Shimizu & Tanner - [2011] FamCA 271

FAMILY COURT OF AUSTRALIA

SHIMIZU & TANNER

[2011] FamCA 271

FAMILY LAW – PROPERTY – Contribution – Kennon & Kennon adjustment sought – Disparity in relation to which assets comprise the asset pool for division between the husband and the wife – Add backs – Husband’s high post separation earnings – Should they form part of asset pool – Wife asserts donations by husband should be added back to the pool – Husband’s donations regarded as discretionary expenditure – Whether husband has tax liability in Japan on earnings not taxed elsewhere – Section 75(2) factors – Just and equitable considerations – Net assets overall 40% to husband and 60% to wife

Child Support (Assessment) Act 1989 (Cth) s117
Evidence Act 1995 (Cth) s140
Family Law Act 1975 (Cth) ss 75(2), 79
Family Law Rules 2004

Cerini & Cerini [1998] FamCA 14
Hickey & Hickey (2003) FLC 93-143
In the marriage of Kowaliw & Kowaliw (1981) FLC 91-092
Kennon & Kennon (1997) FLC 92-757
Kouper & Kouper (No 3) [2009] FamCA 1080
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Omacini & Omacini (2005) FLC 93-218
Wilde & Wilde [2007] FamCA 1044

APPLICANT:

Mr Shimizu

RESPONDENT:

Ms Tanner

FILE NUMBER:

SYF

2746

2006

DATE DELIVERED:

20 April 2011

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Sydney

JUDGMENT OF:

Chief Justice Bryant

HEARING DATE:

16, 17, 18 & 21 September 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Lloyd

SOLICITOR FOR THE APPLICANT:

Newnhams Solicitors

COUNSEL FOR THE RESPONDENT:

Ms Gillies

SOLICITOR FOR THE RESPONDENT:

Enza Ruscica

Orders

That on or before 10 July 2011 the husband do all necessary acts and things and sign all necessary documents to transfer to the wife all of his right title and interest in the property known and situate at W Street, Sydney Suburb 1, NSW (“the property”), having Folio Identifier …, free of all mortgages, charges and encumbrances including but not limited to the Registered First Mortgage to Perpetual Trustees Australia Limited (“the mortgage”); and
That simultaneously upon, or prior to, compliance by the husband with final Order 1 herein, the parties do all acts and things as shall be necessary to discharge, at the husband’s sole cost, the mortgage(s) registered against the home.
That within twenty-one (21) days of the date of the Orders the husband pay to the wife the sum of $646,669.00.
That within 14 days of compliance by the husband with final orders 1, 2 and 3, the wife transfer to the husband, at the husband’s sole expense, all her right title and interest in Motor vehicle 1 having registration number …
That the wife be declared the sole and beneficial owner to the exclusion of the husband of the following:
(a)The furniture and household contents in the former matrimonial home other than the items referred to in Schedule 1 attached herein.
(b) All superannuation entitlements in her sole name.
That the husband be declared the sole owner to the exclusion of the wife of the following: -
(a)The items listed in Schedule 1 herein and the wife make the said items available to the husband for collection at his expense on 7 days notice.
(b)Motor vehicle 2 located outside the Commonwealth of Australia.
(c)Motor vehicle 3 located outside the Commonwealth of Australia.
(d) Motor vehicle 4 having registration number …
(e)Motor vehicle 5 having registration number … subject to all and any encumbrances and charges in respect of the motor vehicle and to be at liberty to arrange the collection of the vehicle from the wife at a location nominated by her upon 48 hours notice of his intention to collect the vehicle.
(f)That pursuant to section 90MT(1)(a) of the Family Law Act 1975 the applicant husband as a member of the AMP/Company 1 Superannuation Scheme, having membership number … (“AMP Super Scheme”) and the Trustee of the AMP Super Scheme do all acts and things, sign all documents and give all consents so that whenever a splittable payment becomes available to the applicant husband from his interest in the AMP Super Scheme that the wife is entitled to an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $97,500.00 and there is a corresponding reduction in the entitlement of the husband in the superannuation scheme had these orders not been made. This Order binds the trustee or trustees from time to time of the AMP Super Scheme.
That for the purposes of Order 6 herein that:
(a)The base amount to be allocated to the respondent wife in respect of the AMP Super Scheme is $97,500.00 and
(b)The operative time for this Order is the date of the making of these Orders and this Order is to take effect from the date of the making of these Orders.
In respect of all other property and/or other financial resources not specifically referred to herein that each party be declared the sole and beneficial owner, to the exclusion of the other, of all such property and/or financial resources in their name, control and/or possession as at the date hereof.
That, except as these Orders provide to the contrary:
(a)the husband by this Order hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband; and
(b)the wife by this Order hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife; and
(c)except as these Orders provide to the contrary, each of the husband and wife releases the other from all debts owing from one to the other.
(d)That in the event that either party refuses or neglects, within a reasonable time of a request to do so, to execute any Deed or instrument necessary to give effect to all or any of the Orders made herein, the Registrar of the Court be appointed, pursuant to section 106A, to execute such Deed or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the said Deed or instrument.
That the Registrar is authorised to execute any necessary instrument upon being satisfied by affidavit that neglect or default, as the case may be, has occurred.
That the parties have leave to apply, upon seven (7) days notice to each other party and the Court, in respect of the implementation and/or clarification of these Orders herein including any application for costs.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2746 of 2006

Mr Shimizu

Applicant

And

Ms Tanner

Respondent

REASONS FOR JUDGMENT

Introduction

This matter concerns the disposition of the property of the parties following the breakdown of their marriage and their subsequent divorce. There is a small issue regarding parenting, but otherwise the parties have agreed on arrangements for the care of their daughter B, who is now 13 years.
The husband is employed by Company 1, a significant Australian investment company, hereafter referred to as “the Company”. He is of Country 1 heritage and at least since 2004 he has been working in the Company’s international operations in Country 1. Despite the global financial crisis, the husband has been in receipt of significant emoluments as a result of his employment, comprising salary, share options and profit share. The disposition of these funds, particularly since separation, is a matter in contention in this case. The husband’s financial position is complicated by uncertainty as to his tax status in Country 1 and consequently the extent of tax liabilities, if any, in Country 1. This too is a matter in contention.
The manner in which the Court should approach an application for property settlement is well established. First the Court should make findings as to the identity and the value of the property, liabilities and financial resources of the parties at the date of hearing. Secondly the Court should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) of the Family Law Act 1975 (Cth) (“the Act”) and determine the contribution based entitlements of the parties, expressed as a percentage of the net value of the property of the parties. The third step is for the Court to identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g) (including the matters referred to in s 75(2) so far as they are relevant) and then determine the adjustment (if any) that should be made to the contribution based entitlement of the parties established at step two. Finally, the Court should consider the effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case (Hickey & Hickey (2003) FLC 93-143).

Relief sought by the parties

The husband’s Application for Final Orders filed 18 April 2006 was amended by an updated Minute of Orders Sought included in his trial documents received by the Court by email on 14 September 2009.
The wife’s Amended Response to an Application for Final Orders was also received by the Court by email on 14 September 2009.
In summary, the husband’s proposals are:
(a)That he transfer to the wife the former matrimonial home agreed at $1,150,000 and that she be responsible for the mortgage agreed at $840,000;
(b)That the wife receive the husband’s investment with Company 1 agreed at $62,000;
(c)That the wife retain all the furniture in the former matrimonial home except for particular enumerated chattels agreed at $20,000;
(d)That the wife transfer to the husband Motor vehicle 1 agreed at $130,000;
(e)That the husband transfer to the wife Motor vehicle 5 agreed at $50,000 and the wife make all repayments pursuant to the hire purchase agreement.
In summary, the wife’s proposals are:
(a)That the husband transfer to the wife the former matrimonial home free of any encumbrance agreed at $1,150,000;
(b)That the wife transfer to the husband Motor vehicle 1 agreed at $130,000;
(c)That the wife receive a superannuation splitting order so that she receive the base amount of $97,500 from the husband’s AMP fund;
(d)That the wife receive from the husband a cash payment such that she receives 70% of the available pool of net assets.

