SMB & MFB - [2006] FamCA 46

[2006] FamCA 46

FAMILY LAW ACT 1975

IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA                  Appeal No NA42 of 2004
AT BRISBANE  File No BRF 10313 of 2000

BETWEEN:

SMB
Appellant Wife

- and -

MFB
Respondent Husband

REASONS FOR JUDGMENT

CORAM:  BRYANT CJ, KAY & WARNICK JJ
DATE OF HEARING:                26 October 2004
DATE OF JUDGMENT:            10 February 2006

APPEARANCES: The wife appeared in person.
Mr Cooper of Counsel appeared on behalf of the Respondent Husband.

SMB and MFB
NA 42 of 2004
CORAM:      Bryant CJ, Kay & Warnick JJ
DATE OF HEARING:        26 October 2004
DATE OF JUDGMENT:     10 February 2006

CATCHWORDS: PROPERTY – CHARACTERISATION OF INTERIM PAYMENTS – Appeal by the wife against property orders particularly the composition of the asset pool – Whether the trial Judge erred in characterising lump sum payments made to the wife pursuant to interim orders as property rather than spousal maintenance and in notionally adding them to the asset pool – Whether parties legal costs should be added back – Whether accountants fees paid by the wife should be treated as a joint liability – Whether contingent tax liabilities of the husband should be treated as a joint liability
CASE LAW CITED:
House v The King (1936) 55 CLR 499

Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621

Gronow v Gronow (1979) 144 CLR 513
In the Marriage of Mallet (1984) 156 CLR 605
In the Marriage of Norbis (1986) 161 CLR 513
CDJ v VAJ (No 1) (1998) 197 CLR 172
Farnell v Farnell (1996) FLC ¶92-681
DJM v JML (1998) FLC ¶92-816
Chorn v Hopkins (2004) FLC ¶93-204
Chapman v Chapman & Holmes [1946] SASR 217
Ah Toy v Registrar of Companies (NT) (1985) 10 FCR 280
Dearman v Dearman (1908) 7 CLR 549
CAR v JRQ (unreported, [2004] FamCA 816, 2 September 2004)
Kennon v Kennon (1997) FLC ¶92-757
In the Marriage of Nolan and Ingram (1984) FLC ¶91-585
Ahmad and Ahmad (1995) FLC ¶92-571
In the Marriage of Atkinson (1997) FLC ¶92-728
Noetel v Quealey (2005) FLC ¶92-230

Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231

Appeal allowed and fresh orders made.

Introduction

This is an appeal by the wife against property orders made by Jordan J on 11 June 2004. The parties were married for approximately 11 years and there are two children of the marriage.
The primary issue in dispute between the parties related to the size of the asset pool and how to treat money to which each of them had access, either immediately prior to, or post separation. While proceedings were on foot, the wife brought several applications for maintenance and/or costs, and orders were made in her favour for about $102,000 to be paid to her on condition that at trial, the Judge would subsequently categorise the precise nature of the payments. At trial, his Honour found that the entire sum should be categorised as property rather than maintenance. He also declined to add back both parties’ legal fees to the asset pool.
The net assets of the parties, assessed by Jordan J as totalling $594,082, were divided 70% to the wife and 30% to the husband after consideration of contribution and section 75(2) factors. In formulating orders to give effect to his judgment, the trial Judge ordered, inter alia, that the wife retain the matrimonial home and pay the husband $36,370.
The wife appealed to the Full Court. She seeks that $36,370 be repaid by the husband to her. The wife alleges the trial Judge erred in a number of respects but most significantly in the categorisation of the sum of $102,500 as property entitlement rather than spousal maintenance.

Background history

There was no challenge to the background history as found by the trial Judge. The parties married in 1990 and finally separated in July 2001. There are two children of the marriage, aged 14 and 9. The wife had two other children by prior relationships. One resided with his father and the other, who was aged three at the date of the marriage, resided with the parties for the duration of their relationship.
The husband was aged 46 years at the date of trial. Prior to separation, he worked in his own alternative medical practice and was also involved in a retail limb of the business, which sold non-prescription health products.
The wife was aged 49 at the date of trial. She was primarily occupied with homemaking and parenting responsibilities, although she assisted the husband with his medical practice in the latter stages of the marriage.
The parties commenced cohabitation in 1989 and married in 1990. When cohabitation commenced, the husband was working as a general practitioner and the wife was working part time as a tutor at university, in addition to receiving supporting parents benefit. They jointly purchased a property in Adelaide soon after commencing cohabitation.
In 1993, the parties moved to South East Queensland. They jointly purchased a block of land and commenced construction of the matrimonial home in 1994.
In 1997, the parties formed a private company, MB Pty Ltd, to operate the husband’s medical ventures. The wife worked as a practice manager for the company. A private superannuation fund, the B Superannuation Fund, was also established around this time.
The parties formed an additional company, EH Pty Ltd, in 1999. A new surgery was purchased in that year and held in the name of EH Pty Ltd. The surgery was sold in late 2002.
At the time of separation, the parties’ primary asset was the matrimonial home. The home was valued at $550,000 at date of trial and encumbered by a mortgage to the National Australia Bank of $175,000.
The husband and wife also had modest superannuation entitlements of $110,855 in the case of the husband and $49,827 in the case of the wife. The husband and wife both owned motor vehicles valued at $15,400 and $5000 respectively.
It was agreed between the parties that the wife withdrew funds from the NAB line of credit secured by a joint mortgage immediately prior to separation. The extent of the husband’s knowledge of the withdrawals and the use to which they were put were issues at trial and form part of this appeal.
The wife continued to live in the home with the children after separation. At the date of trial in 2004, the wife was not in paid employment and had been diagnosed as suffering from an adjustment disorder and depression. A psychiatrist examined the wife in April 2004 and concluded that she was totally unfit for all employment and that it may take up to five years for the wife to be able to undertake part-time or full-time work.
The husband was making child support payments of approximately $450 per week for the two children of the marriage after separation, although payments were irregular. The husband did not provide any financial support for the wife’s child, nor was the wife was in receipt of ongoing financial assistance for him from his putative biological father.
It is agreed between the parties that the husband paid the mortgage on the matrimonial home for the first fifteen months after separation (approximately half the period between separation and trial). The wife has been responsible for making mortgage repayments since that time.
The wife filed an application in September 2001 seeking, inter alia, interim orders for spousal maintenance. By consent, the husband agreed to pay the wife a total of $25,500 in two instalments. A series of further orders, all made by consent, required the husband to make lump sum payments to the wife. In all, between September 2001 and June 2002, a total of $102,500 was paid by the husband to the wife. Each order reserved discretion to the judicial officer dealing with the final issues of property settlement and spousal maintenance as to how, and in what proportions to classify the payments (be it spousal maintenance, interim costs or interim property settlement).
A further order was made in August 2002 requiring the husband to pay the wife $1000 per week in interim periodic spousal maintenance. That sum was subsequently reduced to $500 per week in November 2002 by further order.

