STELLARD & DRESDON-STELLARD

FAMILY COURT OF AUSTRALIA

STELLARD & DRESDON-STELLARD

[2011] FamCA 718

FAMILY LAW – PROPERTY – Contribution – Treatment of gifts by wife’s parents before and during the marriage and wife’s inheritance late in the marriage – Amount inherited spent partly during the last phase of the marriage and in the post separation period – Amount inherited treated as separate pool to which husband did not make significant contribution – To the extent that he contributed to that pool already he has shared in/benefited from the inheritance during the last phase of the marriage – Kennon factor claimed by husband – Kennon factor not made out – Division of property 60% wife and 40% husband in relation to main pool based on contribution – Section 75(2) adjustment in relation to main pool in wife’s favour of 5% having regard to husband’s present ability to conduct ongoing business and wife’s inability realistically to rejoin the workforce and other factors – Kowaliw argument put by husband – Kowaliw argument rejected because assets dissipated by wife either added back to main pool or comprised part of separate pool to which husband did not make significant contribution – Overall division in relation to main pool 65% wife and 35% husband– Observations made that husband and or wife may need to sell real property having regard to individual and joint debts

Family Law Act 1975 (Cth) s79, s 75(2)

Antmann & Antmann (1980) FLC 90-908
Bonnici & Bonnici (1992) FLC 92-272
Chang v Su (2002) FLC 93-117
Coghlan & Coghlan (2005) FLC 93-220
Farmer and Bramley (2000) FLC 93-060
Figgins and Figgins (2002) FLC 93-122
Gosper and Gosper (1987) FLC 91-818
Kennon & Kennon (1997) FLC 92-757
Kessey and Kessey (1994) FLC 92-495
Kowaliw & Kowaliw (1981) FLC 91-092
Lorriman and Lorriman (unreported) Appeal No EA47 of 2004, 5 November 2004
Norbis & Norbis (1986) 161 CLR 513
Pellegrino and Pellegrino (1997) FLC 92-789
Phillips and Phillips (2002) FLC 93-104
Pierce and Pierce (1999) FLC 92-844
Polonius & York [2010] FamCAFC 228
Spagnardi and Spagnardi (unreported) Appeal No EA26 of 2003, 8 September 2003
Smith & Smith (1991) FLC 92-261
Weir & Weir (1993) FLC 92-338
Zyk & Zyk (1995) FLC 92-644 at 82,509-510.

APPLICANT:

Mr Stellard

RESPONDENT:

Ms Dresdon-Stellard by her Case Guardian Peter Sheehy

FILE NUMBER:

BRC

5986

2008

DATE DELIVERED:

9 September 2011

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

O'Reilly J

HEARING DATE:

27, 28 and 29 April 2011

(Written submissions concluded 26 May 2011)

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Selfridge

SOLICITOR FOR THE APPLICANT:

Reardon Family Lawyers

COUNSEL FOR THE RESPONDENT:

Mr James

SOLICITOR FOR THE RESPONDENT:

Buchanan Legal

Order

IT IS ORDERED

Pursuant to s 79 of the Family Law Act 1975 (Cth) the property and assets of the parties or either of them be divided in accordance with the following so as to provide 35% to the husband and 65% to the wife in relation to the matters dealt with in this order:

The husband have:
(a)Property 1, valued at $435,000
(b)Company 1 (business), valued at nil
(c)his chattels (schedule B), valued at $3880
(d)his Rolex watch, valued at $1450
(e)addback insurance proceeds, valued at $43,251
(f)addback insurance proceeds used for legal fees, valued at $14,149
(g)his AMP superannuation, valued at $69,612
Total value: $567,342
The wife have:
(a)Property 2, valued at $600,000
(b)her chattels (schedule A), valued at $15,105
(c)her jewellery, valued at $1430
(d)addback borrowing mortgaged on Property 3, valued at $75,000
(e)addback superannuation funds, valued at $317,337
(f)addback Datsun motor vehicle sale proceeds, valued at $3000
(g)her MLC superannuation, valued at $11,316
(h)her AMP superannuation, valued at $12,490
Total value: $1,035,678
The husband be solely liable for post separation debt to the Australian Taxation Office $84,319 together with any further interest or penalty accretions on that sum and indemnify the wife accordingly.
Subject to paragraph 6, Property 3 be sold by public auction with the following conditions applying:
(a)the real estate selling agent, unless otherwise agreed between the parties, be as nominated by the president of the Real Estate Institute of Queensland or his or her delegate appointed for that purpose
(b)the reserve, unless otherwise agreed between the parties, be $500,000
(c)the advertising program, auction date and similar matters, unless otherwise agreed between the parties, be as determined by the selling agent.
The proceeds of sale of Property 3 be applied in the following manner and priority:
(a)any unpaid outgoings in relation to the property (whether accrued before or after the date of judgment) be paid at settlement
(b)the costs of sale including commission be paid at settlement
(c)the parties’ liabilities listed in the schedule in the reasons for judgment totalling $292,329, together with any interest accretions on those amounts as at the date of payment, be paid at settlement, or, if the accretions not be able to be agreed, the principal debts be paid at settlement and an estimated amount of the accretions be held in the husband’s and/or the wife’s solicitor’s trust account/s pending machinery resolution as to the amounts of interest payable, with the residue of such if any subsequently to be paid 35% to the husband and 65% to the wife
(d)the balance to the parties, having regard to the values in paragraphs 1 and 2 (that is, excluding the ATO liability at paragraph 3), with the value at paragraph 2(d) increased by the difference between the amount paid with accretions and $75,000 and the total value of paragraph 2 increased accordingly, to effect an overall distribution of 35% to the husband and 65% to the wife in relation to the matters dealt with in this order, provided that from the husband’s portion his debt to the Australian Taxation Office referred to in paragraph 3 be paid at settlement if there be sufficient and only the balance of his portion (if any) be paid to the husband.
If prior to the signing any contract of sale by both the vendor and the purchaser in relation to Property 3 the wife is able to obtain finance equivalent to the reserve price and such sum be paid into her solicitor’s trust account she may retain Property 3, with the amount in her solicitor’s trust account to be paid in accordance with paragraph 5.
The husband immediately take all steps and sign all documents necessary to remove any caveat/s on Property 2 and Property 3.
The wife immediately take all steps and sign all documents necessary to remove any caveat on Property 1.
Subject to paragraph 11, the wife’s Mercedes Benz motor vehicle be sold by public auction with the following conditions applying:
(a)the selling agent, unless otherwise agreed between the parties, be as nominated by the president of the Royal Automobile Club of Queensland or his or her delegate appointed for that purpose
(b)the reserve, unless otherwise agreed between the parties, be as nominated by the selling agent on the “as is” basis, after consulting with the parties and/or such other persons as the selling agent considers appropriate as to any motor, differential or other repairs required or other matters relevant to its market value assessment
(c)the advertising program, auction date and similar matters, unless otherwise agreed between the parties, be as determined by the selling agent.
The proceeds of sale of the wife’s Mercedes Benz motor vehicle be applied in the following manner and priority:
(a)the costs of sale including commission be paid at settlement
(b)the balance to the parties, having regard to the values in paragraphs 1 and 2, with paragraph 2 adjusted as previously stated, to effect a distribution of the net proceeds 35 % to the husband and 65% to the wife
(c)if the costs of sale including commission should exceed the price achieved at auction, the parties each be liable for half of the balance costs of sale including commission and indemnify the other as to half accordingly.
If the parties should agree, they may avoid the operation of paragraphs 9 and 10 by the wife retaining the motor vehicle at such value they agree, with the motor vehicle and value accordingly to be added to the list of assets the wife is to have pursuant to paragraph 2 and with the total value of paragraph 2 to be increased accordingly for the purpose of the operation of paragraph 5(d).
The wife must permit the husband, at his cost, to collect and take delivery of the chattels described in schedule B to the updated agreed amended balance sheet filed 26 May 2011, at dates and times to be nominated by him, to be completed within 21 days from today, the collection to be supervised, if the husband and/or the wife should require, by their respective solicitors or other nominee/s.
Otherwise, the parties are to retain all assets, liabilities and financial resources in their respective names or possession.
Unless otherwise specified in this order:
(a)each party is solely entitled to the exclusion of the other to all property and assets (including choses in action) in the possession of that party as at the date of this order
(b)each party is solely entitled to the credit of any moneys in any bank accounts in his or her name
(c)each party is to forego any claim he or she may have to any superannuation benefits belonging to or earned by the other
(d)each party is to be solely liable for and to indemnify the other against any liabilities encumbering any item of property or any asset to which that party is entitled pursuant to this order.
The parties are to sign all documents necessary to give effect to this order and in default a Registrar is empowered to sign all such documents.
The parties have liberty to apply, on short notice, by arrangement with the Associate:
(a) under the slip rule
(b)if I should have made any calculation errors in the reasons for judgment or this order
(c)if the parties, by their solicitors, should be unable to agree the calculations required by this order
(d) if any further machinery or other orders may be necessary to carry out this order or to give effect to the decision or
(e) if clarification of any part of the decision or order should be required.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 5986 of 2008

Mr Stellard

Applicant

And

Ms Dresdon-Stellard by her case guardian Peter Sheehy

Respondent

REASONS FOR JUDGMENT

The parties and their applications

The parties each seek a just and equitable property settlement by way of order under s 79 of the Family Law Act 1975 (Cth).
The husband, Mr Stellard, seeks that on the contribution basis the parties’ assets be regarded as one pool, contribution be assessed as 50% husband and 50 % wife, and that there be no s 75(2) adjustment, to result in a division overall of 50 % husband and 50 % wife, provided that I include in the pool several “addbacks” against the wife, including her “wasted” inheritance received late in the parties’ marriage. In the alternative, if I should “elect” to treat the wife’s inheritance received late in the marriage as a separate pool, she not be entitled to it solely (Mr Selfridge’s written submissions, p 22, par 64iii). In the further alternative, in relation to any s 75(2) adjustment, if there be adjustment in the wife’s favour, it be not more than 5 %, but with such assessed “upon the overall property pool including the substantial addbacks”, which I take, according to the tenor of Mr Selfridge’s written submissions, to include the value of the wife’s “wasted” inheritance received late in the parties’ marriage, the full value of which, it is argued, should be an “addback” against the wife (Mr Selfridge’s written submissions p 17 par (f)).
The husband seeks orders that he retain a specific real property, namely that upon which he conducts a business, he retain the business, that two other real properties be sold and the orders include other specific provisions concerning the parties’ superannuation, chattels and debts.
The wife, Ms Dresdon-Stellard, by her case guardian Peter Sheehy, seeks that on the contribution basis the wife’s inheritance received late in the marriage be dealt with as a separate pool to which the husband made no contribution, that otherwise the parties’ assets be regarded as one pool, contribution to that pool be assessed at 60 % wife and 40 % husband, and that there be a s 75(2) adjustment in her favour of 10 %, to result in a division overall of that pool of 70 % wife and 30 % husband.
The wife seeks, by her case guardian, that she have the two real properties the husband seeks be sold, on the basis that she assume sole responsibility for refinancing the mortgages in relation to the two properties, that the husband have the real property on which he conducts the business, that he have the business and that the orders include other specific provisions and other provisions concerning the parties’ superannuation, chattels and debts.
It is implicit in the wife’s case that in relation to the separate pool (largely dissipated) she be regarded as having 100 % entitlement to it while it lasted.

