SHNELL & FREY

[2020] FamCA 631

FAMILY COURT OF AUSTRALIA

SHNELL & FREY [2020] FamCA 631

FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Where the applicant wife and respondent husband were married for 35 years – Where there is a dispute about whether the wife’s inheritance, the husband’s family trust, and prospective capital gains tax (“GCT”) liability should be included in the parties’ asset ‘pool’ – Where the husband does not control the family trust – Where the husband’s interest in the family trust should not be treated as his property but as a financial resource of the husband – Where the wife’s inheritance is just one of a myriad of contributions made during a long marriage – Where the husband received an inheritance during the marriage – Where both inheritances are included in the parties asset ‘pool’ – Where there is uncertainty surrounding the calculation of GST liability and the timing of any potential sale – CGT taken into account as a factor relevant to s 75(2) – Where it is just and equitable to make an order – Where each party will retain all property in their current possession or control.

Family Law Act 1975 (Cth)

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Bonnici & Bonnici (1992) FLC 92-272
Dickons v Dickons (2012) 50 Fam LR 244
Hall v Hall (2016) FLC 93-709
In the Marriage of Aleksovski (1996) FLC 92-705
Jabour & Jabour (2019) FLC 93-898
Kelly v Kelly (No.2) (1981) FLC 91-108
Kennon v Spry (2008) 238 CLR 366
Mallet v Mallet (1984) 156 CLR 605
Money v Money (1994) FLC 92-485
Pierce & Pierce (1999) FLC 92-844
Rosati v Rosati (1998) FLC 92-804
Singerson v Joans [2014] FamCAFC 238
Stanford & Stanford (2012) 247 CLR 108
Wallis v Manning (2017) FLC 93-759

APPLICANT: Ms Shnell

RESPONDENT: Mr Frey

FILE NUMBER: SYC 1057 of 2017

DATE DELIVERED: 4 August 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Parramatta

JUDGMENT OF: Carew J

HEARING DATE: 23 & 24 July 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Anderson

SOLICITOR FOR THE APPLICANT: Etheringtons Solicitors

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT: Tilley Family Law & Mediation

Order

1. Each party retain to the exclusion of the other all property currently in their respective possession or control.

2. All extant applications (other than any application for costs) be otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 1057 of 2017

Ms Shnell

Applicant

And

Mr Frey

Respondent

REASONS FOR JUDGMENT

1. Ms Shnell and Mr Frey were married for 35 years before separating in 2015. They are both professionals and have two adult children. Unfortunately, they have been unable to resolve their property dispute.

2. The apparent reasons for the dispute arise because of an inheritance received by the wife after separation to which she contends she should be solely entitled, and her contention that the husband’s interest in a trust should be treated as either the husband’s property or at least a financial resource at a particular value. The wife also contends that capital gains tax (“CGT”) on a property in her name should be deducted as a joint liability. The husband resists these contentions, arguing that as his inheritance was received late in the relationship and used for their joint benefit during the marriage or is otherwise represented in the ‘pool’ of property to be divided, the wife’s inheritance should also be included in that same pool. In relation to the trust, he contends that he has a right to be considered as an object of the trust and, as that right has not been valued, his ‘interest’ is at best a nebulous financial resource. The husband contends that whether or not the wife will incur CGT is too uncertain for any particular sum to be deducted as a liability.

3. For the reasons which follow, I propose to divide the property of the parties or either of them (including the wife’s inheritance, but not including the CGT liability or the husband’s interest in the trust) such that they each retain the property in their respective possession or control. Overall this results in a percentage distribution favouring the wife in the proportion of roughly 52/48.

Background

1. The husband is 68 years of age and employed as a professional. The wife is 62 years of age and employed as an advisor for B Ltd.

2. The parties married in 1980 and separated on 26 June 2015. They divorced in 2017. There are two adult children, Ms C born in 1989 and Mr D born in 1996.

3. At the commencement of the relationship, the husband owned a property at Suburb F which became the former matrimonial home until separation. The husband purchased the property in 1978 for $64,250, borrowing $40,000 from the Commonwealth Bank of Australia. The balance purchase price comprised the husband’s savings and what eventually became a gift of about $10,000 from his parents.