Summary of trial Judge’s findings

In order to comprehend the argument advanced by the wife on appeal it is necessary to set out the findings of the trial Judge on relevant issues. After setting out a short history, the trial Judge identified the approach to determining applications for property settlement. His Honour referred to the matters contained in sections 79(4) and 75(2) of the Family Law Act 1975. His Honour then outlined the nature of the inquiry undertaken by the Court in resolving property disputes and there is no challenge to his approach.
As a general observation, the trial Judge concluded that, despite some incidental issues, “the evidence overwhelmingly points to the fact that each of the parties applied themselves diligently and with considerable effort throughout the marriage for the general advancement of the family” (at paragraph 31). He found that the husband was primarily occupied in his medical practice and had provided well financially for the family. He found that the wife was primarily occupied with homemaking and parenting responsibilities though in the latter stages of the marriage she also assisted the husband in his medical practice (at paragraph 22).
The trial Judge then identified the issues in contention and the various submissions made by both parties. His Honour concluded that the primary issues in the case related to the value of the property pool to be brought into account.
His Honour noted that both parties had contended that the other had exclusively accessed and used substantial cash and capital of the parties immediately prior to and after separation. Each party argued that there should be substantial add-backs to the property pool prior to any adjustments.
Further, the trial Judge identified that an issue arose with respect to the characterisation of payments made by the husband to the wife pursuant to a series of consent orders. The primary issue was whether these payments were to be treated as spousal maintenance or interim property and, if the latter, by inference it would be added back to the pool for division.
The trial Judge then summarised the assertions of each of the parties regarding the composition of the asset pool. Counsel for the husband contended that $233,000 should be added back to the asset pool and debited to the wife being:
(a)funds withdrawn from NAB line of credit between
8 March 2001 and 31 July 2001  $62,200
(b)purchase on husband’s Mastercard about the time of separation        $8,845
(c)withdrawal from CBA account  $5,000
(d)payment made between November 2001 and July 2002
pursuant to court orders  $102,500
(e)funds utilised between January and June 2003 from the
proceeds of sale from the surgery   $56,364
(f)sale of shares in West Australian newspaper  $5,000
(g)spousal maintenance August to November 2002   $4,000
(h)funds removed from husband’s credit card account (9 April 2003)    $5,500
(i)funds removed from husband’s credit card account (10 April 2003) $3,800
TOTAL$293,210
His Honour noted that counsel for the husband arrived at a final figure of $233,000 by deducting $60,000 as a notional allowance for spousal maintenance.
1. In her summary of argument, the wife contended that $363,775 should be added back into the asset pool and debited against the husband being:
(a)Dividends removed from companies  $79,775
(b)Proceeds of sale of an apartment  $40,000
(c)Legal fees  $110,000
(d)Additional funds removed from companies   $134,000
TOTAL$363,775

Add-backs sought by the wife

The trial Judge found that the methodology underpinning the wife’s application was “fundamentally flawed” (at paragraph 30). His Honour identified four deficiencies:
(a)The corporate structure put in place during the marriage was entirely the “alter ego” of the husband. In essence, the business of the companies was the business of the husband’s medical practice. The income of the companies was the income of the husband in real terms and thus the husband’s drawings from the company were drawings against his own earnings. The trial Judge found that, subject to considerations of maintenance and support, the husband was not obliged to account to the wife for drawings against his post-separation income. The trial Judge found “it would be entirely inappropriate to add back into the asset pool any post-separation income components.”
(b)Many of the drawings identified by the wife in her category of add-backs were drawings made by the husband to make payments to the wife or to meet outgoings. His Honour found that, were the wife’s argument to be accepted, it would “involve not only a double-dip but, in some cases, a double-dip against the husband’s post-separation income.” (paragraph 33).
(c)Some of the husband’s drawings against the companies’ accounts around the time of separation were made to enable the husband to purchase a unit. This, the trial Judge found, was “a not unreasonable acquisition”, particularly as the wife remained in the former matrimonial home.
(d)The wife sought to add back $40,000 received by the husband from the sale of the unit and applied in the discharge of a tax liability, but did not seek to add-back $50,000 she received from the same sale pursuant to consent orders. The trial Judge noted that counsel for the wife wisely abandoned much of this argument at trial.

Add backs sought by the husband

After discussing add-backs sought against the husband, the trial Judge turned to add-backs sought against the wife. At the outset, his Honour recognised that it was “not unreasonable” for the wife to look to the husband to provide financial support for her and the children, at least pending determination of proceedings for property settlement and spousal maintenance (at paragraph 38). Thus, his Honour found that any drawings of the wife and payments made by the husband to her need to be set-off against the wife and children’s reasonable needs post-separation, measured against the husband’s ability to meet those needs.
His Honour further acknowledged that, in addition to the wife’s drawings and payments made by the husband to the wife, the wife had the benefit of the matrimonial home and the husband had made contributions to the mortgage repayments for that home. His Honour noted that the husband had also made contributions to the children’s private school fees and paid child support as assessed from time to time (at paragraph 39). His Honour stated that:
As a consequence of these matters, the lines are necessarily quite blurred between what might be described as entitlement, on the one hand, and drawings beyond needs, on the other. My task is to do the best I can to provide each of the parties with as just and equitable an outcome as is possible, in all the circumstances (at paragraph 40).
On the issue of the wife’s drawings from the NAB line of credit between 8 March and 31 July 2001, the trial Judge preferred the evidence of the husband over that of the wife. His Honour was not satisfied that the drawings made by the wife were done with the knowledge and consent of the husband. Accordingly, his Honour found that the wife had access to $47,000 which she had failed to account for, representing $62,000 minus $15,000 which had been applied to the children’s accounts and which his Honour offset against the husband’s liability to support the children. His Honour found that “it is clear on the wife’s own evidence that no portion of those funds was applied to the purposes which the wife used to justify accessing the husband’s credit card.” (at paragraph 44)
His Honour went on to find that the wife had access to capital in excess of $133,000 in a period of less than three years since separation. This sum comprised the following items:
(a)drawings against NAB line of credit (minus $15,000
used by the wife to support the children)  $47,000
b)drawings against superannuation entitlement  $38,360
(c)proceeds of sale of the surgery used
by the wife for her own support and that of the children                 $30,000
(d)sale of shares  $5,000
(e)maintenance  $4,000
(f)credit card access to the husband’s account on 9 and 10 April          $9,300
TOTAL$133,660
His Honour also noted that the wife had the use and benefit of the matrimonial home, the husband having met the mortgage repayments over the home for “significant periods” since separation, as well as “significant levels of child support from time to time.” (at paragraph 48)
His Honour concluded:
On this approach, the wife has had access to in excess of $45,000 of after tax money per year to meet her needs and those of the children, exclusive of the need to accommodate herself and her children and in addition to substantial levels of additional child support (at paragraph 49).
His Honour described such a contribution by the husband, directly and indirectly, in all the circumstances, as “extremely generous” on any view of the matter (at paragraph 50).
As a result of his findings the trial Judge took the view that the $102,000 the wife received pursuant to court orders should all be categorised as property rather than spousal maintenance. His Honour reasoned that the wife could not have spent anything reasonably more than the $133,600 identified on her support and that of the children. His Honour found that it would be “entirely unreasonable, unfair and inappropriate” to attribute that sum to spousal maintenance (at paragraph 51). The trial Judge categorised the whole sum of $102,500 as a capital payment made as an advancement against the wife’s entitlement to property settlement that should be added back to the asset pool.
On the basis of the “generous approach” to the wife, his Honour did not allow a debt incurred by the wife to an accountant who was retained by the wife in respect of the operation of the business, to be added as a joint liability of the parties.

