SALESBURY & CANNON

[2014] FamCA 860

FAMILY COURT OF AUSTRALIA

SALESBURY & CANNON [2014] FamCA 860

FAMILY LAW – PROPERTY – final orders – where wife seeks final property orders – where wife is main caregiver – where parties have children – where husband lives overseas – where husband earns significantly more than the wife – where it is just and equitable to make property orders – where there is an application for spousal maintenance – where a superannuation splitting order is made – where contributions of parties are considered equal – where there is an adjustment under s 75(2)

Family Law Act 1975 (Cth) ss 75(2)(o), 90MT(i)(a)

Stanford v Stanford [2012] HCA 52

APPLICANT: Ms Salesbury

RESPONDENT: Mr Cannon

FILE NUMBER: SYC 2132 of 2010

DATE DELIVERED: 12 September 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 19, 20, 21 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd SC

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

COUNSEL FOR THE RESPONDENT: Mr Batey

SOLICITOR FOR THE RESPONDENT: Marks Griffiths & Bova Solicitors

Orders

1. That each of the parties do all things and execute all documents required to effect the sale, for the best price reasonably obtainable, of the property situate at and known as B Street, Suburb C in the State of New South Wales and to distribute the proceeds of such sale as follows:

   1.1in payment of legal costs and expenses incidental to the sale

   1.2in payment of agent’s commission and expenses

   1.3in payment of all monies required to discharge the mortgage on the title to the property

   1.4in payment of the balance then remaining to the wife.

2. 2.1      That the amount allocated to the wife out of the interest of the husband in the AMP Superannuation Fund (“the Fund”) is of a base amount of $157,700.

   2.2That, in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the husband in the Fund that the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations using the base amount and there be a corresponding reduction in any entitlement of the person to whom the splittable payment would have been made but for these orders.

   2.2That the operative time for order 2.1 is 28 days after service of these orders upon the trustee of the Fund, who has liberty to apply at any time during that period of 28 days.

   2.3That the wife cause a sealed copy of these orders to be served upon the trustee of the AMP Superannuation Fund within 14 days of the date of these orders.

3. That, subject to these orders, each of the parties is declared to be solely entitled to all property and superannuation presently in his and her possession or control.

4. 4.1      That all existing orders for payment by the husband of periodic spouse maintenance to the wife are discharged.

   4.2That the husband pay spouse maintenance to the wife in the sum of $1,200 per week until 31 December 2015.

   4.3That the husband continue to pay the outgoings in respect of the property B Street, Suburb C as set out in the orders of 26 May 2010, until settlement of the sale of that property.

5. That all outstanding applications and responses herein are dismissed.

6. That all material produced on subpoena be returned.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Salesbury & Cannon has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2132 of 2010

Ms Salesbury

Applicant

And

Mr Cannon

Respondent

REASONS FOR JUDGMENT

the proceedings

1. Ms Salesbury (“the wife”) and Mr Cannon (“the husband”) are in dispute as to settlement of property, following the breakdown of their marriage of seventeen years.  The parties commenced their relationship in 1988 and married in April 1992.  They separated on 12 June 2009.  The husband has lived in California since November 2008.

2. The parties are the parents of two children:

   L born in December 1997 (16) 

   and

   F born in November 2007 (6).

   Since the parties’ separation the children have lived with the wife in the former matrimonial home at B Street, Suburb C.  They spend time with the husband when he returns to Australia but, to date, they have made no visits to him in California. 

3. The husband was born in 1963 and is currently 50 years of age.  He is a permanent resident of the United States and is employed by Company H in a senior management capacity. 

4. The wife was born in 1969 and is presently aged 45 years.  She has completed a bachelor’s degree, which qualified her to work in that field, and is currently undertaking postgraduate study.  The wife hopes to complete these courses at the end of 2015 and then obtain employment as an academic in that field.

5. At the date of the marriage the wife had minimal savings, together with superannuation of approximately $2,000.  She had unrestricted use of a BMW motor vehicle owned by her father, Mr Salesbury. 

6. At the date of the marriage the husband owned a home unit at I Street, Suburb D, which he had purchased for $155,000 in 1988.  This purchase was funded in part by a mortgage advance of $110,000 from the Commonwealth Bank.  The husband maintained that he had a superannuation benefit of approximately $100,000 at the date of the marriage, arising from his employment in a senior role with Company E.

7. The parties agreed that the husband’s home unit at Suburb D was valued at $170,000 at the date of marriage.  In 1994 he sold this property for $185,000, yielding net proceeds of approximately $98,600.

8. In April 1992 the husband was transferred to Country G in the course of his employment with Company E.  The parties lived in that country between April 1992 and August 1994, when the husband resigned from Company E and they returned to Australia.  The husband then took on a senior executive role at Company J.  The wife’s father was a minority shareholder in this company and Chairman of the Board of Directors.

9. The husband amassed savings of approximately $130,000 while the parties lived in Country G.  The parties applied these funds, together with the net sale proceeds of the husband’s home unit at Suburb D, to the purchase of ten acres of vacant land at Town K.  The purchase price was $215,000, which the parties were able to meet without resort to borrowings.

10. When the parties returned to Australia, the wife’s father provided her with the use of an Audi motor vehicle.  The husband was provided with a company car as a component of his employment package.

11. In July 1995 the parties commenced construction of a house on their land at Town K.  Until this home reached lock-up stage, the parties lived on a rent-free basis at a home in Town M owned by the wife’s parents.