4. The husband was already working as a professional at the time of marriage and the wife qualified as a professional the year after marriage. The husband was the major breadwinner throughout the marriage and, as such, the parties made decisions such as relocating to G City for a number of years because it was advantageous to the husband’s career. The wife was employed for much of the marriage as advisor for companies. At times she worked part time and at other times took maternity leave. The wife was the major homemaker/parent throughout the marriage, although the husband assisted to the extent possible given his longer working hours.

5. On 30 June 1976, the husband’s parents incorporated H Pty Ltd which became the corporate trustee of the H Trust (“the Trust”) established on 1 July 1976. The Trust has been described in these proceedings by the husband as an “intergenerational” trust by reference to the beneficiaries that include not only the children of the husband’s father (i.e. the husband and his two siblings) but their children and their children’s children.

6. The husband’s parents were the joint appointors of the Trust and the joint directors and shareholders of H Pty Ltd. The Trust acquired a property at Suburb J and another property at Suburb K (both properties being situated in New South Wales) in 1977. These properties had formerly been the property of the husband’s father and mother respectively. In 1980, a third property was acquired by the Trust at Suburb L and in 1994, a ‘car space’ in the Suburb L building was acquired.  

7. Upon the death of the husband’s father in 2008, the husband’s mother became the sole director and shareholder of H Pty Ltd. She also became the sole appointor of the Trust. In March 2008, the Suburb J property was sold for $1,020,000.

8. When the husband’s mother died in 2010, her shares in H Pty Ltd were inherited by the husband, his brother, and his sister in equal tranches and each of them became a director of H Pty Ltd. The husband and his two siblings also became the joint appointors of the Trust. Any variation to the terms of the Trust deed require the consent of a majority of the appointors.

9. In 2011, the Suburb L property was sold for $695,000 and in 2012, the car space was sold for $44,000.

10. The net sale proceeds of the Suburb J and Suburb L properties were $1,730,000. In 2011, H Pty Ltd acquired a property beneficially held by the Trust at Suburb M for $1,526,000.

11. The wife accepts that at the time of purchase, the husband told her that the Suburb M property was purchased for a number of reasons including its proximity to the Suburb J property, its proximity to the beach and the shopping centre, and that its size was able to accommodate the interests of his and his sibling’s families. Since its acquisition, the Suburb M property has been used as a weekender and holiday house by the beneficiaries of the Trust, including the husband and the children of the husband and wife.

12. On 29 April 2016, N Pty Ltd was incorporated. Each of the husband and his two siblings are directors and equal shareholders. N Pty Ltd has thereafter received distributions from the Trust as a tax effective measure. Apart from the 2015 year, the distributions to the husband and his siblings have been equal. The only reason the husband did not receive equal benefits in that year was because he had already lodged his tax return and the inequality was rectified in the following years.

13. The wife denies the following assertions made by the husband in a Notice to Admit Facts:

    a)H Pty Ltd is neither a sham corporation nor the puppet of the husband;

    b)Neither the Trust nor H Pty Ltd as its trustee is the alter ego of the husband;

    c)The husband informed the wife that neither he nor his siblings intend to sell Suburb K or Suburb M; and

    d)N Pty Ltd is not a sham corporation and the husband’s sibling directors are not his puppets. 

14. In 2009, the wife received an inheritance from her father of $60,000 which she contributed to her superannuation fund.

15. The total sum sourced from gifts/inheritance by the husband, including his interests in H Pty Ltd and N Pty Ltd are as follows:

Gifts from parents	$115,000
Sums received from mother’s estate	$584,562
Sums received in reduction of beneficiary loan account	$245,000
Income from H Pty Ltd	$287,500
Beneficiary loan account with H Pty Ltd	$679,115
Interest in N Pty Ltd	$104,461
Total	$2,015,638

1. The wife concedes that sums received during the marriage from the husband’s inheritance have been applied to the improvement of assets, acquisition of assets and to the family generally. The balance is represented in the joint balance sheet.

2. On 27 May 2019, the wife’s mother died and the wife inherited her estate apart from a bequest to each of the parties’ children of $100,000. The current value of the inheritance reflected in the joint balance sheet is $2,550,026.