Legal Fees

Counsel for the wife submitted that the legal fees paid by each of the parties should be brought into account and debited against the entitlement of the parties.
His Honour was satisfied on the evidence before him that all payments made by the husband were from his post-separation income. The trial Judge was also satisfied that the husband did not make any payments towards legal fees at the expense of making a proper contribution to the support of his wife and children. His Honour concluded that it would be inappropriate to bring the husband’s legal fees into account as if they were notional capital of the parties.
The wife had taken out a loan of $40,000 secured against the former matrimonial home to meet some of her legal expenses. On the issue of the wife’s legal fees, his Honour found that it was clear on all the evidence that approximately $260,000 had been available to the wife after separation and that a substantial portion of that sum had been applied by the wife to her legal fees. His Honour said that his broad approach to add-backs took account of some of the utilisation by the wife of some of her drawings to pay legal expenses and to bring those fees into account as add-backs, debited to the wife, would constitute ‘double-dipping’ (at paragraph 59).

The husband’s contingent tax liability

It emerged through the trial that, prior to separation, distributions by way of Director’s fees and dividends from companies were attributed to the husband but not paid to him. His Honour said that, according to the oral evidence of the wife’s accountant, the husband would have incurred a taxation liability of between $64,000 and $65,000 as a result.
The trial Judge opined that the notional distributions reduced the taxation liability of the parties pending trial and, as the husband had not derived any direct benefit from the distributions, it would be “entirely inappropriate for him to be left with the debt associated with those distributions” (at paragraph 58). His Honour determined that the taxation liability should be treated as a joint liability and taken into account in determining the parties’ assets and liabilities.

The assets and liabilities of the parties at trial, as found by his Honour, were as follows:

ASSETS
Former matrimonial home			$550,000
Wife’s motor vehicle			$15,400
Husband’s motor vehicle			$5,000
Wife’s superannuation			$49,827
Husband’s superannuation			$110,855
Lump sum payments made to the wife pursuant to Court orders (added back)			$102,500
Total assets			$833,582
LIABILITIES
Mortgage to National Australia Bank		$175,000
Husband’s contingent tax liability		$64,500
Total liabilities	$239,500
TOTAL NET ASSETS	$594,082

Division of the asset pool

Consequent upon these findings, the trial Judge found that the parties had entered the relationship with assets of similar value and that both applied themselves to the advancement and welfare of the family. However, his Honour took into account that the husband had supported the wife’s child throughout the marriage and after separation, and accordingly made a 2.5% adjustment in the husband’s favour.
The trial Judge then considered the husband and wife’s post-separation contributions. The wife’s primary contributions arose from her care of the children and the husband’s in providing direct and indirect financial contributions. The trial Judge balanced these contributions and made a 5% adjustment in favour of the wife.
The two major section 75(2) factors considered by his Honour were the wife’s primary responsibility for the care of the children and the income and earning capacity of each of the parties. His Honour recognised that this, in turn, brought into consideration issues relating to the age, health and prospects for remuneration of the parties.
His Honour found that, having regard to the totality of the evidence, an adjustment of 17.5% to the wife would properly recognise the extra burdens and disadvantages to be borne by her. In conclusion, his Honour found that the wife should be entitled to 70% of the net asset pool and the husband to 30%. The trial Judge also made orders for spousal maintenance which he capitalised at $26,000.
Pursuant to the orders the wife would retain:

the former matrimonial home	$550,000
her motor vehicle	$15,400
her superannuation	$49,827
TOTAL	$615,227

From this sum she was obliged to pay the mortgage of $175,000 and the husband’s contingent tax liability of $64,500, leaving her with net existing assets of $375,727 set out as above. To this figure however should be added the notional sum of $102,500 added back by the trial Judge. She was then required to pay to the husband the sum of $62,370 to bring her to a position of 70% of the asset pool. The husband’s 30% share was made up of:

superannuation	$110,855
motor vehicle	$5,000
from the wife (being $62,370 less $26,000 for capitalised maintenance)	$36,370
TOTAL	$152,225

The orders were framed by his Honour to give the wife the maximum opportunity to retain the home.

Relevant Law

This is an appeal from a discretionary judgment. There is a long line of authority that establishes the principles to be applied in such appeals (see House v The King (1936) 55 CLR 499 at 504; Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627; Gronow v Gronow (1979) 144 CLR 513 at 519; In the Marriage of Mallet (1984) 156 CLR 605 at 621; In the Marriage of Norbis (1986) 161 CLR 513 at 518; CDJ v VAJ (No 1) (1998) 197 CLR 172 at 230-1).
1. In In the Marriage of Mallet (supra), Mason J (as he then was) said:
It has been accepted…that a judgment of the Family Court in determining what order should be made under section 79 of the Family Law Act 1975 (Cth), as amended, is exercising a judicial discretion and the well settled principle governing an appeal from the exercise of that discretion applies to the Full Court of the Family Court when it hears and determines an appeal from the making of an order under the section. The Full Court, in determining the appeal, cannot substitute its opinion for that of the primary judge unless it is shown that he made some error in exercising the discretion ie. by acting on a wrong principle, by allowing extraneous or irrelevant factors to influence him [sic], by failing to take into account some material consideration or by mistaking the facts. And in some cases the exercise of the discretion may be vitiated by the primary judge’s failure to give sufficient weight to a relevant factor.

Grounds of appeal

The wife’s grounds of appeal, as set out in her Notice of Appeal filed on 8 July 2004, are as follows:
(1)That the trial Judge erred in quantifying the sum of $102,500 as property entitlement rather than spousal maintenance.
(2)That the trial Judge erred in finding the sum of $45,000 per year was exclusive of the need to accommodate herself and the children.
(3)That the trial Judge erred in finding that the husband had paid the mortgage on the matrimonial home for the bulk of the period since separation.
(4)That the trial Judge erred in finding that the wife had received in excess of $45,000 of after tax money per year.
(5)That the trial Judge erred in finding that the director’s fees and dividends from the companies attributed to the husband were not paid to the husband and that the husband did not receive any direct benefit from those director’s fees and dividends paid.
(6)That the trial Judge erred in not finding the husband partly responsible for C Partners’ fees relating to work done on behalf of the companies.
(7)That the trial Judge erred in finding $62,200 being pre-separation drawings were for the wife’s sole benefit.
(8)That the orders made as to property settlement and spousal maintenance were not just and equitable.
It is convenient to deal with grounds 2 and 4 together.