12. In November 1994, the parties jointly borrowed a sum of $250,000 from the Commonwealth Bank and used these funds for the construction of a home on the land at Town K.  The husband contended that he borrowed an additional sum of $100,000 from his father for that purpose.  Mr Cannon Senior gave no evidence to corroborate this advance or the husband’s contention that the parties have a current joint debt of $100,000 to his parents.

13. When the parties returned to Australia the wife took on employment for two to three days per week at Company N in Suburb O.  It was common ground that the wife oversaw the construction work on the home at Town K while the husband was fully occupied with his role as a senior executive at Company J.

14. Early in 1996 the wife was admitted to hospital for two weeks, as she was suffering from severe endometriosis.  She underwent surgery and recuperated over a period of three to six months.  Her mother provided assistance to the wife during her recovery.

15. In May 1997 the wife resigned from her employment at Company N, as she was pregnant with the parties’ first child.  In August 1997 she was admitted to hospital for one week, as she had discovered a lump under her arm and was experiencing chest pain.  In November 1997 the wife again suffered pain and was admitted to hospital.  During her three-month stay in hospital the wife was diagnosed with Stage 3 Non-Hodgkin’s Lymphoma.

16. The parties’ daughter L was delivered by Caesarean section in December 1997.  The wife immediately began chemotherapy treatment, which continued on an outpatient basis after her discharge from hospital.

17. In 1999 the parties invested $50,000 in a business at Town P, which was operated by the husband’s sister.   This venture failed in 2004 or 2005 and the parties lost these funds.  In 2001 the parties lost $110,000 and $20,000 through unsuccessful investments in ventures known as Business Q and Business R.

18. In June 1999 the parties purchased a property at S Street, Suburb T for $997,000.  They borrowed the whole of the purchase money from the National Australia Bank.  In September 1999 the parties sold the Town K property for $850,000 and used the net proceeds to reduce the mortgage on the Suburb T property.  After that payment, the mortgage balance stood at approximately $500,000.

19. In late 1999 the wife was diagnosed with a recurrence of cancer and underwent intensive radiotherapy.  The parties and L moved into her parents’ home at Suburb U, on a rent-free basis, while the wife underwent this treatment.

20. In May 2000 the husband terminated his employment with Company J.  He joined Company Q in June 2000 and travelled overseas for work purposes between November 2000 and May 2001.  The wife and L continued to live with her parents in their home at Suburb U.

21. In August 2000 the parties sold the Suburb T property for $1,075,000.  In December 2000 they purchased a property at B Street, Suburb T for $1,250,000, utilising borrowings of $800,000 from the National Australia Bank.  The property was tenanted and the rental income applied to meet mortgage repayments until the parties took up occupation in 2003.

22. Each of the parties was a director of a company known as V Pty Limited, which they caused to be incorporated in 1993.  In February 2002 this company purchased two home units at Suburb D for a total sum of $780,000.  The purchase money and acquisition costs came from a mortgage advance of $823,000 from the National Australia Bank.  These properties were sold at a loss in 2003 and 2005.

23. In March 2003 the company purchased a home unit at W Street, Suburb X for $391,000.  They borrowed $312,800 from Perpetual Trustees Victoria to fund this acquisition.  This property was sold for $341,000 in May 2005.  The husband estimated that the parties incurred a total loss of approximately $100,000 on the investments in the two Suburb D home units and the Suburb X property.  These losses were added to the existing mortgage encumbrance on the Suburb C property.

24. In June 2003 the husband left his employment with Company Q and joined Company H.  He returned to Company Q in May 2005 and again took up employment with Company H in January 2006.  For approximately six months the husband travelled between Australia and Dubai, spending alternate months in each country.

25. The parties’ daughter F was born in November 2007.  After her birth the husband continued to spend approximately half of his time outside Australia.  He moved to California in December 2008, in order to commence his current employment on 1 January 2009.  The husband returned to Australia in February 2009 and the wife and children visited him in the USA in April 2009.

26. In February 2009 the wife commenced her university course.  As noted, she has completed a Bachelor’s degree and is currently undertaking postgraduate studies.

27. After the parties separated on 12 June 2009, the wife and the children continued to occupy the former matrimonial home at Suburb C.  The husband has paid the outgoings in respect of this property.   On 26 May 2010 interim orders were made which required the husband to pay spouse maintenance of $2,000 per month.   This amount was increased to $4,000 per month by further orders made on 17 December 2010.

28. The husband continued to meet the outgoings in respect of the former matrimonial home at Suburb C and paid child support, initially in a sum of $2,233 and later $2,937 per month.  The Child Support Agency issued a nil assessment because the husband pays no income tax in Australia.  Nonetheless, he currently pays child support in the sum of $3,087 per month.

29. In August 2012 the husband purchased a home at Z Street, City A, California for $659,000.  He funded this purchase from savings of approximately $179,000 and borrowings of $480,000.

30. The husband has made regular contributions to a fund known as the Australian Scholarship Group.  On 21 May 2014 the parties consented to orders in relation to this fund in the following terms:

    1.That the husband do all acts and things, execute all documents, instruments and writings and pay all money necessary to effect the following in relation to the Australian Scholarship Group (“ASG”) investment in the joint names of the parties:

    1.1      A payment of all instalments payable to maintain the investment at its current level until maturity;
    1.2      Payment of all benefits presently payable or in the future payable to be paid for the benefit of the children to the wife.

    2.That the wife apply the funds received pursuant to Order 1 above towards the cost of the secondary and tertiary education of [L] born … December 1997 and/or [F] born … November 2007.