Relevant background facts

The husband is 57 years and the wife 59 years.
They met and formed a relationship in 1978 (husband’s evidence) or 1979 (wife’s evidence) in Sydney.
They moved to the Gold Coast in about 1979–1980.
They separated during 1981. The wife remained on the Gold Coast. The husband moved to the Central Queensland coast. The wife says that the separation was for about 18 months. The husband says that the period of their separation while he was at the Central Queensland coast was the considerably shorter period of 6–8 months.
The wife visited the husband at the Central Queensland coast in late 1982. When departing after her visit, she sent the husband a postcard dated 22 November 1982: ex 1.
Their relationship, it would appear, had resumed by that date, in late 1982.
The husband then relocated back to the Gold Coast, and the parties married in April 1983.
During the marriage, they separated for a period of some 4–8 weeks in 1999, and separated finally on 3 October 2007.
Mr Selfridge of Counsel, for the husband, put that the period of the parties’ relationship and marriage, 1978–2007, less the periods of separation which the husband contends occurred, was about 28 years.
Mr James of Counsel, for the wife, put that the period of the parties’ relationship and marriage, 1979–2007, less the periods of separation which the wife contends occurred, was about 26–27 years.
The parties have one child, H born in December 1988, now 22 years.

Nature and value of the asset pool

The parties, by their Counsel, provided on 26 May 2011 an updated agreed amended balance sheet (folio 194).
The document sets out areas of agreement and dispute. It contains also however many pages of notes and argument and unfortunately thus is not in a form which would be helpful to reproduce in these reasons.
Accordingly, I set out below a schedule of the parties’ assets and liabilities which, for convenience, contains only the items and values either agreed or as determined by me which should be included in the asset pool.
Below the schedule I will deal, item by item, with matters in the schedule requiring either observation or determination, and then also, item by item, the balance sheet matters in dispute which I have determined should be excluded from the pool.

Separate pool – wife’s inheritance received late in the marriage

In relation to the wife’s inheritance received late in the marriage, after giving the matter a great deal of thought, I accept the submission of the wife’s Counsel, Mr James, that her inheritance received late in the marriage should be dealt with as a separate pool. I will give my reasons for this below.

Superannuation

Neither party sought that their superannuation interests should comprise a separate pool. Indeed, in the updated agreed amended balance sheet, the parties treated their superannuation interests as included in the pool “as if property”. In Coghlan & Coghlan (2005) FLC 93-220, the Full Court described superannuation interests as “another species of asset in relation to which orders can be made” (at [53]); and said that a trial judge has a discretion as to how superannuation interests will be treated in a particular case (at [65]). I am satisfied, having regard to the parties’ ages and the circumstances of the case that it is appropriate for the parties’ superannuation interests to be included in the pool.

SCHEDULE

ASSETS

Description	Value
1	Property 2	600,000	A
2	Property 3	500,000	A
3	Property 1	435,000	A
4	Company 1	Nil	A
5	Chattels husband	3880	A
6	Chattels wife	15,105	A
7	Jewellery wife	1,430	A
8	Rolex watch husband	1,450	A
9	Other chattels	Nil attributed	A
10	Mercedes Benz motor vehicle	Unknown	D
11	Addback wife – funds obtained by mortgaging Property 3 in December 2008	75,000	A
9	Addback husband – proceeds of insurance policies received by husband for Holden motor vehicle ($28,300) and contents ($22,100) stolen from Property 4 and Chrysler motor vehicle stolen from Property 2 ($7000) net of $14,149 used for legal fees (item 13)	43,251	D
13	Addback husband –insurance proceeds used by husband to pay legal fees	14,149	A
14	Addback wife – funds taken from her superannuation interests 7 February 2008 and 17 March 2011	317,337	A
15	Addback wife – proceeds of sale Datsun motor vehicle	3,000	D
16	Husband’s AMP superannuation	69,612	A
17	Wife’s MLC superannuation	11,316	A
18	Wife’s AMP superannuation	12,490	A
TOTAL	2,103,020

LIABILITIES

Description	Value
19	Mortgage Property 2	150,000	A
20	Mortgage Property 3	75,000	A
21	ATO debt on business as at date of separation	11,250	A
22	Husband’s credit cards as at date of separation	37,847	A
23	Wife’s credit cards as at date of separation	5,232	A
24	Company 2 business debt as at date of separation	13,000	A
TOTAL	292,329

SUMMARY

Gross assets	2,028,095
Gross liabilities	292,329
NET ASSETS	1,810,691

Items 1 – 3 – real properties

There was no dispute as to the valuation of these three real properties. Items 1 and 2 are mortgaged. The mortgages will be referred to in context below.
Item 3 is the premises upon which the business at item 4 was conducted by the parties during the marriage and post separation conducted by the husband.

Item 4 – the business

Mr T, Z Accountants, provided a report dated 7 February 2011 expressing his preliminary opinion that based on the information available to him the value of the business as at 30 June 2010 was “Negative $31,733 (liabilities in excess of assets).” Although not all aspects of Mr T’s report were accepted by the parties, neither required him for cross examination and each accepted and agreed that the business should have a nil attributed value.

Items 5–9 – chattels

The parties prepared and agreed a division of chattels according to schedules A and B attached to the updated agreed amended balance sheet, the wife to have the chattels in schedule A and the husband the chattels in schedule B at the agreed values of $15,105 and $3880 respectively.
The schedules contain lists also headed “Other items not valued by [Q Valuers] to be retained by wife”, and “Other items not valued by [Q Valuers] to be retained by husband”, each setting out values described as “minimal”.

In relation to item 7, it is necessary to mention that in schedule A the items listed under “Other items not valued by [Q Valuers] to be retained by wife” and described in the schedule as “minimal” include (item 46 in schedule A) “Jewellery in the wife’s possession”. The parties have agreed nonetheless to include this in the pool as a separate item at the agreed value $1430.
In relation to item 8, similarly the parties have agreed to include in the pool the husband’s Rolex watch at the agreed value $1450.
In relation to item 9 “Nil attributed”, I have left this item in the schedule to make clear that nothing in schedules A and B has been overlooked by me. Two things however require specific mention in relation to item 9, namely a gold and diamond necklace and a Rolex watch gifted by the parties to the wife’s late father.

“Over the Top” gold and diamond necklace

The updated agreed amended balance sheet (folio 194) included a disputed item of jewellery described as “Over the Top” gold and diamond necklace. The husband seeks to have this included as an item in the wife’s possession.
The item is included in schedule A (item 46(b)) under the heading “Other items not valued by [Q Valuers] to be retained by wife” as an item not valued but to which is attributed the value “minimal”.
The husband contends that the necklace was purchased about 8 years before the trial for about $7500: letter 12 May 2011 husband’s solicitors to the wife’s solicitors annexed to Mr Selfridge’s written submissions. However, in reply, Mr James submitted that the matter was not taken up in cross examination of the wife nor was the subject of submission by the wife’s Counsel and as such should be disregarded as a separate item and not be included as a separate item in pool.
There is merit I think in this submission. There are cases in which, for good reason, a line must be drawn in the identification and valuation of property for the purpose of a just and equitable s 79 division of property. Whilst having regard to the size of the pool a necklace of some initial $7500 value 8 years ago is not necessarily de minimus, to take the matter further plainly would involve further trial costs. In my view, such at this stage would be unjustified expense for both parties. The wife has a case guardian for good reason: see the reasons for judgment 22 October 2010. The necklace it appears was not produced to [Q Valuers] for valuation. However, doing the best I can, as I understand schedules A and B to be agreed between the parties, and the necklace is included, as I have mentioned, at item 46(b) as “minimal” value, properly I should exclude the item from the asset pool.
The husband presented the case that, overall, to the extent that the wife did not present certain items for valuation, and indeed, allegedly did not make full disclosure and allegedly did not comply with Court orders and or directions in relation to disclosure and valuation, such should be taken into account against her under s 75(2)(o), and that the Weir principle: Weir & Weir (1993) FLC 92-338 should be applied. I will deal with this matter below, when dealing with s 75(2)(o).

Rolex watch gifted to wife’s father

Item 46(j) in schedule A in the list of “Other items not valued by [Q Valuers] to be retained by wife” is an item described as “Rolex watch purchased by the parties for the wife’s father”.
The wife’s father passed away in 1986. The husband alleges that he and the wife had purchased for him a Rolex watch costing some $40,000. The wife said that the watch was very similar to the one purchased for the husband in 1985 for about $2300 (included in the asset pool as item 8, with the agreed value of $1450).
However, irrespective of the value, I accept the wife’s evidence that the Rolex watch was purchased by the husband and the wife as a gift by them to the wife’s father, after he had been diagnosed with a terminal illness, and that upon his death the watch became part of his Estate and owned thus by the wife’s mother, who, a few months later, gifted the watch to the wife’s brother (the Deceased’s son).
On the basis of my acceptance of this evidence, the watch does not form part of the pool and I have excluded it.