Relevant background

The husband was born in 1963 and is 47 years of age. The wife was born in 1965 and is 45.
The parties commenced cohabitation in January 1997 when they were both working in the capital city of Country 1. They initially resided in a rented home unit in the capital city of Country 1. The wife was working for a Country 1 company and the husband was then employed by an international company.
In 1998 the parties were married.
In May 1998 the parties relocated to Country 2 and lived in a rented home unit paid for by the husband’s employer, who also paid for a maid for a period for domestic duties.
In December 1998 the child B was born.
In March 1999 as a result of the husband being made redundant by his employer the parties relocated to Australia. After a period of unsuccessfully seeking employment or establishing a business venture the husband commenced employment in October 1999 with the Company.
In 2000 the husband commenced work for the Company on a Country 1 project and thereafter the husband became entitled to Company 1 options.
In July 2003 the parties purchased the property at W Street, Sydney Suburb 1 in New South Wales (“the matrimonial home”) for $1,050,000 with borrowings of $840,000. The balance of the purchase price and the costs of the purchase were paid in cash.
In May 2004 the Company informed the husband that his position was being transferred to Country 1and he transferred to the Company’s international section and thereafter commenced to commute between Country 1 and Australia while the wife and B continued to live in Australia. He was thereafter paid in the currency of Country 1.
In December 2004 the parties separated but subsequently reconciled in May 2005. In August 2005 the parties separated on a final basis. On 1 June 2006 the parties’ marriage was dissolved by divorce order. When the parties were divorced the separation date in the application was asserted to be December 2004. Notwithstanding submissions for the husband that this may have a financial bearing, in the end in my view nothing turns on it.
In late 2006 the husband purchased land in Country 1 for $170,000 and entered into a contract for the construction of a house on the land. In 2007, 2008 and 2009 he made donations to Religious organisation 1.

Matters in issue

Composition of the asset pool

One of the most significant issues in the case is the question of what assets comprise the asset pool for division between the parties. It is here convenient to set out the figures from the joint balance sheet provided by the parties to the Court which indicate the difference between the parties as to what assets should comprise the pool of assets from which the Court should determine the contributions of the parties, and the matters relevant under s 75(2) of the Act.

Joint Balance Sheet

Ownership	Description	Wife's Value	Husband's Value
ASSETS
Real Estate
1.	Joint	[W Street, Sydney Suburb 1]	$1,150,000	$1,150,000
2.	Husband	[…] (House and land in [Country 1])	$636,548	$636,548
Financial Institution Accounts
3.	Husband	HSBC	$413,803	$413,803
4.	Husband	Commonwealth Bank of Australia ([…])	E$13,000	E$13,000
5.	Husband	Commonwealth Bank of Australia ([…])	$300	$300
6.	Wife	Commonwealth Bank of Australia ([…])	E$600	E$600*
7.	Wife	Commonwealth Bank of Australia ([…])	E$6000	E$6000*
Investments
8.	Husband	[Company 1 Investment]	$62,000	$62,000
9.	Husband	Loans from [Ms Y]	$5000	$5000
10.	Husband	[S] Investment	$1,033,941	$1,033,941
Cars
11.	Wife	[Motor vehicle 1]	$130,000	$130,000
12.	Husband	[Motor vehicle 5]	$50,000	$50,000
13.	Husband	[Motor vehicle 2]	$77,842	$77,842
14.	Husband	[Motor vehicle 3]	$155,684	$155,684
15.	Husband	[Motor vehicle 4]	$9745	$9745
16	Husband	[Motor vehicle 6]	$50,000	Nil*
Personal Effects
17.	Husband	Antiques and Objet D’Art	$50,000	$50,000
18.	Joint	Household contents (former matrimonial home)	$20,000	$20,000
19.	Husband	Furniture [Country 1]	$45,198	$45,198
20.	Husband	Frank Mueller Watch	$10,000	$10,000
21.	Wife	Diamond engagement ring	$8250	$8250
22.	Wife	Rolex watch	$1000	$1000
[Company 1] Options
23.	Husband	4-8-05 option sale xp $30.51 granted 1-8-2002 after tax	$41,751	$0
24.	Husband	4-8-05 option sale xp $28.74 granted 28-8-2003 after tax	$82,728	$0
25.	Husband	24-7-07 option sale xp $30.51 granted 1-8-2002 after tax	$79,106	$0
26.	Husband	24-7-07 option sale xp $28.74 granted 28-8-2003 after tax	$152,674	$0
27.	Husband	24-7-07 option sale xp $32.75 granted 9-8-2004 after tax	$114,119	$0
Total Options	$ 203,585
Total	$4,132,496	$3,878,911
ADDBACKS
Legal Fees and Property Settlement
28.	Wife	December 2007 - Partial property settlement pursuant to Orders 17 December 2007	$100,000	$100,000
Total legal fees and property settlement	$100,000	$100,000
Donations
29.	Husband	Donation 2005 – [MM]	$11,786	Nil
30.	Husband	Donation 2006 – [Religious organisation 1]	$62,920	Nil
31.	Husband	Donation [Religious organisation 1]	$40,617	Nil
32.	Husband	Donation [Religious organisation 1]	$32,545	Nil
Total Donations		$147,868
[Company 1] Profit Share
33.	Husband	2005 profit share	$595,562	Nil
34.	Husband	2007 profit share	$1,139,607	Nil
35.	Husband	2007 profit share	$694,918	Nil
36.	Husband	2008 profit share	$944,179	Nil
37.	Husband	2009 profit share	$624,193	Nil
Total profit share	$ 3,998,459	Nil
TOTAL ASSETS	$8,130,955	$3,978,911
Miscellaneous
Husband	Part payments made to rebuild [Motor vehicle 4]	$32,000	Nil*
LIABILITIES
38.	Joint	Mortgage over former matrimonial home	$840,000	$840,000
39.	Husband	Hire purchase [Company 1]	$70,000	$70,000
40.	Husband	Tax payable in [Country 1] for the following years: 2005, 2006 & 2007	Nil	$1,832,898
41.	Husband	Tax payable in Australia 2009	$24,032	$24,000
42.	Wife	Commonwealth Bank personal loan	$17,125	E$17,125
43.	Wife	Commonwealth Bank credit card	E$584	E$584
44.	Wife	Legal fees	$111,854	$111,854
Total	$1,063,595	$2,896,493
NET TOTAL ASSETS	$7,067,360	$1,082,418
SUPERANNUATION
45.	Wife	Colonial First State	$14,591	$14,591
46.	Husband	[Company 1]	$124,720	$124,720
Total	$139,311	$139,311
NET TOTAL ASSETS (inc. superannuation)	$7,206,671	$1,221,729
FINANCIAL RESOURCES
[Company 1] Options
47.	Husband	12-08-08 option sale xp $26.48 granted 28-08-03 after tax	$65,655	$0
48.	Husband	04-06-09 option sale xp $ granted 09-08-04after tax	$15,415	$0
49.	Husband	[Company 1] Options	$6028	$1523
50.	Husband	[Company 1] Options – July 2008	Not known	Not Known
Total options	$353,891	$1523
Profit share
51.	Husband	2005 profit share	Nil	Nil
52.	Husband	2006 profit share	$97,604	$97,604
53.	Husband	2007 profit share	$125,625	$125,625
54.	Husband	2008 profit share	$260,678	$260,678
55.	Husband	2009 profit share – see Affidavit of Husband sworn 30 July 2009	$65,000	$19,980
Total profit share	$548,907	$503,887
Australian Taxation paid on profit shares and options
56.	Husband	2005 – Aust Tax	($4157)
57.	Husband	2006 – Aust Tax	($61,352)
58.	Husband	2007 – Aust Tax	($52,768)
59.	Husband	2008 – Aust Tax	($143,504)
Total Tax paid	($261,781)
Total	$1,164,549	$505,410

*dispute as to inclusion

There are four main areas in which the disparity in the asset pool as between the parties arises and which form the main matters in issue between the parties in relation to the net asset pool. They are:-
a)The wife’s assertion that certain payments by the husband should be brought back into the asset pool. These are:
(i)Motor vehicle 6 sold by the husband in Country 3 and the wife asserts that the proceeds were donated to Religious organisation 2 ($50,000);
(ii)Donation by the husband in 2005 to MM ($11,786);
(iii)Donation by the husband in 2006 to Religious organisation 1 ($62,920);
(iv)Further donations by the husband to Religious organisation 1 ($40,617 and $32,545);
(v)The value of Company 1 options received by the husband and converted by him to cash between 4 August 2005 and 4 June 2009 (net after tax $551,448);
b)Company 1 profit share between 2005 and 2009 inclusive ($3,998,459 less Australian tax of $261,781) which the wife claims should be included;
c)The husband’s assertion that he has tax liabilities in Country 1 for the years 2005, 2006 and 2007 of $1,832,898 which the husband asserts should be treated as a liability;
d)There is a discrepancy between the parties in relation to financial resources respecting the Company 1 options and the 2009 profit share which the wife asserts is $65,000 and the husband asserts is $19,980.

Insofar as payments have been made to the husband in the currency of Country 1 and the currency of Country 2 the parties have agreed on the relevant conversion rates and the values appear in the joint balance sheet in Australian dollars.