    3.And it be noted that he wife acknowledges that Orders 1 and 2 relieves the husband’s obligation to contribute to the children’s primary and secondary education costs other than for his ASG contributions.

Approach To These Proceedings

1. In Stanford v Stanford [2012] HCA 52 the majority of the High Court of Australia held as follows:

   35.  It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.  Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section.  The requirements of the two sub-sections are not to be conflated.  In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.

2. Their Honours further observed as follows:

   42.  In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship.  It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.  No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.  That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship.  And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end.  Hence it will be just and equitable that the court make a property settlement order.  What order, if any, should then be made is determined by apply s 79(4).

3. I am comfortably satisfied that it is just and equitable to make orders for alteration of property interests in the circumstances of these proceedings.  The parties have now lived apart for some five years and they each urge the court to make orders which will put an end to any financial entanglement between them.  I construe the respective positions of the parties as concessions that it is just and equitable that there be orders for alteration of property interests.

4. At the commencement of the trial counsel for the parties informed me of the following agreements:

   ·    the Child Support Agency lacks jurisdiction because the husband is a permanent resident of the United States

   ·    the contributions of the parties were equal as at the date of trial

   · there should be an adjustment of ten per cent of the net pool of assets and superannuation in favour of the wife pursuant to section 75(2) of the Family Law Act. There was some adjustment to these agreed positions by the time of counsel’s final submissions.

5. There was a dispute as to the alleged debt of $100,000 owed by the parties to the husband’s parents.  There was also an issue as to the treatment of the wife’s minority shareholding in a company known as AA Pty Limited, which was created in 1970 by her parents.

The Evidence and Witnesses

1. The applicant wife relied on the following affidavits:

   1.Ms Salesbury (the wife) sworn on 17 April 2014

   2.Ms BB Salesbury (the wife’s mother) sworn on 13 June 2012

   3.Mr Salesbury (the wife’s father) sworn on 14 June 2012 , 5 March 2013 and 17 April 2014

   4.Dr CC (the wife’s general practitioner) sworn on 7 June 2012

   5.Dr DD (Honours Coordinator in the wife’s field at EE University) sworn on 13 June 2012

   6.Affidavit verifying wife’s Financial Statement sworn on 17 April 2014.

   The wife, the wife’s father and Dr CC gave oral evidence but the wife’s mother and Dr DD were not required for cross-examination.

2. The respondent husband relied upon his affidavit sworn on 12 May 2014 and his Financial Statement of the same date.  He gave oral evidence in the proceedings.

3. It seemed to me that all of the witnesses did their best to provide accurate evidence for the assistance of the court.  With respect to the wife, however, it seemed to me that the husband’s recall of the details of the parties’ financial history was more reliable than hers.

4. There was an issue as to the value of the wife’s minority shareholding in the company AA Pty Limited.  This shareholding was valued by a single expert, Mr FF.  The wife engaged Ms GG as an adversarial expert.   

5. On 9 May 2014 Mr FF and Ms GG held a conference and prepared a joint statement.  They agreed that, as at 30 June 2013, the value of the wife’s nine ordinary shares was $525,000.  I will refer below to the opinions of the two experts in relation to the likely value in June 2030, which is the time when statistical tables indicate that these shares are likely to vest in the wife.

The Assets, Superannuation, Financial Resources and Liabilities of the Parties

1. On 19 May 2014 counsel for the parties submitted a Joint Balance Sheet in the following terms: 

No.	Ownership	Description	Wife's Value	Husband's Value		Requires Expert Evidence
Assets
PROPERTY
J	[B Street, Suburb C]	$1,925,000	$1,925,000		Joint Valuation
H	[Z Street, City A], California, USA ($659,000 US Dollars to Australian Dollars as at 17.04.14 @1.0673)	$703,346		Original purchase price
BANK ACCOUNTS
W	National Australia Bank account number …42	$761	$761
W	Commonwealth Bank of Australia account number …45	$124	$124
H	HSBC account numbers …10 and …18	$24,484	$24,484
H	HSBC account numbers …86	Nil	Nil
H	NAB account number …87	NK	$130
H	[Company H] Deposit Account	NK	Nil
H	Shares in [Company Q]	NK	Nil
H	Prudential Life Insurance Policy	$10,000.00	Nil		Surrendered 06/11/2013
H	Money in solicitor's trust account on account of legal fees for hearing	NK	$45,378		Subject to disclosure
MOTOR VEHICLES
W	Mercedes Benz	$12,150	$12,150		Agreed Red Book
H	Lexus sale	Nil	Nil		Sold
H	Hummer – … ($17,160 US Dollars to Australian Dollars as at 17.04.14 @1.0673)	$18,315	$18,315
COMPANIES & LIFE INSURANCE
J	[V] Pty Ltd – ACN …	NK	Nil		Deregistered on … 2012 (See attached ASIC Search)
W	[AA] Pty Ltd	$936,000	$936,000		Joint valuation
H	Various company investments overseas including [Company HH]	NK	Nil		Disposed
W	[JJ] Ltd Sold	$5,476	$5,476		Sold 29.04.2014
FURNITURE & EFFECTS
J	Household contents, [Suburb C]	$11,640.00	$11,640.00		Valuation Received
W	Jewellery	$9,350.00	$9,350.00		Valuation Received
H	Household contents, [City A]	$2,725.00	$2,725.00		Valuation Received
H	Jewellery	$1,060.00	$1,060.00		Valuation Received
H	Coin Collection	$2,632.00	$2,632.00		Valuation Received
W	Additional items	$500.00	$500.00		Agreed
H	Accrued vacation/ benefits	NK	Husband to provide evidence
Total	$2,960,217	$3,699,071
Addbacks
Ownership	Description	Wife’s Value	Husband’s Value	Requires Expert Evidence
H	Monies withdrawn from mortgage unaccounted for	NK	Nil
H	Waste of money invested in overseas companies and/or unaccounted income	$180,000.00	Nil	Subject to disclosure
W	Legal fees paid	NK	NK	Subject to Disclosure
H	Legal fees paid	$NIL	$NIL	Wife asserts these are to be included
H	Valuers paid	$8,250.00	$45,298	See attached list
Total	$188,250	$45,298
Liabilities
Ownership	Description	Wife’s Value	Husband’s Value		Requires Expert Evidence
J	Mortgage [Suburb C]	$1,335,000.00	$1,335,000.00
H	Mortgage [City A] ($346,000 US Dollars to Australian Dollars as at 17.04.14 @1.0673)	$369,286
W	National Australia Bank credit card	Nil	Nil
W	CBA Mastercard	$4,300	$4,300
J	Loan from Mr and [Ms Cannon]	Nil	$100,000.00
W	University fees	$16,000	$16,000		Subject to disclosure
W	Loan from [Ms KK]	Nil	Nil
W	Loan for legal fees – [the wife’s father]	$313,035	NK		Disclosure Required
H	NAB Overdraft	$50,000
Total	$1,668,335	$1,874,586
Superannuation
Member	Fund & Interest	Wife's Value	Husband's Value		Requires Expert Evidence
W	REST	$3,910	$3,910
H	Colonial First State	$	$81,397
H	Colonial First State	$	$37,773
H	AMP	$	$174,986
Total	$3,910	$298,066
Financial Resources
Ownership	Description	Wife's Value	Husband's Value		Requires Expert Evidence
W	[AA Pty Ltd]	$479,000	NK		Disputed
$479,000
Summary
Total	$1,963,042	$2,167,849

