RWW and JWW

[2006] FamCA 1288

FAMILY COURT OF AUSTRALIA

RWW & JWW [2006] FamCA 1288

FAMILY LAW – APPEAL – PROPERTY – appeal from decision of Family Court Judge – Whether the trial Judge erred in determining the notional value of the property pool – Contribution during a long marriage – Misappropriation of funds – Property of the parties agreed not to be included in the pool – Consideration of s 75(2) factors – Appeal allowed – Adjustment made in favour of the husband.

FAMILY LAW – APPEAL – PROPERTY – COSTS – Appeal successful in part – Court to grant costs certificates to the parties under s 9 and s 6 of the Federal Proceedings (Costs) Act 1981.

Family Law Act 1975 (Cth)

AMS v AIF (1999) FLC 92-852
Bellenden (formerly Satterthwaite) v Satterthwaite (1948) 1 All ER

Figgins (2002) FLC 93-122

House v The King (1936) 55 CLR 499

JEL v DDF 2001 FLC 93-075
Joshua (1997) FLC 92-767
Norbis v Norbis (1986) FLC 91-712

White (2001) 1 AC 596

APPELLANT:  RWW

RESPONDENT:  JWW

FILE NUMBER:  BRF4091 of 2003

APPEAL NUMBER:  NA 19 of 2005
DATE DELIVERED:  1 November 2006
HEARING DATE:  3 August 2005
JUDGMENT OF:  Finn, Coleman & May JJ

LOWER COURT JURISDICTION:  Family Court of Australia     

LOWER COURT JUDGMENT DATE:                18 March 2005

COUNSEL FOR THE APPELLANT:

Mr Westbrook of Counsel

assisted by Ms McClymont

SOLICITORS FOR THE APPELLANT: Raeburn Solicitors

COUNSEL FOR THE RESPONDENT: Mr Kirk of Senior Counsel

SOLICITORS FOR THE RESPONDENT: Hirst & Co Solicitors

ORDERS

1. The appeal is allowed.

2. That order 6 of the order made on 18^th March 2005 be varied to provide that in addition to the sum of $101,544, the wife pay to the husband the further sum of $49,374 within three months of the date of these orders.

3. The Court grants to the appellant a costs certificate, pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

4. The Court grants to the respondent a costs certificate, pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal

FAMILY COURT OF AUSTRALIA  AT BRISBANE

APPEAL NUMBER:          NA 19 of 2005

FILE NUMBER:                  BRF4091 of 2003

RWW
Appellant Husband

And

JWW
Respondent Wife

REASONS FOR JUDGMENT

Introduction

1. In a Notice of Appeal filed 15 April 2005 the husband has appealed against property settlement orders made by Carmody J on 18 March 2005.

2. In essence the appeal grounds contend that the trial Judge should have given the husband a greater percentage of the property value by reason of his contribution and identified factors under section 75(2) of the Family Law Act 1975 (“the Act”). In addition, there are several grounds of appeal relating to adjustments made by his Honour by reason of various activities of the husband.

3. The order sought, should the appeal be allowed, is that the property be divided as to 65 per cent to the husband and 35 per cent to the wife. The division applied by the trial Judge was 62.5 per cent to the wife and 37.5 per cent to the husband.

Background

1. The parties were married for 33 years.  They had two children who are now self-supporting adults.  They purchased their first property at “T” in 1972 for $12,000 with borrowed funds.  The house was extended and improved and was their home until 1988 when they moved to “G”.  The husband returned to live in that house in 2002.

2. In 1987 the parties purchased land at “S” and built a large house at a cost between $450,000 and $550,000.  The family moved into the house in 1990.  The wife has lived there since the end of 2003.

3. In 1987, land at “B” was purchased for $85,000 and sold for $185,000.  The sale proceeds were banked, on the wife’s case, or put in the “T” safe on the husband’s case. 

4. The cost of all these real estate purchases and house construction were met from income produced from businesses operated by the parties.

5. The parties operated a business at “T” called “H” from 1974 to 1979. The husband ceased paid employment in 1976. He thereafter played a role in the various jointly operated businesses although the extent of his contribution was disputed by the wife.

6. In November 1980, the “W” Family Trust (“the Trust”) was established with the husband and wife as joint trustees, together with the children as primary beneficiaries.  The income from the trust was used for family purposes.

7. As the trial Judge explained in paragraph 17;

   “Between 1980 and 1997 the trust operated a clothing manufacturing and retail business through ["M"] and other outlets [located at “G”].  ["X"] (children's clothing) and ["Y"] (children's shoes) traded at [“G”] from 1986 to 1992.  A chain of ["C"] fashion stores were opened at [“G”, “SC”, “P”, “O”, and “M”] in the 10 years between 1987 and 1997.” 