3. The respective taxable income for each party since separation is as follows:

Year	Husband	Wife
30.06.16	$88,335	$125,081
30.06.17	$109,991	$161,894
30.06.18	$99,991	$161,464
30.06.19	$99,991	$175,203

1. The wife commenced these proceedings in the Federal Circuit Court of Australia on 30 June 2017 and the matter was transferred to this Court on 5 December 2017. The parties’ attempts to resolve their dispute at a conciliation conference before a registrar on 23 August 2018, a subsequent private mediation, and a further conciliation conference with a registrar ordered on 5 March 2020 and conducted on 28 May 2020, all failed.

2. The husband continues to be employed as a professional. He has suffered some health issues and is currently prescribed 11 tablets per day to treat ongoing issues.

3. The wife continues to be employed as advisor for B Ltd working 9 days a fortnight. She was initially employed by B Ltd on a contract/casual basis commencing in 2003 but became a permanent employee from 2006. The wife suffers from hearing loss and tinnitus (ringing in the ears) and relies upon hearing aids. The wife participated in the trial with the assistance of a hearing loop provided by the Court.

Issues

1. With the assistance of the parties, the following issues were identified as requiring determination:

   a)The treatment of and value, if any, to be attached to the husband’s interest as an object of the H Trust;

   b)Whether the Court should treat as a liability in a specific amount or at all any capital gains tax attaching to the property owned by the wife at Q Street, Suburb L;

   c)Whether the husband has “control” of H Pty Ltd, N Pty Ltd or the H Trust;

   d)The value and weight to be attached as a contribution to the interest in the home at P Street, Suburb F introduced into the marriage by the husband;

   e)The value and weight to be attached as a contribution to the husband’s inheritance received from his mother’s estate;

   f)The value and weight to be attached as a contribution to the wife’s inheritance from her mother’s estate; and

   g)Whether and, if so, what adjustment should be made having regard to the following relevant factors in ss 79(4)(e) and 75(2):

   i)The age and state of health of each of the parties;

   ii)The income, property and financial resources of each of the parties and their respective capacities for gainful employment;

   iii)The terms of any order proposed to be made by the Court after consideration of the parties’ respective contributions; and

   iv)The relevance of the husband’s interest as an object of the H Trust pursuant to the provisions of s 75(2)(b) or (o).

Applicable legal principles

1. In property settlement proceedings, the court may make such order as it considers appropriate altering the interests of the parties in the property including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties, such settlement or transfer of property as the court determines (s 79(1)).

2. The court shall not make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2)).

3. In considering what order (if any) should be made in property settlement proceedings, the court is required to take into account the following (s 79(4)):

   a)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;

   b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;

   c)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;

   d)The effect of any proposed order upon the earning capacity of either party;

   e)The matters referred to in ss 75(2) so far as relevant;

   f)Any other order made under the Act affecting a party;

   g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.

4. The High Court of Australia in Stanford v Stanford[1] identified certain principles applicable to applications for property settlement. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way. Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist. The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.

   [1] (2012) 247 CLR 108 (“Stanford”).

Is it just and equitable to make an order?

1. Neither party contend that it is not just and equitable to make an order. That position is understandable noting that the parties separated in 2015 and “there is not and will not thereafter be the common use of property” by the parties.[2] Additionally “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 relationship”.[3] In such cases the “just and equitable requirement is readily satisfied”[4] and I am satisfied in this case that it is just and equitable to make an order.

   [2] Ibid at 122, [42].

   [3] Ibid.

   [4] Ibid.

The balance sheet

1. The parties produced a joint balance sheet which reflects significant agreement about their assets and liabilities as follows:

