCJ in B & B to that of Kay J in Brice.
At the end of the day, though, the precise nature of the final step or stage in the property settlement exercise may not be of any real significance in the present case. It is enough to record that the process involves the Court metaphorically “stepping back” to consider whether the proposed orders (arrived at after the application of the first three steps described in Hickey) are just and equitable.

Property and liabilities as at the date of trial

The first step in the property settlement exercise relates to the identification and valuation of the property of the parties at trial.
Subject to comments to be made later in these Reasons, I find that the parties’ property and liabilities are as follows:

Assets Amount Sub Total

1. Property T ("the former matrimonial home") $1,600,000

2. [T] Trust $654,042

3. [Z] moneys $52,633

4. Husband’s [omitted] car $18,000

5. Wife's [omitted] car $10,500

6. Agreed add back (pursuant to 15 July 2010 orders) $25,000

7. Husband's legal fees paid $54,646

8. Husband's superannuation entitlements $220,000

9. Wife's superannuation entitlements $231,000 $2,865,821

Liabilities

10. NAB loan presently encumbering the former matrimonial home ($560,000)

11. Extension to NAB loan referred to in 2 above (as contemplated in the orders made on 13 April 2011) ($215,000)

12. [Z] St George loan ($173,000) ($948,000)

TOTAL $1,917,821

It can be seen from the above schedule (which I shall call "the property schedule") that the total net value of the parties' property is $1,917,821 – of which $220,000 comprises the husband's superannuation entitlements and $231,000 comprises the wife's superannuation entitlements.
It was not in dispute that the parties' respective superannuation entitlements should be included in the overall "pool" of property available for distribution between the parties. In other words, neither party suggested that superannuation should be included in a separate list,[18] to be treated differently from the remaining items of property. Further, there was no suggestion that the parties' contributions to their superannuation interests should be treated or assessed any differently to their contributions to other items of property. In other words, a "global" approach was adopted.
[18] see C & C (2005) FLC 93-220, at para.63
Although most of the items contained in the property schedule were agreed (and were noted as "agreed" in the agreed balance sheet), some were not.

Composition of the property schedule – disputed items or items requiring an explanation

Item 1: The former matrimonial home

It was not in dispute that the former matrimonial home should be included in the property schedule. No specific value was attributed to it, however, because the parties had agreed that it would be sold.
Orders providing for the sale of the former matrimonial home were made on 13 April 2011, being the third day of the trial. The orders were made by consent.
Paragraph 2 of the orders made on 13 April 2011 require the parties to execute an authority empowering a nominated real estate agent to sell the former matrimonial home for "a reserve of $1.6 million or as agreed".
In her case outline document, the wife had asserted that the former matrimonial home should be valued at $1.475 million. The husband had asserted that it should be valued at $1.625 million. The agreed reserve price of $1.6 million was obviously a compromise reached by the parties in the context of their agreement to sell the property.
Clearly, I am unable to make any finding as to the actual value of the former matrimonial home – and neither party sought that I do so. Still, I am required to attribute some value to the property in order to properly and effectively undertake the various steps required in the property settlement exercise. I accept that it will be necessary to structure the orders that are eventually to be made as a consequence of this judgment (and the findings contained in it) in such a way as to take account of the uncertainty surrounding the amount that will ultimately comprise the net proceeds of sale of the former matrimonial home.

In the circumstances described above, I have decided to include the agreed reserve price (being $1.6 million) as the value of the former matrimonial home.

Item 2: [T] Trust

This item comprises, in effect, the value of the husband's interest in [M].
Mr H has over 36 years experience as an accountant. Among his other skills, he is an experienced valuer of business enterprises for family law purposes. The wife's solicitors engaged him to prepare a valuation of the husband's interest in [M], and he did so. The documents comprising his valuation are annexed to his affidavit sworn 24 March 2011. They were supplemented by certain amending calculations comprising exhibit W4, which were tendered during Mr H's oral evidence.
The figure of $654,042 is contained in exhibit W4. It has two primary components, the first being an allowance for the husband's contribution to [M]’s working capital, and the second being an allowance for the husband's entitlement to undrawn profits retained within [M].
The husband himself is not a partner in [M]. Indeed, none of the four [occupation omitted] of [M] are partners in the [business]. Instead, and as described above, four corporate trustees comprise the partners. Each corporate trustee is a partner in its capacity as trustee of a trust associated with one of the four [occupation omitted]. In the husband's case, the corporate trustee is [Z] in its capacity as trustee of [T].
As indicated above, it was not in dispute that [Z] is the husband's alter ego, and that he controls both it and [T] in every relevant sense.
The husband, through [Z] in its capacity as trustee of [T], has a 25% interest in [M].[19]
[19] see the Partnership and Succession Agreement for [M], being annexure ATR1 to Mr R’s affidavit
During the course of his evidence, the husband confirmed that [M] is "an old, well-established and ... well known and good [business]" that has been in existence in Melbourne, in one form or another, since 1863.[20] The partnership in its present form, however, commenced on 1 July 2007. At that time, each of the partners (including the husband, through [Z] in its capacity as trustee of [T]) was required to pay $175,000 as a "working capital contribution".
[20] see 13 April 2011 transcript, page 182
Mr R is the most senior of the four [occupation omitted] of [M]. In his affidavit (upon which he was not cross examined), he described the entitlements of a partner of [M] upon the death or retirement of its associated [occupation omitted] as follows:[21]
... upon the death or retirement of a [occupation omitted], its associated partner is entitled to receive the undrawn profit standing to the account of that partner together with interest calculated at 7% per annum from the date upon which the partner joined the partnership ...
In addition to the undrawn profits, a retiring or deceased partner is entitled to repayment of the initial capital contribution made by each partner upon entering the partnership. On 1 July 2007, each partner made a capital contribution of $175,000 to the partnership. Upon retirement or death of the [occupation omitted], the partner is entitled to receive by way of repayment the initial capital contribution, together with interest at the rate of 7% per annum from 1 July 2007 to the date of death or retirement. (Emphasis added.)
[21] see paragraphs 12 and 14 of Mr R’ affidavit
In his valuation report dated 15 March 2011,[22] Mr H valued the husband's entitlements (through [Z] in its capacity as trustee of [T]) as follows:
a)contribution to working capital (including interest to 31 December 2010): $221,896; and
b)attributed undrawn profits (including interest to 31 December 2010): $410,159.
[22] being annexure TWAH1 to Mr H's affidavit
The total of the above figures is $632,045. This comprised Mr H's valuation as at 31 December 2010.
In exhibit W4, Mr H updated his valuation with figures as at 31 March 2011. The figures are as follows:
a)contribution to working capital (including interest to 31 March 2011): $225,638; and
b)attributed undrawn profits, described in exhibit W4 as "attributable withdrawn profits" (including interest to 31 March 2011): $428,404.
The total of the above figures is $654,042. This comprises Mr H's valuation as at 31 March 2011.
The husband did not present any evidence to counter Mr H's valuation. Instead, in both his case outline document and the agreed balance sheet he recorded his interest in [M] (through [Z] as trustee for [T]) as having a value of $632,045. This figure clearly coincides with Mr H's valuation as at 31 December 2010.
It became clear during the course of the trial that the husband or his advisers had obtained a valuation of his interest in [M] (through [Z] as trustee for [T]) from Mr V, an accountant. Mr V’s valuation was never produced; alternatively, it was not relied upon by the husband and was not placed in evidence. Instead, Dr Ingleby cross examined Mr H by highlighting the fact that Mr H was aware that the only difference between Mr V’s valuation and his own was that Mr V "added interest at 2007 in the 2008 year, put the 2008 interest in the 2009 year, etc", and that Mr H's interpretation of the partnership agreement is that "if you earn the interest in the 2008 financial year, then according to the partnership agreement you have an entitlement to interest for the entirety of that financial year".[23] Dr Ingleby also elicited from Mr H a concession to the effect that he did not know whether the [M] [occupation omitted] had actually directed their attention to assessing the payment of interest pursuant to the partnership agreement.
[23] see 13 April 2011 transcript, page 143
In my opinion, it is not to the point that the [occupation omitted] of [M] may or may not have considered how the payment of interest pursuant to the partnership agreement should be assessed. Indeed, during the course of his closing address, Dr Ingleby emphasised that there is no evidence of any practice in relation to the implementation of the partnership agreement consequent upon the death, retirement or other form of leaving a [occupation omitted]. He submitted that the Court should "decide in favour of the husband by reference to a basic principle of the commercial practice that you cannot earn interest on something that you do not actually own".[24]
[24] see 15 April 2011 transcript, page 253
To the extent that I understand Dr Ingleby's submission in that regard, I do not agree with it in the context of the present case. There can be no doubt that the husband (through [Z]) is entitled to repayment of his contribution to working capital and the relevant undrawn profits. He is also entitled to interest on those items. The only question is the method of calculation of the interest.
The husband's case was that the Court should accept that the husband's interest in [M] (through [Z] as trustee of [T]) is worth $632,045. That figure was included in the husband's case outline document, and again in item 4 of the agreed balance sheet. It clearly has its genesis in