NOTES:

10.Prudential Life Insurance Policy which originally had a face value of US $10,000 was surrendered and paid out on 6 November 2013 with an amount of $10,235.52 US being paid into the Husband's US HSBC account on 6 December 2013.

[15]. [V] Pty Ltd deregistered as per ASIC Notice attached.

29.      Husband's Legal fees and disbursements all paid from Husband's post separation earnings.  Total legal fees and disbursements are $164,111.42.

[30]. Agreement that valuation fees paid by husband 50% paid on behalf of Wife and Wife to reimburse Husband.

1. In final submissions counsel stated that it was agreed that a sum of $45,378 held in the trust account of the husband’s solicitor is offset by a $50,000 overdraft which he took out to pay legal fees.  Accordingly, I will omit both the funds held in trust and the overdraft from the Balance Sheet.

2. The wife sought to include as an asset the husband’s paid legal fees of $247,288.  On behalf of the husband, it was contended that these funds came from post-separation income and accordingly should be excluded from the list of assets.  Although there was no evidence as to the source of this money, it seems to me to be a safe inference that the husband did pay these costs from his post-separation income.  The parties separated five years ago and there has been no inter-mingling or common use of their available funds during that period.

3. Similarly, the wife has paid legal and accounting fees in a total amount of $314,608.  In his affidavits of 14 June 2012 and 17 April 2014 the wife’s father gave unchallenged evidence that he has paid the wife’s legal and accounting fees.  He deposed that he expects reimbursement by the wife from the net assets which she receives by way of property settlement.  In his oral evidence the wife’s father said:  “If [the wife] is unable to repay me, there will be an adjustment in the books of [AA] Pty Limited”.  It would thus appear that the wife may not be pressed for repayment of these funds.

4. I see considerable merit in the submission on behalf of the husband that the appropriate course is to exclude from the balance sheet the paid legal costs and associated liabilities of each of the parties.  For the reasons set out above, I will adjust the final balance sheet accordingly.

5. The husband sought to include as an asset a sum of $26,815 which is held in a trust account by a company known as LL Pty Limited (exhibit 3).  There was little evidence in relation to these monies, other than the wife’s Affidavit Verifying Answers To Specific Questions of 5 September 2012.  The wife there deposed that certain amounts are “held by [Mr LL], Chartered Accountant, to be held by him as an education trust account to be applied toward the education of [L] and not to be applied for my benefit”.  In my view the evidence fell short of establishing that the wife is beneficially entitled to this money, which I thus exclude from the list of assets.

6. The husband sought to include as an asset the sum of $6,000 being “funds deposited into the children’s accounts”.  The only evidence in relation to these monies was the wife’s statement:  “I put $100 per month in for each child and they put in any birthday money et cetera”.  On the available evidence, it is thus impossible to distinguish funds given to the children by third parties and money lodged into these accounts by the wife.  In such circumstances, I am not prepared to include these funds in the balance sheet as an asset of the wife.

7. There was a dispute between the parties as to whether the wife’s shares in AA Pty Limited should be treated as a financial resource, as contended on her behalf, or included in the list of assets. As noted, Mr FF and Ms GG agreed that the wife’s shareholding had a value of $525,000 as at 30 June 2013. 

8. In his affidavit of 5 March 2013 the wife’s father outlined the circumstances in which he and his wife established the company AA Pty Limited.  He deposed that they incorporated the company in March 1970 “with the purpose and intention that it be an estate distribution and inheritance structure”. 