Issues regarding contributions and section 75(2) factors

The parties are also in dispute over the manner in which the Court should deal with their contributions and any adjustment under s 75(2).
In summary, the husband asserts that:
a)the Court should deal with the assets and liabilities on an “asset-by-asset” approach, rather than a global approach. Ultimately no submissions were directed to this issue and the husband’s final submission as to how the Court should deal with the assets took a global approach. I propose to do the same.
b)he has made the only significant direct financial contributions to the acquisition, conservation and improvement of the property of the parties;
c)he had significantly greater assets than the wife at the commencement of cohabitation;
d)at the time of separation the net position of the parties was $614,900 and the increase in the parties’ net assets over the period of the marriage was directly referable to the husband’s income and financial benefits from his employment;
e)after separation and to the date of hearing the husband accumulated assets post-separation which form a substantial percentage of the current pool of assets to which the wife has made no direct or indirect financial contribution, including:
·house in Country 1;
·HSBC Country 2 account;
·Company 1 investment;
·Loan from Ms Y;
·S Investment ;
·Motor vehicle 2 and Motor vehicle 3;
·Furniture in country 1.
f)after separation the husband maintained the mortgage payments on the matrimonial home and the wife had the benefit of occupation of the home;
g)the wife has had the benefit of $50,000 from the parties’ bank account and $100,000 by way of partial property settlement paid by the husband.
In relation to non-financial contributions the husband asserts that he has exercised unusual skill and acumen in managing the parties’ assets and demonstrated special skills in his occupation as a financial industry employee and his ability to earn income and accumulate assets, which the Court should take into account in his favour. The husband submitted through his Counsel that the percentage split as a result of contributions should be 80/20 per cent in his favour.
The husband acknowledged that his income and financial resources are greater than the wife’s and that the child is with the wife for longer periods than with him. He asserts that this should result in an increase for s 75(2) factors. Thus the husband’s final position was that the wife should receive 35 per cent of the net assets.
The wife contends that while the husband has been primarily responsible for the financial contributions, she has had primary responsibility as a parent and homemaker, particularly as once the husband started working for the Company he spent extensive periods of time overseas. Given the length of the marriage, the assets each party brought to the relationship, the assistance by the wife and extent of her non-financial contribution she contends that:
a)the Court should have regard to the difficulty in making her contributions due to the husband’s physical and emotional abuse of the wife throughout the marriage, which made making contributions more difficult (Kennon & Kennon (1997) FLC 92-757);
b)contributions as at separation should be treated as being equal;
c)as far as post-separation contributions are concerned, she has had primary responsibility for the care of B and other than mortgage payments and the lease on her car, she has not received spousal maintenance and that there should be no adjustment for post-separation contributions to the property in favour of the husband;
d)as far as s 75(2) matters are concerned, she is at a significant disadvantage because of:
·her age, training and work experience;
·the fact that she has the full-time care of B;
·the subjugation of her own career at the behest of the husband for several years during the marriage;
·the husband’s far superior and excellent earning ability;
·the wife’s continued responsibility for B for some years to come;
·the high standard of living enjoyed by the parties during the marriage.
These matters, the wife contends, should result in her receiving a 20 per cent adjustment in relation to s 75(2) factors. This would result in a percentage split in her favour of 70/30 per cent of the net assets.

Other matters in dispute

The wife contends that the husband has not made full financial disclosure. In particular, she maintains that:
·he has not provided bank statements or details of any accounts held by him in Country 1;
·he has not provided full bank statements showing specific withdrawals and credits from his employee account, day-to-day accounts or any other accounts that he holds;
·the personal expenses that he claims are exorbitant and he has not provided documents that would support them;
·there is a real doubt that the expenses claimed are being incurred and if they are not, there remains the question of the location of funds received by him;
·the husband has a financial resource available to him through the use of his corporate credit card because his employer pays for significant personal travel costs, meals and other personal expenses over and above the remuneration package he receives;
·the husband has the benefit of Frequent Flyer points accumulated during the course of travelling for business;
·the husband developed the project in which he currently works during the course of the marriage and while there were periods earlier in the marriage when his wages and bonuses were comparatively modest when the project was in its infancy, it is now paying substantial dividends and the wife’s earlier role in providing support to him requires rectification by the inclusion of post-separation options and bonuses.

Evidence, findings and credibility

In accordance with the Family Law Rules 2004 (Cth) the parties in the main relied upon affidavit evidence, supplemented with leave by brief oral evidence. Both were cross-examined.
The evidentiary standard of proof to be applied in the Family Court of Australia is to be found in s 140 of the Evidence Act 1995 (Cth) which provides that the case of the party is proved if the Court is satisfied that the case has been proved on the balance of probabilities. Regard has been had to the evidence given by the parties in their affidavits, and oral evidence, particularly in answers given to cross-examination. In general terms there is no need to make any finding about any overall lack of credit worthiness by either party. Both gave evidence in a straight forward way and the husband in particular made many concessions against his interest. However, there are some issues which require specific consideration as to whether assertions should be accepted. In particular, this relates to the question of whether the husband has a tax liability in Country 1 and the question of whether he has properly accounted for income and expenditure since separation. These matters will be separately considered when the evidence is analysed.

Issues regarding the asset pool

The husband’s employment with Company 1

It was not always easy to reconcile various amounts earned by the husband in particular years but there was no challenge to the figures he presented.
When the husband commenced employment with the Company in October 1999 his income was approximately $150,000 per annum plus bonuses. The arrangement with the Company employees was through a salary package in which all salary, superannuation and bonuses fell within the package and were held by the Company prior to income tax being paid. This was through a package called Company 1 Investment. Employees were able to access funds in Company 1 Investment in one of three ways. First, they could elect to have cash payments by way of income, taxed at the individual’s tax rate. Secondly, employees could elect to have an amount of Company 1 Investment paid as a fringe benefit which attracted Fringe Benefits Tax. Thirdly, employees could elect to purchase infrastructure bonds which were taxed at a flat rate of 42%.
In addition, employees did not have to utilise all of the funds in the Company 1 Investment in one financial year and could elect to defer their income to subsequent financial years. The Company 1 Investment was also used as a loan facility and employees could in certain circumstances owe Company 1 money.
In addition to salary and bonuses, employees were also given stock options. These options came with certain terms and conditions which had to be satisfied before the employee could cash the stock options and the money was received into the employee’s nominated bank account. The money received from the sale of stock options was taxed at the individual tax rate.
In the three financial years prior to separation the husband’s salary consisted of Company 1 Investment valued at $150,000 and profit share. The sale of the Company options did not occur until the 2003-04 financial year. For the financial year ended 30 June 2003 and 30 June 2004 the husband’s profit share was $400,000 and $420,000 respectively.
In the financial year ended 30 June 2005, which was the year the parties separated, the husband received the following emoluments:
a)   Company 1 Investment  $175,000.00
b)     Profit Share – Australia (bonus)   $265,000.00
c)     Profit share – Country 1 (bonus)   $377,048.88
d)     6000 Company 1 Options     $Nil
The husband also earned in that year a profit share in Australia of $41,000 that crystallised over a two year period commencing June 2008 and a profit share in Country 1 of $57,463.00 which also crystallised over a two year period commencing June 2008. Should the husband cease employment with the company he will not be entitled to profit share that crystallised in the future.
On 30 August of the 2004-05 financial year the husband commenced working for Company 1 International Limited and all salary received thereafter was paid in the currency of country 1.
Because the husband’s income, and what he has done with it since separation, was an issue in the case it is necessary to set out the income received by the husband in the years after separation. This also has relevance in relation to whether or not there is any liability for income tax in Country 1 and, if so, what part of this income. As a result of the sale of options and deferred profit share there is a capacity to arrive at different figures but the following gives a sound indication of the amounts available to the husband from earned income.
The husband’s income from salary and profit share for financial years following 30 June 2006 was[1]:
[1] Exhibit H5
Year ended 30 June 2006

a) Australian income net after tax

$128,822.31

b) Country 1 income

$1,171,218.00

Year ended 30 June 2007[2]
[2] Exhibit H5

a) Australian income net after tax

$98,384.42

b) Country 1 income

$779,159.51

Year ended 30 June 2008

a) Australian income net after tax

$206,180.00

b) Country 1 income

$1,046,394.85

The husband deposited salary and profit share received by Company 1 into his Company 1 Investment account. All Country 1 salary and profit share was deposited into his account at HSBC Country 2 (“HSBC”).
In addition to the salary and profit share he was also entitled to the Company options and since separation has exercised the following options[3]:
[3] Husband’s affidavit dated 2 September 2008, page 4 at paragraph 11