Item 10 – Mercedes Benz motor vehicle

Neither party adduced any admissible evidence as to the value of the wife’s Mercedes Benz motor vehicle.
At an early stage of the proceedings, it appears that the parties by their lawyers engaged Q Valuers to value many items, including this motor vehicle. As I understand the matter, Q Valuers was not engaged as a single expert appointed by the Court, but by the parties, to endeavour to agree values for the purpose of an agreed balance sheet.
There was no affidavit by any Q Valuers valuer.
The wife said however that she had been advised (seemingly, according to Mr James’s written submissions, by Q Valuers) that it was valued at about $150 on the basis of two quotations for rebuild or replacement of the engine and repair to the differential. The wife said she had been advised that the vehicle has a “blown engine” and a “blown differential” and advised further that the estimated cost of repair was about $8000.
The husband, who is qualified in the automotive industry, agreed in cross examination that if the engine needed to be rebuilt or replaced and the differential repaired such could cost as much as $8000.
However, as the wife did not present the vehicle for inspection by the husband, or a valuer nominated by him, he was not able to agree that the motor vehicle needs such repair.
During the trial, I directed that the solicitors endeavour to have the vehicle inspected and if possible agree a valuation. However, even after the conclusion of the trial, it appears that the wife resisted this course. In this regard, Stephen Buchanan, the solicitor for the wife, by her case guardian, said in an affidavit filed 26 May 2011 (par 8) “I have been unable to arrange for the cooperation of the respondent wife to have the vehicle[s] valued post the Trial proceedings” and (par 10) “I did not receive the cooperation of the Respondent as she indicated to me inter alia that the vehicle had been valued and that the evidence had been given at Trial and as far as she was concerned that was the end of it” and that he had conveyed this information to the case guardian.
As I have observed earlier, the wife has a case guardian for good reason. Be that as it may, it is clear that the wife has not allowed inspection of the vehicle by the husband or any valuer on his behalf.
The husband initially sought to rely on a “red book” median value of $4350 (annexure MHS45 to his trial affidavit). The wife said in her evidence “I would say that it is for a motor vehicle running and that works”.
After the trial, the husband’s solicitor Andrzej Stanislaw Meysner in an affidavit filed 27 May 2011 said (par 11) that given the reluctance of the wife to enable the vehicle to be valued the husband instructed that there be a “sight unseen” valuation “from previously agreed motor valuers”, namely Y Valuers and annexed a “sight unseen” valuation dated 16 May 2011, part of annexure ASM7, based on “data provided”, in the amount of $5000, but containing the following:
No images of this vehicle were supplied with the data collected. The condition assessed has been based on the letter provided which states that this vehicle was in perfect condition and mechanically very well looked after. For the purpose of valuation we determine “perfect” to mean “very good” as even new vehicles have minor flaws as per standard industrial finish. No odometer reading has been physically cited and the figures used have been supplied by Reardon Family Lawyers as at 2009.
The “data provided” seems to have included a note on Company 1 letterhead, in the husband’s handwriting, signed by him and dated 16 May 2011:
To whom it may concern
[Registration number] Merc [Model] [Year]
This car was in perfect condition body wise and mechanical (sic) very well looked after. Refer [Auto repairer] on [Phone number].
See annexure ASM7 to Mr Meysner’s affidavit in relation to these documents.
Mr James objects to the husband relying upon the valuation obtained from Y Valuers post trial on the basis of procedural fairness as there has been no opportunity for him to cross examine the person who gave the opinion as to value and on the further basis that it does not take into account the wife’s evidence as to the advice to her that significant repairs are required at a cost exceeding the “sight unseen” valuation, namely $5000, so that in effect the present value may be as scrap metal only.
I am unable to resolve the problem in the case caused by the evidentiary gap.
I have considered reconvening the trial, however, the amount in contention, potentially, is less than the cost to the parties of taking that course, involving the parties by their solicitors and Counsel reopening on this issue. Moreover, the wife made clear, according to Mr Buchanan, that she regarded the issue of valuation as, in effect, “closed” and would not present the vehicle for valuation.
It is relatively plain that the “red book” values of motor vehicles are only indicators of value and not admissible evidence of the actual market value of any particular motor vehicle according to its history and condition.
In these awkward circumstances, regrettably, it is not open to me to attribute a value to the vehicle (for example, a midpoint value). Indeed, whilst such course is open to the parties, in the absence of expert evidence, it is my duty to apply the law in cases in which the estimates by the parties are challenged by each other, and where, as the trial judge, accordingly I am unable to determine the value of an asset, that “the preferable course” is to order the sale of the property, as held by the Full Court in Smith & Smith (1991) FLC 92-261 at 78,759:
… [W]here the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations… the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces. …
This is a matter in which, unfortunately, there being no sworn evidence as to value by any person who has inspected the vehicle, and there being considerable disparity between the parties as to its value, I am left with no other course than to order the sale of the vehicle. This is regrettable because, if the wife’s contention is correct, the costs of sale, or attempted sale, may well exceed its market value.
I have considered whether I should give the wife the opportunity to transfer title to the vehicle to the husband if he should pay her the amount of $5000 which he contends to be its value. However, as I recall the evidence, the vehicle presently is not registered, and it is the case that Queensland Transport will not register a transfer absent a current Roadworthy Certificate. If the wife’s contention as to the condition of the motor vehicle is correct, it may be unlikely that she could obtain such in order to transfer title to the husband. Moreover, the wife said in her evidence “I need a car to drive” and “I love the car”.
Doing the best I can I will order that the vehicle be sold by public auction, but make provision that if the parties should agree, they may avoid the operation of the sale order and consequent costs of sale by some sensible agreement. Perhaps, a sensible agreement would entail the vehicle being retained by the wife with some value attributed to it agreed between the wife’s case guardian and the husband by his solicitors.

Item 11 – addback wife – mortgage by wife Property 3

The wife mortgaged Property 3 in December 2008.
The debt the subject of the mortgage presently is about $75,000.
Mr James acknowledged in his written submissions that this amount should be an addback against the wife.
As will be seen, the mortgage debt, item 20, will be a joint liability of the parties, presently included in the schedule at $75,000.
The addback against the wife has the effect that there is no double counting, or disadvantage to the husband.
As will be seen, I will order that Property 3 be sold, and that out of the net sale proceeds the mortgages at both items 19 and 20 be paid, together with any interest accretions accrued since the values attributed in the schedule.
It goes without saying that if at the time of payment of the mortgage on Property 3 it has increased from $75,000 then the amount of the addback against the wife, item 11, should be increased accordingly, with commensurate increase to be represented in par 2 of the s 79 order and the total of par 2 for the purpose of the operation of other provisions in the order.

Items 12 and 13 – addback husband – value of insurance payments for stolen items – question relating to legal fees paid by husband from insurance payments

The amounts the husband received are agreed at $28,300 in relation to a Holden motor vehicle and $22,100 for contents stolen from Property 4 (his residence) on 24 February 2010, those proceeds having been paid to him by Suncorp and CGU respectively, and $7000 in relation to a Chrysler motor vehicle stolen from Property 2, totalling $57,400.
From the $22,100 amount, the husband paid legal fees $14,149.17, this amount being an agreed addback against him (item 13 in the schedule).
The husband argues accordingly that in relation to the $22,100 received by him, the addback at item 12 should be reduced by that amount, so that the addback component in relation to the $22,100 amount be $7,950.83 ($22,100 less $14,149.17).
This contention seems to me to be correct.
Accordingly, I would determine that the amount of the addback for item 12 be $43,251 ($43,250.83, rounded).
Otherwise, the existence of item 13, an agreed item, would “double count” against the husband. That is to say, either the item 12 addback should be $57,400, with item 13 excluded, or item 12 be included as $43,251, and item 13 included. Either way, the collective addback is $57,400, regardless of how the husband used that amount.
The notes to this item in the updated agreed amended balance sheet include that the husband asserts that of the contents insurance amount $22,100 received from CGU, $10,000 was for jewellery stolen belonging to his partner, Ms V.
There is little evidence about this, and my attention was not drawn specifically to it.
Although mention is made of it in the notes, the updated agreed amended balance sheet, on its face, did not suggest that the addback against the husband be reduced by reason of this contention. In short, it was not litigated. In any event, it would be awkward for the husband to contend that of the CGU payment for contents, $22,100, only $12,100 was for his benefit but that he used $14,149 for his legal fees.
Ms V provided an affidavit in the proceedings filed 25 March 2011. She did not mention in that affidavit that she claimed that $10,000 of the CGU proceeds belonged to her. She was cross examined, and mention of this subject matter did not emerge in her cross examination, not surprisingly, because of the absence of mention of it in her affidavit.
As the trial judge, in these circumstances, I consider that the proper conclusion is that I should ignore the husband’s contention in the notes for want of evidence to prove the contention.

Item 14 – addback wife – superannuation taken and used by her post separation – 7 February 2008 and 17 March 2011

This amount is agreed, as superannuation drawn by the wife post separation, $105,000 on 7 February 2008 and $212,337 on 17 March 2011.

Item 15 – addback wife – proceeds of sale Datsun motor vehicle

This is contentious.
In 1977, before the wife met the husband, and at the time of her first marriage to her first husband, the wife’s parents purchased for her and her then husband a new Datsun motor vehicle. The wife described this motor vehicle as a “wedding present for that marriage”. Potentially, thus, this motor vehicle properly is characterised, in relation to that marriage, as a gift to both the wife and her first husband, albeit, potentially, a contribution to the assets of that marriage by or on behalf of the wife.
This motor vehicle was unencumbered when the wife met the husband.
In or about January 2009, post separation, the wife sold this motor vehicle to her ex-husband, described in the material as “[Mr A]”, for $3000.
It was put to the wife in cross examination that the mean “red book” value in January 2009 was $6850. The wife said that her ex-husband, Mr A, was “very good to me”, and “he didn’t bleed me dry” and “I was pleased to give it to him”, in particular because “we had never had a property settlement”.
The wife agrees to an addback against her of the $3000 she received from Mr A.
The husband contends, by reference to a “sight unseen” valuation by Y Valuers dated 16 May 2011 (part of annexure ASM7 to the affidavit of Andrzej Stanislaw Meysner filed 27 May 2011 (after the trial) that the current market value is $8000. The qualification in that valuation was made in similar terms to the qualification in relation to the Mercedes Benz motor vehicle previously set out, the “data provided” including a note on Company 1 letterhead, in the husband’s handwriting, signed by him and dated 16 May 2011 in relation to this motor vehicle that it was “in perfect condition body wise and mechanical”.
Criticism is made of the wife that she did not produce this vehicle for inspection and valuation. She explained however in evidence that the vehicle is no longer in her possession, as it has been sold.
Mr Selfridge made much of the circumstance that, as the wife appears to be on “good terms” with her first husband, she could easily have made this vehicle available “for valuation purposes”.
In relation to this matter, I am faced with a similar difficulty as in relation to the Mercedes Benz motor vehicle, in that there is no sworn evidence as to its market value in January 2009 when the wife sold it to her former first husband.
Arguably, this item should not be in the pool at all, but be excluded and segregated into a separate pool for the reason that the wife owned it before she met the husband and thus he did not contribute to its acquisition or ownership. Possibly, however, if such had been raised, the husband would have mounted argument that throughout the period of his relationship and marriage with the wife, he either maintained it, or assisted with its mechanical and other maintenance and other costs (eg registration, insurance).
Against this is the circumstance that even if there were sworn evidence that this vehicle as at the date of trial might have had the value attributed by Y Valuers (sight unseen), nonetheless the wife and her former first husband had not had a property settlement, so that arguably the wife was entitled to do what she did, namely to “let him have it” for $3000.
The husband, I should think, is on tenuous ground to have this vehicle, or its sale proceeds, included in the pool at all, given that it was already owned by the wife and her former first husband before the husband met the wife. The wife thus would have been on strong ground, I think, to argue that this asset should be excluded from the pool on this basis, or regarded as a “single item” separate pool, to which the husband made no contribution, save perhaps, as I have observed, as to its maintenance and costs during the course of the parties’ relationship and marriage.
As such exclusion however was not argued, I regard the husband as lucky to have the wife’s admission that the value she received, $3000, be included in the pool.
The husband, by his Counsel, sought to contend for a Kowaliw case: Kowaliw & Kowaliw (1981) FLC 91-092, in relation to the wife’s disposal of this vehicle at $3000 in the face of the (unsworn) Y Valuers assessment of value (sight unseen) of $8000. The authorities concerning Kowaliw are dealt with below in a different context and I would incorporate them here by reference. In my view, the above analysis concerning the wife’s disposal of this vehicle has effect that there was no reckless or wanton waste by the wife concerning it. In the circumstances, she was entitled to dispose of it as she did, with no waste to the pool, in recognition of the fact that it was a gift to both her and her former first husband (that is, half hers, half his) and they had not had a property settlement.