Ownership		Description	Wife’s value	Husband’s value
ASSETS
1	H	P Street, Suburb F	2,600,000	2,600,000
2	W	Q Street, Suburb L	1,400,000	1,400,000
3	W	S Bank ending …00	29,090	29,090
4	W	R Bank ending …34	12,032	12,032
5	W	CBA Account Number …30	6,124	6,124
6	W	R Bank ending ...52	8,581	8,581
7	W	R Bank ending ...11	77	77
8	W	CBA Smart Access Account ending …38	8,189	8,189
9	H	CBA Account Number ...74	874	874
10	H	CBA Savings Account ...28	689	689
11	W	T Company (1,154 shares at $5.56 per share)	6,416	6,416
12	W	V Company (247 shares at $1.75 per share)	432	432
13	H	H Pty Ltd(1/3 shareholding)	NK	4
14	H	N Pty Ltd (1/3 shareholding)	NK	4
15	H	Beneficiary loan account - H Trust	679,115	679,115
16	H	Shareholder’s funds - N Pty Ltd	104,461	104,461
17	H	Motor Vehicle 1	NK	NIL
18	H	Motor Vehicle 2	22,300	22,300
19	W	Motor Vehicle 3	5,400	5,400
20	H	Motor Vehicle 4	NK	NIL
21	W+H	Artwork	10,000	10,000
22	W+H	Household contents	20,000	20,000
23	W	Household contents	3,000	3,000
24	W	Jewellery	10,000	10,000
25	W	U Bank Investment (a/c …31)	2,260,026	2,260,026
26	W	CBA CDIA Account ending …48	14,942	14,942
Total		$7,201,748	$7,201,756
LIABILITIES
30	W	Capital Gains Tax on sale of Suburb L	E$290,029	NIL
Total			E$290,029	NIL

SUPERANNUATION
Member		Name of Fund	Wife’s value	Husband’s value
31	W	Y Super	2,024	2,024
32	W	W Super	26,617	26,617
33	W	X Super	14,656	14,656
34	W	U Bank Super (a/c ending …71)	666,307	666,307
35	H	ANZ Super Advantage	711,936	711,936
Total		$1,421,540	$1,421,540
FINANCIAL RESOURCES
Ownership		Description	Wife’s value	Husband’s value
36	H	The H Trust	1,561,099	NIL
Total		1,561,099	NIL

1. The wife received an inheritance after separation. The value of the inheritance is included in the balance sheet above but the wife submits it should be in a ‘separate pool’ to the other assets and that she should receive half of the other assets, plus her inheritance. The wife’s inheritance comprises the U Bank Investment account (a/c …31) and $290,000 of the U Bank Super account (a/c …71) – a total of $2,550,026.

2. The wife says she does not know the value of the husband’s shareholding in H Pty Ltd and N Pty Ltd and, in the absence of any evidence as to an alternative value, I accept the husband’s value which is de minimis.

3. The wife accepts the husband’s value for the Motor Vehicle 2 in his possession. The husband contends that he gifted the Motor Vehicle 1 to the parties’ son and the Motor Vehicle 4 to the parties’ daughter. The husband was not challenged about that contention. In any event, there is no valuation for either car. The husband provides an estimate of value for the Motor Vehicle 4 of $3,000. It was conceded by the wife that the asset is de minimis and ultimately the issue about the cars gifted to the children was not pressed by the wife.

1. The husband accepted the value attributed by the wife to her vehicle.

2. The husband contends that he is the legal owner of the Artwork (valued at $10,000) and the household contents (valued at $20,000). The wife contends she holds an equal interest. There is no evidence about either item and no order is sought in relation to these particular items. I have assumed they are in the former matrimonial home where the husband has continued to reside and propose therefore to leave them with the husband.

3. The husband does not dispute the calculation of capital gains tax (“CGT”) on a sale of the Q Street property on the information provided to the accountant, but disputes it can or should be deducted from the wife’s property settlement because of the uncertainty surrounding its sale.[5] It is common ground the calculation of CGT will depend on the actual sale price for the property, the earnings of the wife in the year of sale, and also whether the property is occupied as a principal place of residence by the wife prior to sale.

   [5]Rosati v Rosati (1998) FLC 92-804.

4. Although the wife submits that the husband controls the H Trust and that the value of the husband’s interest in it could be treated as an asset, it seems that her preferred position is that it be treated as a financial resource as reflected in the joint balance sheet.

5. I turn now to consider the particular issues raised by the parties at trial.  

The treatment of and value, if any, to be attached to the husband’s interest as an object of the H Trust

1. As noted above, while some submissions were made by the wife suggesting that the husband’s interest as an object of the H Trust could be treated as property within the meaning of the Act, it was not a submission pressed with any particular fervour.

2. No evidence was presented to support the wife’s vague contention that the Trust or H Pty Ltd are a sham or the puppet of the husband.