Mr H's valuation report dated 15 March 2011, which records the husband entitlements (through [Z] as trustee of [T]) as at 31 December 2010. If that is not its source, then the figure relied upon by the husband is completely unexplained (and certainly unsupported by any relevant evidence).
Mr H's valuation as at 31 December 2010 includes interest at the rate of 7% per annum from 1 July 2010 to 31 December 2010, on both the contribution to working capital and the undrawn profits.[25] It seems clear, therefore, that the husband was prepared to accept a valuation which included a component for the then current year's interest calculated over a six month period, but saw fit to reject a valuation which included a component for the then current year's interest calculated over a nine month period. In my opinion, there is no satisfactory answer as to why it is appropriate to include interest at the rate of 7% per annum for the first two quarters of the year, but not for the third quarter.
[25] see annexure PWAH 1 to Mr H's affidavit
I am not unaware that the Partnership Agreement includes a "Valuation Methodology" at pages 51 and 52 of the document.[26] The relevant formula provides that a partner’s contribution to working capital (including any additional contributions) is to be paid or repaid (depending upon the circumstances of the [occupation omitted’s] departure from the [business]) together with interest at the rate of 7% on the amount of that contribution to working capital "calculated annually from the date of payment of the contribution to working capital until repayment of such contribution to working capital" (provided that the partner has been a partner for not less than three years).
[26] see annexure ATR1 to Mr R affidavit, pages 51-2
The formula also provides that a partner’s attributed undrawn profits are to be paid or repaid (depending upon the circumstances of the [occupation omitted]’s departure from the [business]) together with interest at the rate of 7% "on the amount of the attributed undrawn profit of the partner at the end of each financial year calculated annually from the date the partner (became a partner) until payment of the attributed undrawn profit".
The existence of the formula in the Valuation Methodology section of the Partnership Agreement potentially opens the door to an argument to the effect that the calculation of interest might operate in a different manner when considering the payment or repayment of a partner's contribution to working capital (on the one hand) and the payment or repayment of the partner’s attributed undrawn profits (on the other).
But these provisions were not put to Mr H, and there is no evidence that the valuation figure relied upon by the husband was purportedly calculated in accordance with them (indeed, given that the husband's valuation figure adopts Mr H's valuation as at 31 December 2010, it clearly was not). As well, I find that Mr H's interpretation of the operation of the relevant formula (coupled with Mr R’s summary of the arrangements) was reasonably open to him, particularly in light of the fact that no countervailing evidence was presented to him and he was not cross examined on the validity of his interpretation.
For the above reasons, I accept Mr H's evidence in relation to the value of the husband's interest in [M] (through [Z] in its capacity as trustee for [T]).