In all of the circumstances, I am satisfied that the inclusion in the pool of an addback amount against the wife for the amount she received in January 2009 in relation to the disposal of this vehicle to her former first husband, $3000, is appropriate, and that the husband has no favourable contention to the contrary, even if, which I am unable to find, the present market value of the vehicle is in the order of $8000.
Indeed, even if the present market value should be $8000, so that as between the wife and her former first husband the wife’s interest be assessed as $4000, the difference between $3000 and $4000 is de minimus.

Items 16, 17 and 18 – superannuation interests

I have included these amounts as they appear in the updated agreed amended balance sheet.
As I have observed earlier, although a judge has a discretion as to how superannuation interests will be treated in a particular case, I am satisfied, having regard to the parties’ ages and the circumstances of the case that it is appropriate for the parties’ superannuation interests to be included in the pool. Neither Counsel contended to the contrary.

Items 19 – 24 – liabilities

All items, and the amounts, are agreed as joint liabilities.
I have mentioned already that I will make provision in the s79 order that items 19 and 20, being the mortgages on Property 2 and Property 3 respectively, be paid with interest accretions as at the date of payment from the sale proceeds of Property 3.
The same should obtain in relation to item 21, the ATO debt as at the date of separation, and item 24, the Company 2 debt, if there have been interest accretions on them as at the date of payment.
As to interest accretions on items 22 and 23, the parties’ credit card debts at the date of separation, initially I considered that the husband and the wife respectively should be responsible for interest accretions on the amounts in items 22 and 23, and that the husband could and should have paid his debt from business income, and the wife could and should have paid her debt from her inheritance.
However, on reflection, such would fail to give recognition to the circumstance that the two amounts of credit card debt were at separation, and still are, joint liabilities of the parties, although the credit cards “happen” to be in the names of one or other of them. Put simply, as the debts are agreed as joint debts as at the date of separation, it is immaterial that one card was in the husband’s name and one card in the wife’s name and the matter should be treated as if both cards were in both names. Similarly, as the debts are agreed to be joint debts, it is immaterial that the amount on the husband’s card is considerably greater than the amount on the wife’s card. Thus, any interest accretion on the amounts unpaid at separation should be a joint liability.
Accordingly, I will order that interest accretions on both unpaid amounts be a shared liability, to be paid from the sale proceeds of Property 3.
It will be the responsibility of the solicitors to calculate and agree the relevant interest components, if necessary by seeking that information from the credit card providers. If that cannot be agreed, the matter will have to come back to me as a machinery matter.

Other balance sheet matters in dispute which I have not included in the schedule

“Over the Top” gold and diamond necklace

I have dealt with this matter above.

Rolex watch gifted to wife’s father

I have dealt with this matter above.

Remaining proceeds of sale in solicitor’s trust account $1920

This appeared as item 10 on the updated agreed amended balance sheet, as a contended “residue” amount to be distributed.
In short, by orders made throughout the proceedings certain items were sold, and part of the proceeds used to pay specified accounts, with the balance to be retained in a solicitor’s trust account: see the orders made on 3 July 2009, 20 October 2009, 18 December 2009 and 15 June 2010 (annexure A).
There is now the remaining balance $1920.
There is however an existing order in relation to that amount which must be obeyed. In particular, pars 1 and 2 of annexure A of the order made on 15 June 2010 makes this clear. Upon the carrying out of that order, there will be no amount to be included in the pool.
I would emphasise that there is no authority for the remnant $1920 to be used to pay for any valuations other than those expressly referred to in annexure A to that order, despite suggestions by the husband’s solicitors to the contrary.
The order must be carried out.

Wife’s inheritance – separate pool

Before proceeding to other matters, it is necessary to deal with the wife’s inheritance from her mother. (This is not to be confused with the matter of gifts/assistance from the wife’s parents in relation to Property 2 and Property 3. I will deal with these matters when dealing with contribution).
Mr James summarised the position succinctly. He put that the wife’s mother passed away, as is the case, in 2004.
The wife subsequently commenced Testator’s Family Maintenance proceedings in the Supreme Court of Queensland.
These proceedings were settled between the wife and her brother, who was Executor of the wife’s mother’s Estate. Between 24 February 2006 and 4 December 2007 the wife received 14 payments from her mother’s Estate totalling $369,500.
The wife, as I find, paid $27,000 in legal fees in relation to the Supreme Court proceedings, which were incurred by her prior to and/or in the course of settling the action. See annexure MHS5 to the husband’s trial affidavit, in particular the Estate Cash Distribution Summary, showing, clearly, the disbursement 24 February 2006 “repayment of costs” $27,000 (the second item in the Cash Distribution Summary).
The genesis of this issue is that the $27,000 legal costs initially had been funded by the business.
The wife contended that the 24 February 2006 “repayment of costs” $27,000 was a payment to a bank account of the business. Indeed, the wife was able to show by reference to the business’s NAB bank statements that this amount was reimbursed to the business in February 2006: ex 8. See also, which I accept, Mr James’s written submissions, pars 32-35, on this point. Thus, whilst the business initially paid the legal fees, it is clear that the amount was reimbursed with effect, as I find, that the wife received net $342,500 cash from her mother’s Estate.
The wife received also a share portfolio from her mother’s Estate. Most of the shares were sold in transactions between October 2007 and November 2009, resulting in the wife receiving $302,712.29.
The wife continues to hold a small parcel of shares valued at $363.48.
The wife, it appears, otherwise has spent all of her inheritance, partly pre-separation between February 2006 and October 2007, and the balance post separation.
The husband, by Mr Selfridge, argues for the inclusion in the pool of the whole of the wife’s inheritance, in effect, $645,575, namely the 2 amounts $342,500 cash and $302.712 share sale proceeds, as well as the small remnant parcel of shares $363.48, as an addback against the wife.
The wife resists this, and seeks that her inheritance be regarded as a separate pool, for the following reasons, first on the basis that the inheritance was received very late in the parties’ lengthy relationship and marriage, and secondly on the basis that husband made no contribution to it.
It is I think incorrect however to contend that the husband made “no” contribution to the wife’s inheritance.
Although described by the parties as the wife’s “inheritance”, it was not really such, but the result of a court action which required the husband and the wife to risk legal costs. However, as the parties have used the term “inheritance”, it is convenient to use the same expression.
It is important thus to observe that the amount $645,575 received by the wife was not received without effort, for example, by mere inclusion in her mother’s Will, but achieved only after the risk of the court action.
The matter thus is quite different from a straight forward bequest by Will to the wife, to which certainly, if such had occurred, the husband could not be heard to claim any contribution.
That said, the husband’s contribution nonetheless was small, when it is considered that the legal fees $27,000, paid out from funds of the parties’ then joint business, were not great in amount compared with the value $645,575 received by the wife, with the legal fees then reimbursed in full.
The circumstance of the late receipt of the wife’s inheritance, towards the end of the parties’ lengthy relationship and marriage, and the considerable size of the amount the wife received, when compared with the parties’ own assets absent reference to the wife’s inheritance, persuade me that it is appropriate to regard it as a separate pool: Norbis & Norbis (1986) 161 CLR 513 at 523-4. Zyk & Zyk (1995) FLC 92-644 at 82,509-510.
Further, Mr James in his written submissions referred to Bonnici & Bonnici (1992) FLC 92-272, urging that I consider the wife’s inheritance as a separate pool:
37.It is submitted, having regard to the length of the relationship, which came to an end in October 2007, and the fact that the wife did not begin to receive any payments from her mother’s estate until 2006, the inheritance was received late in the relationship.
38.The Full Court in Bonnici and Bonnici (1992) FLC 92-272 considered how an inheritance received late in the relationship should be treated when determining the distribution of property. In this regard, the Full Court said:
“The more difficult issue in this case is as to whether [the husband’s inheritance] should be treated differently from other types of property in which the parties clearly have an interest.
The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
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.
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 moneys received by the husband from the sale of the freehold and from his uncle’s estate should be brought into account.” (Mr James’s emphasis)
39.It is submitted that there is no evidence to suggest that the husband contributed to the care of the wife’s mother prior to her death. Nor is there evidence that would support a finding that he contributed to the protection of a property. Rather, he confirmed in cross-examination that the wife’s mother resided in a nursing home prior to her passing. It is submitted that having regard to the lack of contribution by the husband towards the inheritance received from the wife’s mother’s estate, together with such inheritance being received very late in the relationship, it is appropriate to deal with the inheritance from the mother’s estate as a separate pool.
I accept Mr James’s submissions, and, as indicated, determine that in the particular circumstances of the case it is appropriate to deal with the wife’s inheritance from her mother’s Estate as a separate pool.
Accordingly, I reject Mr Selfridge’s submissions that the wife’s inheritance should be an addback against the wife in the one pool.
However, that is not the end of the matter.
I have mentioned the husband’s contribution, being the shared risk of legal costs, subsequently fully reimbursed. This contribution was so small however in relation to the overall outcome of the amount received by the wife that it should be given some but not great weight.
Even if that view should be considered wrong, and it be considered that his contribution be given modest weight, or even greater weight, by reason of the parties’ joint outlay and risk of the legal fees, there is another powerful factor to regard the inheritance not only as a separate pool, but, as I determine, a pool to which the husband has no present entitlement to any just and equitable share.
That factor is, as submitted by Mr James, the husband already has had whatever benefit possibly he could claim in relation to the wife’s inheritance based upon contribution because, during the period February 2006 – October 2007, when the parties separated, most of the amount of $342,500 cash was already received, and the husband thus shared so much of it as was spent during the course of the marriage until the separation (all but $5000, not received by the wife until 4 December 2007: see the Estate's Cash Distribution Summary annexure MHS5 earlier referred to).
An earlier version of the parties’ balance sheet filed 18 April 2011 (folio 179) showed (item 22 in that document) that as at the date of separation the wife had $146,702 in bank accounts ($110,704 and $35,998). It is not suggested that the wife earned this by employment or by other means, and it seems plain that such represents the balance she then had of the cash received by her from her mother’s Estate. (In particular, the shares sales were later: see the dates in the updated agreed amended balance sheet filed 26 May 2011, showing that the shares sales commenced 31 October 2007, that is, after the parties’ separation on 3 October 2007).
Thus, it appears that in the last 18–20 months of the marriage the husband and the wife enjoyed the expenditure of some $191,500 ($342,500, less $5000, less $146,000, rounded), so that, as submitted by Mr James, if I should find that the husband has made some contribution to the wife’s inheritance that would warrant a distribution to him or part of it “It is submitted he has already had the benefit of such a distribution”: Mr James’s written submissions, par 94.
In support of that argument, the wife deposed in her affidavit filed by leave on 28 April 2011 that before the separation she spent from her inheritance about $30,000 on extensive renovation to Property 2, about $25,000 in relation to a holiday for H’s 18th birthday and about $15,000 for sport events for H. These collectively amount to about $70,000. Elsewhere, the wife said that in the 12 months prior to the separation she had to “prop up” the business by “cash injections” of more than $100,000 from her inheritance: wife’s trial affidavit, par 45. The husband denied this. In relation to the business however there are at least two evidentiary matters referred to by Mr James to support the wife’s evidence. These are set out in Mr James’s written submissions, pars 96-100, namely that in an earlier affidavit filed by the husband he had deposed that “additional funds” deposited to a loan account were used to “top up” the business account, and that it was clear on the husband’s own material that the business could not always meet its obligations, evidenced by inability of the business to pay the Company 2 account as at the date of separation (item 24 in the schedule).
In any event, whether or not any of these “particulars” of expenditure by the wife from her inheritance in the latter part of the marriage are proved, it is relatively clear, by way of calculation, as mentioned, that in the last 18–20 months of the marriage some $191,500 of the wife’s inheritance was used by the parties in the course of the marriage (the wife having accounted directly for about $170,000 of this amount), so that, to the extent of contribution by the husband to the wife’s inheritance, by risk of the legal fees during the marriage, fully reimbursed in February 2006, I am satisfied that in relation to his contribution to the wife’s inheritance that would warrant distribution to him of part of it “he has already had the benefit of such a distribution”: Mr James’s written submissions, par 94.