8. The husband and the wife gave various accounts of the business and although the size of the turnover described by them was significantly different, it was common ground that the business was a financial success.  However, by 2000, the size of the business was significantly reduced.  There are now three shops operating: the first, “C”, operates at “M”, and the remaining two shops at “U”, which commenced in 2000.  They are managed by the wife who works a 12 day fortnight doing long hours.

9. At the time of the trial the wife was aged 57 and the husband 63. The children had both worked in the businesses; the son for a short time in 1992 and the daughter worked full time from 1996 to 2003.

10. Although the husband ceased to have any involvement in the business in 2002 he has always received an income and at the time of the trial was still paid approximately $400 per week from the trust.  The wife received a wage of $800 and some of her personal expenses were paid.

11. The wife received an inheritance in 2002 of $41,000 which she gifted to their daughter.  In December 2002, the parties advanced $124,000 to their son to set up a cafe/bar business, as well as $93,000 to their daughter when she opened a clothing business in 2003. 

12. The husband travelled to Asia Minor on several occasions.  On one trip in 1992 or 1993 he was arrested and imprisoned. He was charged with smuggling antiquities.  The husband spent two months in goal and was subsequently fined.  Legal and other associated costs amounted to $110,000.

The Trial Judge’s Judgment

1. After an accurate and relevant discussion of the proper approach to dealing with an application for property settlement about which there is no challenge, the trial Judge first dealt with those assets to be divided between the parties.

2. In paragraph 42 of his Honour’s judgment, the agreed assets and their values are set out and shown as amounting to the net figure of $1,895,913.  The only liability in that list is the husband’s tax liability of $3,178.  The property known as “S” is valued at $1,300,000 and the property known as “T” is valued at $520,000.

3. The trial Judge then dealt with various disputed issues between the parties concerning monies expended by each of them during the marriage or since separation.  He found that the sum of $64,015 expended by the wife on legal fees, should be “added back” to the pool.

4. Having observed that the husband was evasive as a witness and noting that there was a disparity between the cost of the relics in Asia Minor and their commercial value in Australia, the trial Judge concluded that the husband knew his activities “were impermissible”:

   ‘I find that he took a calculated risk that he would not be caught, and ultimately paid the price for his recklessness. As far as I can tell from this distance, the wife was blameless in the affair and, therefore, I accept the wife’s submission that she ought not be required to share that loss, but rather than notionally adding the money back I will bring it into account as an adjustment factor.’

5. Additionally, the trial Judge was critical of the husband’s evidence in relation to the issue of moneys withheld by the husband from the “B” sale proceeds, describing his evidence as “expedient and unconvincing”. It was concluded that the husband had taken for his personal use the sum of $65,000 but returned half. Rather than adding back such sum the trial Judge said he would take it into account as part of the adjustment process under s 75(2).

6. Having rejected the submission to allow a sum of $105,787, potentially payable under a personal guarantee connected with the adult children’s businesses, being included as a liability, the trial Judge again observed that this would be considered as a s 75(2) adjustment factor.

7. In relation to the value of the Family Trust, the arguments on behalf of the husband were referred to:

   60.    The husband submits that because of wildly fluctuating stock values the negative book value of the business operated by the trust is more apparent than real and its liabilities should not be taken into account to artificially reduce the net asset value of the parties for property division purposes.

   61.    He suggests that the beneficiary loan accounts of the parties were internal loans within the family and are not likely to be enforced by the trust.  He says, in those circumstances, that it is appropriate for the wife to indemnify him and cause the trust to forgive his loan.

   62.    I reject these suggestions because, as a matter of principle, those who share in the fruits of the trading operations of a corporation or trust should also bear the burden of any losses it occurs in the course of its normal operations.  I find that the trust is worth what the valuer says it is and, in my view, its negative net value should be included.

8. In paragraph 63 of the judgment appears the “notional pool”, as so described by the trial Judge, in the sum of $1,745,572 as follows:

   -            “S”  $1,300,000.00

   -            “T”  $   520,000.00

   -            “W” Family Trust:

   (a)   Trust Fund  $   (82,691.00)          

   (b)  beneficiary loan - wife   $   (65,650.00)

   (c)  beneficiary loan - husband  $   (66,015.00)

   -            Children's debts  $     16,081.00          

   -            Antique relics :  

   Husband (4)  $     12,300.00

   Wife (1)  $      2,000.00

   -            Furniture :

   Husband  $     12,255.00

   Wife  $     28,255.00

   -            Motorcar  $      7,000.00          

   -            Motorcycles (5)  $      1,200.00

   -            Pre-paid legal fees  $     64,015.00

   $1,748,750.00

   Liabilities :

   -            Husband's tax  $      3,178.00

   Total:  $1,745,572.00

   -----------------

9. Of note, neither party has superannuation. 

10. The husband asked that the “T” property be transferred to him and the wife agreed seeking the transfer to her of the “S” house and the assets of the trust.