Item 7: Husband's legal fees paid

It was not in dispute that the husband had paid, directly or indirectly, legal fees totalling $54,646. Dr Ingleby argued, however, that the agreed quantum should not be added back into the "pool" of property available for distribution between the parties. He argued that that should necessarily follow from the fact that the husband had paid the legal fees (or caused them to be paid) after separation, and from post separation income or earnings.
In NHC & RCH (2004) FLC 93-204, the Full Court said:
55.    This decision (Finlayson v Finalyson and Gillam (2002) FLC 93-121) appears to confirm the principle that where the payment of legal costs can be regarded as a premature distribution of funds (in which both parties have an interest), it is appropriate to add back those costs as a notional asset. It also confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account. The decision also supports the proposition that where it is determined that a payment of legal fees should be taken into account as a notional asset, any outstanding liability in respect of those fees should also be taken into account.
56.    In summary, ... while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57.    If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58.    If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post- separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
59.    Outstanding legal fees themselves are generally not taken into account as a liability
60.    If in the exercise of the discretion, it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.
To the extent that the above passage amounts to the Full Court providing "guidelines" for the exercise of a judicial officer’s discretion with regard to the treatment of paid costs, it is clear that such guidelines do not have binding effect. In Harrington (2007) FLC 93-317, the Full Court sat on appeal from a decision of O’Ryan J at first instance in which his Honour rejected at least one of the guidelines in NHC & RCH because he disagreed with it. Quoting one of his own earlier decisions, his Honour said:[27]
In my view, it is plainly wrong ... that "if funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset".
[27] see Harrington at paragraph 8
In considering whether O’Ryan J’s rejection of the guideline constituted an error of law, the Full Court said:
18. We think the present position in this Court is that if a guideline is departed from without adequate explanation, the appeal court may give "close scrutiny [to] the particular exercise of the discretion".
19. However, even if this Court may give guidelines with "...the force of a binding rule", we were not referred to any cases and have not for ourselves located any, which purport to give the guidelines set out in NHC & RCH such binding effect. Rather, in our view, the guidelines in NHC & RCH fit into that category where in the event of a failure to give reasons for a departure from them, close scrutiny may be given to the circumstances of the case by the appellate court.
Dr Ingleby referred to the recent decision of Murphy J in Hayton & Bendle (2010) 43 Fam LR 602 in support of his submission to the effect that the husband’s paid legal fees should not be included in the "pool". In my opinion, however, Hayton & Bendle does not add to the passages already cited from NHC & RCH and Harrington. His Honour recognised that "the treatment of funds used to pay legal fees is, ultimately, a matter for the trial judge's discretion".[28] His Honour did not refer to Harrington, and seemed to imply that a trial judge is somehow bound by the guidelines in NHC & RCH.[29]
[28] see paragraph 126
[29] see, for example, paragraph 129
I do not regard the guidelines in NHC & RCH as having the effect of binding rules. I retain a discretion as to whether or not the husband's paid legal fees should be added back, and I have decided to add them back for the following reasons:
a)As Murphy J. recognised in Hayton & Bendle, the payment of legal fees by the husband amounts to a premature distribution of property that might otherwise have been available for distribution between the parties in accordance with the court's ultimate assessment of the parties’ entitlements by way of property settlement.[30]
b)Although the payment of other expenses (including accommodation or living expenses) after separation and prior to trial might also have the effect of removing funds from the "pool" of property that could otherwise be available for distribution between the parties, legal fees related to advice dealing with the consequences of a relationship breakdown or anticipated breakdown and family law issues generally, dispute resolution or court processes would not have been paid at all if the parties’ relationship had not broken down or was not likely to break down, or if the parties did not have a dispute to resolve or court proceedings to conduct. To that extent, it is unfair to allow one party what could amount to unfettered or almost unfettered access to funds that would otherwise be included in the "pool" to (among other things) further his or her own side of the case or counter or damage the other party's case.
c)Dr Ingleby conceded from the outset that the Court should treat the parties’ contributions (in all their various guises) as being equal. Mr Spicer had argued at the commencement of the trial that the parties’ contributions should be regarded as equal up to the point of separation, but unequal (in the wife's favour) thereafter. Although Mr Spicer later resiled from this submission, it had the effect of focusing each counsel’s mind on pre- and post-separation contributions. In that context, Dr Ingleby's concession is of significance – covering, as it did, the entire period from the commencement of the relationship to the date of trial. The effect of the concession is that each party must be regarded as having made contributions (in any relevant form, and whether direct or indirect) to property acquired or money saved by the other party after separation, and the other party's earnings after separation. In such circumstances, it is not possible to "quarantine" either party's post separation earnings, or to suggest that the other party made no contribution to them.
d)In my opinion, it cannot be said that the funds used by the husband to pay legal fees were generated by him post-separation from his own endeavours (exclusively). To so conclude would be to ignore the effect of the wife's contributions to the welfare of the family after separation and her broader direct or indirect contributions made during the course of the relationship ─ which served to assist the husband to advance his [omitted] career and, ultimately, become a [occupation omitted] at [M].
e)In any event, the funds used by the husband to pay legal fees were clearly generated from the husband's professional activities. Put another way, they were generated from the business in which the husband is a [occupation omitted] (and the corporate entity that he controls is a partner – in its capacity as trustee of a family trust that the husband also controls).
f)Dr Ingleby did not dispute that the value of the husband's interest in [M] (through [Z] as trustee for [T]) should be included in the “pool”. As discussed above, the value of the husband's interest has two components: the contribution to working capital (being the original contribution of $175,000 at the time of the establishment of the partnership, together with interest), and the attributed undrawn profits. The partnership was established with effect from 1 July 2007, nearly two years before the parties separated. A proportion of the attributed undrawn profits were also accumulated prior to separation. It follows that the wife has clearly made relevant contributions to the husband's interest in [M]. It also follows that moneys used to pay the husband's legal fees should not be treated any differently if they were paid from the husband's "salary" than if they were paid from the husband's profit share (paid through [Z] as trustee for [T]) or from profits which otherwise remained undrawn.
g)In all the circumstances, I am satisfied that the wife clearly had an interest in the moneys used by the husband to pay his legal fees, as contemplated in paragraph 57 of NHC & RCH.
[30] see Hayton and Bendle at paragraph 127

I am fortified in my views in this regard by comments made in the husband's case outline document. In support of an argument to the effect that the nine monthly payments of $4000 made to the wife pursuant to the orders of 15 July 2010 should be added back into the “pool”, the following submission appears:[31]
... it may be that the issues (being the submission to the effect that moneys received by the wife should be added back into the pool) disappear if the moneys were applied to legal fees and are treated as add backs consistently with the approach of the Full Court in Farnell (1996) FLC 92-681 and NHC & RCH.
[31] see husband's case outline document, page 13 subparagraph (m)
I note that this passage is inconsistent with the forceful submissions made – to the opposite effect – by counsel for the husband at trial. Given that there was no suggestion in the husband's case outline document that his paid legal fees should be included in the pool, a cynic might be minded to observe that, from the husband's point of view, what is sauce for the goose is not necessarily sauce for the gander.

Item 11: Extension to NAB loan

The consent orders made on 13 April 2011 provided for the parties to jointly approach the National Australia Bank in order to borrow additional funds for certain purposes (including the payment of income tax and "cosmetic repairs" to the former matrimonial home prior to its sale). The parties estimated that a further $200,000 to $220,000 would be borrowed.
Again, I am unable to make any finding as to the actual amount that the parties will borrow – and neither party sought that I do so. Still, I am required to attribute some value to this liability in order to properly and effectively undertake the various steps required in the property settlement exercise. As recorded above, I accept that it will be necessary to structure the orders that are eventually to be made as a consequence of this judgment (and the findings contained in it) in such a way as to take account of the uncertainty surrounding the amount that will ultimately comprise the net proceeds of sale of the former matrimonial home.
In the circumstances described above, I have decided to include this anticipated liability in the property schedule at $215,000 – which is the average of the likely range provided by the parties.