9. The wife’s father deposed that he and his wife have been directors since that date in March 1970 and that they exercise control of the company pursuant to the share structure and provisions of the Articles of Association.  He deposed further that he and his wife intend that the survivor of them will assume sole control of the company.  His uncontradicted evidence was that the company has never paid a dividend to any shareholder and that he and his wife have no intention to cause AA Pty Limited to do so in future.

10. Mr FF and Ms GG agreed that the appropriate methodology for valuation of the wife’s shareholding “is to assess the value of the shares held by the wife in [AA Pty Ltd] on the basis of “value to owner” rather than fair market value because it is unlikely that these shares represent a saleable asset to the wife until after the death of her parents”.  They indicated that the figure of $525,000 “equates to the net present value of a one-third interest in [AA Pty Ltd] that will be attainable in seventeen years, discounted at 6.79% per annum”.  That seventeen year figure was extracted from life tables published by the Australian Bureau of Statistics.

11. The experts acknowledged that “a number of factors will ultimately impact upon the value of [AA Pty Ltd] in June 2030”.  Specifically, they pointed to a change in the market value of the company’s assets, the most significant of which is a rural property.  They looked also to the extent to which trading losses, incurred between 2009 and 2013, will continue until the wife is able to realise her shareholding.

12. Ms GG applied a discount rate of 6.79 per cent in her report of 11 March 2014.  She explained her reasons for selection of this multiple as follows: 

    Discount rate adopted

    5.25    In determining a suitable discount rate to adopt in the circumstances, I have had regard to:

    (a)The 10 year Australian Government bond rate as at 30 June 2013 of 3.54% (which has increased to 4.12% as at February 2014), which is a commonly adopted measure of a risk-free rate.

    (b)The underlying assets owned by [AA Pty Ltd], which include [Property MM] and [Property NN].  In this regard, I have been advised that [Property NN] at [Town OO], NSW has recently been put on the market for sale.

    (c)The fact that [AA Pty Ltd] has sustained trading losses on its primary production activities for an extended period, which are likely to continue.  On average, [AA Pty Ltd] has incurred a net loss (before tax and extraordinary items) of approximately $322,000 per annum during the five years prior to the date of valuation.  If trading losses of this magnitude continue into the future while the Company remains under the Father’s control, then the capital base of [AA Pty Ltd] will be eroded such that there will be little or no value remaining as at June 2030.  The extent of any trading losses in the future will particularly depend on the Father’s decisions regarding the conduct of the primary production activities of [AA Pty Ltd], which is outside of the Wife’s control.

    5.26In my opinion, a discount rate of 6.79% is reasonable in the circumstances.  In selecting this discount rate, I have also considered the value of the Wife’s equity interest in future (when it becomes a 33.33% interest) assuming that the historical trading losses will continue into the future, at least to some extent.  In this regard, my conclusion as to the value of the Wife’s interest in [AA Pty Ltd] (refer paragraph 5.28 below) is approximately equivalent to the value calculated assuming that:

    (a)Approximately one-third of the historical average trading losses incurred over the last five years will continue to be incurred after 30 June 2013 i.e. a net loss before tax of around $(105,000) per annum.

    (b)[Property MM] will increase in value at the rate of around 1.25% per annum and adopting a discount rate of 5.74%.

13. At their conference on 9 May 2014, Mr FF and Ms GG agreed that it is appropriate to apply a discount rate of 6.79 per cent for the purpose of valuation of the wife’s shareholding in AA Pty Limited.  They applied this multiple to arrive at their valuation of $525,000 as at 30 June 2013.

14. Certainly it is the case that the wife is unable to realise her shareholding until the demise of her parents.  In my view, however, that fact alone does not mean that her shareholding should be treated as a financial resource rather than an asset.  Two experts agreed on a present value for the wife’s shareholding, with full knowledge of her inability to realise its worth for a statistically assessed period of seventeen years.  For these reasons, I will treat the wife’s shareholding as an asset with a value of $525,000. 

15. My determination to include the wife’s shareholding in the balance sheet as an asset has implications for the agreement indicated by counsel that the parties’ contributions were equal as at the commencement of the trial.  On the part of the wife, this agreement was contingent upon her shareholding being treated as a financial resource.  In final submissions, counsel for the wife contended that “her contribution would increase in accordance with the percentage of the pool” if her shareholding is treated as an asset.  I refer to this issue below in these reasons, in the context of the contributions of the parties.

16. Counsel for the husband contended that the wife’s credit card balance is a post-separation debt and, accordingly, should be excluded from the list of liabilities.  There was no evidence to that effect but it seems to be a reasonable inference that the wife’s current credit card debt accrued after the parties ceased living together and pooling their financial resources.  Accordingly, there is no basis upon which the husband could be required to assume responsibility for any part of that debt.  I will exclude the wife’s credit card liability from the balance sheet.

17. The wife took issue with the husband’s contention that the parties have a joint debt of $100,000 to his parents.  In his affidavit the husband deposed as follows in relation to this alleged advance and/or debt:

    23.      In July 1995 [the wife] and I arranged to borrow $250,000 from the National Australia Bank to assist us with constructing a three bedroom house with separate double garage, in-ground swimming pool and gravel driveway from front to rear of the property.  In addition this property required extensive fencing to be erected and my father [Mr Cannon Snr] and I constructed an orchard and we planted trees and gardens.  The building costs were approximately $400,000 and as the loan from the National Australia Bank was not sufficient to cover these costs I borrowed $100,000 from my parents and the rest I drew from our accumulated savings and income earned by me during the course of the construction…

18. The husband’s father gave no evidence in relation to this alleged loan.  The husband gave evidence orally that his father is 84 years old and a resident of a nursing home at Town PP.  He gave hearsay evidence as to his father’s poor state of health and offered unqualified opinions as to his lack of present testamentary capacity and poor memory.