11. In a lengthy and careful discussion about the evidence the trial Judge dealt with the parties’ claims in relation to contribution, described by the trial Judge as being “poles apart”.  Each party called a number of witnesses to support their case.

12. His Honour set out the evidence given by these witnesses, describing the wife’s case as:

    “…an impressive array of friends, acquaintances, employees and business associates in support of her case that the husband was a basically lazy, unmotivated and unsupportive husband, who played little or no useful role in business or family matters.  In all, 12 supporting affidavits were read in the wife’s case and 10 of the deponents were cross-examined.”

13. After referring to the argument about contribution, correctly describing it as “distasteful and regrettable”, his Honour also acknowledged that it “was probably unavoidable here because neither party could have properly presented their case otherwise”.

14. The trial Judge reflected upon the nature of marriage and the approach of this Court at first instance to contributions by reference to a number of well known authorities and settled principles.

15. In view of the way the case was presented, the trial Judge was largely left to decide the contribution issues based on credibility.  It is helpful to recite in part his Honour’s findings on this:

    “106.       Overall, I preferred the wife’s account to the one given by the husband.  Although sometimes confused by some of the questions she was asked, the wife retained her composure throughout cross-examination and held her ground in the face of the scrutiny of Mr Hamwood’s questioning.  I found the answers of the husband, by contrast, were often glib and expedient.  His evidence concerning the fate of the failed proceeds of the “B” land is a particularly good example.

    107.  I reject the husband’s contention that he was an integral part of the trust’s activities and domestic affairs.  I am reasonably satisfied that his affidavit material significantly inflates the level of support he gave the wife in accumulating the wealth and providing for the welfare of the family.

    ...

    109.  The husband’s evidence also suffered from his apparent willingness to deceive in a commercial context as in the circumstances surrounding his dealings with the insurance company in connection with the jet ski.

    ...

    111.  I reject the husband’s evidence concerning the size of his contribution to parenting and family welfare to the extent of any inconsistency with the evidence of the wife or her corroborating witnesses.”

16. Ultimately, his Honour said:

    “118.       It is not a special, exceptional or even stellar performance as a superwoman balancing business responsibilities with home duties that distinguishes her s79(4)(a), (b) and (c) contributions from those of the husband, but his significantly inferior input in both of those realms.  In my assessment, the husband’s contribution, both quantitatively and qualitatively, is overshadowed by the wife’s.  This is simply an acknowledgement of a reality that must be reflected in the percentage division and final orders to achieve a fair or just and equitable result.  It is not a form of reverse discrimination on the basis of gender.  Nor does it give preferential treatment to one role over the other.  His performance in his role, in my view, fell well below par.  The outcome would have been the same if the shoe had been on the other foot.”

17. After referring to White (2001) 1 AC 596 and Figgins (2002) FLC 93-122, his Honour correctly said:

    “122.       In both Figgins and White the wife was found to have done all she could in the role of homemaker in a long marriage and, therefore, would have been unfairly discriminated against by any bias in favour of the breadwinner.

    123.  The position of the husband in this case is quite different.  His role in the marriage is not viewed as intrinsically less valuable than the wife’s.  He is not being disadvantaged by the chosen roles of the parties or the way the matrimonial labour was divided.  Nor because his contributions were different or less tangible than the wife’s.  His share of the property is not diminished because he has not been gainfully employed since 1976 or chose to work at home instead of in an office.  He could have had a reasonable expectation of an equal division if he contributed equally to the wealth and welfare of the family, doing the best he could in his allocated or chosen sphere as a hard-working, dedicated parent, house spouse and supportive husband of an equally dedicated, hard-working and dedicated business-woman.  However, he did not.  His contribution weighs less than the wife’s because he put less in.  This, and only this, is the justification for dividing the product of the wife’s efforts unequally between them.

    124.  The husband simply did not do all that was required of him given the shape and nature of this marriage (see Kennon at 84,298).  He did not contribute all that he could emotionally and physically to the wealth and welfare of the marriage.

    ...

    127.  The result of all this is that the wife’s s 79(4)(a) – (c) contributions outstripped those of the husband’s to such an extent that the justice and equity of the situation would not be met, in my opinion, unless she received or retained at least 70 per cent of the available net assets before adjustment.”