Number of Options

Date Exercised

Amount Received

1333

4 August 2005

$41,751.51

2500

4 August 2005

$82,728.67

1334

24 July 2007

$79,106.09

2500

24 July 2007

$152,674.79

2000

24 July 2007

$114,119.84

2500

13 August 2008

$65,655.02

For the financial year ended 30 June 2005 the husband’s Australian taxable income was $24,220.00 which consisted of a $16,890.95 draw down from the husband’s Company 1 Investment.[4]
[4] Husband’s affidavit dated 2 September 2008, page 4 at paragraph 13
During the financial year ended 30 June 2008 the husband exercised 5834 options with the Company and received the net proceeds of sale of $345,900.00, the proceeds of which were deposited into his Commonwealth Bank account.
For the financial year ended 30 June 2008 the husband was required to pay $140,873.84 in capital gains on the disposal of the Company 1 options.
On 13 August 2008 the husband further exercised 2500 options with the Company and received net proceeds of sale of $65,655.02. The capital gain on this exercise of the options is payable at the end of the 2009 financial year.
In May 2009 the 2005 Australian profit share derived from the Company vested and the husband received $22,127.00 which was credited to his Company 1 Investment account. The husband’s further evidence is that he had utilised the Company options for mortgage payments, miscellaneous expenses and day-to-day living expenses when he is in Australia. The money is deposited into the Commonwealth Bank Cash Management Account.
In January 2009 the husband purchased Motor vehicle 4 from Company 1 for $9,745.31. He transferred money from his HSBC account to his Commonwealth Bank account to effect the purchase.
On 7 July 2009 the husband paid his outstanding tax liabilities in Australia by a transfer from HSBC account into his Commonwealth Bank account, utilising a portion of his bonuses received from Company 1 International.
In 2009 the husband’s discretionary profit share was 27,460,000 Country 1 currency and his total profit share was 31,579,000 Country 1 currency of which 4,462,050 Country 1 currency was retained. In that year the vesting of the 2005, 2006 and 2007 profit share allocations occurred and in May 2009 the husband received profit share in respect of these years from the Company of $560,316.00. The money was deposited into his HSBC account.
On 5 June 2009 the husband sold 4000 options with the Company as the expiry date on the options was 9 August 2009. The husband received net proceeds of $15,415.59 and deposited those funds into his Commonwealth Bank account. He asserted that the money was used to meet the mortgage payments of the former matrimonial home, pay off his credit card and other miscellaneous expenses including travel expenses for himself and B. The husband is required to pay tax on the sale of the options.
A slight change occurred in relation to the 2009 profit share in that the Company 1 Group implemented a new policy whereby a portion of the profit share is guaranteed if the employment continues with the Company, however, a certain portion of the profit share is withheld pending shareholder approval.

HSBC Country 2 account

On 3 July 2009 the husband closed the HSBC account which was in the name of the wife and husband and he withdrew the sum of $1,183,036 from the HSBC account and invested the money with S Investment.
On 14 July he transferred $456,450.20 from his investment account with S Investment to his HSBC account and the balance of his HSBC account as at 27 July 2009 was $458,217.00.
Money withdrawn from his HSBC account (that which was not subsequently returned to the HSBC account) was invested in bonds issued by the Country 2 Mortgage Corporation. The bonds will mature on 1 September 2012 with a face value of 6,500,000.00 Country 2 currency only realised when the bond has matured. The husband invested in the Country 2 currency on the basis that he estimated that it would appreciate against all major currencies. At 27 July 2009 the bonds have a value of $1,092,680.00 (6,915,670.55 Country 2 currency).

Add-backs

Company 1 options and profit share

The wife asserted, as appears from the figures in the joint balance sheet, the Company options and Company 1 profit share, less Australian taxation paid on the profit share and options, were add-backs which should form part of the asset pool. Notwithstanding the sums set out in the balance sheet, the case for the wife was not argued on the basis that the amounts as set out in the balance sheet were in fact to be added-back as appears. This is mainly because consideration of the husband’s income and banking arrangements demonstrates clearly that amounts received from the sale of Company options and profit share were used, in addition to Company 1 Investment salary, to meet the living expenses of the husband, purchase assets and make payments in respect of the former matrimonial home in Australia.
In her written Outline of Case Document the wife put her argument as to why add-backs should apply. She contended that:
·The husband had not made full financial disclosure.
·The husband did not provide bank statements or details of the account held by him in Country 1.
·The husband had not provided full bank statements which show specific withdrawals and credits from his employee account, day-to-day accounts or any other account he holds.
·The personal expenses that the husband claimed are exorbitant and he has not provided documents which support them.
·The wife has real doubts they have been incurred and if not, there remains the question of the location of the funds.
In the end, the wife did not establish to the requisite standard that the husband had not made full financial disclosure or that there were other accounts or documents which would indicate that the husband had other funds available to him in an account or some other institution.
In her final submissions, Counsel for the wife tendered schedules W10 and W11 which sought to establish, first, the husband had received by way of wages, profit share and sale of Company 1 options, between the period 1 July 2005 and the date of hearing, a total sum of $5,414,723.80.[5]
[5] The total figure on schedule W10 is in fact $5,428,48.40. The wife’s Counsel indicated that there was an error for the wages for the first period in which the wages had been overstated by $13,324.69 which when carried through leads to a final figure of $5,414,723.80. See transcript dated Monday 21 September 2009 page 49 at lines 47-47 and page 50 lines 3-8.
Exhibit W11 took the total remuneration in exhibit W10 (now amended) added the balance of the Commonwealth Bank account of $54,058.61 and came to a total (as amended) of $5,468,782.40. The wife then deducted from that figure various expenses that she calculated for the husband’s weekly expenses, legal fees, the S Investment, tax paid in Australia, the increase in the HSBC account, the wife’s partial property payments, donations, the Company 1 Investment account and Motor vehicle 5 and came to a figure for total expenses of $4,849,507.00.
The difference between the income as alleged by the wife and expenditure as calculated by her is (as amended) $619,275.40.
This sum, the wife alleged, was unaccounted for by the husband and should be added back to the pool of assets.
Counsel put her submission in this way[6]:
Now, my friend has pointed to the fact that we can’t save [sic] that the father –I withdraw that, that the husband has in some ways set about to deceive or hide or otherwise keep this money from being included in these proceedings and that’s right, I can’t say that it’s been put somewhere, your Honour, or that it’s sitting in a fund somewhere or identify it, but what we can say is that going through this and applying really quite liberal interpretations of the evidence and not cutting back any of the weekly expenses which, in our respectful submission, were extravagant in any event, as were the expenses that were set out in paragraph 22 of that September 2008 affidavit. The husband has been given the benefit of the doubt about where his money has been applied and he’s failed to provide an answer or an appropriate answer about where this 600,000 might be although he says that its nowhere because the maths presumably is wrong.
…
MS GILLIES: We would say that that gets added back into the pool because it hasn’t been identified where it’s gone. It has always been the wife’s case that the husband has been extravagant and somewhat boastful with the funds that he’s received.[7]
[6] Transcript dated 21 September 2009, page 51 at line 37.
[7] Transcript dated 21 September 2009, page 52 at line 9

The wife conceded that she was not running a case about waste in the sense understood from the principle arising in In the marriage of Kowaliw & Kowaliw (1981) FLC 91-092. In particular, Counsel for the wife said:
MS GILLIES: And, that’s why, your Honour, we can’t run a straight waste case because the husband has procured assets with some of this income and we concede that.[8]
[8] Transcript dated 21 September 2009, page 52 at line 40
The husband did not accept that the evidence supported a conclusion that there was $600,000 unaccounted for between income and expenditure.
In particular, Counsel pointed to the unreliable nature of the figures set out in exhibit W10 which the wife relied upon to support this contention. In particular, Counsel for the husband submitted that, for example, the profit share set out in the wife’s schedule for the year ended 30 June 2005 which totalled $642, 048 included $377,048.88, a proportion of which ($57,463) did not crystallise until June 2008 when it crystallised over a two year period.
Secondly, for the financial year ended 30 June 2006 the wife included a total profit share of $1,299,631.72 of which $274,922 did not crystallise until June 2008 and then crystallised over a three year period.
Finally, in relation to the unreliability of the document, Counsel for the husband pointed out that in the 2008 year the wife’s schedule included 2,448,000.00 Country 1 currency which did not become available until May 2010.
When these documents are considered carefully it is clear, in my view, that the husband is correct in these submissions.
True it is that there are some amounts vested in previous years which crystallise in later years but it does appear that there has been double counting by the wife in her schedules and her schedules therefore are not reliable indicators of the income received by the husband for the period July 2005 to June 2009. The ultimate conclusion reached by the wife, therefore, that there is a demonstrable shortfall of approximately $600,000 in how the husband has accounted for income, savings and earnings during this period cannot be supported. The evidence does not enable me, on the balance of probabilities, to find the shortfall alleged between the husband’s income as disclosed and his income and expenses as disclosed.
But even if the wife’s calculation was correct or substantially correct there are considerable difficulties with this argument. In final submissions the wife’s case was that the sum of approximately $600,000 should be added back to the pool, not because it was asserted that this fund existed in an account which had not been disclosed, nor that the husband had failed to provide proper disclosure which may lead to an interest he had in other funds, nor that the husband had “wasted” assets that were in existence. Rather, it was a submission that was based on the wife’s assertion that the husband’s income and expenditure during the five years between separation and trial could not be sufficiently aligned and that on her case it was a deficit unexplained of $600,000 that should thus be added to the pool.
Although the wife conceded that she was not running a case about waste in the sense understood in Kowaliw (supra), it is important to consider the principles upon which add-backs might be included in the asset pool to determine the basis upon which the wife is asserting funds should be added back and whether her claims fall within such principles.
In Omacini & Omacini (2005) FLC 93-218 the Full Court noted the circumstances in which it is appropriate to notionally add back to the pool of assets falling into “three clear categories”. Where the parties have expended monies on legal fees; where there has been a premature distribution of matrimonial assets; and in the circumstances outlined in Kowaliw (supra). Those circumstances are, as articulated by Baker J, that although add-backs to the pool are the exception and not the rule, an exception can exist when one party has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets; the effect of which has reduced or minimised their value or the pool of assets.
The Full Court has emphasised that, without seeking to place a fetter on the exercise of discretion by the trial judge in individual cases, the concept of adding monies recently disposed of back into the pool ought to be the exception rather than the rule. In Cerini & Cerini [1998] FamCA 143 at par 46 the Full Court said “The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.”
In Kouper & Kouper (No 3) [2009] FamCA 1080 at paragraphs 90 to 113 Murphy J sought to distil the principles from the Full Court authorities on the question of add-backs by reference to five questions, which are as follows (at par 108):
(a)Is it contended that property (including money), that would otherwise be available for distribution between the parties if a s 79 order is made, has been dissipated with a consequential loss to the property otherwise potentially divisible between the parties at the date of trial?;
(b)If so, is it alleged that the dissipation of property was in respect of things other than what, in the particular circumstances of this particular marriage, can be classified as “reasonable living expenses”?;
(c)If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the result should be a sharing of that loss by the parties other than equally?
(d)If it is contended that this be the result, why should there be an add back (which brings to account, dollar for dollar, such past expenditure in current dollars) as distinct, for example, from there being an adjustment being made pursuant to s 75(2)(o)?; and
(e)How should either any “add back”, or adjustment pursuant to s 75(2)(o), be quantified?
I think these are useful questions to pose in the context of this case. The issue in this case, thus expressed, focuses first on the first two questions. Explained in this way, the wife’s case appears to be that, following separation, the husband had a significant income which he controlled and used. Some of this income was used to acquire assets which are part of the pool, and the rest was used by the husband. To the extent that the income used by the husband was not used for reasonable living expenses (interpreted liberally) it should be added back to the pool.
I do not agree that that contention falls within existing legal principles as described. There are several problems with it. First, the husband did not dissipate an existing asset. Far from it. He created assets which added to the pool from his income. Secondly, the husband was under no legal obligation to provide other funds from his income to the wife and B in the form of child support or spousal maintenance beyond what he was already contributing voluntarily. Thirdly, I am not satisfied that the figures put forward by the wife are in any event reliable as to what shortfall might have been provable between expenditure and income.
Having regard to the final two questions posed by Murphy J, a lack of particularity as to an amount to be considered would make it almost axiomatic that there could not be an add-back to the asset pool. That might leave open an argument that there should be an adjustment pursuant to s 75(2)(o) and I do propose to take into account the husband’s income and therefore his capacity for discretionary expenditure when I consider the matters in s 75(2).
There is, therefore, no justification in my view for adding-back any sums by way of income received or profit share received by the husband between separation and hearing on any basis.