Ground One

The trial Judge erred in quantifying the sum of $102,500 as property entitlement rather than spousal maintenance

Submissions

The wife submitted that the trial Judge ignored evidence about her financial situation post separation, and about her evidence of what it cost her to support herself and the three boys including paying private school fees. In particular she submitted that the evidence was:

Discussion

The wife’s financial statement set out her expenses and those of the children; however some confusion attends the issue of the cost of wife’s reasonable living expenses. The husband’s submissions at trial refer to expenses in the wife’s financial statement, particularly in part F. However, there are two identical pages for part F in the wife’s financial statement with different figures on each (appeal book pages 232 and pages 233 respectively). No explanation was offered for this by the wife in evidence in chief but the wife was cross examined by counsel for the husband on this issue (appeal book page 810) in the following passage:
“The – you’ve set out two schedules of expenses to your form 17 financial statement? ---- yes, that’s correct.
One gives expenses of $415 per week and the other gives expenses of $1130 per week for yourself. Why do we have two different schedules?----Because at the moment I am in receipt of no income and I’m having to rely on the moneys I get to pay everything. So I just pay – there are – there’s nothing extra than basics.
Well---?--- But the actual expenses ---
--- 63 ---?--- The actual expenses are on that second page that I incur”.
Thereafter followed some questions regarding telephone expenses and the passage concluded on the following page (appeal book 811) with this exchange:
“Okay. Fine. I suggest these expenses are completely out of line with the sort of expenses that you and Michael were incurring when you were together? ---- They’re actually less.
And that they’re excessive? ---- They’re actually less - much less than when we were together.
I’m not going to go through the process of examining everyone of the expenses, I’ll leave that to (indistinct). Excuse me, your Honour. I think I’ve finished.”
No further cross examination regarding the expenses set out by the wife took place.
In written submissions (appeal book 541) the husband’s counsel identified the fixed commitments claimed by the wife (excluding school fees) of $461 per week. Then, using the first (with lower figures) of the two pages referred to in part F of the financial statement, he added sum of $415 claimed by the wife as her additional expenses in supporting herself and adjusted it by $51 for amounts double counted to arrive at the figure of $352. He then added that to the fixed expenses ($352 plus $461) to arrive at $813 per week for her expenses. The submission reads “Giving a maximum figure on the wife’s case of ($461 plus $352) $813 per week over a period of say three years (the actual period is slightly less) a total of $126,828 is the maximum amount she could have spent on herself post separation according to her own evidence.”
If he had used the second page of the wife’s expenses contained in part F of her financial statement (even allowing for his adjustment) the expenses would have been $1,067 ($1,130 less $63) plus $461 for fixed expenses, a total of $1,528 per week.
Over the three year period since separation the total expenditure would have been $238,368, ($79,456 per annum) rather than $126,828 as the husband’s counsel submitted the wife was claiming.
Presumably because the focus was on the possible categorisation of the sums paid as spousal maintenance the children’s expenditure was not considered. If the school fees of $500 per week are added, that would make the wife’s expenditure either $1,313 per week ($813 plus $500), using the lower figure, which is $68,276 per annum, or $2,028 per week ($1,528 plus $500) using the higher figure, which is $105,456 per annum.
Had the wife’s expenses been calculated inclusive of the costs of maintaining the children in addition to school fees even using the lower of part F of the financial statement which the husband’s counsel seemed to have adopted, her total expenses were $808 plus fixed expenses of $461 plus school fees of $500, a total of $1,769 per week or $91,988 per annum over three years.
Neither of the two pages of part F were the subject of any real challenge but it is fair to note that for about half of the post separation period the husband was making the mortgage payments so the amounts would have to reflect this. But despite the confusion that might be said to attend the two pages of part F of the wife’s financial statement, the evidence was largely unchallenged and would indicate that the expenditure claimed solely for herself was between $126,828 (based on the husband’s submissions) and $238,368 on the wife’s best case.
The husband’s submission in conclusion on this point to the trial Judge (appeal book 542) paragraph 5.2 (f) was that the wife also took $38,360 from the superannuation fund/unit trust and thus her support should be reduced from $126,828 to $88,468. He submitted “However, the amount claimed by the wife should be reduced substantially as it is clearly excessive. $60,000 (ie. $385 per week x 3 years plus the superannuation/unit trust money of $246 per week, a total of $631) would have been more than sufficient to cover the wife’s reasonable expenses over the said [3 year] period of time.” It can readily be seen that this figure is significantly less than the figure of $813 counsel started with. Nothing was submitted to indicate why his Honour should not accept even the lower figures provided by the wife which had not been the subject of any real challenge or why it was as counsel submitted “clearly excessive.”
The trial Judge does not appear to have dealt with the wife’s evidence as set out in her financial statement about the expenses that she said she incurred. Rather, the trial Judge approached the question of reasonable expenditure by identifying specific funds received by the wife and, having identified them, concluded that she had access to capital in excess of $133,000 in the period since separation (paragraph 48 appeal book 28).
He then extrapolated that having regard to that sum, she had access to in excess of $45,000 of what his Honour described as “after tax money” per year to meet her needs and those of the children, exclusive of the need to accommodate herself and the children and in addition to substantial levels of additional child support. He did not however consider the expenses the wife claimed were necessary for her maintenance or indicate why he did not have regard to her essentially unchallenged evidence or explain why it was unreasonable. Instead, having identified a figure she had received from other sources, he then looked at the husband’s gross income over that period and determined that such a contribution was “extremely generous” (paragraph 50 appeal book 29). Nor did he give any reasons for rejecting the husband’s submission that $60,000, plus monies received from the superannuation/unit trust (a total of approximately $98,000) was sufficient to cover the wife’s expenses over the whole three year period between separation and trial.
In addition to setting out the expenses for her support and the support of the children, the wife set out in her affidavit sworn 15 February 2004 how she had used the sums received (paragraph 286 appeal book 307 to 311). This explanation included detailed itemised schedules, the accuracy of which was not challenged in cross examination. True is that there would be an overlap between the description of the expenditure from the $102,500 and part F of the wife’s financial statement indicating her weekly expenses, but his Honour did not deal with the wife’s evidence about the expenditure. His Honour made no finding that any of the wife’s expenditure was reckless or unreasonable or unnecessary, or other than as she alleged. Nowhere did his Honour make general adverse credit findings against the wife nor specifically on this issue.
Rather, the approach taken by the trial Judge was as follows:
(a)by assessing the money of which the wife had the use (exclusive of the Court ordered monies paid to her) to be applied in support of herself and the children, which his Honour calculated at $133,600;
(b)by dividing that sum over the period of separation to arrive at $45,000 per annum;
(c)by concluding, having regard to the husband’s capacity to pay, that sum was a sufficient amount to maintain the wife and children;
(d)by then concluding that the sum paid to the wife pursuant to the Court orders of $102,500 could not be spousal maintenance but must be property; and
(e)by inference as that sum was property it must be notionally added back to the asset pool.
In approaching the matter in this way his Honour failed to have regard to the evidence about the wife’s needs for the support of herself and the children including their school fees, and how she had spent the funds received, all of which was largely unchallenged. His Honour’s figure of $45,000 per annum was arrived at by way of a construct of what the wife had received and required and was not referable to her evidence. As we have pointed out in paragraph 60, the lower of the costs claimed by the wife for the support of herself and the children was $91,988 per annum or $275,964 over three years. At paragraph 52 of the reasons for judgment his Honour found that the funds to the order of some $260,000 had passed through the wife’s hands. On her evidence her expenditure and needs amounted to substantially more than that sum. Furthermore, we consider that if the trial Judge had considered the interim maintenance order of $1000 per week, made by consent on 22 April 2002 after the payment of the $102,000, he would have had a clearer impression of the wife’s reasonable weekly need for support.
Even if his Honour had been correct in not categorising the sum of $102,500 as spousal maintenance on the basis that it was essentially paid from capital of the husband rather than income, it is not axiomatic that a sum, even if characterised as property, will be added back to the pool. Here, his Honour did not consider whether the money was available to the wife and how it had been spent. Having characterised it as property he simply added it back notionally to the pool. True it was that the wife was “on notice” of a need to account for the funds that she had received, but subject to the comments that we have made, she did so and that evidence was not the subject of any significant challenge. Nor was there any evidence that she had misapplied the funds in some way.
In Chorn and Hopkins (2004) FLC ¶93-204, the Full Court considered the issue of add- backs to the asset pool, particularly in relation to post-separation expenditure and legal costs. At paragraph 42 and following they cited extensively from WBM v RCM [1998] FamCA 42, 1 May 1998 (per Baker, Kay and Chisholm JJ):
“2.10 It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC ¶90-285; Wardman v Hudson (1978) FLC ¶90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC ¶91-092; Fane-Thompson v Fane-Thompson (1981) FLC ¶91-053; Winnel v Winnel (1984) FLC ¶91-580; Townsend v Townsend (1995) FLC ¶92-569; Doherty v Doherty (1996) FLC ¶92-652) Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell(1996) FLC ¶92-681).
2.11There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge (WBM v RCM [1998] FamCA 42, 1 May 1998, per Barker, Jay and Chisholm JJ).”
The Full Court summarised the principle in the following passage :
“46. Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (GVC v HPC [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.)”
In the present case, no finding was made by the trial Judge that the wife had either embarked on a course of conduct designed to minimise the value of the matrimonial assets, or that her expenditure was reckless, wanton or negligent.