18. His Honour then moved to a consideration of s 75(2) factors, deciding that the most relevant in this case were the “age, state of health, income, financial position and earning capacity of the parties as affected by the duration of the marriage”, together with “the economic loss resulting from the reckless conduct of the husband in Asia Minor and his misuse of joint funds in 1975 [sic] and the wife’s contingent liability under the personal guarantee”.(paras 128-9)

19. At trial, the husband sought a 15 per cent adjustment in his favour, while the wife sought an adjustment of 5 per cent to her.

20. But for the husband’s reckless conduct and misuse of joint funds, and the wife’s contingent liability, the trial Judge said he would have

    “135.       … allowed an adjustment in the range of 10-12.5 per cent in the husband’s favour given the length of the marriage and the significant gulf between his earning capacity and hers and the overall financial position, even though it does not seem to me to have deteriorated to any significant degree as a result of the marriage itself. Any economic discrepancy is due mainly to the husband’s age and his early retirement… “

21. However, the trial Judge was mindful of the “obvious limits to the significance of the disparity in likely future earnings and capital positions of the parties”, and ultimately found that in

    “136.       … doing the best I can for the husband without doing any injustices to the wife, I consider an increase of 7.5 per cent to the husband for contribution based entitlement is justified.  In monetary terms this is $130,918.00.

    137.  An order dividing the net pool of assets 62.5 per cent to the wife and 37.5 per cent to the husband, in my opinion, satisfies the requirement of justice and equity in s 79(2).  It recognises the wife's greater effort in all areas and provides the husband with a reasonable place to live and enjoy a reasonable, though not lavish, lifestyle in his new situation as a single person, as well as compensating him for his comparatively poorer post-separation economic position but not at the expense of the wife.”

22. The orders of Carmody J specified that each party be transferred title to the property they currently resided in and that the wife retain control of the family trust and pay the husband a lump sum amount of approximately $100,000.(para 139)  The order in relation to the payment of such sum is as follows:

    “(6)   That the WIFE pay to the HUSBAND the sum of $101,544.00 within such time as shall be reasonably required for the WIFE to raise the funds necessary in that regard.” (original emphasis)

23. There was no issue at the trial that the wife should retain the property at “S”, the husband the property at T” and that the wife retain the property held by the family trust.

Grounds of Appeal

1. In the course of hearing the appeal, the husband’s counsel, Mr Westbrook,  asked for leave to rely on amended grounds of appeal. Leave was granted. Those grounds including the amendments are as follows:

   “1.     The learned Trial Judge erred in law in that his determination that the Husband was entitled on contribution to 30% of the assets was outside of a reasonable exercise of discretion.

   2. The learned Trial Judge in finding that the Husband was entitled to 7.5% pursuant to s.75(2) of the Family Law Act erred in:

   (a) failing to give any or any proper weight to the disparity earning capacities of the parities [sic];

   (b)failing to give any or any proper weight to the disparity in assets of the parties pursuant to his orders;

   (c)   failing to give any or any proper weight to the duration of the marriage and its effect upon the earning capacity of the Husband.

   (d)   The learned Trial Judge was in error in assessing the husband’s average weekly expenses to be $65.00 when the evidence was that the husband’s average weekly expenses were $448.00.

   (e)   As a consequence of the error referred to in (d) the learned Trial Judge was in error in anticipating that the Husband would not have to draw down on capital to sustain himself, and in identifying the capital that the Husband would have available to supplement his earnings he failed to recognise the impact that the legal costs of the proceedings would have.

   3.     The learned Trial Judge erred in determining contributions in failing to give any or any proper weight to the fact that the parties’ assets, which formed the basis of the property pool at the hearing, had been substantially accumulated by about 1994.

   4.     The learned Trial Judge erred in failing to give any or any proper weight to the contribution of the Husband over the period of the entire marriage and particularly in relation to his contribution as a parent.

   5.     The learned Trial Judge erred in finding that the Husband’s entitlement ought to be adjusted by reason of the monies expended in relation to his imprisonment in [Asia Minor].

   6.     The learned Trial Judge erred in finding that the use or alleged use of money in 1995 ought to be taken into account as an adjustment against the husband’s contribution in circumstances where:

   (a) there is no evidence that the husband has applied those monies other than for the purposes of the parties;

   (b)   the parties by agreement led no evidence as to any application of the parties’ funds to property owned and/or developed by the parties in [Asia].

   7.     The learned Trial Judge erred in bringing into account as liabilities to be taken up in the calculation of the property pool the liabilities of the [“W”] Family Trust being the liabilities to the trust fund and to the wife and husband in circumstances where:

   (a)   it was the evidence of the single expert witness that despite the apparent shortfall in the trust fund, the trust was solvent;

   (b)   the family trust loans to the husband and wife were not external liabilities and it was not suggested that the existence of such liabilities decreased the net value of the assets of the parties.