Other add-back claims by the wife

Motor vehicle 6

The husband purchased this vehicle for his fiancé but subsequently sold it and donated the money to Religious organisation 2. He contended that this was done because of his wish to make a donation arising from his relationship with his fiancé whose parents live in Country 3. The husband regularly visits Country 3 with his fiancé. The amount involved is $50,000.

Donations to Religious organisation 1

The other donations by the husband including the donations to Religious organisation 1 in three separate amounts which totalled $147,868 and which the wife contended should be added back.
The husband is a practising follower of Religious organisation 1 and it was conceded that he made contributions to Religious organisation 1 prior to separation. It was also conceded by the husband that the amounts that he had contributed prior to separation were smaller amounts than these donations. In determining whether or not in the exercise of the Court’s discretion I should include them, I take account of the fact that they are a small proportion of the husband’s post separation income which for the years ended 30 June 2006 to 30 June 2008 inclusive on the husband’s own evidence totalled $3,430,159.00.[9] The percentage is 0.04 per cent of his gross income during that period. Having regard to the fact that the husband accumulated assets for the parties in the post-separation period and was earning a significant income, there is no reason why he should not be entitled to make this discretionary expenditure without having to add it back to the asset pool. In any event, had he not spent the money on donations but rather purchased clothing for himself, for example, it is unlikely the argument would be made that that sum should be added back. I apply the same reasoning to Motor vehicle 6.
[9] Exhibit H5.

Other matters relevant to the asset pool

By orders of 17 December 2007 the wife received $100,000 partial property settlement which the parties agreed should be taken into account. The wife’s evidence was that she had used most of that sum on legal fees and approximately $15,000.00 on servicing Motor vehicle 5. The remainder of those funds was about $6000.00 represented in the wife’s Commonwealth of Australia bank account. She had another account of $600. Having regard to the fact that the partial property settlement has been brought into account it would doubly disadvantage the wife if the contents of the Commonwealth Bank account were added back. In the circumstances therefore, I intend to omit from the pool of net assets the wife’s Commonwealth Bank accounts.
In his final submissions, Counsel for the husband proposed that, in principle, both the husband’s and wife’s paid legal fees should be included in the asset pool as add-backs. However, given that the majority of the partial property settlement, received by the wife, was used to pay legal fees, the wife’s Counsel conceded that it would be unreasonable to include her paid legal fees as well and proposed that, if the partial property settlement of $100,000 was added back to the pool, then this would encompass the paid legal fees of the wife. I do propose to include the partial property settlement received by the wife and I will include the husband’s paid legal fees (but not the wife’s) of $132,718.[10]
[10] Transcript, 21 September, p. 26, line 22-25.
The wife sought to include in the add-backs some of the $2000 expended on Motor vehicle 4. The motor vehicle was owned by Company 1 and the wife asserts that the expenditure on the vehicle was incurred recklessly or wantonly by virtue of the fact the husband did not own the vehicle and the expenditure on the vehicle could not be recovered because the cost of rebuilding the vehicle would exceed the market value of the rebuilt vehicle. No argument was directed to this item by either party. Ultimately in January 2009 the husband purchased Motor vehicle 4 from Company 1. In the context of this case this sum, and its expenditure appears to me to be de minimis and I do not propose to treat it as an add-back to the net asset pool.

Liabilities

Husband’s liability for tax payable in Country 1

The husband asserts that he has a tax liability for the years 2005, 2006 and 2007 in Country 1 in a total of $1,832,898. It is common ground that the husband has not filed any tax returns in Country 1 nor paid any tax in Country 1.
As is apparent from the figures in pars 34, 38 and 39, the more significant part of the husband’s income has not been earned in Australia.
The evidence is that the husband is taxed for Australian purposes as a non-resident. The source of the income he derives in Australia is his income from his employment with the Company drawn down on his Company 1 Investment account. As far as his cash conversion of options and his profit share are concerned, neither of these sums are paid into an Australian account nor a Country 1 account. He does not operate an account in Country 1. The mortgage payments he makes in Australia are paid directly into a Commonwealth Bank account. The funds derived from profit share and conversion of the options are paid into his HSBC account in Country 2.
The husband filed an affidavit on 11 September 2009 annexing the opinion of a Mr S, a licensed tax accountant in Country 1, who provided an opinion in relation to the status of his Country 1 residency for tax purposes. He also attached draft tax returns prepared by Mr S for 2005, 2006, 2007, 2008 and 2009 tax years. The Country 1 tax year is from 1 January to 31 December in each year, in distinction to the Australian tax year. The husband deposed to the fact that under Country 1 law he has seven years in which to pay his tax.
Mr S was called by the husband and, with leave, gave evidence through an interpreter and by telephone. I am satisfied that Mr S has the requisite expertise to provide an opinion and that his evidence and opinion complies with the principles of Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 and Wilde & Wilde [2007] FamCA 1044. Mr S is a licensed tax accountant licensed by the Financial Ministry of Country 1 and has been so licensed for 21 years.
Mr S’s initial evidence by letter of advice set out the following relevant facts:
(a)According to Country 1 domestic laws for a resident, all income derived from any country in the world is taxable.
(b)For a non-resident, only the source income earned in Country 1 is taxable.
(c)A resident is a person who has resided in Country 1 continuously for more than one year and a non-resident is a person who has no residential address in Country 1 and has not lived in Country 1 continuously for more than one year. The residential address means the person‘s principal domicile for his/her daily life must be judged according to objective facts rather than personal and subjective facts and must be one place, not multiple places.
Mr S then opined in relation to his instructions that the husband:
·had been posted to Company 1 International in Country 3 since 30 August 2004 and has been on an extended work assignment at Company 1 Country 1 Limited;
·the real source of his income is Country 1;
·as at today he is considered a non-resident for tax purposes in Australia;
·his family resides in Australia, however he has no ongoing normal relationship with his family, therefore this is not considered as his principal place of living;
·the centre of existence was Company 1 Country 1 and the length of his stay in Country 1 would make him a resident of Country 1.
When cross-examined, Mr S indicated that he took into account the fact that the husband was based in the capital city of Country 1 long-term, his income was not taxable in Australia, he has been based in Country 1 for more than six months each year and his income was derived in Country 1.
Mr S conceded, however, that for the purpose of residency there are three classes (the fact of which he had not averted to in his written opinion). They are: non-permanent residence, permanent residence and non-residence. He acknowledged there is a critical difference between a permanent resident and a non-permanent resident. In the case of a non-permanent resident, only the portion of income remitted to Country 1 is taxable. If there are sources of income outside Country 1, a non-permanent resident is only taxed on amounts brought back to Country 1. Mr S opined that, in his belief, if income was earned in Country 1, then it would be taxable. However, he acknowledged that there were various factors that would affect his opinion, for example:
·if the husband was spending equal time outside Country 1 and inside Country 1;
·that he was part of a Division of the Company based in Australia;
·that his wage was determined by the Company in Sydney and paid to an account in Country 2;
·that he had no bank account in Country 1;
·that he did not have an account in, nor bring money back into, Country 1.
Mr S, then, when asked whether he believed that the husband was a non-permanent resident said: “It’s not a definite conclusion but I believe he falls into that category.” He confirmed that if the husband is a non-permanent resident, then only nominated income, or income that is returned to Country 1, would be taxable. He agreed that there would be a real question about any liability for tax if the husband fell into the category of a non-permanent resident and if his income was paid by an Australian company to a Country 2 account.
Further evidence from him elicited the fact that after five years, even if the husband’s status is that of a non-permanent resident, he will acquire the status of a permanent resident. This would apply to tax in the year 2010 and thereafter but would not be retrospective.
On the subject of lodgement of tax returns, Mr S agreed that he had seen the husband a few years ago and that under Country 1 law it was a voluntary disclosure and his advice had been to lodge tax returns. He was unable to say why the husband had not done so. He conceded the documents could be amended up until they were lodged. He confirmed that although he had concluded that the husband was a resident, he had not decided whether he was a non-permanent resident or a permanent resident. He stated that he was not conclusively able to determine whether the husband was a permanent or a non-permanent resident and agreed that the difference was critical and that he had not undertaken the exercise to determine this part of his status.
Mr S said that tax returns are required to be filed by 15 March of the following year and there is a penalty for late lodgement. The penalty for late lodgement, as distinct from late payment, is 10% of the tax payable. He also said that technically the tax authority has the right to charge tax prior to the seven year date if returns are lodged. He finally added that while it is an important fact that the husband owns real estate in Country 1, it is also relevant whether he uses the motor vehicles and resides in the residence.
The husband asserts that he believes that he is liable for tax and the reason he had not filed the returns was that he did not wish to put himself in a position where the tax authority might require him to pay tax prior to the seven year period in which he otherwise has to pay the tax due.

