Stephens and Stephens and Ors
[2007] FamCA 680
•13 July 2007
FAMILY COURT OF AUSTRALIA
| STEPHENS & STEPHENS and ORS | [2007] FamCA 680 |
| APPEAL and CROSS-APPEAL – From decision of Family Court judge – PROPERTY SETTLEMENT – Discretionary Trusts – Trust established by husband prior to marriage – Husband by deed relinquished his position as beneficiary early in marriage – Late in marriage, at a time when the wife alleged the marriage was failing and after separation, husband took various steps which resulted in assets of the first trust being transferred to trusts for each of the four children of the parties - Primary basis on which trial Judge’s s106B orders were based was that the Deed of relinquishment could be overcome (either revoked, cancelled or avoided) and the husband could regain or resume his position as beneficiary of the Trust –Whether it would be contrary to law or public policy for the husband to regain membership of the class of beneficiaries of the Trust – Whether trial Judge was correct in finding that even if the Deed remained in full force and effect, the Trust was the alter ego of the husband and under his control; at the least, the Trust assets could be treated as a financial resource - Question as to control of the Trust in the absence of beneficial entitlement – Whether orders prefaced on the availability to the husband of Trust assets required a breach of trust/fraud on the power – Whether there was, contrary to finding of trial Judge, an agreement between husband and wife that Trust capital was to pass to the children at any time before either parent’s death – Question as to whether if husband had put Trust assets out of reach by the Deed, that action could amount to a reckless or wanton use of “marital” assets and draw the application of Kowaliw and Townsend provisions – Whether the trial Judge was correct in setting aside the 1998 instrument of variation – Whether the trial Judge was correct in setting aside the 2002 instrument and consequent dispositions - Whether shares held by the wife as nominee were “double-counted” by the trial Judge – Whether the value of shares disposed of by the husband should have been reduced to provide motor vehicle for each of three younger children – Whether the beneficiary loan accounts in Trust should have been deducted in the calculation of the asset pool by trial Judge – Whether the shares declared by husband to be held by himself as trustee for children should have been included as notional property - Contribution assessment and s75(2) conclusion challenged – Criticisms of the husband and children by the trial Judge – Whether this exceeded the trial Judge’s judicial role - Whether the husband, trustees and/or children were denied procedural fairness during trial |
| Family Law Act 1975 (Cth) s 79, s 106B, Part VIIIAA |
| Federal Proceedings (Costs) Act 1981 (Cth) |
Ashton and Ashton (1986) FLC 91-777
Davidson and Davidson (1991) FLC 92-127
Goodwin and Goodwin-Alpe (1991) FLC 92-192
Webster and Webster (1998) FLC 92-832
JEL & DDF (2001) FLC 92-083
Milankov and Milankov (2002) FLC 93-095
Kelly and Kelly (No.2) (1981) FLC 91-108
In re Beesty’s Will Trusts [1966] Ch 223
In re Gulbenkian’s Settlements (No.2) [1970] 1 Ch 408
Re Paradise Motor Co Ltd [1968] 2 All ER 625
Banque Nationalle de Paris v. Falkirk Developments Ltd (1977) 136 CLR 177
Gartside v. Inland Revenue Commissioners [1968] AC 553
Commissioner of Taxation (Cth) v. Ramsden [2005] FCAFC 39
Re Richstar Enterprises Pty Ltd and Ors; Australian Securities & Investments Commision v Carey & Ors (No.6) (2007) 233 ALR 475; (2006) 153 FCR 509