   8.     The learned Trial Judge erred in failing to give any or any adequate weight to the minimal opportunities for observation of the husband which the wife’s supporting witnesses admitted they had.

   9.     The learned Trial Judge erred in that he gave weight or inappropriate weight to the unqualified opinion evidence of the wife’s supporting witnesses.

   10.    The learned Trial Judge erred in his consideration of the adjustment that was appropriate between the parties pursuant to s.75(2) because he failed to have any or any appropriate regard for the property interests held by the parties in [Asia].

   11.    Because the learned Trial Judge was aware that the parties held property interests in [Asia] but was unaware of the extent of the interests of the parties, and each of them, the learned Trial Judge was unable to determine whether the orders that he proposed to make were just and equitable.” (emphasis added)

1. In a letter dated 29 July 2005 from the respondent wife’s solicitors to the solicitors for the husband, made available to us at the hearing of the appeal, the respondent conceded part of one of the grounds of appeal, being Ground 7 affecting the value of the asset pool. The consequence of this is that the asset pool is to increase by $131,665. That letter read as follows:

   “We refer to this matter and your summary of argument. In relation to ground 7 which is addressed as the first matter in your summary or argument we have had some difficulty understanding paragraphs 1 to 6 as the position is suited that the family trust had “liabilities …. to the Husband and the Wife” is in fact the opposite of the true position – each of the parties had in fact liabilities to the Family Trust. However the implicit contention in paragraph 6 that the asset pool has been understated by $131,665.00 is correct in our view but not for the reason stated.

   As a consequence, our client has instructed us to concede that your client should succeed to this extent on ground 7 of his Appeal Notice and that the affect of this is to increase the divisible asset pool by $131,665.00 and your client’s entitlement ought increase by $49,374.00.

   Our client does not concede that there should be any further adjustment made to the percentage ultimately applied by the trial judge and resists your client’s appeal in all other respects.”

Appellate Principles

1. Apart from the issue of the composition of the pool the remainder of the grounds allege an error in the application of the trial Judge’s discretion. It is useful to briefly identify the applicable principles to which an appeal court must turn their minds. 

2. Clearly stated in House v The King (1936) 55 CLR 499 at 504-505, is the principle that:

   “It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. “

3. However, as was said by Asquith LJ in Bellenden (formerly Satterthwaite) v Satterthwaite (1948) 1 All ER 343 at 345 and reiterated by Brennan J in Norbis v Norbis (1986) FLC 91-712 at 75,178:

   “… on the same evidence two different minds might reach widely different decisions without either being appealable.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”

4. As was explained by Kirby J in AMS v AIF (1999) FLC 92-852, at 86-043:

   “[A]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge’s reasons, given the large element of judgment, discretion and intuition which is involved.  Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.”

Grounds of Appeal - Discussion

1. The matter was argued by each counsel commencing with the question of the value of the pool (Ground 7).

2. Counsel then added to their written submissions dealing with the issues of:

   1.Contribution (Grounds 1, 3, 4, 8 & 9)

   2.Section 75(2) factors (Ground 2) and other grounds reduced to various sub-headings:

   I.Alleged misappropriation of $65,000 in 1995 (Ground 6)

   II.Costs associated with prosecution in Asia Minor (Ground 5)

   III.The Asia property (Ground 10 & 11).

The Property Pool - Ground 7

1. It is convenient to commence with ground 7.

2. In assessing the notional pool the trial Judge determined that he should bring into account the liabilities of the trust. In dealing with the value of the trust the trial Judge erroneously treated the beneficiary loan accounts of the husband and wife as liabilities of the trust. In doing this, his Honour also did not accept the submission on behalf of the husband that he could ignore such debts. In paragraph 22 of this judgment we have set out the relevant parts of the judgment in this respect.

3. The loan to the wife was in the sum of $65,650 and the loan to the husband was in the sum of $66,015. The difficulty is that in dealing with them as liabilities of the trust it seems the trial Judge failed to then appreciate that each of the parties would have had such a sum as an asset. Therefore, as was accepted by counsel for the respondent the monies available to be distributed between the parties was $131,665 more than calculated.

4. In paragraph (2)(b) of the orders the husband is required to transfer to the wife “any loan account or other monies due and payable to the husband by the trustee of the “W” Family Trust”. The consequences of this order it is accepted is to provide to the wife the sum of $131,665 which the trial Judge failed to bring into account. As already mentioned this part of the ground was conceded.

5. The other part of the ground relates to his Honour’s inclusion in “The notional pool” of a liability of $82,691 being monies owed to persons unrelated to the parties.  Counsel submitted the effect would be to give a negative value to the trust but clearly that was not correct on the evidence. Further that the consequence in conferring the assets of the trust upon the wife was to impute this negative value giving her an advantage of $82,691 more than was no doubt anticipated. Reference was made to the expert evidence of an accountant.