Conclusion

I make the following findings from the evidence.
a)If the husband has a liability to pay tax under Country 1 law on his income, he has a period of seven years after the relevant year in which the income was earned in which to pay the tax. Thus for the years where the debt is asserted, the tax would be payable in the following years:
·    2005 tax year – payable 2012;
·    2006 tax year – payable 2013;
·    2007 tax year – payable 2014.
b)No liability will arise unless the husband lodges tax returns. There is no evidence that the husband intends to lodge any tax returns prior to the time when the tax would become due.
c)The tax will be payable if the husband is a permanent resident.
d)If the husband is a non-permanent resident, then the tax will not be payable unless the income is remitted to Country 1.
e)The husband neither receives nor remits income to Country 1 and does not hold a Country 1 bank account.
f)The Country 1 tax expert had not initially considered whether or not the husband was a permanent or non-permanent resident.
g)After five years of residence in Country 1 the husband’s status would change to that of permanent resident in any event. That period has not yet occurred and when it does the provision will not be retrospective.

When provided with information about the husband’s circumstances, and particularly the fact that he has not earned income in Country 1 nor remitted income to Country 1, the tax expert said that he was not able to conclusively determine whether the husband was a permanent or non-permanent resident but opined that he was probably a non-permanent resident and that there would be a real question about his liability for tax in Country 1 if his income was paid by an Australian company to a Country 2 account.
The conclusions I reach as a result of the facts established by the evidence are the following:
(a)The husband does not presently have a liability for tax arising from the years 2005, 2006 and 2007 and therefore the amount of $1,832,898 should not form part of the liabilities of the husband for the calculation of the net asset pool. It is a contingent liability at best.
(b)If the husband is liable for tax, then his liabilities will not arise until 2012, 2013 and 2014.
(c)As the husband has no bank accounts in Country 1, and his income is not paid in Country 1 nor remitted to Country 1, the question of whether the husband is a permanent or non-permanent resident becomes critical.
(d)There is doubt about whether the husband is a permanent resident and on the balance of probabilities I conclude that he has a respectable argument at the present time that he is not liable for tax in Country 1 on income earned in 2005, 2006 and 2007.
Therefore I do not intend to include the tax liability as an existing liability in the pool.
Accordingly, I find the assets and liabilities to be as follows:

Ownership	Description	Value
ASSETS
Real estate
Joint	W Street, Sydney Suburb 1	$1,150,000
Husband	House and land in Country 1	$636,548
Financial institution accounts
Husband	HSBC	$413,803
Husband	Commonwealth Bank of Australia (…)	E$13,000
Husband	Commonwealth Bank of Australia (…)	$300
Investments
Husband	Company 1 Investment	$62,000
Husband	Loans from Ms Y	$5000
Husband	S Investment	$1,033,941
Cars
Wife	Motor vehicle 1	$130,000
Husband	Motor vehicle 5	$50,000
Husband	Motor vehicle 2	$77,842
Husband	Motor vehicle 3	$155,684
Husband	Motor vehicle 4	$9745
Personal effects
Husband	Antiques and objet d’art	$50,000
Joint	Household contents (former matrimonial home)	$20,000
Husband	Furniture Country 1	$45,198
Husband	Frank Mueller watch	$10,000
Wife	Diamond engagement ring	$8250
Wife	Rolex Watch	$1000
Legal fees
Husband	Paid legal fees	$132,718
Wife	Partial property settlement	$100,000
Total		$4,105,029
LIABILITIES
Joint	Mortgage over former matrimonial home	$840,000
Husband	Hire purchase Company 1	$70,000
Husband	Tax payable in Australia 2009	$24,032
Wife	Commonwealth Bank personal loan	$17,125
Wife	Commonwealth Bank credit card	E$584
Wife	Legal fees	$111,854
Total		$1,063,595
NET TOTAL ASSETS		$3,041,434
SUPERANNUATION
Wife	Colonial First State	$14,591
Husband	Company 1	$124,720
Total		$139,311
NET TOTAL ASSETS (inc superannuation)		$3,180,745

CONTRIBUTIONS

There were two aspects to the parties’ contributions, pre-separation contributions and post-separations contributions.

Pre-separation contributions

Much of the wife’s material, and the husband’s cross-examination, revolved around the wife’s contributions as parent and homemaker and the circumstances in which those contributions were made. Other than for short periods, in Country 2 and Australia all of the direct financial contributions both pre and post-separation were made by the husband. A concession made by the husband’s Counsel in his closing address was that contributions at separation were probably equal.[11]
[11] Transcript dated 21 September 2009, page 25 at lines 35-40: “My friend contends that the contributions at separation were probably equal. I think they were part of my submissions. I don't disagree necessarily with that proposition, but probably for different reasons. Had the trial or hearing been conducted at that time, that was more likely than not to be the result. And it is a matter of the effluxion of time and what has occurred since then which makes all the difference.”
That concession renders it to a large extent unnecessary to detail the wife’s contributions as parent and homemaker and to consider them together with the husband’s contributions in this respect. However, as it has some relevance to the post-separation period I will address the evidence on this issue.
The wife set out in considerable detail her contributions, prior to separation, as parent and homemaker, her financial contributions to the purchase of the former matrimonial home and non-financial contributions in relation to the purchase and renovation of the former matrimonial home.[12] In summary, the wife describes a situation in which she was largely responsible for the running of the household, including shopping, cleaning and cooking and had the major responsibility for childcare.
[12] Affidavit of the wife, filed 23 July 2007 paragraphs 40-67.
She conceded that the husband cooked sometimes and described a household in which both parties had high standards of cleanliness. She described the husband being particular about the food he ate and its preparation and the expectation that she would prepare meals of a very high standard for the husband. She described situations where the husband would telephone throughout the day to ask what was for dinner and to seek a different meal if he preferred something other than that which the wife had intended.
Once B was born the wife assumed responsibility for her care during the week when the husband was at work and when she became old enough to attend kindergarten assumed responsibility for all of her travel arrangements and her care. Once the husband’s work started to take him out of Australia the wife’s responsibilities for the care of the household and their daughter became even more onerous as she was made the person responsible for them.
When the matrimonial home was acquired the wife was instrumental in finding a suitable property and coordinating and arranging the renovations. Thereafter she remained responsible for the majority of the care of the household including the garden and pool.
She asserted in her affidavit that these contributions were made more difficult because of the husband’s mental and physical abuse of her and that account should be taken of the difficulty this posed (see Kennon & Kennon (supra)).
It is again important to note the concession made by the husband’s Counsel that up to the date of separation the contributions in all aspects should be regarded as equal. As the wife was not seeking to persuade the Court that she had made a greater contribution up to the date of separation than 50%, the husband’s concession makes it unnecessary to deal in detail with her assertion that the husband’s behaviour and in particular his violent behaviour, required weight. The wife, however, was not to know about the husband’s concession prior to the hearing. The wife detailed her allegations under the heading “physical and emotional abuse” and described in detail what she asserted was the mental and physical abuse she suffered at the hand of the husband.[13]
[13] Affidavit of the wife, filed 23 July 2007 paragraphs 85-107.
The husband was cross-examined extensively about these allegations. In particular the husband conceded that:
·He would direct the wife what to cook for dinner.
·He physically struck the wife on more than one occasion.
·He physically hit B, asserting that it is acceptable in Country 1 culture to do so.
·He blamed the wife for him losing his job in Country 2.
·When he and wife had arguments he found her conversations illogical and hostile.
·He said nasty things to the wife but also says that the wife did the same.
·When he and the wife came to Australia and he lost his temper he would smash things in the matrimonial home and that occurred often.
·On one occasion he ordered the wife and child to leave the house.[14]
[14] Transcript dated 17 December 2009.
Whether or not the wife meets any “threshold” test posed in Kennon v Kennon (supra) and subsequent authorities, I comfortably find that the wife did face considerable pressures in the household from the husband, who was aggressive both physical and verbally, and that her contributions as parent and homemaker were made more difficult.
However, as I have indicated this does no more than support the concession by the husband that the wife’s contributions up to the date of separation were equal to those that he made, which were mainly financial. His concession also encompassed the imbalance in the assets they brought into the marriage.