Excluded item (agreed balance sheet #9): Tax for [Z]

According to the husband's case outline document, this alleged liability (estimated at $19,000) relates to tax for the 2011 year and is "based on estimates as in paragraph 117 of the husband's affidavit". The case outline document also suggests that this liability "derive(s) from the fact that the parties disbursed the entirety of the moneys received from the partnership pre 1 July 2008 without making provision for tax and have played 'catch up' ever since by using the next year's drawings to pay for the outstanding taxation obligations (with the drawings themselves creating a taxation liability)".[32]
[32] see husband's case outline document, page 13
It is apparent from paragraphs 114 to 118 of the husband's affidavit, however, that this alleged liability is unrelated to previous tax obligations. There is no relevant nexus between it and the alleged actions of the parties in disbursing all moneys received from the partnership prior to 1 July 2008 without making appropriate provision for tax and playing "catch up" ever since.
Paragraph 117 of the husband's affidavit is as follows:
The estimated profit share of [Z] for the year ending 30 June 2011 is approximately $90,000. Taxation liabilities based on such taxable income will be approximately $43,000. As PAYG instalments are payable from 31 March 2011, [Z] has paid a quarterly instalment of taxation for the quarter ending 31 March 2011 in the amount of $23,142, such payment having been made on 4 April 2011. After this payment was made, the estimated balance of the taxation payable of $19,000 is due on or before 21 July 2011 for this financial year ending 30 June 2011.
Both parties received tax refunds relating to tax paid for the 2009 tax year. The wife received a refund of approximately $9,200 in or about early April 2010. The husband received a refund of approximately $18,300 in March 2010. The husband also received a further refund of $17,183 in or about late February 2010.[33] The parties had previously agreed to deposit their tax refund cheques into the variable mortgage account to meet certain agreed expenses (including mortgage payments and school fees). Although the wife's refund and the larger of the husband's two refunds were deposited in the variable mortgage account, the husband's refund for $17,183 was not.
[33] see the wife's affidavit, annexure MLR12
There was a dispute between the parties as to whether the husband had adequately disclosed the receipt of the second amount, and as to whether it should have been deposited in the variable mortgage account together with the other amounts received by the parties. Little turns on the resolution of that dispute, but I find that the husband did not volunteer the receipt of the cheque for $17,183 to the wife or her legal advisers in a timely fashion. Indeed, his evidence was that he held on to the cheque because he did not know what to do with it. In the end, he deposited it in an internal account conducted by [M] on behalf of [Z]. Some three months elapsed between the husband receiving the cheque and its deposit in this account.
The cheque for $17,183 was not, strictly speaking, a tax refund cheque. According to the husband, it was "a repayment to [Z] of a quarterly tax instalment".[34] According to the records of the Australian Taxation Office, however, the payment was not a repayment to [Z]. It is described as a "refund", and appears to relate to the repayment of the husband's PAYG income tax instalment for the quarter ended 31 December 2009, which instalment was paid on or about 15 February 2010 – just a few days before the repayment was made. The reason given for the repayment of a quarterly instalment is "a significant change in trading conditions".[35]
[34] see the husband's affidavit, paragraph 150.107
[35] see the wife's affidavit, annexure MLR14 – and in particular the pages numbered 4 and 6 in the bottom right hand corner
The husband's evidence in relation to the cheque for $17,143 was confusing and inconsistent. For example, in his affidavit the husband said of the cheque that it was "a quarterly instalment of taxation (that) was paid by [Z] on my behalf in or about October 2008 which was repaid in or about March 2009".[36] The ATO records reveal that the quarterly instalment related to the 2010 tax year. The husband also said that the cheque was "a repayment to [Z]". In his oral evidence, however, the husband confirmed that the cheque was made out to him. He said that it was a refund of money paid by [Z] towards an instalment of his personal tax and that, as a result, the funds were paid back to him as the taxpayer. His explanation for paying the moneys into the [M] account for [Z] was as follows:
[36] see the husband's affidavit, paragraph 150.107
[Z] gave it to me to be able to pay tax, so I gave it back to [Z].
Leaving aside the fact that [Z] is the husband's alter ego and that he controls its every action, the fact of the matter is that the cheque was made out to the husband and could have and should have been paid into an account in his name. The moneys could then have been repaid to [Z] if that was deemed necessary and if the relevant transactions could not have been adequately dealt with in some other way by appropriate accounting entries.
Having regard to the husband's unsatisfactory evidence in relation to the cheque from the ATO to $17,143, and bearing in mind that:
a)the parties received tax refunds for the 2009 tax year;
b)the full amount of tax for the 2010 year has yet to be paid (the tax for the 2010 year is one of the expenses to be met by way of the extension to the NAB loan referred to in item 11 of the property schedule and in the orders of 13 April 2011);
c)the estimated liability of $19,000 appears to result from a restructuring of [Z]'s tax arrangements which has led to an apparent need to pay the 2011 tax in two instalments instead of four (because, according to the husband, [Z] "came into the PAYG system halfway through");[37]
d)the husband asserts that [M] has experienced a downturn in the 2011 financial year and that his share of profit (through [Z] as trustee for [T]) will be significantly less than in previous years; and
e)the alleged liability of $19,000 is an estimate only and was not due and payable at the time of the trial (indeed, it appears to relate, at least in part, to income likely to be earned between the date of the trial and 30 June 2011),
I am not prepared to conclude that the alleged liability should be included in the property schedule. In my opinion, it is both vague and uncertain. Alternatively, it is either vague or uncertain.[38]
[37] see 13 April 2011 transcript, pages 179-80
[38] see, for example, Biltoft (1995) FLC 92-614, page 82,127