6. The evidence of the expert includes the valuation of the trust dated 26^th August 2004 commencing at p.233 of the appeal books and exhibit one which was questions for and answers from the valuer commencing at p.696 of the appeal book. It is clear from paragraph 6 the letter of 12 October 2004 being the answers, that the expert opinion was that there is “no operational deficiency in assets and therefore no likely goodwill”.  However, it was submitted by Mr Westbrook that an examination of all of the evidence of the accountant revealed some conflict in his conclusions.

7. The question that emerged was whether a finding contained in paragraph 62 of the judgment that “the trust is worth what the valuer says it is and, in my view, its negative net value should be included’’ was open to His Honour in view of the opinion of the valuer expressed in the letter that there is no operational deficiency.

8. As Mr Kirk correctly explained the apparent difference in the evidence is due to the question asked of the accountant. In relation to the letter and the conclusion of no operational deficiency, it was apparent when one has regard to the question he was asked that this was directed to the concept of goodwill. The accountant had clearly explained in his valuation at paragraph 8.1.4 that there was a net deficiency of $82,691. The question was asked under a heading called goodwill and a calculation was put to him that the value of the business was $32,719. Reference was made to questions asked by Mr Kirk of the expert (See t/s p653 at line 15). It is accepted that the opinion contained in paragraph 6 of the letter of 12 October 2004 was merely in relation to the question of goodwill but that the value of the trust was otherwise explained in the valuation which includes the net deficiency. It was not suggested to the trial Judge that any different approach should be taken.

9. Thus, save for the concession concerning the need to add the sum of $131,665 to the value of the property to be distributed between the parties, Ground 7 cannot otherwise succeed.

Contributions  (Grounds 1, 3, 4, 8 & 9)

1. It is argued on behalf of the appellant that the decision that the contribution of the parties during the marriage of 33 years expressed as a percentage as to 70/30 percent in favour of the wife is outside the generous ambit within which reasonable disagreement is possible and is plainly wrong. The basis for asserting this relates to the following facts:

   a.It is common ground that the parties each came to the relationship with no property of substance;

   b.Two children were born to the parties and grew to independent maturity during the parties co-habitation;

   c.There is no relevant ‘external’ benefit received by either party during their co-habitation;

   d.There is no assertion of any ‘special contribution’ by the wife;

   e.There is no finding of any ‘negative contribution’ by the husband;

   f.Each of the parties worked, though in separate spheres, in their joint interests;

   g.The parties married ‘for better or worse’.

2. Much reliance was placed on the fact that this was a long marriage and that this must mean that the parties contributed according to the expectation of each of them reinforced by the fact that for a time they separated and then resumed cohabitation.

3. It was submitted by counsel for the husband that it is not appropriate to allow parties after such a long marriage to catalogue their own contributions and “…criticise or minimise that of the other of them, His Honour has been lead into overlooking or failing to have regard to that part of their contributions for the welfare of the family which reflected their mutual support, care and intimacy”.

4. Finally, under this general ground of contribution it is submitted that just because the effect of the wife’s contribution “was more visible, and was able to be measured as more directly affecting the parties’ income …. does not lead to the conclusion that her contribution was more than that of the husband.” 

5. The essential submission of the respondent was that the husband’s contributions were limited. The trial Judge it was submitted correctly rejected the husband’s evidence of any greater contribution and found on some occasions his evidence to be untruthful. Applying some traditional descriptions it was submitted that he was neither a “homemaker” nor the “bread winner”. Reference is made to JEL v DDF 2001 FLC 93-075 at 88,334. Our attention was particularly directed to paragraphs 94 to 104 of that judgment.

6. It was correctly submitted on behalf of the respondent that for the appellant to succeed in his argument that the contributions of the parties should have been assessed as equal, it would be necessary for the appellant to demonstrate that the trial Judge’s primary findings of fact in relation to contribution were erroneous.

7. However, it was not submitted on behalf of the appellant that the primary findings of fact were erroneous, and in any event, it would be difficult to sustain such a submission given that the primary findings of fact in relation to contributions depended on credibility issues.

8. Therefore in the absence of a successful challenge to the primary findings of fact, we can only conclude that his Honour’s assessment of the parties’ contributions was open to him.

Section 75(2) - Grounds 2, 5, 6, 10 & 11

1. The net effect of the judgment is to give the wife an interest in the parties’ property which is 25 percent greater than that of the husband, in real terms $436,393 on the mathematics applied by the trial Judge. It is submitted that this cannot be a proper result because the husband is closer to retirement age, has not worked since 1976 and is without any skills.