Thus, we think that there is a fundamental flaw in the pool created by the trial Judge which included a notional add back of the monies that the wife had received on account during the hearing. Absent any negative finding about the wife’s expenditure which she had detailed in her affidavit and which she asserted to be her reasonable annual expenses, we cannot see any basis upon which his Honour ought reasonably to have added back the sum of $102,500 to the asset pool.

Grounds Two and Four

Ground Two

The trial Judge erred in finding the sum of $45,000 per year was exclusive of the need to accommodate the wife and the children.

The trial Judge found that the wife had access to in excess of $45,000 after tax money per year to meet her needs and those of the children, exclusive of the need for accommodation. In his finding in the previous paragraph (paragraph 48 appeal book 28) he said “she has had the use and benefit of the matrimonial home and significant levels of child support from time to time. The husband also met the mortgage repayments in relation to the matrimonial home for significant periods since the date of separation”.
It was conceded by the husband’s counsel that he paid the mortgage until 2002 which was only approximately half of the post separation period (lines 27-33, appeal book 752). That being so it was not strictly correct for his Honour to find that the wife had access to in excess of $45,000 to meet her needs and those of the children “exclusive of the need to accommodate herself and children”. However, nothing turns on this as a result of the matters discussed under ground one.

Ground Four

The trial Judge erred in finding that the wife received in excess of $45,000 of after tax money per year.

The wife’s contention in relation to this ground is that all money received by her as ordered by the Family Court totalling $102,500 was taxable income as a result of the way in which the husband paid those monies to her. The husband’s counsel submitted that moneys that have been distributed from income “are taxable to the parties and this has been taken into consideration in his Honour’s assessment of the asset pool”. The trial Judge took into account in determining the asset pool the husband’s contention of the tax liability of $64,500. The trial Judge said as to the issue of the tax liability:
The other issue to be addressed relates to some contingent taxation liability payable by the husband. It emerged during the course of the trial from the wife and her accountant Mr J that, subsequent to separation, distributions by way of Director’s fees and dividends from the companies were attributed to the husband, but not actually paid to him. In his oral evidence Mr J acknowledged, that, as a consequence, the husband would be liable to pay income tax upon those distributions and he estimated that the tax payable would be somewhere between $64,000 and $65,000.
Those notional distributions have reduced the taxation liability of parties and their companies pending trial. The husband has not derived any direct benefit from those distributions and it would be entirely inappropriate for him be left with a debt associated with those distributions. Clearly, such liabilities should be treated as joint and taken into account in determining the assets and liabilities of the parties. However, because the actual tax payable has not been assessed and would be, in part, depending on the husband’s income from time to time, I will make specific order designed to set aside sufficient funds to meet any such contingent liability and to make a further order to affect the distribution of any remainder not applied to that purpose in the same portions as the overall distribution. (paragraphs 57 and 58, appeal book 31).
The trial Judge dealt with tax liabilities in the orders in the following way:
8(a) That the wife indemnity and keep the husband indemnified against all taxation liabilities arising as a result of the following distributions, that is:
A distribution to the husband from MB Pty Ltd in the sum of $84,300 by way of Director’s fees for the year ended 30 June 2002.
By distribution to the husband from MB Pty Ltd in the sum of $15,000 for the year ended 30 June 2003.
By distribution to the husband from the B Family Discretionary Trust in the sum of $28,350 for the year ended 30 June 2002.
By distribution to the husband from MB Pty Ltd in the sum of $38,500 for the year ended 30 June 2002.
(b)That the wife pay any tax payable as a result of the aforementioned distributions as and when such tax becomes due and payable.
(c)That pending discharge of all such taxation liability referred to herein, the wife execute all such documents as maybe necessary to provide the husband with a charge over the former matrimonial home in the sum of $65,000, provided however that that the husband be restrained from exercising his rights under that charge unless the wife defaults in making the payments referred to herein and provided further that such rights be exercised by the husband only to the extent that is necessary to meet any taxation liability arising as a result of the transactions referred to in paragraph 8(a) herein.
9That pending the payments referred to in paragraphs 7 and 8(b) hereof, the wife be restrained from selling or further encumbering the said home, save as may be necessary to make payments to the husband or on account of taxation payments in accordance with paragraph 8(b) hereof.
What his Honour effectively did, therefore, was to bring in the contingent tax liability which would ultimately accrue as a liability of the parties in determining the net asset pool for distribution. He then treated it as a liability that the wife would have to bear and as a consequence orders 8 and 9 reflect the fact that she would be responsible for the tax.
Part of the wife’s submissions were directed to an assertion that the $102,500 or at least part of it paid to the wife was paid in a manner which made it taxable in her hands. In the end the wife was unable to satisfy us that there was any evidence before the trial Judge that such tax was payable in her hands, or the amount of such tax. She conceded that no tax returns relevant to this contention had been put into evidence and accordingly her argument to that extent cannot succeed.
However, the part of the wife’s argument that had some merit was that by making the tax liability a joint liability as the trial Judge did, it had the effect of the wife bearing half the tax on income received by the husband, including income from which he paid his legal fees. The effect of his Honour leaving the husband’s legal fees out of the asset pool was that, whereas they were left out because they had supposedly come from post-separation earned net income of the husband, in fact they had come from post-separation earned gross income, the tax on which was to be shared by the husband and wife. Moreover, to the extent that the $102,500 was written back “against” the wife included her paid legal fees, she was being “made accountable” for those legal fees.
In our view his Honour failed to consider the fact that the wife was paying tax on some funds at least which the husband had used to meet his legal costs, which were not then added back to the asset pool. We conclude that his Honour erred in failing to take account of the effect of leaving the wife with the tax liability but failing to require the husband to account for his legal fees paid. As the Full Court said in Atkinson (Unreported, Appeal no. EA78 of 1997, 23 December 1997), while the question of whether or not to add back legal fees to the asset pool remains a matter of discretion, that discretion must be exercised in a way that is just and equitable as between the parties. In this case, we do not believe a just and equitable result was achieved (see further Farnell v Farnell (1996) FLC ¶92-681; DJM v JML (1998) FLC ¶92-816; Chorn v Hopkins (2004) FLC ¶93-204). Relevantly, in Chorn and Hopkins (supra) the Full Court said:
“56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.”
The issues of the funds received by the wife, her reasonable needs for the support of herself and the children and whether the contingent liability for tax was joint or solely that of the husband, were all relevant issues determined by the trial Judge, and Grounds One, Two and Four could be said to impinge upon them. It is however important to bear in mind that this is an appeal against the judgment and the orders, not the reasons for judgment and the individual findings or steps by which the Court reached its conclusion (see Chapman v Chapman & Holmes [1946] SASR 217; Ah Toy v Registrar of Companies (NT) (1985) 10 FCR 280).