Excluded item (agreed balance sheet #10): Claimed $36,000 add back

On 15 July 2010, it was ordered, by consent, that the husband would cause certain payments to be made by [Z] (as trustee for [T]) to the wife. They comprised:
a)a lump sum of $25,000 which was to be "counted as part of, or added back to, the asset pool for division between the parties at trial"; and
b)$4000 per month from 1 August 2010 until the conclusion of the proceedings, such payments "to be characterised by the trial judge but not as, or in the nature of, spousal maintenance".
Pursuant to the above orders, the lump sum payment of $25,000 has been included in the property schedule. It is available, or notionally available, for distribution between the parties.
In accordance with his obligations under the orders, the husband also arranged for the wife to receive $4000 per month. Between the date of the orders and the date of the trial, the wife received nine payments, totalling $36,000. The husband seeks to have this amount counted as part of, or added back to, the pool of property available for distribution between the parties. In support of his argument in this regard, Dr Ingleby referred to one of the notations to the above orders, which reads as follows:
The husband is at liberty to argue that the payments (of $4000 per month) should have been preserved and held to meet taxation obligations he will incur.
I am not persuaded that any of the $36,000 paid to the wife in instalments of $4000 per month should be added back. Indeed, I do not understand the basis upon which Dr Ingleby has submitted that they should be. It is not in dispute that both the mortgage encumbering the former matrimonial home and the currently outstanding taxation liabilities of the husband and/or [Z] are liabilities that must be taken into account in defining the pool of assets available for distribution between the parties. The payment of either liability, be it by lump sum payment or periodic payments, serves to benefit both parties by increasing the net value of the property available for distribution.
There is no evidence before me to the effect that using the $4000 per month to reduce the husband's (or [Z]'s) tax liabilities would somehow have been more beneficial to these parties – in a financial sense – than using the funds to meet mortgage payments. Dr Ingleby suggested that the wife had acted unreasonably in failing to agree to the sale of the former matrimonial home at an earlier stage. I am not persuaded that she did. In my opinion, the wife was entitled to undertake reasonable investigations into the husband's financial position and to explore all reasonably available avenues that would enable her to retain the former matrimonial home as a residence for herself and the children.
Further, there is no evidence before me as to the relative benefit of using the periodic payments to reduce the husband's tax liabilities as opposed to using them to meet mortgage payments. For example, there is no evidence before me that penalty interest was imposed on any outstanding tax debt, or that such interest could have been avoided or offset had the periodic payments being used for this purpose instead of for the payment of the mortgage.
In any event, even if the wife had agreed to the former matrimonial home being sold at an earlier stage, the mortgage would have had to have been paid pending settlement, and the wife and children would thereafter have been obliged to find somewhere else to live. That accommodation would likely have been rented and, given that the wife would wish to acquire a home for herself and the children with any moneys awarded to her by virtue of the property settlement proceedings, it is arguable that the use of the periodic payments to pay rent would have been less advantageous to the parties from a financial point of view than allowing the wife and children to live in the former matrimonial home for as long as possible and meeting the associated mortgage payments to enable that to occur.
Notwithstanding the discussion relating to legal fees under the general heading of Item 4 above, the fact remains that "the concept of adding moneys reasonably disposed of back into the pool ought to be the exception rather than the rule".[39] The periodic payments of $4000 per month do not comprise a form of premature distribution of a proportion of the matrimonial assets, and there is no obvious (or even subtle) injustice to the husband if his application to have them added back into the pool is rejected. It cannot be said that the wife alone has had the benefit of the payments (and there is certainly no, or no credible, evidence to that effect), any more than it could be said that the husband alone would have had the benefit of the payments if they had been used to meet his (or [Z]'s) outstanding tax liabilities.
[39] see, for example, C & C (1998) FamCA 143, AJO v GRO (2005) FLC 93-218, W & T (2006) FLC 93-266 and Gollings & Scott (2007) FLC 93-319
Further, the evidence falls far short of the Court being able to conclude that the wife embarked upon a course of conduct that was designed to reduce or minimise the effective value or worth of the parties’ assets, or that she acted recklessly, negligently or wantonly with those assets (thereby reducing or minimising their value).[40] The husband wanted the former matrimonial home sold; the wife wished to retain it as a home for herself and the children, and believed that it might be possible for her to do so. The matter is really no more complicated than that, and I am unable to find that either party's wishes or expectations were unreasonable or fanciful.
[40] see Kowaliw (1981) FLC 91-092, page 76,644
For the sake of clarity, I also confirm that I reject Dr Ingleby's submission to the effect that the wife somehow "frustrated the process of this case being decided" by either maintaining her argument to the effect that she should be permitted to retain the former matrimonial home or by not commencing the rectification work spoken about during the course of the trial (or, alternatively, by not facilitating the commencement of such work).[41] There was no evidence that the wife's actions (or inaction) had any real effect on what is likely to be the sale price of former matrimonial home; nor was there any evidence presented as to whether the delay in finalising the insurance claim and commencing rectification work had any impact whatsoever on the likely sale price (or on any other relevant consideration, for that matter).
[41] see 15 April 2011 transcript, page 259
I do not propose to add back the $36,000.

Contributions

Having identified the pool of property available for distribution between the parties, I would ordinarily turn to consider the second "step" of the property settlement exercise – namely, the identification and assessment of the parties' contributions in all their various guises.
Having regard to the concession described above, however, it is unnecessary for me to go further than record that I accept Dr Ingleby's submission to the effect that it was inevitable that a finding of equality in relation to contribution (for the whole of the period from cohabitation to trial) would be made.
Thus, I find that that an appropriate division of the parties’ property available for distribution between them – on the basis of contribution alone – is 50% to the wife and 50% to the husband.

Section 75(2) factors

So far, in considering the question of property settlement I have dealt with the identification of the parties' property and the question of their respective contributions. The Court has power to make an adjustment to a party's property settlement entitlement based on such contributions in order to take account of, among other things, both parties' respective means and needs. The Family Court has been critical of shorthand terms being used to describe this step in the property settlement exercise, preferring to refer to it simply as “the section 75(2) factors”.[42] In essence, section 75(2) is concerned with the process of arriving at a just and equitable result.[43]
[42] See Clauson (1995) FLC 92-595.
[43] See, in that regard, Waters & Jurek (1995) FLC 92-635.

Age and state of health

Both parties are in their mid-40s. Neither has any significant, or relevant, health difficulty.

Income, property and financial resources, earning capacity and capacity for employment

I have already dealt with the property and liabilities of the parties as at the date of trial. The net "pool" is slightly under $1.92 million. The "pool" includes the parties' superannuation entitlements of $220,000 (in the case of the husband) and $231,000 (in the case the wife).
The wife's superannuation entitlements are likely to be worth more than $230,000, which comprised their value as at 30 June 2010. The wife did not present satisfactory evidence regarding the current value of her superannuation entitlements. I find, therefore, that the wife has the benefit of a relatively minor "resource" comprising the difference between the value of her superannuation entitlements as at 30 June 2010 and the value of those entitlements as at the date of trial.
To the extent that the husband may have suggested that the wife's failure to present satisfactory evidence regarding the current value of her superannuation entitlements was a deliberate attempt to conceal property, or amounted to a significant failure to make full and Frank disclosure of her financial position, I reject that suggestion. There was nothing sinister in the wife's failure to provide an up-to-date value for her superannuation entitlements. I accept that such failure was, in effect, an oversight on the part of the wife or on the part of her legal advisers.
The husband's income is significantly greater than that of the wife.
According to the wife's financial statement, her current gross income is approximately $2140 per week, or approximately $111,280 per annum. She also receives a modest carers allowance (presumably for [Y], although no direct evidence in relation to this allowance was presented) of $55 per week and family tax benefit of approximately $47.50 per week. The wife also receives child support from the husband (currently at the rate of approximately $526 per week).
I am satisfied that the wife is exercising her earning capacity to the full and that she is unlikely to be able to earn any significantly greater amount in the foreseeable future than she is currently earning.
As a [occupation omitted] of [M], the husband receives a base salary of $192,661 per annum. Mr D explained that this translates to a salary package of approximately $210,000 per annum (including superannuation). In addition, the husband (or, more accurately, [Z] as trustee for [T]) receives a 25% profit share of the partnership. This profit share is distributed in two forms:
a)cash drawings; and
b)undrawn profit.