Wife’s Suncorp account – $20,832

The updated agreed amended balance sheet, at item 11, referred to a Suncorp “Everyday Basic Account” in the name of the wife with the balance of $20,832 as at 5 January 2011.
Mr James, in his submissions in reply, par 29, referred to this item, which in the notes to the balance sheet is described as a “Refund from [Dr B]”. Mr James submitted that it is uncontroversial that the wife’s only source of income after 2002 (when she ceased employment) was (1) the inheritance she received from her mother’s Estate; (2) the mortgaging of Property 3; and (3) access to her superannuation (all previously referred to). Mr James submitted that, as such, it can be inferred that the refund from Dr B was a refund of money from one of these sources. The date of the account, 5 January 2011, would indicate that the source indeed is one of these, so that to deal with the refund as a separate item of property would be to count it twice. I accept this submission.
Accordingly, I have not included this amount in the pool.

H’s AMP Education Fund used by husband

The updated agreed amended balance sheet, item 14, refers to an AMP Education Fund or policy which was used by the husband and H after separation, for about 6 months, for rent, furniture and establishment costs. The amount in dispute is $25,791. The wife seeks that this amount be an addback against the husband. The husband disputes this, on the basis that his use of these funds was reasonable and necessary for his and H’s living costs post separation.
Mr Selfridge deals with these matters in his written submissions, par 52 (page 14) referencing the husband’s trial affidavit, pars 46 and 66. I am satisfied with the husband’s explanation as to his use of the AMP funds as reasonable and necessary.
Accordingly, I have excluded this suggested addback amount from the pool.

Wife’s legal fees – 211, 244

The updated agreed amended balance sheet included this as item 21, the husband seeking to have it included in the pool as an addback against the wife.
Mr James, in his written submissions in reply, par 37, dealt with this matter in the same way as the wife’s Suncorp account $20,832 referred to above. In short, Mr James submitted that the wife’s only source of income since 2002 has been (1) the inheritance; (2) the mortgaging of Property 3; and (3) her superannuation; so that it can be inferred that the wife’s payment of her legal costs must have come from one of these sources. I accept this submission.

Tax unpaid on income from the business/husband’s personal tax post separation $84,319

The parties agreed that income tax outstanding on the business as at the date of separation $11,250 be a joint liability: item 21 in the schedule.
The husband contends that there should be joint liability also for income tax payable in respect of the business/husband’s personal tax post separation in the amount of $84,319 plus accretions. The wife resists this.
Mr Selfridge submitted (written submissions, page 14, par 49) that the balance of the income tax assessed and unpaid by the husband in respect of the business post separation to date has arisen in circumstances in which the husband has spent $74,000 in relation to the mortgage on Property 2, and other considerable sums (Mr Selfridge’s written submissions, pp 12–13, par 41), including payments for the lease of a Holden motor vehicle, payments to reduce business overdraft account/s and spousal maintenance to the wife $236 weekly from 3 July 2009 being 20 payments of in aggregate about $4,720.

In respect of the $74,000 mortgage payments, Mr Selfridge submitted that whilst in the post separation period the wife was spending her inheritance on herself, the husband made these payments out of business income, when he solely was operating the business, to preserve the assets of the parties, in particular Property 2, with no assistance from the wife, and that the business/personal post separation tax liability commensurately has been incurred such that if he had paid the business/personal tax rather than the mortgage payments he would not now have the post separation business/personal taxation liability, but Property 2 would have been placed in financial jeopardy. Mr Selfridge submitted, saliently (written submissions, par 51):
51.The husband has continued to maintain the mortgage in relation to the property to enable the wife to remain living in that property albeit in relative luxury to the husband’s circumstances which has resulted in him being unable to meet his other outgoing liabilities particularly in relation to tax. By comparison to the wife’s circumstances, the husband has had to find alternative accommodation and re-establish himself.
At first blush, there is force in this submission, particularly because, but for the husband’s mortgage payments amounting to about $74,000 in respect of Property 2, the mortgage debt in respect of it, as a joint liability, potentially would be some $224,000, or more, rather than $150,000 (item 19 in the schedule).
However, Mr James submitted (written submissions, pars 45–53), in essence that the husband relied on an affidavit by his accountant Mr M filed 31 March 2011 which exhibited ATO correspondence showing a summary of the taxation liabilities for both the husband and the business, including general interest charges and penalties imposed upon the husband for failure to lodge his 2010 tax return, failure to remit GST, PAYG withholding tax and other matters including penalty for failure to lodge a BAS return. There is much force in Mr James’s analysis, and consequent submissions, with effect that, according to Mr M’s evidence not all of the post separation ATO debt of the husband and/or the business $84,319 can be directly or even consequentially attributable to, in particular, the husband’s expenditure of about $74,000 towards the mortgage on Property 2 in order to preserve it as an asset in the pool.
In my view, Mr M’s analysis, relied upon and summarised by Mr James, has effect that the $74,000 spent by the husband in the post separation period in relation to the Property 2 mortgage is appropriately dealt with as a matter of contribution by him in the post separation period, and indeed as a significant contribution by him in the post separation period, but does not have effect that the post separation business tax liability should be regarded as a joint liability in the pool.
Accordingly, I will take into account when assessing post separation contribution the husband’s post separation mortgage payments but determine on the basis of Mr M’s evidence and Mr James’s submissions in relation to it that the post separation ATO debt $84,319 should be the sole liability of the husband on the basis that post separation he solely operated that business and solely received all income from it.
To determine otherwise would require an accounting by the husband to the wife of all income from the business post separation, in which she has not shared, with effect that nor should she share the income tax burden upon that income.

Contribution

Principles relevant to the assessment of contribution

In Kessey and Kessey (1994) FLC 92-495 at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
… In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party. (emphasis added)
In Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881 a differently constituted Full Court (except for Baker J) said:
28.In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: … (emphasis added)
In Farmer and Bramley (2000) FLC 93-060, Kay J clearly stated two things, namely:
The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstances (par 68); and
There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed (par 69).
In Figgins and Figgins (2002) FLC 93-122 Nicholson CJ and Buckley J made the timely reminder, at par 134:
134.… Marriage is and should be regarded as a genuine partnership to which each brings different gifts. …

