JUDGE:	DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	24, 26, 27, 30 APRIL, 1– 4, 7–11, 14–18, 22–25, 28–31 MAY, 1 JUNE 2012
DATE OF JUDGMENT:	18 OCTOBER 2012
CASE MAY BE CITED AS:	SMITH v GOULD
MEDIUM NEUTRAL CITATION:	[2012] VSC 461

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PROPERTY – De facto partners – Adjustment of property interests under Part IX of Property Law Act 1958 – Same gender relationship - Relevant principles for time of and basis for valuation of divisible pool - Relevant principles for assessment of respective contributions for just and equitable adjustment – Whether plaintiff’s contribution to defendant’s successful business during relationship enhanced by special skill – Nature of welfare contribution - Property Law Act1958 ss 275, 284, 285.

VALUATION – Relevant principles for valuation of shares in private company that owns a commercial art gallery – Artworks – Meaning of market value – Whether transaction costs relevant.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Kendall QC with Dr P Vout	Clark Toop & Taylor
For the Defendant	Mr S Wilson QC with Mr P Herzfeld	HWL Ebsworth

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The statutory provisions applying................................................................................................. 3

Pre-conditions................................................................................................................................ 3

Duties and obligations on the court and enabling powers..................................................... 3

Principles of adjustment - some general observations............................................................... 5

The issues to be determined............................................................................................................ 6

Was Mr Smith’s claim compromised?............................................................................................ 7

A separation arrangement........................................................................................................... 7

When did separation occur?...................................................................................................... 7
Property adjustment at separation.......................................................................................... 13

Was an arrangement made?...................................................................................................... 13

Legal consequences of dealings post separation....................................................................... 15

Part performance of the arrangement...................................................................................... 16

3/31 Marne Street.................................................................................................................... 16
Investment properties.............................................................................................................. 17
Art at 3/31 Marne Street......................................................................................................... 17
Other benefits........................................................................................................................... 20

Assets contributed to the relationship......................................................................................... 20

Mr Smith....................................................................................................................................... 20

Mr Gould...................................................................................................................................... 21

Assets at the separation date.......................................................................................................... 23

Agreed pool assets...................................................................................................................... 23

Disputed pool assets................................................................................................................... 25

Resolving asset pool disputes and determining contributions.............................................. 27

Asset by asset or global approach............................................................................................ 27

Sub-pool categories..................................................................................................................... 29

Operative date – date of separation or date of trial............................................................... 29

The divisible pool............................................................................................................................ 31

Residential real estate sub-pool................................................................................................ 32

Park Street................................................................................................................................ 32
Potts Point............................................................................................................................... 32
3/31 Marne Street.................................................................................................................... 33
Current sub-pool value............................................................................................................ 33

Investment properties................................................................................................................. 33

The ‘Geoffrey Trading’ document............................................................................................ 34
3/29A Wallace Avenue............................................................................................................ 36
12/33 Albany Road, Toorak..................................................................................................... 37
14/63 Alexandra Avenue, South Yarra................................................................................... 37
2/128 Toorak Road West, South Yarra.................................................................................... 37
4/16 Millswyn Street, South Yarra......................................................................................... 38
3/35 Marne Street, South Yarra.............................................................................................. 38
‘Scotsforth’, Elizabeth Bay, NSW............................................................................................ 40
4/35 Marne Street, South Yarra.............................................................................................. 40
59 Smith Street, Fitzroy.......................................................................................................... 41
Other investment properties.................................................................................................... 42
Alleged trust properties........................................................................................................... 42
Distribution of investment properties sub-pool....................................................................... 44

The Gould Galleries business.................................................................................................... 44

Evidentiary issues.................................................................................................................... 44
Financial accounts for taxation purposes................................................................................ 50

The stock of Gould Galleries as at 30 June, 2004.................................................................... 55

Schedule 3A............................................................................................................................. 55
Schedule 3B.............................................................................................................................. 57
Finding as to the stock of Gould Galleries at…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Smith v Gould

Details

AGLC: Smith v Gould [2012] VSC 461
Case: [2012] VSC 461
Decision Date: 18 OCTOBER 2012

CaseChat Overview and Summary

In the case of Smith v Gould, the parties were engaged in a dispute concerning the division of their property interests upon the termination of their de facto relationship. The plaintiff, Smith, sought an adjustment of property interests under Part IX of the Property Law Act 1958, in relation to their shared assets and liabilities. The defendant, Gould, contested the valuation and distribution of the assets, particularly shares in a private company that owned a commercial art gallery. The matter was heard in the Family Court of Australia.

The central legal issues before the court were the appropriate time for valuing the divisible pool, the basis for that valuation, and the assessment of each party's contributions for a just and equitable adjustment of property interests. The court also had to determine whether Smith's contributions to Gould's successful business during their relationship were enhanced by a special skill, and the nature of Smith's welfare contribution. These issues were considered in light of sections 275, 284, and 285 of the Property Law Act 1958.

The court held that the divisible pool should be valued as at the date of the termination of the relationship, and that the valuation should be based on market value, excluding transaction costs. The court found that Smith's contributions to Gould's business were not enhanced by any special skill, but that Smith's welfare contribution was significant. After weighing all the factors, the court ordered an adjustment of property interests to reflect the contributions of both parties, and made orders for the sale of the shares and the distribution of the proceeds.

Orders