Other facts or circumstances

There appear to be no other facts or circumstances that are relevant to the issue of property settlement, and neither party suggested that there are.

Relevant financial agreements

This does not appear to be a relevant factor, and neither party suggested that it is.

Conclusion as to section 75(2) factors

Having regard to all the evidence before me, I am persuaded that it is appropriate to make an adjustment on the basis of the section 75(2) factors. I am so persuaded because the purpose of the section 75(2) adjustment is to assist the Court in the process of arriving at a just and equitable result. To refuse to make an adjustment in the present proceedings would be to run the risk of making orders which are neither just nor equitable.
In my opinion, the most significant of the section 75(2) factors are as follows:
a)the husband's income earning capacity is very significantly greater than that of the wife; and
b)the wife will continue to be primarily responsible for caring for, supervising and supporting the children and, for the foreseeable future, she will be obliged to discharge this responsibility alone and without significant, practical input from the husband.
When I have regard to the above matters, together with all the other matters discussed under the general heading of the section 75(2) factors, I conclude that an appropriate adjustment of the parties' entitlements on the basis of contribution alone is to increase the wife's entitlement by something between 12.5% and 15%. It would be intellectually dishonest for me to choose either of those figures, and hence I propose to adopt the midpoint of the two, being 13.75%
It follows that the overall distribution of the property between the parties should be on the basis of 63.75% (being 50% for contribution factors plus 13.75 % to take account of the section 75(2) factors) to the wife, and 36.25% to the husband.
In G & G (2004) FamCA 1179, the Full Court said (in relation to an exercise of judicial discretion such as that which I have performed in the previous paragraph):
73.…(Words) will often (perhaps always) fall frustratingly short of an incontestable explanation for any particular exercise of discretion – or, for that matter, for a finding by an appellate court that a particular exercise was wrong. All the relevant factors can be described, with modifiers in abundance, but still the analysis will beg the question, “Yes, but why that figure and not another?” or “Why was that the range rather than some other parameters?”
74.The deficiency is unavoidable. When there are a number of “right” results available, the explanation for the choice of one over others can never be incontestable. Nor can the reasons for saying that a result is outside a range be beyond challenge. The very nature of a discretionary exercise that ascribes mathematical consequences to a batch of actions and events amenable only to descriptive evaluation, means that it is impossible to place beyond argument the explanation for all the steps to the ultimate selection of result.
…
81.…(In) respect of virtually every exercise of discretion, by definition, it will not be possible to deliver a judgment which excludes reasoned argument that another result was available.
For what it is worth, I concur with the Full Court’s view as expressed in the passage from G & G quoted above. The “balancing exercise” that the court must perform is rarely an easy or non-contentious one.

Just and equitable?

Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable – and not simply that the underlying percentage division of the net value of the parties’ property is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution itself, which must be considered.[52]
[52] see Russell (1999) FLC 92-877
Although I am of the view that the testing of any proposed orders by reference to s.79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and although I have considered the justice and equity of the overall “split” under the general heading of Conclusion as to s.75(2) factors, I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties’ contributions and the section 75(2) factors has brought about a just and equitable result.
The Full Court has cautioned against assessing the section 75(2) factors in percentage terms, without considering the real impact of any proposed adjustment. In other words, the real impact in money terms is "the critical issue".[53]
[53] see Clauson (1995) FLC 92-595
In the present case, the section 75(2) adjustment equates to approximately $263,700 (being 13.75% of approximately $1,917,821). I am satisfied that such an adjustment is proper. Indeed, I am also satisfied that the adjustment is proper when regard is had to the differential between the wife's overall entitlement (being 63.75%) and the husband's overall entitlement (being 36.25% per cent), which differential equates to 27.5% of the property pool (or approximately $527,400).
I am very conscious that justice and equity must be done to both parties, and I am satisfied that the split that I have proposed achieves that result.
It follows that the wife will receive property to the value of approximately $1,222,610 (being 63.75% of $1,917,821) and the husband will receive property to the value of $695,210 (being 36.25% of $1,917,021).