19. There was no documentary evidence to corroborate the proposition that the husband’s father or parents loaned a sum of $100,000 to the parties at the time of construction of the house at Town K.  No documents such as bank statements were tendered in the case for the husband.

20. The reality is that the evidence fell short of establishing that the parties have a joint debt of $100,000 to the husband’s parents.  There was no evidence, for example, of the terms of any such loan agreement or whether there was any request for repayment between 1995 and the time of the trial.  No explanation was advanced as to why this evidence was not adduced from the husband’s mother.  The husband said that his mother was living at the time of the trial.

21. For these reasons, I am unable to find that the parties have a joint debt of $100,000 to the husband’s parents.  I accept, however, the husband’s evidence that his father and/or parents provided a sum of $100,000 at the time of the construction of the Town K home.  As appears below, the evidence suggested that insufficient funds were available to that purpose, without such an injection from his father or parents.  That matter is relevant as a contribution factor in the husband’s favour and will be considered below in these reasons.

22. I thus find the assets, superannuation, liabilities and financial resources of the parties to be as follows, noting that the letters “J”, “H” and “W” in this table denote legal ownership thereof by the parties jointly, the husband or the wife: 

NON-SUPERANNUATION ASSETS
1.	B Street, Suburb C	J	$1,925,000
2.	Z Street, City A	H	$703,346
3.	National Australia Bank Account	W	$761
4.	Commonwealth Bank Account	W	$124
5.	HSBC Account	H	$24,484
6.	National Australia Bank Account	H	$130
7.	Mercedes Benz Motor Vehicle	W	$12,500
8.	Hummer Motor Vehicle	H	$18,315
9.	Shareholding in AA Pty Limited	W	$525,000
10.	Household Contents at Suburb C Property	J	$11,640
11.	Household Contents at City A Property	H	$2,725
12.	Jewellery	W	$1,060
13.	Coin Collection	H	$2,632
14.	Additional Items	W	$500
$3,228,217
SUPERANNUATION
15.	REST	W	$3,909
16.	Colonial First State	H	$81,397
17.	Colonial First State	H	$37,773
18.	AMP	H	$174,986
$298,065
$3,526,282
LIABILITIES
19.	Mortgage on Suburb C Property	J	$1,335,000
20.	Mortgage on City A Property	H	$369,286
$1,704,286
NET ASSETS AND SUPERANNUATION			$1,821,996

The Contributions of the Parties

1. The wife’s parents caused the company AA Pty Limited to be established in March 1970, when she was approximately thirteen months of age.  The evidence did not indicate when or in what circumstances the wife acquired her shareholding.  There was no suggestion whatsoever that she made any payment for her shares, nor for any purpose associated with this company during the parties’ cohabitation.  Equally, the wife received no financial benefit from the company during the marriage.  Essentially, the parties conducted their joint financial affairs entirely independently of the wife’s shareholding and her parents’ dealings with this company.

2. In these circumstances, the husband properly made no submission that he contributed directly or indirectly to the acquisition or conservation of the wife’s shareholding in the company AA Pty Limited.  This asset thus can be distinguished clearly from the remaining net assets and superannuation, which the parties largely accrued during their cohabitation and as a result of their joint endeavours.  For these reasons, it seems to me to be appropriate to adopt a modified “asset by asset” or “two pool” approach to the assessment of the parties’ contributions.  The first pool would consist solely of the wife’s shareholding in the company AA Pty Limited.  The second pool would be constituted by the remaining assets, superannuation and liabilities.

3. These two pools can be identified as follows:

Pool One
1.	Wife’s shareholding in AA Pty Limited	$525,000
Net Value of Pool One	$525,000
Pool Two
1.	B Street, Suburb C (J)	$1,925,000
2.	Z Street, City A (H)	$703,346
3.	National Australia Bank Account (W)	$761
4.	Commonwealth Bank Account (W)	$124
5.	HSBC Account (H)	$24,484
6.	National Australia Bank Account (H)	$130
7.	Mercedes Benz motor vehicle (W)	$12,500
8.	Hummer motor vehicle (H)	$18,315
9.	Household Contents at Suburb C Property (J)	$11,640
10.	Household contents at City A Property (H)	$2,725
11.	Jewellery (W)	$1,060
12.	Coin Collection (H)	$2,362
13.	Additional Items (W)	$500
14.	REST (W)	$3,909
15.	Colonial First State Super (H)	$81,397
16.	Colonial First State Super (H)	$37,773
17.	AMP Super (H)	$174,986
$3,001,012
Less Liabilities
18.	Mortgage on Suburb C Property (J)	$1,335,000
19.	Mortgage on City A Property (H)	$369,286
$1,704,286
Net Value of Pool Two	$1,296,726

1. For the reasons set out above, I find that the husband made no direct or indirect contribution to the acquisition or conservation of the wife’s shareholding in AA Pty Limited.  I find that the direct and indirect financial contributions to that asset on behalf of the wife properly should be assessed at 100 per cent in her favour.

2. In relation to Pool Two, the parties cohabited for seventeen years and are the parents of two children.  During the marriage the husband assumed the role of major breadwinner and the wife that of primary homemaker and parent.  I appreciate that the wife suffered periods of illness, which must have impacted on her ability to fulfil the role of primary homemaker and parent.  I am satisfied, however, that the maternal grandmother provided considerable assistance to the family at these times.  The husband was employed on a full time basis throughout the marriage and was absent overseas for substantial periods from May 2000.  He moved permanently to the United States in November 2008, when the parties’ daughter F was approximately twelve months of age. 