Contributions since separation

I find the wife’s contributions since separation to be significant, and they are not confined to contributions as parent.
In the main, the husband’s contact with B is confined to one half of each of the school holidays and two weeks of the Christmas holidays. The husband also has contact with B in Australia for weekends if he is able to visit. It is self evident from these arrangements that the wife has the majority of the responsibility for the care of B. B attends Country 1 language lessons as well as attending N Primary School. For three days per week the mother picks her up from school which is approximately 10 kilometres from her home. On the remaining two days she gets the bus to attend her mathematics tuition and the mother then collects her and drives her home but she has sole responsibility for every other aspect of B’s care save for when she sees her father.[15]
[15] Affidavit of the wife, filed 23 July 2007 paragraphs 110-120.
In addition she has cared for and maintained the former matrimonial home without any assistance from the husband.
The husband has not paid any child support as such. He originally paid $5000 per month into a Commonwealth Bank account which was used for payment of the mortgage on the house and if there was anything left over the wife could put it towards some of her expenses. However, over time the mortgage amount had increased and finally the husband ceased making payments into the Commonwealth Bank account and paid for the mortgage directly. This meant that the wife did not receive any payments directly for B other than to have the mortgage over the former matrimonial home paid.
The wife had been working part-time and apart from the mortgage and some modest amounts shortly after separation which were available to her, has maintained B and met all of her expenses from her resources. Her family live in Queensland and she has no other physical support to assist her with B.
The husband conceded that at least until 2007 he had only provided the wife with money on a very erratic basis for any other expenses connected with B.[16] He conceded that B was engaged in a lot of activities and was classified as a gifted and talented child but anything he had paid for extra-curricular activities was not significant.
[16] Transcript dated 17 December 2009, pages 14-15
He conceded that he did not always pay the mortgage on time which he asserted was due to difficulties getting money from Country 2 to Australia.
In the post-separation period there is no doubt that the husband has made significant financial contributions. All of the assets that have been accumulated between separation and the date of hearing were acquired by the direct financial contribution of the husband. The wife conceded that she had made no direct financial contribution to any of the assets acquired between separation and the hearing and had contributed only indirectly to the conservation of the assets of the parties since separation.
The husband submits that the fact that the net assets of the parties have increased from the date of separation to the date of hearing is a significant contribution which should weigh heavily in his favour and effectively take him from what was an equal position with the wife at the date of separation to a position where the Court should find he should have 70% of the net asset pool, at the date of hearing.
I do not agree with that proposition. There is no doubt that the husband has made a significant financial contribution but he has had significant income during that period as well, and he would not have been able to work in Country 1 and earn what he was earning if it were not for the fact that the wife was able to care for B and leave him free to pursue his career as an international financial industry employee. . Her contributions as effectively sole parent for B and her financial contributions in meeting B’s expenses over and above the mortgage require significant weight to be given to them as well.
I do not accept the husband’s contention that the wife should be regarded as having effectively a windfall in the sense that her accommodation was paid for. During this time the husband was not paying any child support for B nor any spousal maintenance for the wife. One can only speculate as to what amounts the husband might have had to pay, particularly for B’s care, had an application for child support and a departure application been made and the wife sought spousal maintenance. In my view, in light of the husband’s significant income, the contributions to the mortgage were appropriate but when the scales are weighed they do not tip further in the husband’s favour by provision for accommodation to the wife and B.
Weighing up these contributions in the exercise of my discretion, it is appropriate that the husband be given recognition for the increase in the net assets of the parties post-separation. However, in doing so, I take into account the significant contribution made by the wife to which I have referred and find that the assets should be divided on the basis of contributions as to 55% to the husband and 45% to the wife.

Section 79(4)

Having dealt with the matters and the contributions in s 79(4)(a)-(c), I turn to the considerations in subsections (d)-(g) inclusive.
First, given that both parties are working, albeit that the wife is working part-time, and the nature of the asset pool, there will not be any direct effect of the proposed orders on the earning capacity of either of the parties.
The parties have reached agreement regarding the arrangements for B. As previously set out, those arrangements involve the wife having the majority of the responsibility and care for B. There is no suggestion that the husband’s current employment will not continue and thus he will continue to live out of Australia for most of the year in the foreseeable future.
As far as child support is concerned, I propose to deal with this matter under the consideration of matters in s 75(2) of the Act.

Relevant Section 75(2) Factors

Age and state of health of each of the parties

At the date of judgment the husband is 47 years of age and the wife is 45 years. Both parties appear to be in good health.

Income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment

The husband, as noted earlier, is employed by Company 1 and his earning capacity is significant. There is no evidence to suggest that his employment is in any danger and judicial notice can be taken of the fact that notwithstanding the global financial crisis and its notorious effect on the financial industry internationally, the husband continues to be employed by the Company.
The wife is working part-time due, in the main, to her obligations for the care of B. She earns slightly less than $35,000.00 per annum and it is unlikely that she will be able to find full-time employment in the foreseeable future as a result of her obligations as essentially a sole carer to B.
Both parties have the capacity to continue in this kind of employment. The husband is obviously an experienced and successful international finance industry employee. The wife’s international experience is now well out of date and any opportunity to work in some national area is limited by her obligations to B.
The wife has no financial resources. The parties have agreed that the husband’s financial resources consist of his Company 1 options. I appreciate that I must be cautious in having regard to any financial resources in the husband’s hands. Partly that is because, in some respects, the Company options could be said to form part of the Husband’s income. Options from earlier years will crystallise and the husband will be able to realise them. It would be penalising the husband were I to attribute significant financial resources to him given that I have taken into account in assessing his past and future income that in most years some of that will be made up of options that he has realised and will realise. It is also possible that the husband will have a potential tax liability for income already earned in Country 1. Considering both of these matters, I do not tend to give any further weight to financial resources of the husband.

Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years

The wife is caring for B and is likely to have the majority of the responsibility for B for the foreseeable future. This is a highly significant factor.

Commitments of each of the parties that are necessary to enable the party to support themselves and the child

Each of the parties are required to support themselves and each of them have responsibility for the support of B. The wife has been able to maintain herself, from her own earnings, and the husband has available to him significant resources from which he has been able to, not only save, but spend as he wishes on discretionary items. I will return to this matter when I consider the standard of living that is reasonable in all of the circumstances.
Both parties have a duty to maintain B. The question remains over the extent to which the husband will provide for B’s needs. I will consider this matter further under s 75(2)(na). What is clear is that both parties have high expectations for B and for her future education. She is regarded by both parties as a gifted and talented child and she is already involved in extra-curricular activities. The cost of her activities was not put into issue by the husband and he conceded his expectations for B included her attendance at a private school at some later stage.

Responsibilities for either party to support any other person

The husband has made payments for his fiancé but there is no evidence at this point that he has a legal obligation to maintain her. Even if he ultimately acquires a legal obligation he has a substantial income from which to meet it.

The eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, State or Territory or of any superannuation fund or scheme

Both parties have some superannuation which has been taken into account in the asset pool. Other than these sums the husband does not have access to any superannuation in Country 1.

Standard of living that in all the circumstances is reasonable

During the marriage the parties enjoyed a high standard of living and the evidence disclosed that the husband has continued to enjoy a high standard of living since separation. The wife set out in some detail her affidavits the kind of lifestyle the parties enjoyed while the husband was employed at Company 1.[17] Clothing was purchased using vouchers gained from redeeming frequent flyer points and a number of expenses including airfares, hotel accommodation and meals were paid for by Company 1; some of these were functions directly related to the Company and others were not. Frequent flyer points were used for international travel.
[17] Affidavit of the wife dated 4 February 2009, paragraphs 2-8 inclusive.