Ground Three

The trial Judge erred in finding that the husband had paid the mortgage on the matrimonial home for the bulk of the period since separation.

Nothing turns on this ground as the result of the matters discussed under Ground One.

Ground Five

The trial Judge erred in finding that the director’s fees and dividends from the companies attributed to the husband were not paid to the husband and that the husband did not receive any direct benefit from those director’s fees and dividends paid.

To a significant extent the wife’s written submissions addressing this ground assumed leave to admit further evidence from her accountant. No application was ultimately made to introduce fresh evidence and to the extent her submissions rely upon the introduction of fresh evidence her argument cannot succeed.
The accountant Mr J, who was the wife’s witness, gave evidence at the trial that the distributions, dividends and directors fees attributed to the husband for the years ending 30 June 2002 and 2003 would create a taxable liability for him (Appeal book page 285). He calculated the tax liability as approximately $23,647.47 and $40,885.50 (a total of $64,533). (Appeal book page 826). The trial Judge was concerned about the tax liabilities and was aware of the potential injustice to the husband. (Appeal book page 830) His Honour said:
“yes. I – we need to know as best we can whether the parties are facing actual liabilities whether they are book entries. What are the implications for them because on the one hand I don’t want to see the husband leave here with a $63,000 tax liability for funds he hasn’t actually received? On the other I wasn’t (sic) to reduce the pool as if it were by $63,000 which would effect the wife’s entitlement if it’s not a real debt so it’s not an insignificant issue. We need to have a (sic) clarified one way or the other”.
Later that day the wife’s counsel called Mr D, a forensic accountant and partner at an accounting firm. At the end of his evidence his Honour raised the issue of the tax liabilities again in this passage:
“HIS HONOUR: yes just before Mr D leaves, is there consensus about the taxation implications of the distributions made to the husband? MR GALLOWAY: your Honour we are not going to challenge through Mr D the figures but where the liability may fall, your Honour will have some submissions”.
Thus his Honour was left with evidence that there was a tax liability attaching to the distributions and directors fees paid to the husband since separation in the sum of approximately $64,500.
At paragraph 57 of the reasons for judgment his Honour said:
“the other issue to be addressed relates to some contingent taxation liabilities payable by the husband. It emerged during the course of the trial from the wife and her Accountant, Mr J, that, subsequent separation, distributions by way of directors fees and dividends from the companies were attributed to the husband, but not actually paid to him. In his oral evidence Mr J acknowledged that, as a consequence, the husband would be liable to pay income tax upon those distributions and he estimated that the tax payable would be somewhere between $64,000 and $65,000”.
It is clear that from the evidence his Honour was entitled to find that there was a contingent tax liability attaching to distributions by way of directors fees and dividends attributed to the husband, and that in the exercise of his discretion his Honour was entitled to bring the liability into account as a joint liability.
Mr J gave evidence that in preparation of tax returns advantage was taken of dividends that the company had accumulated and paid, in a manner that would provide tax effective planning for the parties and reduce their tax liability. We cannot see therefore that his Honour erred by calling the particular transactions upon which the tax was payable “notional distributions” from which the husband has “not derived any direct benefit”. In any event it appears to us that this was a finding that did not have a material effect on the judgment. His Honour was not asserting that the husband had not had any benefit from the companies and trusts but rather that the particular distributions by way of director’s fees and dividends which attracted tax were not actually paid in the form of cash to him. Nothing turns on this distinction.
Furthermore, the wife contended that the husband had not been responsible for how the funds were to be distributed and dealt with in the tax returns of the companies for the years ending 30 June 2002 and 30 June 2003, as these returns had been completed by the wife’s accountant. The wife’s accountant Mr J was cross examined on this point (Appeal Book page 825) in the following passage:
“…..now in the preparation of the tax returns for the companies did you speak to the husband at all? ----- I believe I spoke to the husband twice. Alright. Was he involved in deciding how the funds would be distributed and dealt with in the tax returns? ----No”.

Ground Six

The trial Judge erred in not finding the husband partly responsible for C Partners’ fees relating to work done on behalf of the companies.

The trial Judge dealt with this matter at paragraph 53 of the reasons for judgment in which he said:
“Given what I regard as a generous approach to the wife in this regard, I do not propose to allow a debt incurred by the wife to Mr D, Accountant, retained by the wife in relation to the operation of the business, to be added to the debt of the parties. In my view this sum should be set off against the generous allowances I have made to the wife by only apportioning to her the sum of $102,500 as and by way of lump sum advance against her property settlement, in lieu of any portion of the remaining $158,000, which has notionally been identified as funds necessary to meet her needs and available to pay the likes of Mr D”.
The written submissions of the wife at trial said:
“The wife was required to manage the husband’s businesses when he became incapable of doing so. The work done by Mr D save to the extent of $200 was for the benefit of them both. The work done by Mr D of C Partners to the extent (as he gave unchallenged evidence) of $11,249 was also done for the benefit of the business (this is reflected in exhibit 11). Furthermore, your Honour will be mindful that Mr D is yet to be paid a very significant sum and this may represent a private liability of the wife’s”.
The list of liabilities for which the wife contended showed a liability of $11,249 to Mr D to be brought into account as a joint liability of the parties (at page 571 of the Appeal book). The amount owed to Mr J who was engaged by the wife after Mr D from C Partners to prepare the tax returns for the entities in order to save costs was estimated by him as being between $6000 and $7000, which the wife had paid by the date of trial (page 822 of the Appeal book). The total figure incurred by the wife for forensic accountants appears to have been $30,000 as appears in her affidavit at paragraph 325 (page 319 of the Appeal book). The trial Judge accepted that the wife had incurred the debt in relation to the operation of the business but did not add it in as a debt because he offset it against what he described as “generous allowances” made to the wife. In effect therefore this ground falls to be determined on the question of whether his Honour was correct in adding back the sum of $102,500 as notional capital of the wife. If the sum of $102,500 is not added back to the pool, there is added force to the trial Judge’s conclusion that the wife had funds – arguably joint funds – from which to meet this debt.