3. As noted above, I accept the husband’s evidence that his father provided a sum of $100,000 to the parties when the Town K house was constructed in 1995/1996.  The husband gave persuasive evidence that the total building costs amounted to some $400,000.  The wife contended as follows:

   26.      Over the next twelve – eighteen months building work was performed at the [Town K] property which entailed the building of a house, fencing, roadways and landscaping.  The cost was over $100,000 which was met from savings and borrowings.

4. With respect to the wife, it seems to me inherently improbable that such work could have been completed at a total cost in the vicinity of $100,000.  The husband adduced documentary evidence that the parties borrowed $250,000 from the National Australia Bank in order to fund the construction work.  He deposed that the total cost amounted to approximately $400,000, thus there would have been a shortfall of about $150,000.  It seems to me to be more probable than not that the husband obtained $100,000 from his father to meet in part this shortfall.

5. I am of the view that the parties’ endeavours complemented each other during their seventeen years of cohabitation.  No submission was put on behalf of the husband that his initial contributions, primarily the equity in the Suburb D property and superannuation, should lead to a finding in his favour as at the date of trial.  The wife made significant contributions during the next seventeen years, particularly as homemaker and parent during the husband’s extensive overseas absences for employment purposes.  I find that the parties made equal contributions to the net assets and superannuation in Pool Two.

Section 75(2) Factors

1. Counsel for the husband properly conceded that there should be an adjustment in favour of the wife on account of section 75(2) factors. Counsel for the wife submitted that there should be an adjustment in her favour of ten per cent “if the [AA Pty Ltd] shares are a resource”.  Counsel for the husband agreed with that submission on behalf of the wife.

2. It seems to me that confinement of the wife’s shareholding to a separate pool, coupled with a finding of contribution thereto of 100 per cent in her favour, has the same practical effect as treatment of her interest in AA Pty Limited as a financial resource.  Effectively that asset stands in isolation from the net assets and superannuation to be divided between the parties and will assume a real value to the wife at some time considerably into the future.

1. Independently of the agreement of counsel, I am comfortably satisfied that an adjustment of ten per cent of the net assets and superannuation in Pool Two in favour of the wife is appropriate on account of section 75(2) factors. The husband enjoys a substantial income earning capacity, which is significantly superior to that of the wife. In his Financial Statement of 12 May 2014 he deposed to a gross weekly income of $13,573 and income tax of $6,345, which leaves a net figure of around $7,000 per week. I will examine more closely at the husband’s net income below in these reasons, when I consider the wife’s application for periodic spouse maintenance. By contrast, the wife is in the process of completing tertiary qualifications with a view to employment as an academic. Her uncontradicted evidence was that she would earn approximately $55,000 gross per annum, if she were to take on employment in that field immediately. A reasonable expectation thus is that the husband will re-establish himself financially in a relatively short time period.

2. Another relevant consideration, in the context of section 75(2) factors, is that the wife is and will continue to be responsible for most of the care of the parties’ two children. The younger of the children is only six years old, so that responsibility will remain with the wife for a considerable period into the future. The husband pays child support in an amount commensurate with his income.

3. I am comfortably satisfied, and I find, that it is appropriate to make an adjustment in favour of the wife on account of section 75(2) factors. I find that the wife should receive an amount equal to ten per cent of the net value of the assets and superannuation in Pool Two.

Conclusion as to Alteration of Property Interests

1. I thus find that the wife should receive 100 per cent of the net assets in Pool 1.  The husband and the wife should receive 40 per cent and 60 per cent respectively of the net assets and superannuation in Pool Two.  Those percentages equate to approximately $518,798 to the husband and $778,198 to the wife.

2. Both parties sought orders for the sale of the former matrimonial home at Suburb C, although the wife proposed that this step be deferred until December 2015 to enable their child L to complete her Higher School Certificate.  Counsel for the wife, however, conceded that such a delayed sale “would be a bit of an ask”.  I agree with that observation, in circumstances where these proceedings have been on foot since 2010, and I will order an immediate sale of this property. 

3. The husband will retain the following assets and superannuation:

1.	Z Street, City A	$703,346
2.	HSBC Account	$24,484
3.	National Australia Bank Account	$130
4.	Hummer motor vehicle	$18,315
5.	Household Contents at City A Property	$2,725
6.	Coin Collection	$2,632
7.	Colonial First State Superannuation	$81,397
8.	Colonial First State Superannuation	$37,773
9.	AMP Superannuation	$174,986
$1,045,788

The husband retains the mortgage debt of $369,286 on the City A property which means that he will thus hold net assets and superannuation to the valuation of $676,502.  That amount exceeds his entitlement by $157,704.

1. The wife will retain the following assets and superannuation:

1.	National Australia Bank Account	$761
2.	Commonwealth Bank Account	$124
3.	Mercedes motor vehicle	$12,500
4.	Household Contents	$11,640
5.	Jewellery	$1,060
6.	Additional Items	$500
7.	REST Superannuation	$3,909
$30,494

The wife will assume no liabilities, thus she will hold net assets and superannuation to the value of $30,494.  That figure falls short of her entitlement by $747,704.