The wife gave detailed evidence of the husband’s use of his corporate credit card for private expenses. The husband was cross-examined about this and he said that it had been his practice to spend on the corporate credit card some personal expenses as alleged by the wife. This, he said, was done essentially as a “quid pro quo” for money he spent from his own pocket for business expenses. If that is correct it would have been an unusual and counter-intuitive business practice. To pay out of one’s own pocket for business expenses for which he could have used his corporate card and then to endeavour to “even out” those expenses by putting dubious purchases on his corporate card, leaving him open to assertions that he had used his corporate card improperly, seems unlikely.
I find that the wife’s version is more likely and that in addition to legitimate business expenses the husband was able to put personal expenses on his card which were accepted by his employer, apparently without scrutiny. Although the husband said that this practice was no longer available, he still has a corporate credit card and is entitled to at least entertain clients for meals which he does regularly. He conceded that this is of benefit to him and if past practice is indicative of the husband’s attitude to his corporate credit card then it is more likely than not that he will obtain the maximum benefit from it.
In addition, some of his visits to Australia to see B occur in the course of business trips for which he is not liable. The wife asserted that expenditure on the holidays was about $35,000 per annum when the parties were still married and she was not challenged on this.
Given the payments that the husband has made to Religious organisation 1, to his fiancé and on other discretionary expenditure, I find that the husband’s standard of living has not decreased since separation and he continues to enjoy a very high standard of living.
Conversely, the wife is confined very much by her capacity to earn an income and the obligation to maintain B. Given the husband’s obvious talents and his experience, it is likely that he will continue to be able to earn significant income into the future whereas the wife is faced with a much more constrained and modest lifestyle which will be dictated what she can earn to support herself. I regard this factor as requiring significant weight.

The need to protect a party who wishes to continue that party’s role as a parent

In this case there is no doubt that the wife wishes to maintain her role as parent and is working to the extent of her capacity to do so. Despite cross-examination by the husband’s Counsel, the husband’s expectations for the care of B themselves militate against the wife working longer hours. This factor is also of some significance.

Any child support under the Child Support (Assessment) Act 1989 that has been provided, is to provide, or might be liable to provide in the future, for a child of the marriage

I find this to be a difficult and troubling part of the case. Neither party addressed any argument to this issue nor led any evidence about what proposals the husband had for payment of child support. To date the husband has been meeting at least his moral obligations, if not legal ones, by payment of $5000.00 into the Commonwealth Bank account from which the mortgage had to be paid and subsequently paying the mortgage on the former matrimonial home in which the child and wife were living. He has not made any proposals as to what he will do by way of child support following these proceedings, although I raised the question with both Counsel at the outset.
While the husband has been reliable in making repayments, they have not always been made on time. A strict application of the Child Support (Assessment) Act 1989 (Cth) (“Child Support Assessment Act”) would provide an assessment based on the husband’s taxable income in Australia. This will not be an accurate picture of his earning capacity in general although the wife would have available to her the means of seeking a departure from an unjust or unequitable assessment under s 117 of the Child Support (Assessment) Act. This would require litigation on her part. It may be that the parties will reach agreement on appropriate child support but at the conclusion of this case the husband had not put forward any proposals for child support and I do not have any evidence as to what form that support might take. I note that the wife has made payments of rates on the former matrimonial home and once the house is transferred from the husband’s name then he does not have an imperative to make payments which have been to date at least, while supporting a residence of the wife and child, also contributed to the conservation of an asset in which he had an interest.
I note that only a portion of the husband’s salary is paid into his Australian bank account and there is no evidence as to whether this must continue or whether there is capacity for the husband to be paid elsewhere. While I accept the husband would wish to see B provided for, I have no evidence from which I could confidently find that an appropriate sum of child support will be secured and, the state of the evidence does not enable me to make any positive finding about what will happen in the future. I give this factor some weight.

Conclusion

Having regard to all of these matters, and particularly the husband’s significant earning capacity and the wife’s significant role as the primary caregiver for B in my view there should be an adjustment in respect of these factors in the wife’s favour of 15%, giving a total of 60% to the wife.

The effect of the orders

There was little argument as to who should retain what asset save for Motor vehicle 5 the husband sought to leave with the wife and the wife sought to transfer to the husband, largely because the vehicle was encumbered by a liability to the husband’s employer. In the circumstance I propose to accede to the wife’s application and make orders for the transfer of the vehicle to the husband who can then deal with it and the liability. I am satisfied that he is the appropriate person to do so.
Accordingly, the assets which the parties will have pursuant to these orders, without any further adjustment at this point, are as follows:

ASSET	Wife
Former matrimonial home (W Street, Sydney Suburb 1)	$1,150,000
Contents of the home	$20,000
Diamond engagement ring	$8250
Rolex watch	$1,000
Partial property settlement	$100,000
Sub total (less liabilities)	$1,279,250
Commonwealth Bank personal loan	$17,125
Commonwealth Bank credit card	$584
Unpaid legal fees	$111,854
Total	$129,563
Net	$1,149,687
Wife’s superannuation	$14,591
TOTAL	$1,164,278
ASSET	Husband
House and land in Country 1	$636,548
HSBC	$413,803
Commonwealth Bank of Australia (…)	$13,000
Commonwealth Bank of Australia (…)	$300
Company 1 Investment	$62,000
Loans from Ms Y	$5000
S Investment	$1,033,941
Motor vehicle 1	$130,000
Motor vehicle 5	$50,000
Motor vehicle 3	$155,684
Motor vehicle 2	$77,842
Motor vehicle 4	$9745
Antiques and Objet D’Art	$50,000
Furniture Country 1	$45,198
Frank Mueller Watch	$10,000
Paid legal fees	$132,718
Total (less liabilities)	$2,825,779
Discharge of mortgage over former matrimonial home	$840,000
Hire purchase Company 1	$70,000
Tax payable in Australia 2009	$24,032
Total	$934,032
Net	$1,891,747
Company 1 Superannuation	$124,720
TOTAL	$2,016,467
Net total of asset pool	$3,180,745

If the wife is to receive 60% of the assets, she is entitled to a payment of $1,908,447. She currently has assets of $1,164,278 which means an adjusting payment of $744,169. Of this sum the wife should have a sum paid pursuant to s 90MT(1)(a) of the Act in relation to the husband’s AMP/Company 1 superannuation scheme in a base amount of $97,500.00. The balance, namely $646,669, is to be paid by the husband to the wife within 21 days of the date of these orders.

Are the orders just and equitable?

The wife will retain her share of the former matrimonial home which will be unencumbered. If the wife remains in Sydney, or indeed if she moves elsewhere, she will have sufficient funds to have an unencumbered home and if she moves, perhaps some funds to invest as well. Otherwise she will retain jewellery, a partial property settlement which has already been spent on legal fees and the contents of the home. She will have a portion of the husband’s superannuation fund at the time when he retires and after she discharges her liabilities, including legal fees of approximately $130,000.00 she will have a sum of approximately $500,000 available to her. I observe that her sum is less than what the husband earns in a year.
The husband will have to pay from his net assets the mortgage of $840,000 and a further payment to the wife of $646,669, totalling $1,486,669.00. He can make these payments from the investment in S Investment and the monies in HSBC. That will still leave him with the remaining investment in Company 1 Investment, his property located in Country 1 and the motor vehicles. He will also be liable for a hire purchase and has a tax liability to meet. He has, however, the ongoing benefit of a significant salary and options and the capacity to save and add build up his assets fairly quickly.
I am satisfied that the orders proposed are just and equitable as between the parties.

I certify that the preceding one hundred and fifty-eight (158) paragraphs are a true copy of the reasons for judgment of the Honourable Chief Justice Bryant

Legal associate:

Date: 20 April 2011

Schedule 1

(i)Persian silk rug;
(ii)Baccarat wine and champagne glasses;

Bizen ceramics collection;
Antique libraries;
(v)Antique tea table and chairs;
Antique Korean chest;
Antique Japanese bamboo cabinets x 2;
Chinese cabinet;
Aura and Focus audio stereo set;
(x)Japanese white wood chest of drawers;
Japanese red wood chest of drawers;
Yamagata painting x 2;
Neaman painting.

a) Australian income net after tax	$128,822.31
b) Country 1 income	$1,171,218.00

a) Australian income net after tax	$98,384.42
b) Country 1 income	$779,159.51

a) Australian income net after tax	$206,180.00
b) Country 1 income	$1,046,394.85

Number of Options	Date Exercised	Amount Received
1333	4 August 2005	$41,751.51
2500	4 August 2005	$82,728.67
1334	24 July 2007	$79,106.09
2500	24 July 2007	$152,674.79
2000	24 July 2007	$114,119.84
2500	13 August 2008	$65,655.02