3. The wife’s argument that the husband’s interest could be treated as property relies upon a finding that the husband controls the Trust. It is to be remembered that ‘control’ in the relevant sense does not relate to him exercising control in the interests of the Trust and its beneficiaries but rather the ability to treat the Trust as his own.[6] The evidence said to support such a finding is as follows:

   a)Documents relevant to the Trust and H Pty Ltd are received by the husband at his home address;

   b)The husband is a director and secretary of the two corporate entities whereas his siblings are only directors;

   c)The husband has experience in “legal commercial matters”;  

   d)He provided advice and assistance to his parents relating to “trust matters”;

   e)He is likely, because of his “experience”, to direct his brother and sister in relation to trust decisions.

   [6]Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 343 – 344.

4. An appropriate concession was made by the wife’s counsel that the wife’s case was rather weak on this point.

5. The husband is one of three directors of H Pty Ltd along with his brotherand his sister. Each of them hold an equal shareholding in H Pty Ltd. Each of them, along with their children (the husband’s brother does not have children) and their children’s children, are beneficiaries of the Trust. The Trust was established in 1976 by the husband’s parents and property owned by the Trust has been utilised by various family members from time to time. The Trust has owned the Suburb K property for decades and it has a long term tenant from which an income is derived to maintain the assets of the Trust and to meet outgoings. Each of the husband and his siblings deny that there is any intention to sell Trust property and each said they would oppose such a course. The husband’s brother intends to use the Suburb M property to a greater extend upon his retirement. I accept the husband’s evidence about the reason the Suburb M property was purchased. His siblings give similar evidence about the attraction of Suburb M. Each of the husband and his siblings have acted unanimously in relation to decisions relating to the Trust and H Pty Ltd up to this point and indicated that on the only occasion or occasions when there has not been a unanimous decision, there was a majority decision but such decisions were minor e.g. a colour scheme for improvements at Suburb M. The husband’s brother and sister each impressed as independently minded people who would not be swayed into making a decision they did not think was in the interests of the Trust. I reject the wife’s contention that the husband controls the Trust and/or H Pty Ltd.

6. The husband has a right to ensure that the Trust is properly administered and to be considered as one of the objects of the Trust. The plurality in Kennon v Spry[7] held that such rights constitute equitable choses in action[8] and while such rights are difficult to value[9] “a valuation might not be beyond the actuarial arts in relation to the right to due consideration”.[10] In that case, the wife’s right to be considered as the object of benefaction of a discretionary trust controlled by the husband (instruments divesting himself of control were set aside) was treated as property of the parties or either of them for the purposes of s 79 of the Act.[11] The value of the trust assets were included in the pool of assets available for distribution in circumstances where the husband controlled the trust and had a power to appoint the whole of the trust to the wife.[12]

   [7] (2008) 238 CLR 366.

   [8] Ibid at 394 [77] per French CJ and at 407-408, [125] per Gummow and Hayne JJ.

   [9] Ibid at 394, [77].

   [10] Ibid at 394, [78].

   [11] Ibid at 395, [81] per French CJ and at 407-408,[125], [126] per Gummow and Hayne JJ.

   [12] Ibid at 409,[130].

7. In the current case, the wife cannot succeed with an argument that a one third value of the assets of the Trust should be included in the property pool, because the husband does not control the trust. Nor can the value of the husband’s equitable choses in action be included in the property pool where no valuation of those interests has been undertaken.

8. The husband and wife accept that the husband’s interest can nevertheless be treated as a financial resource but they disagree about what, if any, value can be attributed to it.  

9. In Hall & Hall,[13] the plurality said:

   54.The reference to ‘financial resources’ in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”.  The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one which the party is capable of drawing.  It must involve something more than an expectation of benevolence on the part of another.  But it goes too far to suggest that a party must control the source of financial support.  Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee, but has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.[14]

   55.Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.

   [13] Hall v Hall (2016) FLC 93-709, see especially at 81,456, [54]-[55].

   [14] Kelly v Kelly (No.2) (1981) FLC 91-108 at 76,803.