2. It was submitted in contrast that the wife is healthy, comparatively ‘young’ and earns a reasonable income from the Trust assessed by his Honour to be $70,000 per annum.

3. Reference was made to the husband’s financial statement filed 31 August 2004. Under the heading, Personal Expenditure, costs of living including food were not included and the total cost claimed for personal expenditure was $66.00 per week. This figure was accepted by the trial Judge in paragraph 133 of the judgment. There was no other evidence about the husband’s expenses nor was there cross examination.

4. In response, counsel for the wife referred to Joshua (1997) FLC 92-767 at p84,444 for the proposition that if there be an error that was created entirely by the appellant and it cannot now be relied upon in the appeal.

5. In any event, it is obvious however that the trial Judge also understood that the husband was receiving the sum of $400 per week “which will shortly cease and be replaced by Centrelink payments”.

6. It is the last sentence of paragraph 133 “Accordingly, he could remain in the [“T”] property without having to draw down on capital to sustain himself” which at first sight contains some difficulty.

7. It is also submitted that the husband’s legal fees should have been taken into account. It is noted that in relation to this submission there was no evidence on this topic in relation to the husband’s case and no submissions were made to the trial Judge to the effect now being put to the appeal court.

8. Apart from those considerations it was submitted that His Honour fell into error when relying upon the factors to which he referred by reference to s 75(2)(o) when considering the future circumstances of each of the parties. It was submitted this was particularly so since the events relied upon took place in 1993 and 1995 respectively.

9. It was submitted that the proper approach was to deal with these sums as an “add back” or as negative contributions. It is difficult to see how this could have been an advantage to the husband if the trial Judge had taken that approach.

10. Counsel for the husband made the unusual submission that as the parties had property of an “indeterminate value in [Asia]” and despite the agreement at trial that this interest should not be taken into account as was communicated to the trial Judge, the decision to exclude the property was misconceived. It was then submitted that the trial Judge made an error in accepting the agreement and should at the least have taken the property into account in relation to s 75(2) in considering the future financial circumstances of the parties. The relevant part of the judgment is contained at paragraph 59 as follows:

    “59.   The parties have holidayed regularly in [Asia] since 1980.  They have acquired leasehold interests in land and built a holiday home there.  They have agreed between themselves not to alter their interests in their [Asian]  properties and these proceedings have been presented and determined on that basis.”

11. The argument that the trial Judge erred in failing to have regard to the Asian property interest is not maintainable. Not only was it not raised below but there was an agreement about the property and it cannot now be raised on appeal. As counsel for the respondent wife submitted had there not been such an agreement there could have been evidence on the subject at trial.

12. The trial Judge had proper regard to the evidence about the parties’ comparative financial positions including that the wife’s earning capacity was limited to her own personal exertion. It is clearly the case as is submitted “if the wife ceased to work the Trust would have no capacity to pay her an income”.

13. We also accept the submission of counsel for the respondent wife that:

    “The husband’s capacity for work is no more or less than it ever has been. His attitude to any form of paid employment to almost all his previous working life will no doubt remain. Any capital disparity between the parties – if in truth there is any given the extra territorial property holdings – is a result of disparate contributions.”

14. Although it is apparent that the husband may need to rely in part on capital to support himself it is equally apparent that it is only through the wife’s personal endeavours that she will be able to maintain herself.

15. No error in principle nor in the exercise of the discretion has been demonstrated in the trial Judge’s reasoning or calculations in relation to s75(2) matters.

Costs associated with prosecution in Asia Minor (Ground 5)

1. It was submitted that his Honour “misconceived the gravity of the events that had occurred in [Asia Minor]”. The evidence revealed the following. The husband had visited Asia Minor on many occasions including on one occasion to arrange for doors and furniture for the “S” house. On one of his trips, the husband was detained although the precise nature of the charge was not it was submitted, clear. Further it was submitted that there was no evidence of whether the act alleged against the husband constituted an offence. The uncontested evidence was that he purchased some artefacts in an open market and asserted that he had not committed any offence. It seems that he had previously purchased similar artefacts.

2. The evidence revealed that the fine was approximately A$1,200. It may be as asserted that his plea of guilty reduced any possible further expense. The submissions to some extent take issue with the findings of fact of the trial Judge. For example in paragraph 24 the trial Judge said:

   “24.   On the second last trip in either 1992 or 1993, the husband was arrested for allegedly smuggling antiquities out of [Asia Minor].  He pleaded guilty and was sentenced to two months' imprisonment.  Legal and incidental costs amounted to $110,000.00.”

3. The main submission in this respect was that it was an error to bring the consequences of the circumstances of that trip into account as relevant pursuant to the provisions of s 75(2)(o). It is submitted that it might have been justifiable to add back the sum of this amount.