Principles relevant to gifts from a spouse relative

In relation to gifts from a spouse relative, the following authorities are relevant.
In Gosper and Gosper (1987) FLC 91-818 at 76,168, Fogarty J said:
Normally, where title to a property is transferred to one or both of the parties that would be the strongest indicator of the intention of the donor.
In this particular case it is clear that the gift of the land at McCrae was a gift by the wife’s father to both of the parties jointly. The evidence and the transfer into their joint names makes that clear and indeed the wife’s counsel did not really contend to the contrary.
…
Where a gift is made solely to the donor’s relative … and that spouse applies that property to the marriage, that is a direct financial contribution solely by that party and will be assessed in the ordinary way alongside other contributions by each party to the marriage. ...
…
The critical case is where a relative of one of the parties gifts property to both of the parties to that marriage. Dependent upon the circumstances of the case it is, in my view, open to the Court in such a case to look at the actuality and treat that as a “financial contribution made directly … on behalf of” the spouse relative …
In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made “because she was a daughter of that family” as was said in W’s case at p. 75,527.
…
In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them. (emphasis added)
In Kessey and Kessey (1994) FLC 92-495, the Full Court referred to the lack of evidence in that case to establish intention to benefit other than the donee (at 81,149-150):
In the present case the trial Judge found (as earlier quoted) that the evidence did “not clearly establish the intention of the deceased mother” and that it would not be open to him to infer what probably her intention was. We would say at this point that we were not taken to any evidence that would challenge his Honour’s finding that the evidence did not establish the intention of the deceased mother. We also agree that the trial Judge was correct in concluding that it was not open to him to infer intention on the part of the mother. (emphasis added)
Then, as to principle, the Full Court said (at 81,150):
… It may well be, however, that the trial Judge’s approach and our approval of it, go somewhat further than what was said by Fogarty J. in Gosper. This is because this case would establish that where there is no evidence of any intention by a parent-donor as to whether he or she wished to benefit only his or her child or also to benefit the spouse of the child as well as the child, then the fact of the parent-child relationship, especially in circumstances where that has been a relationship of support on the part of the child, will be sufficient to establish a contribution of the donation by or on behalf of the child of the parent. In other words, a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child. (original italics, emphasis added)
In Pellegrino and Pellegrino (1997) FLC 92-789, Chisholm J at 84,727 referred to the difficulty in applying “the qualifying paragraph” in Gosper (the par commencing “In other cases …” set out above):
My task is to apply the law as formulated in the decisions to which I have referred. The critical question, I think, is whether this case falls within the following paragraph of Fogarty J’s judgment, already quoted:-
“In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them.”
For convenience, in the following discussion I will refer to this paragraph as “the qualifying paragraph”. The issue is, when does this qualifying paragraph apply? In what sort of circumstances does the evidence not justify the conclusion that the contribution was made on behalf of the spouse? This is an important issue, because parents often provide financial assistance to their married children. Often, perhaps usually, they do this in a way that benefits their child and their son or daughter in law. Often there is no specific evidence of their intention at the time. I think I can take judicial notice of the fact that frequently parents make such provision in a way that does not involve them formulating or specifically considering whether they intend to benefit their own child or both parties. They are happy to benefit both parties. The gift, as vividly illustrated by the provision of a home in this case, might inherently benefit both. Also, they will realise that their own child’s happiness is bound up with that of their son or daughter in law, so that benefiting one will benefit the other indirectly. They may also have in mind other benefits associated with an extended family, being involved with grandchildren, and enriching the complex web of obligations and attachments that characterise extended families.
and then at 84,728 said:
I return to the question whether this case falls within that I have called the “qualifying paragraph” of the judgment by Fogarty J in Gosper, quoted earlier. My reading of the authorities is that in such cases it is normally appropriate to treat the provision as a contribution made by or on behalf of the spouse whose parents made it. I am not sure precisely what cases fall within the qualifying paragraph. An example might be, perhaps, where the parents’ gift is in recognition for some service made to them jointly by the parties. …(emphasis added)
In Lorriman and Lorriman (unreported) Appeal No EA47 of 2004, 5 November 2004, the Full Court said at par 31:
The correct approach to gifts coming from the family of one of the parties appears to be settled in law. In Gosper and Gosper (1987) FLC 91-818 Fogarty J concluded that such an advance ought generally be treated as being a contribution made by or on behalf of the party from whose family it came. His Honour added a rider that if there was evidence that the donor intended to benefit both spouses, such a conclusion may not be justified. In such circumstances the court may determine that it should be treated as an equal contribution by both parties to the marriage. See also Balnaves v Balnaves (1988) FLC 91-952; 12 Fam LR 488, and Kessey and Kessey (1994) FLC 92-495; 18 Fam LR 149. In Pellegrino v Pellegrino (1997) FLC 92-789; 22 Fam LR 474, Chisholm J when considering Gosper spoke of the qualification to the general proposition expounded by Fogarty J as “the qualifying paragraph. …(original italics, emphasis added)
In Lorriman, the donor expressly had acknowledged that certain gifts had been made to both a daughter and son in law. Counsel for the son in law had conceded, “correctly”, the Full Court said, that nonetheless were it not for the relationship between the donor and his daughter, the gifts would not have been made (Lorriman, par 32). The Full Court then (at par 33) considered what weight should be given to the gifts overall in that particular case, adding (at par 33):
… [T]hese gifts should be viewed within the matrix of the entire contributions made by or on behalf of the parties throughout their long relationship and up to the date of the hearing. …
In Lorriman, the gifts amounted to in excess of $250,000, progressively given during the marriage. The pool was a little less than $1,000,000. The Full Court, in re-exercising the discretion, assessed contribution on behalf of the wife having regard to the gifts as 60 % in the wife’s favour and 40 % in the husband’s favour (par 33).

Contributions

I would emphasise that in this part I deal with contribution to the assets represented in the schedule and not contribution to the wife’s inheritance, which I have dealt with already as a separate pool.

Initial contribution – 1978/1979

When the parties met in 1978 or 1979, neither had significant assets.
The wife owned a Datsun motor vehicle, subsequently disposed of by her for $3,000, as discussed, with this amount remaining in the pool.
The husband says he had a Datsun motor vehicle (which he says in his trial affidavit he still has, although it is not in the balance sheet), some furniture including a lounge room suite, and other chattels including a tuckerbox freezer and refrigerator which all up (including the motor vehicle) he values at about $20,000 at the time.
Neither party had debts.
There is no reason I think to give other than equal weight to the parties’ initial contributions, particularly having regard to the passage of time.

Contribution – Property 2 – 1980 – 1986/1988

The parties moved from Sydney to the Gold Coast in about 1979/1980.
Significant events occurred in 1980 relating to contribution.
On 6 October 1980, some 2½ years before the parties married in April 1983, the wife says that her parents purchased for her a block of land at Property 2, for which her parents paid $34,900. The wife’s parents purchased that property in the wife’s name as and from 6 October 1980: wife’s trial affidavit annexure TKS6. There was no mortgage on the property, so the wife owned it outright in her own name. The wife says her parents then paid for the construction of a home on the property, at the cost of $55,000, and a boat ramp and pontoon costing $10,000. The property and construction costs however were not a gift to the wife. On the contrary, she says that she agreed with her father that she would repay the whole amount outlaid $100,000 ($34,900 land, $55,000 house, $10,000 boat ramp and pontoon), and that she was to repay her father the $100,000 from income earned by taking in boarders.
She says that two boarders at a time were taken in for between $35 and $65 per week over the period of 6½ years, until her father died on 5 June 1986. (October 1980 until June 1986 is actually about 5½ years). She says that “we” (meaning, plainly, she and the husband) paid to her father “exactly $200 per week” and “my father kept a book in which he recorded those payments”. Plainly, rent from two boarders at $35 – $65 per week (whether collectively or each) would not have amounted to $200 per week. The wife says she and the husband subsidised the $200 weekly payments by their earnings, the wife as an airline employee and the husband as a manager with a company on the Gold Coast. The wife says she was earning about $288 per week and the husband about $192 per week. The husband disputes this saying that the wife was earning about $400 per week gross and he was earning about $350–$400 per week gross, and that he also worked at weekends in his trade earning on some weekends, an additional $1,000 per weekend.
The husband says that he and the wife socialised frequently with the wife’s parents and sometimes would give the wife’s father between $600 to $2,000 per week. The wife says that such figures were not possible having regard to their income. The husband says that there were three boarders at the time, not two, at $60 per week initially in 1980 increasing gradually to $120 per week by 1988. The husband agreed that the wife’s father recorded the dates and amounts of payments in a book. The book is now lost or destroyed.
The wife says that as at the date of her father’s death, 5 June 1986, she and the husband had repaid $52,000, and that after her father’s death her mother forgave the remaining $48,000. The wife was very specific in her evidence as to these figures. The wife thus regards the $48,000 forgiven as a gift to the parties to be taken into account as a contribution made by her or on her behalf: Kessey (above) at 81,150.
The wife says also that when she and the husband separated in 1981 (par 10 above) her father repaid to the husband “all the money that he had paid towards the reduction of debt on the home prior to the separation”: wife’s trial affidavit, par 43, and her oral evidence.
However, as I have mentioned already (pars 11-13 above) the parties reconciled in about 1982 and married in April 1983. Plainly, the payments to the wife’s father then continued until his death in June 1986. If the wife’s father, in 1981, repaid to the husband the moneys which the husband had contributed from October 1980 (when Property 2 was purchased), and if, as the wife contends, the payments were $200 weekly, then any amount repaid to the husband would have been modest ($200 per week for one year would amount to $10,400; possibly, if the husband was repaid, conceivably it would have been about half that sum being the modest amount of about $5,200). I need not however determine this aspect of the matter because, if the repayment occurred, it was now some 30 years ago, being very early in the parties’ relationship and indeed before their marriage.
As I have said, the wife claims that upon her father’s death her mother forgave the remaining debt of $48,000. The husband disputes this, contending that he and the wife repaid to the wife’s parents the full $100,000.
It is not possible to determine now without documentary evidence whether the $48,000 was forgiven or the whole $100,000 repaid. I will however make some observations. The husband’s evidence is telling. He said (trial affidavit, par 26(a)(vi)) that by 1988 “The loan was repaid in full”. The husband said that he knows this because in or about December 1988, when the wife was about 8 months pregnant with H, he and the wife had dinner with the wife’s mother. He said: “…We got around to discussing the loan over the meal and the wife’s mother said: “It is all paid”. I said: “That is great, it’s been a long haul with the boarders and I am glad it’s over and we can look forward to [H]. We were all very happy. …”