Ground Seven

The trial Judge erred in finding $62,200 being pre-separation drawings was for the wife’s sole benefit.

His Honour dealt with the question of the wife’s drawings in the period leading up to separation at paragraphs 41-43 inclusive in the reasons for judgment. The husband detailed these payments in paragraph 81 of his affidavit filed on 24 February 2004. He set out the withdrawals and asserted that they were unusual transactions. He asserted that they were made in circumstances where the wife had the credit card for normal costs of living, supermarket shopping etc and during the same period she made large and uncharacteristic cash withdrawals from a joint Commonwealth Bank account after transferring money into this account from the line of credit facility. The husband asserted that he was largely unaware of the transactions and did not see account statements prior to separation. He asserted that she did not inform him of the withdrawals.
Perusal of the husband’s evidence and particularly his cross examination about the withdrawals appears at pages 127, 134, 136 and 137 of the transcript. The husband’s evidence is consistent with that in his affidavit, namely that the household expenses were being met mostly with the use of credit cards pre-separation and that the withdrawals referred to were not demonstrably for household and family expenses. His evidence was not impeached under cross examination. The wife’s evidence was in direct contradiction. She asserted that she withdrew the money under the husband’s direction and that she was told by him to use it on everyday items.
The trial Judge dealt with the evidence on this issue at paragraph 41 of the reasons for judgment. He referred to the evidence and said that the wife had not satisfied him that the drawings were with the husband’s knowledge and consent and his direction. He accepted the husband’s evidence on this point and rejected the wife’s. The trial Judge was clearly entitled to make the finding on the basis of the credit of the parties. A trial Judge has a well recognised advantage over an appellate court in hearing and evaluating all the evidence and making assessments as to witnesses’ credibility. As explained by Issacs J in Dearman v Dearman (1908) 7 CLR 549 at 561:
The mere words used by the witnesses when they appear in cold type may have a very different meaning and effect from that which they have when spoken in the witness box. A look, a gesture, a tone or emphasis, a hesitation or an undue or unusual alacrity in giving evidence, will often lead a Judge to find a signification in words actually used by a witness that cannot be attributed to them as they appear in the mere reproduction in type. And therefore some of the material, and it may be, according to the nature of the particular case, some of the most important material, unrecorded material but yet most valuable in helping the Judge very materially in coming to his decision, is utterly beyond the reach of the Court of Appeal.

In CAR v JRQ [2004] Fam CA 816, the Full Court said:
39.The need for appellate respect for the advantages of trial Judges, and especially where their decisions might be affected by the credibility of witnesses whom the trial Judge sees, but the appellate court does not, is well known. So too are the principles to be applied, see Jones v Hyde (1989) 85 ALR 23 at 27-8; Abalos v Australian Postal Commission (1990) 71 CLR 167 at 179 and Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479.
40.In State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Ors (1999) 160 ALR 588, Kirby J described the trial Judge's real advantages at p. 619 as follows:
"[89] None of the foregoing considerations requires the abandonment of the respect which appellate courts, by present legal authority, must pay to the advantages enjoyed by the trial judge. Instead, they require renewed attention to precisely what the advantages are which the trial judge has over those enjoyed by the appellate court, conducting a second look at the facts, usually with more opportunity to evaluate particular facts than is possible in the midst of a trial and with the appellate advantage of viewing such facts in the context of the record of the complete trial hearing.
[90] The true advantages in fact-finding which the trial judge enjoys include the fact that the judge hears the evidence in its entirety whereas the appellate court is typically taken to selected passages, chosen by the parties so as to advance their respective arguments. The trial judge hears and sees all of the evidence. The evidence is generally presented in a reasonably logical context. It unfolds, usually with a measure of chronological order, as it is given in testimony or tendered in documentary or electronic form. During the trial and adjournments, the judge has the opportunity to reflect on the evidence and to weigh particular elements against the rest of the evidence while the latter is still fresh in mind. A busy appellate court may not have the time or opportunity to read the entire transcript and all of the exhibits. As it seems to me, these are the real reasons for caution on the part of an appellate court where it inclines to conclusions on factual matters different from those reached by the trial judge."

In our view the wife has not established any error in relation to this ground.

Ground Eight

The orders made as to property settlement and spousal maintenance were not just and equitable.

Most of the wife’s submissions in relation to this ground rely upon an argument that the trial Judge erred in assessing the contributions of the parties under Section 79(4) as an equal contribution, specifically in the context of non-financial contributions. The wife submitted before us that the trial Judge in particular did not give enough weight and due and proper consideration to the impact of abuse and violence which occurred to the wife and children throughout the entire marriage (see Kennon v Kennon (1997) FLC ¶92-757).
There are several difficulties with the wife’s submission. The first is that many paragraphs of the wife’s affidavit concerning matters relating to violence were the subject of concessions to objections by the husband’s solicitor to strike them out. Secondly, on the second day of the hearing the wife’s counsel conceded the ‘Kennon component’ was not being pursued. Thirdly, in consequence of that concession the written submissions on behalf of the wife at the conclusion of the hearing asserted that at the time of separation the parties had made equal contributions.
The law is clear that the appellant can not make submissions at the hearing of an appeal which were contrary to the way in with the case was presented to the trial Judge (In the Marriage of Nolan and Ingram (1984) FLC ¶91-585 at 79,723; Ahmad and Ahmad (1995) FLC ¶92-571; In the Marriage of Atkinson (1997) FLC ¶92-728; Noetel v Quealey (2005) FLC ¶92-230. In Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231 at 241 Barwick CJ, in relation to concessions made by a party at trial as to a fact, said:
[I]t should only be in the clearest case and the most cogent reasons that a party who has conceded matter at trial should be allowed to make the validity of what has been conceded the basis for overturning the result of the trial.
No such reasons were advanced on behalf of the wife in the instant case.
The other matters relied upon by the wife in support of the ground that the order was not just and equitable related to matters arising under section 75(2). Her contentions are as follows:
(a)that the trial Judge did not give proper weight to the evidence provided by Dr S on the wife’s behalf or gave too much weight to the husband being sick and unable to work;
(b)capitalisation of future spousal maintenance against the wife’s property entitlement left the wife relying on the equity of the home and struggling financially;
(c)the comparative financial position of the wife and children compared to that of the husband were not given sufficient weight;
(d)no provision was made for the cost of the wife’s ongoing medical treatment; and
(e)the company still owed the wife $15,000.
As to the first it is clear that his Honour carefully weighed up the evidence provided by Dr S on behalf of the wife. As well as the evidence relating to the husband’s capacity to work, his Honour accepted the evidence of the doctors who gave evidence about the husband’s earning capacity and accepted the evidence of Dr S about the wife. Findings about the respective earning capacity of the parties were consistent with the medical evidence led on their behalf and no error has been demonstrated by the wife. In any event, an appeal court should be slow to overturn a primary Judge’s discretionary decision on grounds which only involve conflicting assessment of matters of weight (Gronow and Gronow (1979) 144 CLR 513).
As to the other matters raised by the wife we observe that there was no evidence from Dr S that the wife was in need of intensive ongoing medical psychotherapy treatment; nor was his Honour given any indication of the cost of same. His Honour noted at paragraph 68 in the reasons for judgment that Dr S had suggested that “with the resolution of litigation and appropriate psychotherapy the wife’s prospects might well improve sufficiently to enable her to return to some level of employment at an earlier stage”.
As to the capitalisation of future maintenance the wife sought, at trial, an order for capitalisation to enable her to keep the house.
As to the assertion that the company still owed the wife a sum of money the wife’s accountant had prepared the tax returns for years ending 30 June 2002 and 2003. Part of the accounting was a reversal of loan accounts so that although the wife owed the company $48,045.66 as at 30 June 2001 by 30 June 2003 the books of account indicated that the company owed the wife $15,000. The husband’s counsel submits, and we agree, that this appears to be a book entry. It was not a matter in any event that was agitated before the trial Judge as something he should take into account.
Finally, the trial Judge was aware of the disparity in earnings between the parties. He noted particularly in paragraph 72 of the reasons for judgment that “in the context of section 75(2) considerations, it is clear there will always be likely to be a significant disparity of earnings.” His Honour took the view that a 17.5% adjustment to the wife’s advantage on account of the section 75(2) factors properly recognised the extra burdens and disadvantages to be borne by her, offset to some extent by the likelihood the husband would continue to make a substantial financial contribution to the children’s needs. The effect of the totality of the considerations by his Honour of section 75(2) factors was that the wife received 70% of the asset pool and the husband 30%.
The wife has not succeeded in demonstrating that his Honour did not take into account the relevant matters or inappropriately considered irrelevant matters or that the percentage that he arrived at was manifestly unjust. Accordingly, we see no merit in this ground.