10. The husband’s interest as an object of the Trust has resulted in him receiving benefits, such as the right to occupy the Suburb M property from time to time. In addition, the husband has been allocated distributions from the trust arising largely from the Suburb K property’s rent exceeding outgoings for the Trust. The distributions since 2011 have been equal (or equalised) between the husband and his two siblings.[15] It seems likely that distributions will continue into the future but I reject the contention that the value of the husband’s interest is represented by the value of one third of the assets of H Pty Ltd as trustee of the Trust. Given the opposition expressed by the husband and his two siblings to selling the assets of the Trust, I consider it unlikely that the trustee will take steps to vest the Trust and distribute the capital during the husband’s lifetime.  

    [15] In 2013 the husband’s mother’s estate received $98,966 from H Pty Ltd as trustee for the Trust; in 2014 $91,862; in 2015 each of the husband’s siblings received $47,044; in 2016 N Pty Ltd received $135,410; in 2017 N Pty Ltd received $112,143; in 2018 N Pty Ltd received $78,582; in 2019 N Pty Ltd received $118,871. The husband’s interest in the Trust and N Pty Ltd represented by the distributions are included in the balance sheet.

11. If I am incorrect in my assessment of the nature of the husband’s interest, or the value of it, I would nevertheless place considerable weight on the fact that the assets of the Trust or the source of funds to acquire those assets were contributed by the husband’s parents and accordingly would represent an indirect contribution by the husband.

Whether the Court should treat as a liability in a specific amount or at all any capital gains tax attaching to the property owned by the wife at Q Street, Suburb L

1. The Q Street property is registered in the wife’s name and she could have taken up occupation of it at any time since separation. However, I accept that although it has water views, the location and amenity of the unit do not meet the wife’s current needs and at the time of separation the wife preferred to remain closer to the children. The wife maintains that it is her intention to sell the property within the next two years, but during cross-examination she conceded that a final determination about when to sell would be made having regard to her best interests financially at that point in time.

2. In addition, the wife’s counsel conceded that the CGT calculation would depend on a number of factors including:

   a)The ultimate selling price;

   b)The wife’s income in the year of disposal; and

   c)Whether or not she occupied the property before sale.

3. In the circumstances, I reject the wife’s submission that the CGT calculation of $290,029 should be deducted from the value of the assets in the balance sheet. The CGT consequences of a possible sale at some point in the future is nevertheless a factor to consider under s 75(2)(o) of the Act because I consider that there is a significant possibility that the wife will sell at some point.[16] 

   [16]Rosati v Rosati (1998) FLC 92-804 at 85,043, [6.36], 85,045, [6.44] per Ellis, Lindenmayer and Kay JJ.

Whether the husband has “control” of H Pty Ltd Pty Ltd, N Pty Ltd or the H Trust

1. The issue of the husband’s control of H Pty Ltd and the Trust has already been considered and determined above. For similar reasons, I reject the contention that the husband controls N Pty Ltd. N Pty Ltd is merely a corporate beneficiary to which distributions have been made for tax effective reasons. The husband is one of three directors and one of three equal shareholders. He does not control N Pty Ltd.

The value and weight to be attached as a contribution to the interest in the home at P Street Suburb F introduced into the marriage by the husband

1. It is not in contention that the husband owned the Suburb F property at the time of marriage. He purchased it for $64,250 in 1978 and borrowed $40,000. Over the parties’ 35 years of marriage there were numerous improvements made to the property, the most recent of which were paid for with the husband’s inheritance.

2. The husband’s initial contribution is but one of a “myriad”[17] of contributions made over this very long marriage.

   [17]Jabour & Jabour (2019) FLC 93-898.

3. In relation to the assessment of contributions generally, Senior Counsel for the husband submits:

   The overwhelming weight of the evidence is that the parties undertook their disparate contributions to the marriage which subsisted for over 35 years to the best of their respective abilities.  They were genuinely engaged in a partnership endeavour.  While each of them might wish to view it otherwise, it is submitted that the overwhelming weight of the evidence leads to a conclusion that their contributions should be treated as equal and equal with respect to all of the assets in which they presently hold an interest.  This conclusion, it is respectfully submitted, inevitably flows from an assessment of the evidence and the law with respect to the treatment of ‘introduced’ assets. [18]

   [18] Money v Money (1994) FLC 92-485 per Fogarty J at 81,054; In the Marriage of Aleksovski (1996) FLC 92-705; Pierce & Pierce (1999) FLC 92-844 at 85,881, [28]; Jabour & Jabour (2019) FLC 93-898; Wallis v Manning (2017) FLC 93-759; Dickons v Dickons (2012) 50 Fam LR 244; Singerson v Joans [2014] FamCAFC 238.