Structure of the orders

As indicated above, one of the Court's obligations – whether as some form of fourth substantive step or as part of the section 75(2) factors – is to consider the justice and equity of the actual orders that it proposes to make to give effect to the overall "split" that it has found is appropriate in all the circumstances.
In the husband's case outline document, it was argued that the structure of any proposed orders should recognise the "illiquid nature" of the husband's interest in [M] (through [Z] as trustee for [T]) and the parties' superannuation entitlements. The argument pursued the proposition that the wife should be allocated the whole of the husband's superannuation entitlements as part of her overall share of the property. It was suggested that, in this way, the husband would be able to gain access to "liquid" funds in order to assist in re-establishing himself (in the broadest sense).
I discussed the question of how property settlement orders should be structured in my judgment in OSF and OJK (2004) FLC 93-191,[54] and do not propose to repeat what I then said. My comments in relation to the structure of relevant orders flowed on from my earlier comments in the judgment to the effect that:[55]
... the problem with considering the application of section 79(2) as some form of stand alone requirement or consideration is that it is impossible to determine what factors may direct the court in its consideration of what may or may not be a just and equitable result in the proceedings before it. ... It is impossible to look at the question of whether an order or a result is "just and equitable" without measuring or assessing that consideration by some yardstick. The approach set out in section 79 requires that the court use the considerations in section 79(4) (including the section 75(2) factors) as the yardstick, and not other (wholly undisclosed) considerations.
[54] paragraphs 89 to 96
[55] see paragraph 18
While recognising that my comments in OSF and OJK were partially rejected (and partially accepted) by Thackray J sitting at first instance in Woollams (2004) FLC 93-195, I am not persuaded that I should resile from them.
In Orchard (2009) FamCAFC 90, counsel had argued that it was not just and equitable for a party to receive his or her property entitlement in the form of superannuation only (apart from some jewellery). The Full Court disagreed. It held that:[56]
The question of a just and equitable division of property, having regard not only to the percentage apportionment of the available property, but also to the nature of the assets to be received retained by each party, is of course in the trial judge's discretion.
[56] see paragraph 54
Dr Ingleby properly conceded that there is no principle of law which requires the Court to divide liquid and illiquid assets in exactly the same proportions. Nor, of course, is there any principle or guideline which would indicate that the trial judge's discretion has miscarried if he or she allocates one party's property entitlement entirely in the form of superannuation or some other "illiquid" asset.
In M v M (2006) FLC 93-282, the Full Court observed that the trial judge seemed to have approached the question of division of superannuation interests by asking herself a single question – namely, whether one party ought to receive the same percentage of superannuation as that party was to receive in respect of tangible assets.[57] In the Full Court's opinion, certain other questions (at least) were probably relevant. For example:[58]
a)contributions to superannuation;
b)the nature of the superannuation "assets";
c)the impact of any section 75 (2) factors on the question of apportionment of superannuation; and
d)what would constitute a just and equitable "mix" of asset types for each party.
[57] see paragraph 25
[58] see paragraph 26
When re-exercising its discretion after allowing the appeal in M v M, the Full Court looked at the type of factors referred to in the preceding paragraph. It appeared to accept the trial judge’s view that it would be appropriate for the wife (in that case) to be left in a position to purchase a modest home for herself and the children was an appropriate consideration. The Full court also said:[59]
There are no findings by the trial judge about any particular need of the husband for capital, although implicitly it seems to have been accepted that it was reasonable for him to purchase housing, no doubt with the help of significant borrowing. If both these things are accepted as reasonable objectives touching upon the Justice and equity of orders and in particular the "mix" of assets to be retained by each party, then we think the necessary consequence is that the wife, who has much less capacity to retain and repay any borrowing, needs to receive most of the "tangible assets". As perceived by the trial judge, however, if the wife does receive most of the tangible assets, the only asset of substance remaining superannuation. Like the trial judge, we conclude that it is appropriate for the husband retain most or all of his superannuation.
[59] see paragraph 74
In my opinion, the Full Court’s approach to its re-exercise of discretion in M v M simply highlights the difficulty of the task that confronts a trial judge when presented with this type of dilemma. Importantly, it emphasises the need for parties to present relevant evidence as to their specific needs and how a particular form or structure of orders might assist to meet those needs.
Although many first instance decisions, and some Full Court decisions, place great emphasis on the difference between realisable or liquid assets (on the one hand) and assets that are not readily realisable or are illiquid (on the other), I do not accept that it is obvious or that it "goes without saying" that one form of asset is necessarily better than the other. After all, speculative investments such as shares might be readily realisable, but they might also be a far less attractive proposition for a party than the right to retain, say, a former matrimonial home or an established, income producing business. Similarly, cash might only be of attraction to the extent that it enables a party to purchase an item of property that is itself not readily realisable or illiquid (such as a new home, business or an annuity or fixed investment of some sort). As I stated in the previous paragraph, a trial judge's presumptions or assumptions should not be expected to take the place of relevant evidence as to a party's needs and the reasons why one form of order should be preferred to another.
Turning from the general to the particular, it is apparent that I have concluded that the wife should receive 63.75% of the net property currently available for distribution between the parties. In money terms, that means that the wife should receive property to the value of $1,222,610. I am aware, of course, that the former matrimonial home is to be sold and that the precise amount available to the parties after that sale is unclear. In order to deal with the parties' submissions, however, I have had to attribute a value to the property, and I have done so.
The net proceeds of sale of the former matrimonial home, after paying out the NAB loans (including the extension – being items 10 and 11 in the property schedule) is likely to be approximately $825,000. If the wife were to retain the whole of that amount, together with her car (item 5, at $10,500), the agreed add back of $25,000 (item 6) and her superannuation entitlements (item 9, at $231,000), then it is apparent that the wife will receive property to the value of $1,091,500. In order to receive the full amount that she is entitled to pursuant to these Reasons, the husband would have to pay her a further $131,111.
From the husband's point of view, the effect of these Reasons is that he should receive 36.25% of the "pool", or property to the value of $695,210. If he were to retain his interest in [M] (through [Z] as trustee for [T], and being item 2 in the property schedule ─ valued at $654,042), the [Z] moneys valued at $52,633 (item 3), his car (item 4, valued at $18,000), his legal fees paid of $54,646 (item 7), his superannuation entitlements of $220,000 (item 8) and the [Z] St George loan (item 12, being a debt of $173,000), then it is apparent that he would be retaining property to the value of $826,321. Hence, he would have the requirement to pay $131,111 to the wife in order to bring him "down" to his property entitlement of $695,210.
As I understand Dr Ingleby's submissions, the husband would prefer that the wife be allocated the whole of his superannuation entitlements. As a consequence, he would receive some of the net proceeds of sale of the former matrimonial home. Thus, if the wife were to receive all of the property referred to in paragraph 201 above (which totals $1,091,500), together with the whole of the husband's superannuation entitlements (amounting to $220,000), then it is apparent that she would be retaining property to the value of $1,311,500. Hence, she would have the requirement to pay $88,890 to the husband in order to bring herself "down" to her property entitlement of $1,222,610.
Clearly, the only source of funds to enable the wife to meet a payment of $88,890 to the husband is the net proceeds of sale of the former matrimonial home. If the husband were to receive this amount from the proceeds of sale, the wife would receive $736,110 (being the likely net proceeds of sale of $825,000, less the payment of $88,890 to the husband).
In all the circumstances, I have decided that it would be just and equitable to make an order which is similar to that sought by the husband. In reaching this conclusion, I have taken the following matters into account:
a)No or almost no evidence was presented in relation to the parties' contributions to their superannuation entitlements. The effect of the concessions made during the hearing, however, is that I am entitled to assume that those contributions were approximately equal. Given that each party's superannuation entitlements are approximately equal, this factor might support a conclusion that each should retain his/her own superannuation entitlements.
b)I was not provided with any evidence as to the nature of the parties' superannuation entitlements. I am aware, however, that the wife's entitlements have been valued as at 30 June 2010 and will likely to be of slightly greater value at the time of trial. As to the particular type of superannuation funds involved, and as to the way in which those funds operate for the benefit of the parties, there was no evidence.
c)I have discussed the value of the husband's interest in [M] (through [Z] as trustee of [T]). Notwithstanding the evidence of the husband, Mr R and Mr D, I am not persuaded that this asset is as "illiquid" as the husband would urge the court to accept. The fact of the matter is that partnerships are often unstable, and [M] itself has operated in different forms (so it would appear) for well over a hundred years. Partners leave for a variety of reasons, and new partners join the [business]. There is no reason for the Court to be concerned that [M] may not be able to pay out the husband if he were minded to leave the [business]. The husband conceded (in effect) that the [business] would do everything in its power to pay out a departing partner, and nothing in Mr R or Mr D’s evidence suggests the [business] would not or could not pay if such an eventuality were to arise. After all, and as I commented (somewhat flippantly) during the course of the hearing, the husband "could get run over by a bus tomorrow" and the [business] would simply have to find the funds necessary to pay out his entitlements (through [Z] as trustee for [T]).
d)Allied to the previous factor is the evidence of the husband to the effect that he has not lifted a finger to inquire as to whether he is capable of borrowing funds against his interest (or that of [Z] as trustee for [T]) in the [business]. In my opinion, the husband's failure to make such an inquiry is extraordinary. He is anything but commercially naïve, and in my opinion his failure to make the inquiry can only be explained on the basis that he may have thought that the potential response from the relevant financial institution would not have assisted his case. Given that a proportion of the husband's interest in [M] comprises a contribution to working capital (which is earning interest at the rate of 7% per annum), together with retained profits in respect of which all income tax has been paid, and given the very significant outstanding debtors in the books of the [business] and very low rate of bad debts, it is least possible that the lending institution would be prepared to advance funds to the husband using his interest (or that of [Z] as trustee for [T]) as a form of security.
e)I accept that both parties will have to rehouse themselves in the future. In my opinion, the fact that the children are living with the wife (and spending no or almost no time with the husband) supports a conclusion to the effect that greater priority should be given to the wife’s need to purchase secure accommodation than to the husband's need to do so.
f)On the other hand, there is no evidence before me as to the precise amount that the wife will require in order to purchase a suitable accommodation for herself and the children. In other words, I do not know whether an order to the effect that the wife must receive the husband's superannuation entitlements as part of her share of property would adversely affect her capacity to purchase reasonable accommodation. Nor, I should add, is there any clear evidence as to why the husband needs what he would categorise as realisable or liquid assets at this point in time. More importantly, there is no clear evidence as to precisely how much the husband needs (or desires) by way of liquid assets. For example, I have no evidence as to whether a payment of, say, $50,000 from the net proceeds of sale of the former matrimonial home would achieve the husband's purposes as effectively as a payment of $88,890.
g)The transfer of the whole of the husband's superannuation to the wife could conceivably work an injustice to him in the long term. Although I have found that it is most unlikely to occur, if the husband were to find himself unable to work for any reason, and if [M] were to indeed encounter difficulties in paying out the husband's entitlements as a [occupation omitted] (through [Z] as trustee for [T]), then the husband might be disadvantaged if his superannuation were not to be available to him. Although the husband might perceive that superannuation is of little assistance to him in the short term, there can be no doubt that it is a most important resource (using that term in its broadest lay sense, and not as some form of alternative to "property" or "asset") as the husband grows older, or in the event of health problems. I recognise, however, that – at the end of the day – this is a matter for the husband.
h)If the husband is obliged to pay the wife $131,111 as envisaged above, then the only convenient source of such funds from the husband's point of view comprises his superannuation entitlements. I accept that it seems unfair that he should have to borrow funds from an as yet undisclosed source in order to pay out the wife when there is no evidence that the wife "needs" more than that currently anticipated net proceeds of sale of the former matrimonial home in order to commence the task of rehousing herself and the children.
i)Finally, there is some sense in the husband having an "interest" in ensuring that the former matrimonial home sells for the best available price. The best way of creating such an interest is to award him share of the net proceeds of sale.