Re-exercise of the discretion

Both parties sought that if the appeal was successful the Full Court re-exercise the discretion of the trial Judge. Other than the wife’s submissions that his Honour gave inappropriate weight to certain matters under section 75(2), the balance of the appeal was, as it had largely had been at trial, argued on the question of the constitution of the asset pool itself. For that reason we see it appropriate to re-exercise the discretion rather than to remit the matter for rehearing.
In our view for the reasons expressed in paragraphs 53 to 73 his Honour should not have added back the lump sum payments made to the wife pursuant to the interim orders of $102,500. His Honour found in paragraph 52 of the reasons for judgment that “funds to the order of some $260,000 have, in fact, passed through the wife’s hands in the period since separation”. His Honour acknowledged that part of that sum had been used to pay legal expenses by the wife of $46,000 and accounting expenses of $21,000 leaving her with a net of $193,000 which from her evidence she had accounted for.
If his Honour had considered the evidence, as we have suggested he should have, then even accepting the lower figure in part F of the wife’s financial statement the expenses of the wife and children including fixed expenses and school fees was $91,988 per annum (see paragraphs 57-60 of these reasons). That sum multiplied over a period of three years is $275,964. Even allowing for the fact that the husband was paying the mortgage for the fifteen months after separation and also paying some child support, in our view it can not be said that the evidence did not disclose the use of funds by the wife or that she had expended them in ways other than on herself and the children. Thus, in our view it is not appropriate to add in the sum of $102,500 as a notional add back to the asset pool. If it is necessary to characterise the payments then we would characterise them as lump sum spousal maintenance.
Whilst his Honour seems to have focussed on the husband’s annual income (see paragraph 50 of the reasons for judgment) as a means of assessing whether a payment of $43,000 per annum for her maintenance in addition to other payments was a reasonable one, we see no reason why this payment should not be made out of other monies available to the parties. In this case the husband utilised other assets available to him to pay the lump sums.
In our view, as the legal costs paid by the wife came out of the sums she received from the husband they should be added back, as should those of the husband. In particular the husband’s costs should be added back because the trial Judge ruled that the wife is responsible for half of the tax liability on dividends and directors fees allocated to the husband in the tax returns, being part of the funds from which he paid his legal fees.
We thus find the asset pool to be as follows:

ASSETS
Former matrimonial home	$550,000
Wife’s motor vehicle	$15,400
Husband’s motor vehicle	$5,000
Wife’s superannuation	$49,827
Husband’s superannuation	$110,855
Wife’s legal fees paid (added back)	$46,000
Husband’s legal fees paid (added back)	$101,161
Total	$878,243

LIABILITIES

Mortgage to National Australia Bank	$175,000
Husband’s contingent tax liability	$64,500
Total	$239,500
NET ASSETS FOR DIVISION	$638,743

There were concessions made at the hearing that contributions had been equal at the time of separation. There was no challenge to the adjustment of 2.5% for the support of the children nor to an adjustment in favour of the wife as a result of post separation contributions (paragraphs 63 and 64 of the reasons for judgment). Given that we have rejected the wife’s argument in relation to the section 75(2) matters and the husband does not challenge his Honour’s adjustment of 17.5% in favour the wife, we see no reason to depart from his Honour’s conclusion that the wife should be entitled to 70% of the available property and the husband entitled to 30%. The effect of that would be that the wife should receive $447,120 and the husband $191,623.
The wife would retain:

Former matrimonial home	$550,000
Motor vehicle	$15,400
Superannuation	$49,827
Cost of legal fees paid	$46,000
Total	$661,227

Less

Mortgage	$175,000
TOTAL	$486,227

The husband would retain:

Motor vehicle	$5000
Superannuation	$110,855
Cost of legal fees paid	$101,161
Total	$217,016

Less

Tax liability	$64,500
TOTAL	$152,516

Adjustment

As the husband is entitled to receive assets worth $191,623 he would require a payment from the wife of $39,107. This should be offset against the capitalised maintenance of $26,000 that was not the subject of the appeal. The wife thus owes the husband $13,107. In addition the husband must repay the sum of $36,370 paid to him by the wife pursuant to the orders of Jordan J. The net effect is a payment by the husband to the wife of $23,263. The evidence suggests that the husband could meet this modest sum. The husband will be required to meet the entire tax liability but given that it is not clear in which period the tax will be liable, whether it will all be payable at one time and, depending on whether the husband has any deductions, whether it may be ameliorated to some extent by his deductions or income in the particular year in which it is included, we are satisfied in all circumstances that the orders are just and equitable.

Orders

That the appeal be allowed.

That the orders 7 to 15 inclusive of the orders made by Jordan J on 11 June 2004 be set aside.

The husband pay to the wife the sum of $23,263 within twenty-eight days of the date of these orders.

That the husband indemnity and keep the wife indemnified against all taxation liabilities arising as a result of distributions to him from MB Pty Ltd and the B Family Discretionary Trust.

That the wife transfer to the husband any shareholding in MB Pty Ltd and in EH Pty Ltd and resign as a director of each company and relinquish any office that she may hold in relation to any of the related trusts in favour of the husband.

That the husband be entitled to retain the shares in MB Pty Ltd and in EH Pty Ltd and his interest in the B Superannuation Fund and any other related entity, subject to the payment to the wife upon her nomination of the sum of $49,827 to be rolled out of the B Superannuation Fund.

That the husband indemnify the wife and keep the wife indemnified in respect of any liabilities that may be incurred by MB Pty Ltd, EH Pty Ltd or any trust, unit trust or entity of which by these orders he assumes control.

I certify that the preceding 116
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

Associate