4. This submission has much to commend it.

The value and weight to be attached as a contribution to the husband’s inheritance received from his mother’s estate

1. As already discussed above, the husband’s contribution of his inheritance received during the marriage was accepted by the wife as having been utilised in the improvement and/or acquisition of assets and for the family generally. A significant portion of the husband’s inheritance (about $530,000) was used to further improve the Suburb F property. The husband’s inheritance was received over a period after the granting of probate of his mother’s will which occurred on 11 February 2011. As noted above the total sums received by the husband as a consequence of gifts or inheritance total $2,016,138.

The value and weight to be attached as a contribution to the wife’s inheritance from her mother’s estate

1. The wife resists the inclusion of her inheritance in the balance sheet as an item available to be divided between the parties. The wife submits that this approach is supported by the Full Court authority of Bonnici & Bonnici[19] where it was said:

   43. A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.

   44. The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. See James and James (1978) FLC 90-487. But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the monies received by the husband from the sale of the freehold and from his uncle's estate should not be brought into account.

   [19] (1992) FLC 92-272 (“Bonnici”).

2. However, the Full Court went on to say:

   45. Because his Honour did not condescend to detail as to how he arrived at his finding of equality of contribution, and because of the fact of the substantial inheritance to which the wife did not contribute it is, we think, necessary for this Court to examine carefully whether his Honour's finding can be supported.

   46. In a case such as this, we think that the global approach, taken by his Honour, presents considerable difficulties. If the matter had been approached upon an asset by asset basis, we think that the task of his Honour and this Court would have been a simpler one. To approach the matter globally as his Honour did, in circumstances where the wife had clearly made no contribution to a major asset, must of necessity have involved a greater weighting of her contribution than that of equality to the assets to which she did contribute. There would, nevertheless, have been nothing wrong with his Honour having approached the matter globally if he had explained how he did so.

   47. If his Honour did so weight her contributions, he should have outlined his reasoning so that the same could be the subject of examination. Because his Honour failed to do this it seems to us that his judgment cannot stand unless it can be established that the end result which he reached was a proper one.

3. This case is distinguishable from Bonnici[20] in a number of respects but perhaps most importantly because in this case each party received an inheritance – the husband’s towards the end of the marriage and the wife’s after separation. Even if a two pool approach were adopted, the husband’s contribution of his inheritance would have to weigh heavily in favour of the husband in ‘pool one’ and wife’s inheritance in ‘pool two’ would have to be taken into account under s 75(2)(b) as property of the wife not otherwise included in ‘pool one’.

   [20] Ibid.

4. I propose to include the wife’s inheritance in the pool of assets available to be distributed between the parties. It is obviously a significant contribution but ultimately it is but one of the myriad of contributions made by each party during this long marriage.

Conclusion – contributions

1. The fact that this was a long marriage of about 35 years does not absolve the Court from a proper assessment of the contributions made by each party. There is no starting point of equality.[21]

   [21]Mallet v Mallet (1984) 156 CLR 605.

2. In this case, each party accepted that their marriage was akin to a partnership to which each of them made contributions to the best of their ability. The husband made the greater contribution as a breadwinner but as a consequence, the wife made the greater contribution as homemaker and parent after the birth of the children in 1989 and 1996 respectively. Nevertheless, the husband and wife each made financial contributions and each made contributions to the welfare of the family.

3. The husband introduced the property which became the matrimonial home and paid off the existing mortgage over a number of years commencing during the two years prior to marriage. He utilised his earnings and further borrowings to undertake several major renovations to the property and paid off the loans from his earnings. He personally undertook considerable work related to the renovations. 

4. The wife forfeited the early advancement of her career because the husband was earning more and she and the husband saw it for their long term mutual benefit to make decisions favourable to the husband’s career. The husband’s long working hours resulted in the wife’s contributions as homemaker and parent significantly exceeding those of the husband’s.