The husband referred also to an incident post separation on 23 December 2010 about which the husband made complaint to the Queensland Police Service, alleging that the wife telephoned him saying “You’re fucked, you’re fucked”, the QPS report noting that a witness reported that the call “only lasted for around 10 seconds”: ex 7.
In other evidence, the husband detailed allegations of verbal and other harassment of him by the wife post separation describing it as “irrational and denigrating”, which has adversely affected the business. He describes “several unannounced and provocative” visits from the wife and H to the business premises, and his rented premises, and several anonymous threatening telephone calls including death threats and calls saying things like “All your money is going to be gone. All your money honey, you’ll be broke. You won’t have one cent left, you bastard”, and attendances by the wife at the business harassing staff saying things like “This is half my business. Look here, I have the rate notice”, saying to the husband “I haven’t finished with you. I’m going to kill you”, and variously either at the business or in telephone calls “You are going to lose your business, it’s going to be shut down”, the wife at the time being “out of control” and “screaming her lungs out”. Other examples include “It’s all going to happen. I’m going to bury you. Ha Ha Ha”, and other examples too numerous to reproduce in this judgment.
Earlier in his affidavit (pars 5–7), the husband said that during the marriage and particularly after her father’s death the wife “would become quite angry on occasions and would attempt or succeed in physically harming me or damaging my property”, giving examples, in the 2 years leading up to separation, of numerous occasions punching him in the back saying “Oh no, he’s home, it’s not him, is it? Why can’t you go back to work?”, then throughout the marriage generally “for years prior to separation” threatening divorce “as soon as [H] left school”, insisting that he do the washing and/or ironing because she would not do it, saying to him many times “Why don’t you go and put a gun to your head and blow your brains out”, being critical of almost everything he did, not leaving him alone to enjoy his hobbies, throwing things at him, on at least 20 occasions during the last 10 years of the marriage, throwing cups of hot coffee and wine glasses at him, smashing an oven door by “slamming it about 30 times until it exploded”, in relation to H holding her sport dresses over the swimming pool and threatening to drop them in if H “didn’t co-operate”, in September 2007 (the month before separation) attending at the business premises and yelling at him then slapping him in the face and on 2 occasions during the marriage damaging a mudguard to his vehicle and kicking a mudguard on his vehicle, each costing about $200 to repair.
Mr Selfridge submitted that the husband’s evidence shows that he has suffered “abuse” by the wife both during and after the marriage and this has had “impact on him mentally” and on his business both during the marriage and post separation because of the wife’s “continued aggression and abuse”.
As to the allegations that the abuse has had “impact on him mentally”, Mr Selfridge relied (written submissions, par 25, footnote 11) only upon:
· an alleged admission in Mr James’s written submissions: “It has never been in contention and is conceded by the wife at par 103 of her Counsel’s written submissions that the husband has suffered from mental health issues associated with these proceedings” and
· exhibit MHS49 to the husband’s affidavit being the report by Dr L dated 22 May 2009 (earlier referred to) “which outlines the husband’s mental health diagnosis and associated factors” and which Mr Selfridge contended “remains as uncontested evidence before the Court”, the relevant part of the report relied upon being at p 5:
From the history and mental state examination, it appears [the husband] is suffering from an Adjustment Disorder with mixed emotions (anxiety/depression). The stressors that have perpetuated this appear to be the behaviours of his ex-wife [Ms Dresdon-Stellard], not only in their marriage in which he has described her malicious and vindictive behaviour, but after their separation, in which she has attempted to discredit financially and personally. It also appears she has been instrumental in turning their daughter against him especially since [the husband] started a new relationship with another woman.
First, I do not read par 103 of Mr James’s written submissions as “conceding” that the husband has suffered from mental health issues “associated with these proceedings”. On the contrary, Mr James’s written submissions, par 103 (dealing, I should say, with the s 75(2) factors) reads as follows:
103.…Despite suffering from his own mental health issues in the past, the husband deposes that he has generally recovered. …
There is no reference to such being “associated with these proceedings”, let alone any concession that the husband’s “mental health issues in the past” were caused by or linked to any conduct of the wife.
Further, Mr James, in reply, (written submissions in reply, par 19), referred to the circumstance that on the husband’s own evidence (trial affidavit, par 51) his post separation “stress” was exacerbated by other factors, including the “downturn in his business”, and other matters which have nothing to do with the wife:
45.The husband asserts by his Counsel that his stress has been exacerbated by the thefts from [Property 2] and the downturn in his business, which he attributes in part to ‘further competitors in the area, the downturn in the economy, and “do it yourself” [customers]’.
The thefts, and the decline of the husband’s business attributed, even in part, to “further competitors in the area”, “the downturn in the economy” and “do it yourself” customers, cannot be sheeted home to the wife under the Kennon banner.
Secondly, in relation to Dr L’s report, relied upon by Mr Selfridge as “uncontested evidence”, the paragraph of the report relied on does no more than describe stressors which the husband, it appears, having regard to the report as a whole, described to Dr L, Dr L first observing that it “appears” the husband was suffering from an Adjustment Disorder and that the stressors that have perpetuated this “appear” to be … matters complained of by the husband to Dr L.
The matters complained of by the husband in his affidavit, and as told to Dr L and recorded in his report, seem to me not to be the sorts of matters capable of coming within “the narrow band” of matters in which a Kennon factor adjustment properly is considered. Further, the husband’s Kennon case must fail because of the want of any evidence as to how the husband’s condition, even if caused by the wife, affected his ability to contribute either during the course of the marriage or subsequently, and this cannot be inferred.
I will refer now to the relevant principles concerning this aspect of the matter.
In Spagnardi and Spagnardi (unreported) Appeal No EA26 of 2003, 8 September 2003, the Full Court considered the question whether a trial judge may infer from evidence that the result must be that a party’s contribution has been affected. (See Spagnardi, par 42).
At pars 47 – 48 in Spagnardi their Honours said:
47. An insufficiency of evidence in the present case leaves the Court with a limited ability to deal with allegations in the context of section 79 proceedings. As Kennon has established it is necessary to provide evidence to establish:
·   The incidence of domestic violence;
·   The effect of domestic violence; and
·   Evidence to enable the court to quantify the effect of that violence upon the party’s capacity to “contribute” as defined by section 79(4).
48. We do not agree that the evidence in this case could properly have led to an adjustment pursuant to section 79. There was no suggestion by counsel of (sic) the wife that his Honour did not correctly summarise the evidence in relation to this topic. The particular deficiency apart from those referred to by the trial Judge is the complete absence of evidence as to how the husband’s conduct affected her ability to contribute.” (emphasis added)
It is clear, despite these passages, that the Kennon principle is not limited to domestic violence but other forms of conduct falling short of that: Kennon, 84,294.
Nonetheless, in the present case, in my view, as was the case in Spagnardi, there is the “complete absence of evidence” as to how the wife’s alleged conduct (even if it be regarded as proved) affected the husband’s ability to contribute; and further a “complete absence of evidence” to enable me to “quantify” the effect of the wife’s alleged conduct (again, even if it be regarded as proved) on his capacity to contribute, or indeed made such more arduous.
Moreover, whilst it is recognised that in some cases the impact of violence or other conduct on a person is obvious, or a likely inference from the facts, such that certain kinds of violence or conduct must have affected a person’s contributions or made them more arduous, in my view such is not the case here. In Spagnardi the trial judge at first instance, set out by the Full Court at [45], had said:
45.It seems to me that that question of interpretation of the judgment in Kennon is of great importance in resolving this matter. As has been apparent, I have found it a difficult one. It seems to me that the question of whether the evidence in this case is admissible or not, is one of some difficulty. It is partly one of difficulty because the wife’s material, although it refers to some specific acts of violence, does not expressly refer to the impact of the violence on her contributions. It cannot, however, be the law that the failure to state such matters expressly is necessarily fatal to such evidence; there must be cases where it is obvious or a very likely inference from the facts, that certain kinds of violence must have adversely affected a person’s contributions. The question in the present case is whether the material on behalf of the wife can be said to fall within that category.” (emphasis added)
The husband, in my view, most certainly is not in the position that the matters complained of by him are in that category.
Mr James, in his written submissions, par 125, referred to Kennon at 84,294-5, in which Fogarty and Lindenmayer JJ emphasised that the principle should only apply to exceptional cases:
However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters – a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
Further, their Honours referred to the “relatively narrow band of cases” to which the principle should apply (84,294-5):
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply.
…
It does not encompass … conduct related to the breakdown of the marriage.
Further, in Kennon their Honours said (84,294):
… It is a matter of common sense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.
Mr James thus submitted:
127. It is submitted that it is of critical importance for a claim based on Kennon argument for there to be evidence not only about the conduct but for there to be evidence to enable the court to quantify the effect of that conduct upon the other party’s capacity to contribute.
128. In the current matter the husband complains of the conduct associated with the breakdown of the relationship in October 2007, and of various conduct following separation, which the wife denies. It is submitted that having regard to the decisions of Kennon and Spagnardi any conduct complained of leading up to the breakdown of the marriage, and certainly any conduct following separation, cannot form the basis of a Kennon argument. However, if this Court were to accept that such evidence is relevant to a Kennon argument, it is submitted that the husband has not placed evidence before this Honourable Court that would enable this Court to quantify the effect, if any, upon his capacity to contribute.
Whilst it is not the case that “any” conduct leading up to the breakdown of the marriage necessarily is excluded, (although conduct at the breakup of the marriage is excluded), and I do not express any view as to whether conduct following separation cannot form the basis of a Kennon argument, at least in relation to post separation contribution, I accept Mr James’s submission that there is no evidence to enable me to quantify the effect, if any, upon the husband’s capacity to contribute and, as I have earlier determined, the conduct complained of in my view is not such as to fall into that narrow category of cases where effect on contribution can be inferred.
I have mentioned already, in dealing with post separation contribution, that although the value of the business diminished while the husband operated it post separation, absent the wife’s involvement in the business after separation, specifically I have not taken this into account against him in any negative way but rather taken into account his positive contribution post separation.
The husband has failed in my view to establish a Kennon factor adjustment argument.