4. The manner by which His Honour dealt with this issue is contained between paragraphs of 46 and 50 of the judgment. It is apparent that the wife’s claim was that the sum of $110,000 should be added back. Alternatively, that the matter be dealt with pursuant to s 75(2)(o). The husband’s case as His Honour recorded it was “that it should be seen as an unfortunate but natural incident of overseas travel to a politically volatile [place] like [Asia Minor]”. The trial Judge as we find was open to him concluded “It is clear from his arrest and subsequent plea of guilty that what he was doing in Asia Minor was unlawful” and in paragraph 50:

   “I have concluded on the basis that the husband evasiveness during cross examination on the point, and the disparity between the costs of the relics and their commercial value in Australia, that the husband knew or believed that his activities were impermissible. I find that he took a calculated risk that he would not be caught, and ultimately paid the price of his recklessness. As far as I can tell from this distance, the wife was blameless in the affair, and, therefore, I accept the wife’s submission that she ought not to be required to share that loss but rather than notionally adding the money back I will bring it into account as an adjustment factor.”

5. The trial Judge did subsequently refer to this matter under the heading “Adjustment Factors” and said (para 135):

   “If it had not been for the s 75(2)(o) factors, I would probably have allowed an adjustment in the range of 10 - 12.5 per cent in the husband's favour given the length of the marriage and the significant gulf between his earning capacity and hers and the overall financial position, even though it does not seem to me to have deteriorated to any significant degree as a result of the marriage itself.”

6. Ultimately His Honour concluded that an adjustment of 7.5 per cent to the husband was justified.

7. In answer to the contention that the husband’s conduct may not have been so serious or criminal in nature, it is correctly submitted, we think, that should this have been the case, it would have been an easy matter for the husband to place that evidence before the Court and he did not do so. In addressing the alternate submission that His Honour should have treated these facts differently and for example made it an ‘add back’ it is submitted correctly that a different approach would not lead to any different (or better) result for the husband.

Alleged misappropriation of $65,000 in 1995 (Ground 6)

1. It was submitted that the trial Judge fell into error in concluding that the alleged use of the money by the husband ought to be taken into account as an adjustment pursuant to section 75(2)(o) where:

   a.  There is no evidence that the husband has applied those monies other than for the purpose of the parties;

   b.  The alleged retention occurred at 7 years prior to the parties separation;

   c.   The parties placed before the Court no evidence as to the application of their funds to properties owned or developed by them in [Asia] in circumstances where it is a reasonable inference that a significant amount of the parties funds would have gone to such developments.

2. It is therefore submitted that apart from the approach being incorrect, the conclusions were not supported by the evidence. Alternatively, it is submitted that if a conclusion of waste was available then the proper manner in which this ought to have been dealt with might have been an add back of some amount. However, we infer that it is submitted that any such sum ought to have been discounted because of the time when these events occurred. As a further alternative, it is submitted that it may have been available to the trial Judge to bring the matters referred to into account in the assessment of the parties’ contributions.

3. Reference was made to paragraphs 51 to 54 of the judgment where His Honour dealt with this issue. At paragraph 54 the trial Judge concluded:

   “The husband's evidence on this issue was expedient and unconvincing.  I am reasonably satisfied that the husband took the money and has returned only half of it.  He has not disclosed what he did with the missing funds.  The financial consequences of the husband's conduct in relation to that money ought to be taken into account.  The best way to do this, in my view, is not by notionally adding it back but as part of the adjustment process under s 75(2).”

   Counsel for the wife demonstrated that during the husband’s evidence he gave a number of conflicting explanations about these monies.

4. It was not demonstrated that these conclusions of fact were not open to the trial Judge or that a proper approach was not followed.

The fourth step – Ground 11

1. Ultimately, it was submitted by Mr Westbrook that the combination of the Asia argument, the concession made at the outset and the consequent impact of this figure on s 75(2) factors demands that the appeal be allowed, that the matter be remitted for rehearing or that the Court re-exercise the discretion in relation to s 75(2) adjustments.

Conclusion

1. The appeal must be allowed because of the conceded issue raised in Ground 7. Otherwise, however, we have concluded that there is no substance in any of the grounds of appeal.

2. It was agreed that the husband’s entitlement is to be increased by $49,374. Although there was no agreement about the date for payment we will order that the further sum be paid by the wife to the husband within 3 months of today or on a date to be agreed between the parties.

Costs

1. Having regard to the submissions of the parties and the nature of the error which has caused us to allow the appeal, we are persuaded that it would be appropriate to grant certificates to the parties under s9 and s6 of the Federal Proceedings (Costs) Act 1981.