1. The equity in the Suburb C property amounts to approximately $590,000, all of which should pass to the wife as part of her entitlement.  The balance of approximately $157,700 could come only from a splitting order in relation to the husband’s superannuation, as there exist insufficient liquid assets from which he could pay that amount to the wife.  The suggestion of a splitting order came from the wife’s counsel only in final submissions, thus no notice was afforded to the trustee of the fund.  I will make provision that the operative time is 28 days from service of final orders upon the trustee and allow a liberty to apply during that period.  The only fund with sufficient value to accommodate a splitting order of $157,700 in favour of the wife is the husband’s AMP benefit.

Spouse Maintenance

1. The wife sought an order for periodic spouse maintenance but there was no clear indication as to the quantum or duration of any such arrangement.  In final submissions counsel for the wife suggested that a spouse maintenance order should operate until mid-2016 or the end of that year.  The only reference to spouse maintenance in the Minute submitted on behalf of the wife was the following proposed order:

   1.        That all existing orders continue pending completion of the sale of the home referred to in order 2 hereof save and except order 1 of the orders made 17 December 2010 which shall be varied to be $7,500 per calendar month pending further order.

2. In her Amended Initiating Application filed on 12 May 2010 the wife sought, inter alia, an order that the husband pay to her a sum of $1,875 per week by way of spouse maintenance.  She further sought that the husband pay, by way of spouse maintenance, all outgoings in respect of the former matrimonial home, running costs relating to her motor vehicle and medical expenses.

3. In final submissions, counsel for the husband conceded that “he should pay spouse maintenance for a closed period” but suggested that “the quantum is difficult to assess”.  In my view, I am entitled to treat these remarks as a concession that the wife has a need for and the husband a capacity to pay spouse maintenance. 

4. Pursuant to the orders for settlement of property, the wife will receive an amount in excess of $500,000 in cash from the proceeds of sale of the former matrimonial home.  She has a responsibility to accommodate the parties’ two children, however, and no other funds available to achieve that purpose.  In these circumstances, I do not consider that the wife’s access to cash per se negates a need for spouse maintenance. 

5. According to her Financial Statement of 17 April 2014, the wife’s total weekly income is $2,233.  That figure is constituted by $499 per week in government benefits, which must be disregarded for present purposes, child support of $515 and spouse maintenance of $923.

6. In terms of the wife’s need for spouse maintenance, it seems to me that the real issue is whether she has a capacity to earn income which she chooses not to exercise at present.  In her affidavit the wife gave persuasive evidence that she is undertaking postgraduate studies with the intention to embark upon an academic career or to enhance her prospects of full time employment in her field. 

7. The wife deposed that she is concerned as to her physical stamina to sustain employment in her field.  To some extent, that concern was verified by evidence from her general practitioner Dr CC.  In her report of 9 December 2011 and oral evidence Dr CC referred to recurrent respiratory infections suffered by the wife.  Dr CC attributed these infections to exposure to viruses in her role as a trainee in her field and stress associated with her workload and the breakdown of the marriage. 

8. The wife deposed that she intends to complete her postgraduate studies at the end of 2015.  It seems to me that she should be afforded an opportunity to do so and to establish a secure career path, rather than abandon these studies and enter the workforce immediately.  The parties’ daughter F is only six years of age and they both have an ongoing responsibility for her financial support for a considerable period into the future.  It seems to me that the wife is taking constructive steps to secure her own financial future and that of her child.  To his credit, the husband conceded that he should pay spouse maintenance for an unspecified period. 

9. The husband has paid spouse maintenance in a sum of $4,000 per month since the orders of 17 December 2010, in addition to all outgoings in respect of the former matrimonial home.  There was no evidence that the husband has fallen into arrears in relation to any of these payments during the last three and a half years.  In cross-examination the husband conceded that sale of the former matrimonial home will “save me approximately $75,000 per annum from the mortgage and insurance premiums”.  That figure equates to some $1,442 per week.

10. In his oral evidence the husband said that his gross annual income for the 2013 tax year was $765,563 or $14,722 per week.  Ultimately it was accepted on behalf of the wife that he pays tax of $5,320 per week, leaving a net weekly income of $9,402.

11. In his Financial Statement of 12 May 2014 the husband deposed to total weekly expenditure of $14,517.  There was no testing of this evidence by way of cross-examination but a relatively cursory analysis suggests that this figure may well include inflated estimates, “double dipping” or amounts which the husband will not be obliged to pay after the sale of the former matrimonial home.  It seemed to me that examples of such alleged expenses included the following:

    ·    Suburb C mortgage  $1,391

    ·    Suburb C rates  $91

    ·    holidays and incidental travel costs (excluding travel to Australia)  $250

    ·    clothing, entertainment and hobbies  $150

    ·    gifts  $50

    ·    “incidentals”  $150

    ·    interim spouse maintenance  $923.

12. For all of these reasons I am satisfied that the husband has a capacity to pay spouse maintenance.  Given the state of the evidence, selection of a quantum involves an element of arbitrariness.  I will order that the husband pay to the wife the sum of $1,200 per week by way of spouse maintenance until 31 December 2015.

Child Support Departure Order

1. In her Amended Initiating Application and Minute the wife sought orders for child support departure or, alternatively, child maintenance.  At the commencement of the trial counsel informed me that there was agreement that the Child Support Agency lacks jurisdiction as the husband is a permanent resident of the United States.  There was no cross-examination nor submissions made in respect of the Application for Child Maintenance.  Accordingly, I will deem that both of these applications were abandoned by the wife.

I certify that the preceding ninety four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 12 September 2014.

Associate:     

Date:              12 September 2014