The section 75(2) factors

The husband is 57 years and the wife 59 years.
The husband will retain the business. Although it is in the balance sheet at a nil value, and indeed negative $31,733 liabilities over assets as at 30 June 2010, there is no present reason to think that the husband cannot continue to operate the business and to earn income from it. Indeed, even if the land on which the husband conducts the business should need to be sold there is no reason to think he could not endeavour either to lease back the premises or lease another premises to continue the business. Even if the husband were to close the business, as no longer viable, there is no reason to think he could not earn reasonable income, indeed, enough to support himself, employed in the automotive industry. Even in the early 1980s when the husband was employed in the automotive industry, he said that he was earning $350–400 per week, plus on some weekends about an additional $1,000 for private work. The husband is very experienced in his line of work.
In contrast, the wife’s employment at the time of the marriage was as an airline employee. Her employment ceased upon the collapse of that airline in 2002. Subsequently, she sought employment with other airlines, however was not accepted. The training she received from the airline is her only formal training.
During the course of the marriage the wife worked in and for the business with the husband, which opportunity will not now be open to her, as the husband is to keep the business.
The husband’s material asserts that the wife is capable of employment “in the travel industry, in travel agencies, selling overseas holidays or as a group leader”; also could obtain employment with a charity where previously she has done voluntary work; as a personal care worker; and also could work as a bar and gaming attendant: husband’s trial affidavit, par 133.
However the wife, it would appear, would have to undergo training to secure full time employment, or other than casual employment. She acknowledges that she has made no job applications since those made to the other airlines. However, there was no need for her at that stage to make job applications because readily she was able to join the husband in the business, which together they established in 1991.
The wife said she has no qualifications other than her airline training/home duties. In the 4 years since separation she has not undergone retraining, quipping to Mr Selfridge in cross examination “You can’t do retraining [in her previous role]”, in that such can only be done internally with an airline when employed by the airline. She said that since the separation in October 2007 she has been fully engaged “with the legal matters” and “keeping myself together” such that realistically in that time she could not undergo retraining.
The wife’s only income presently is $336 per week disability support pension, which she has received since about January 2009. It is unlikely having regard to the wife’s age that she will be able to obtain airline employment, especially as she has not been involved in it since 2002, and by no means certain having regard to her age and circumstances that at this stage she could train for employment in a new field other than for casual employment.
The wife since the separation in October 2007 has continued to live at Property 2. Since 4 July 2008, H has lived there with her. Presently, although there is no certainty, there is no reason to think that the wife will not be able to continue to reside in Property 2 after the conclusion of these proceedings.
The husband, in contrast, has rented premises since October 2007 and in the future may be likely to continue to rent premises to live in.
The husband suffers Type II diabetes, for which he is on medication. He said in cross examination that his condition does not affect his ability to work, which is about 40 hours per week, and that he did not anticipate that such would affect his ability to work in the future. In relation to Dr L’s report, the husband said in respect of his diagnosed Adjustment Disorder (trial affidavit, par 121):
… I have now generally recovered from this disorder however I am worried, still stressed, suffer from anxiety and am in genuine fear that [the wife] will try to take my life.
The medical evidence which resulted in the appointment of a case guardian for the wife was related to stress.
However, for present purposes, there is no reason to think based upon any medical evidence that the husband’s or the wife’s stress or anxiety will continue once these proceedings are concluded and thus removed as a stressor in their lives respectively.
The parties’ child H is now 22 years. She attends university. Presently H lives with the wife at Property 2. Presently, H does not enjoy a good relationship with the husband.
The wife has not re-partnered. She has a friend, Mr W, whom the wife describes as a social friend with whom she has outings.
The husband has re-partnered, as previously mentioned, with Ms V who is in employment and who contributes to groceries for herself and the husband.
Each party enjoyed a reasonable standard of living during the course of their relationship and marriage and is entitled so far as their current financial circumstances allow to such in the future. Mr Selfridge submitted that the wife “continues to maintain a high standard of living”, denied to the husband. This belies however that the wife has now spent all of her inheritance (bar a parcel of shares $363) and two further amounts of $75,000 mortgaged on Property 3 and $317,337 from her superannuation interests, both of which will be added back against her in the pool.
Mr James submitted that the s 75(2) matters have effect that a 10% adjustment should be made in the wife’s favour, in particular having regard to the husband’s ability to earn significant income through the business or, even if the business is closed, employed in the automotive industry, being only 57 years, whereas the wife at 59 years has little or no realistic prospect of full time employment now or in the future and may be likely to continue to be reliant upon her receipt of a disability pension or other form of pensions.
Mr Selfridge submitted that the husband paid the wife $236 per week spousal maintenance between 3 July 2009 and 17 February 2010 in circumstances in which the wife did not disclose to the Court that she had substantial cash/shares at her disposal. It is surprising that the husband would contend now, or at any stage, that he did not know of this to inform the Court at the time because plainly enough the husband was well aware of the Testator’s Family Maintenance proceedings which were settled in February 2006, during the marriage, and thus that the wife had cash and shares at her disposal. Be that as it may, the husband plainly is very bitter that he was required to pay spousal maintenance to the wife for this short period (which appears to be 32.5 weeks in the amount of about $7,670).

The husband however did not appeal the interim spousal maintenance order made by Federal Magistrate Burnett on 3 July 2009, which was a consent order, and indeed in a further consent order made by me on 15 June 2010 (annexure A) agreed that the arrears of interim spousal maintenance be paid from certain proceeds in his solicitor’s trust account.
Mr Selfridge submitted that the husband’s standard of living has declined considerably since the separation because of the downturn in his business, and because he is renting his personal accommodation.
Mr Selfridge submitted that “both parties” have some restrictions in respect of their future work capacity, such that any s 75(2) adjustment in the wife’s favour be limited to 5% maximum “given that the husband has an ongoing business”. He submitted however (written submission, p 17, par (f)), that such 5% should be “based upon the overall property pool including the substantial addbacks”. Mr Selfridge, of course, had contended that the addbacks include the $645,000 wife’s inheritance. Curiously, Mr Selfridge’s submission that any s 75(2) adjustment in the wife’s favour be limited to 5% “based upon the overall property pool” including the wife’s inheritance would be greater than 5% of the main pool as I have described it as represented in the schedule. That is to say, 5% of a greater pool is more than 5% of a smaller pool.
Under s 75(2)(o), in this particular case, I think it not unreasonable that I take into account also that although the business is included in the schedule at a nil value, in reality the husband has had or will have had liability for the $31,733 deficiency of assets over liabilities as at 30 June 2010.
In my view, the s 75(2) factors warrant a 5% adjustment in the wife’s favour, having regard to all matters, but primarily in relation to the disparity in the parties’ present and future income earning capacities. There is also the age factor of the wife being nearly 3 years senior to the husband, and indeed 60 years at her next birthday. I would have been inclined to assess this as marginally higher in the wife’s favour if it were not for the circumstance that as at October 2007 she was in the fortunate position of having, for her own use, the balance of her inheritance and ought to have used that more frugally.
If the business ceases to be viable there is no reason to think the husband cannot obtain secure employment, whereas the wife is unlikely to be able to rejoin the workforce.

Application of the Weir principle

Mr Selfridge mounted a scathing case against the wife in relation to alleged nondisclosure of assets and documents, and non-access by the wife to assets for valuation.
The duty to disclose is absolute. Weir & Weir (1993) FLC 92-338 at 79,593; Chang v Su (2002) FLC 93-117 at [70].
Mr Selfridge referred to the wife’s failure to present for valuation the “Over the Top” necklace, the wife’s Mercedes Benz motor vehicle and the wife’s Datsun motor vehicle (disposed of by her in January 2009). In his written submissions, he urged that “generally” I should draw an “adverse inference” against the wife in relation to alleged further nondisclosure.
There is a difference, however, between nondisclosure of assets, and a failure to present them for valuation.
There is no basis to conclude that the wife has failed to disclose assets.
The husband and the wife each were aware of their assets during the course of their relationship and marriage. The wife’s inheritance, received late in the marriage, and the proceeds of it, received partly then and partly in the post separation period have been dealt with. There is no suggestion that the wife has any concealed or nondisclosed assets or, for example, secret bank accounts in relation to her post separation inheritance. Candidly, the wife said “It is all gone”. There is no reason to doubt this.
Mr Selfridge complained that until late in the day the husband did not know that, post separation, the wife had drawn $317,337 from her superannuation. However, this is of little consequence. The amount is agreed still in the pool, as an addback against her. Moreover, in the post separation period, the wife suffered the particular difficulties which led me to appoint a case guardian for her.
Mr Selfridge’s contention as to any continued nondisclosure by the wife, or nondisclosure as at the date of the trial, otherwise is vague and unparticularised.
In my view, there is no basis to make any finding that, as at the date of the trial, the wife had not made full disclosure of all matters affecting her financial circumstances and, on the contrary, determine that the trial has been conducted on the basis of full disclosure by both parties.
Although, during the course of preparation for the trial, the wife’s duty to disclose may have been tardy in some respects, I do not regard this as her fault, nor indeed the fault of her solicitors, but rather the result of her mental disability which led to the appointment of a case guardian, as elsewhere detailed, in particular in the reasons for judgment in relation to the appointment of a case guardian for her: see again reasons for judgment 22 October 2010.
In essence however, I am confident, as the trial judge, that as at the trial dates there was no nondisclosure by the wife.
I have dealt in detail already with her non-presentation of two assets for valuation, however, this does not amount to nondisclosure of assets.
In all of the circumstances, I find that there is no basis to apply the Weir principle in the husband’s favour in relation to the distribution of the parties’ assets.

Result before application of the fourth step

I have assessed contribution to the main pool as 60 % wife and 40 % husband, and that there be a 5% adjustment in relation to the main pool in the wife’s favour, to result in a division overall of 65 % wife and 35 % husband, subject to application of the fourth step.

The fourth step

In Phillips and Phillips (2002) FLC 93-104 at 88, 985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally that in the consideration of whether the result is just and equitable it is the justice and equity of the actual order, not just the percentage distribution, which must be considered.

Analysis and conclusion

As I mentioned at the outset, the wife seeks to have both Property 2 and Property 3. These two properties represent however $1.1 million in a net pool of $1.8 million. Unfortunately this will not be possible unless the wife can arrange private finance because the wife’s asset division necessarily will include the significant addbacks including the $317,337 taken from her superannuation interests on 7 February 2008 and 17 March 2011 and the $75,000 she borrowed against the title to Property 3.
It appears to be common ground that the husband should have Property 1, in the pool at $435,000, but he also has the significant addback of $57,400 and will carry solely the post separation Australian Taxation Office debt for $84,319 with accretions for post separation income earned by him and/or the business while being operated by him.
Otherwise, it is fairly clear, and common ground, that the husband will have the business, the chattels in schedule B and his superannuation interest $69,612, and the wife her chattels in schedule A and her superannuation interests, collectively about $24,000.
It is common ground also that the parties’ considerable joint liabilities, $292,329, will need to be paid, and it is appropriate that I make specific provision in this regard, including as to interest accretion, which I have discussed.
Unfortunately, there is also the circumstance that each of the parties has significant liability to their respective solicitors: exs 10 and 11, which will need to be met from their own assets and resources, post division, and that the husband will have/has had responsibility for the business debt $31,733 as at 30 June 2010.
In all of the circumstances, I propose to order that the husband and the wife respectively have the assets which I will set out in pars 1 and 2 of the proposed order, which allocation appears to be uncontroversial; the husband be solely liable for post separation business and personal debt to the Australia Taxation Office $84,319 with accretions, and indemnify the wife accordingly; and that, subject to affording the wife opportunity to keep for herself Property 3 by providing bank or private funding in the amount of $500,000, or other agreed reserve price, that property be sold by public auction, with provision that out of the net proceeds the parties’ joint liabilities $292,329 with accretions as at the date of payment be paid; and the balance be paid to the parties so as to result, having regard to the values in pars 1 and 2 of the order, 65 % distribution to the wife and 35 % distribution to the husband.
I propose to include a provision that from the husband’s portion, if there be sufficient, before payment to him his debt to the ATO $84,319 with accretions be paid.
If Property 3 is sold, it would appear to be capital gains tax free, having been purchased in 1980.
In relation to the wife’s Mercedes Benz motor vehicle, as I have determined already, there is no option presently but to order its sale, unless the parties are able to come to some sensible arrangement about it, as I have previously mentioned. I will include in the order a provision to this effect.
The parties jointly have sought a specific order as to collection from the wife of the husband’s chattels in schedule B. I will include an order to that effect.
Otherwise, the provisions in the order are noncontroversial and will put an end to the financial relations between the parties, save for any necessary machinery orders.

I certify that the preceding three hundred and fifty-one (351) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly

Associate:

Date: 9 September 2011

[2011] FamCA 718

9 September 2011

Key Legal Topics

Areas of Law

Family Law

Negligence & Tort

Legal Concepts

Damages

Duty of Care

Negligence

Remedies

Abuse of Process