Having regard to all the above factors, and doing my best to determine what might constitute a just and equitable "mix" of asset types for each party, I have concluded that the husband should receive $70,000 from the net proceeds of sale of the former matrimonial home (or, more accurately, the percentage of the net proceeds of sale of the former matrimonial home that $70,000 represents when regard is had to the figures in the property schedule). The balance of his obligation to pay funds to the wife pursuant to the orders envisaged in these Reasons can be met from a superannuation split.

Summary of proposed orders

As previously ordered, the former matrimonial home is to be sold and the loans referred to in items 10 and 11 of the property schedule are to be paid out. The net proceeds of sale are likely to be approximately $825,000. As indicated above, the husband is to receive the percentage of the net proceeds of sale of the former matrimonial home that $70,000 represents when regard is had to the figures in the property schedule. $70,000 as a percentage of $825,000 is 8.48%, which I shall round up to 8.5%. Thus, the net proceeds of sale of the former matrimonial home are to be divided as follows:
a)91.5% to the wife; and
b)8.5% to the husband.
While I accept that the actual amount that the husband may receive could be higher or lower than $70,000, it seems to me that the most efficient course of action is to use that figure for the purpose of calculating the precise amount of the superannuation split that is to occur. To do otherwise would mean that it would become necessary to wait for the sale of the former matrimonial home in order to define and implement a superannuation split.
I have recorded that in order to implement the property division foreshadowed in these orders the husband must cause the wife to receive $131,111. But that figure was on the basis that the wife was to receive the whole of the net proceeds of sale of the former matrimonial home. Given that the husband is now to receive approximately $70,000 of those proceeds, it follows that the amount that the husband must cause the wife to receive in another form should increase from $131,111 to $201,111. As indicated above, the most practical way of achieving this reallocation of property is by way of a superannuation split. Thus, the husband must transfer $201,111 to the wife by way of a superannuation split.
It follows from the above that I propose to make orders to the following effect:
a)The wife as to retain:
i)the [omitted] car;
ii)the agreed add back of $25,000; and
iii)her superannuation entitlements.
b)The husband is to retain:
i)his interest in [M] (through [Z] as trustee for [T]);
ii)the [Z] moneys (amounting to $52,633);
iii)his [omitted] car;
iv)his paid legal fees (amounting to $54,646); and
v)liability for the [Z] St George loan (in respect of which $173,000 is owing).
c)The net proceeds of sale of the former matrimonial home are to be divided as follows:
i)91.5% to the wife; and
ii)8.5% to the husband.
d)The husband must transfer $201,111 to the wife by way of a superannuation split.
e)All extant child support applications be struck out.
I shall now hear Counsel as to the precise orders necessary to give effect to these Reasons.

I certify that the preceding two hundred and eleven (211) paragraphs are a true copy of the reasons for judgment of Walters FM

Date: 29 November 2011

Assets	Amount	Sub Total
1.	Property T ("the former matrimonial home")	$1,600,000
2.	[T] Trust	$654,042
3.	[Z] moneys	$52,633
4.	Husband’s [omitted] car	$18,000
5.	Wife's [omitted] car	$10,500
6.	Agreed add back (pursuant to 15 July 2010 orders)	$25,000
7.	Husband's legal fees paid	$54,646
8.	Husband's superannuation entitlements	$220,000
9.	Wife's superannuation entitlements	$231,000	$2,865,821
Liabilities
10.	NAB loan presently encumbering the former matrimonial home	($560,000)
11.	Extension to NAB loan referred to in 2 above (as contemplated in the orders made on 13 April 2011)	($215,000)
12.	[Z] St George loan	($173,000)	($948,000)
TOTAL	$1,917,821