5. Each party has received significant inheritances although the wife’s inheritance was greater than the husband’s. The husband however utilised a significant portion of his inheritance in further improving the former matrimonial home.

6. Overall, I consider that the myriad of contributions made by each party should be assessed as largely equal although slightly favouring the wife because of the disparity in the inheritances/gifts and the timing of the wife’s inheritance.  

Whether and, if so, what adjustment should be made having regard to the following relevant factors in ss 79(4)(e) and 75(2)

The age and state of health of each of the parties;

The income, property and financial resources of each of the parties and their respective capacities for gainful employment;

The terms of any order proposed to be made by the Court after consideration of the parties’ respective contributions; and

The relevance of the husband’s interest as an object of the H Trust pursuant to the provisions of s.75(2)(b) or (o).

1. The husband is 68 years of age and has had some health issues which have resulted in his ongoing reliance on medication. It is not suggested that those issues impair his current ability to remain in employment.

2. The wife is 62 years of age and suffers from hearing loss and tinnitus, but it is not suggested that this impairs her ability to remain in employment. Both parties would like to retire, but given the wife’s younger age she is likely to be able to continue in employment longer than the husband. The wife’s taxable income has exceeded the husband’s over the last several years.

3. Each party is in a relatively strong financial position in terms of the assets they are likely to retain.

4. The husband will be likely to continue to receive the benefit of the use of the property at Suburb M, director’s fees, and distributions from the Trust. While I accept it is not the intention of the husband or his siblings to vest the trust and distribute the capital, there is always the possibility they might change their minds in the right circumstances and while it is not possible to place any particular value on such a possibility, it is nevertheless a factor I take into account.

5. If the wife proceeds to sell the Q Street property, whether that be in the next two years or subsequent thereto, she will be likely to incur a CGT liability. Given the uncertainty about the timing of any sale, or the wife’s income at the time, it is not possible to be precise about what the CGT liability will be but the current calculation provides some guide, although it is of limited assistance. 

6. In addition to the particular matters identified by the parties in the list of s 75(2) issues for trial, a further matter was raised during the trial which I take into account. 

7. After separation the husband remained in the former matrimonial home rent free while the wife paid rent elsewhere. The husband did however maintain the former matrimonial home and paid the outgoings. The children also continued to live in the former matrimonial home for at least some years after separation and the husband provided financial assistance to them. The wife also received the rent from the Q Street property.

Conclusion – what order will achieve a just and equitable outcome?

1. Overall I consider a just and equitable property settlement is for each party to retain the assets currently in their respective possession or control. Such a result would see the wife and husband respectively retain the following property:

Wife to retain		Husband to retain
Description	Value ($)	Description	Value ($)
Q Street , Suburb L	1,400,000	P Street, Suburb F	2,600,000
S Bank ending …00	29,090	CBA Account Number ...74	874
R Bank ending …34	12,032	CBA Savings Account ...28	689
CBA Account Number …30	6,124	H Pty Ltd(1/3 shareholding)	4
R Bank ending ...52	8,581	N Pty Ltd (1/3 shareholding)	4
R Bank ending ...11	77	Loan owing from the H Trust	679,115
CBA Smart Access Account ending …38	8,189	Loan owing from N Pty Ltd	104,461
T Company (1,154 shares at $5.56 per share)	6,416	Motor Vehicle 2	22,300
V Company (247 shares at $1.75 per share)	432	Artwork	10,000
Motor Vehicle 3	5,400	Household contents	20,000
Household contents	3,000	ANZ Super Advantage	711,936
Jewellery	10,000
U Bank Investment (a/c …31)	2,260,026
CBA CDIA Account ending …48	14,942
Y Super	2,024
W Super	26,617
X Super	14,656
U Bank Super (a/c ending …71)	666,307
Wife’s Total	$4,473,913	Husband’s Total	$4,149,383

1. The percentage distribution overall favours the wife in the proportion of roughly 52/48 or $324,530. I consider that such a result appropriately reflects the myriad of contributions made by each party over a long marriage and the relevant matters under s 75(2) of the Act.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 4 August 2020.

Associate: 

Date:  4.08.20