Federal Commissioner of Taxation v. Vegners (1989) 90 ALR 547
Ascot Investments Pty Ltd v. Harper (1981) FLC 91-000
Vatcher v. Paull [1915] AC 372
Re Skeats Settlement (1889) 42 Ch D 522
Re Crawshay (Deceased) (1948) 1 Ch 123
Halabi v. Artillaga & Ors (1994) FLC 92-470
Kowaliw and Kowaliw (1981) FLC 91-092
Townsend and Townsend (1995) FLC 92-569
Stein (1986) FLC 91-779
Whim Creek Consolidated NL v Colgan and Anor (1991) 31 FCR 469
Lock v Westpac Banking Corporation & Ors (1991) 25 NSWLR 593
Re Ball’s Settlement Trust [1968] 2 All ER 438
Re Dyer [1935] VLR 273
Buzza v. Comptroller of Stamps (Vic) (1951) 83 CLR 286
Re Stratton’s Disclaimer: Stratton v IRC [1958] Ch 42
Pierce and Pierce (1998) FLC 92-344
Money and Money (1995) FLC 92-485
D & D [2003] FamCA 1356
Norbis and Norbis (1986) 161 CLR 513
| APPELLANT HUSBAND: | STEPHENS |
| 1ST RESPONDENT WIFE: | STEPHENS |
| 2ND RESPONDENT & CROSS-APPELLANT: | [MR J] & [THE HUSBAND] (as Trustees of the X Stephens Trust and the Z Stephens Trust) |
| [THE HUSBAND] & W STEPHENS |
| 3RD RESPONDENT: | W STEPHENS |
| 4TH RESPONDENT: | X STEPHENS |
| 5TH RESPONDENT: | Y STEPHENS |
| 6TH RESPONDENT: | Z STEPHENS |
| FILE NUMBER: | MLF | 2847 | of | 2002 |
| APPEAL NUMBER: | SA | 69(i) and 69(ii) | of | 2005 |
| DATE DELIVERED: | 13 JULY 2007 |
| PLACE DELIVERED: | BRISBANE |
| JUDGMENT OF: | BRYANT CJ, FINN AND WARNICK JJ |
| HEARING DATE: | 13 and 14 June 2006 |
| DATE OF FURTHER WRITTEN SUBMISSIONS: | 1 May 2006 - 24 July 2006 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 30 November 2005 |
| LOWER COURT MNC: | [2005] FamCA 1181 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT HUSBAND: | Mr A J Myers QC with Mr P J Cronin |
| SOLICITOR FOR THE APPELLANT HUSBAND: | Nedovic & Co., Solicitors |
| COUNSEL FOR THE RESPONDENT WIFE: | Mr J W K Burnside QC with Mr R J Spicer |
| SOLICITOR FOR THE RESPONDENT WIFE: | Kennedy Wisewoulds Solicitors |
| COUNSEL FOR THE TRUSTEES: | Mr R C Macaw QC with Mr G R Dickson |
| COUNSEL FOR THE CHILDREN: | Dr I J Hardingham QC |
| SOLICITOR FOR THE CHILDREN: | Marshalls & Dent, Solicitors |
Orders
IT IS ORDERED
That the appeal and cross-appeal be dismissed.
That the appellant and cross-appellant jointly pay the respondent wife’s costs of and incidental to the appeal and cross-appeal, with such costs to be assessed in accordance with the Family Law Rules 2004 (Cth) in default of agreement.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Stephens & Stephens and Ors [2007] FamCA 680
REASONS FOR JUDGMENT
BRYANT CJ:
Introduction
I have had the benefit of reading the judgments of Finn and Warnick JJ. There is no matter of factual background on which they disagree and thus there is no reason for me to repeat any of the history or set out again the appellants’ grounds of appeal.
I also adopt the fourteen major issues identified by Warnick J at paragraph 179 of his judgment as those we are required to address in the appeal.
I agree with the reasons of Warnick J save for one matter on which I arrive at the same conclusion, but for a different reason.
Whilst many of the issues were vigorously pursued, in my view the major issue, and the plank upon which the trial Judge based his conclusion that the assets of the Stephens Trust should be treated as property of the parties, is the first question.
Could the effect of the 1983 Deed be overcome (ie. revoked, cancelled or avoided) so that the husband resumed or regained his position as a beneficiary of the Stephens Trust?
Before considering this issue, which was ultimately the primary basis on which the orders of the trial Judge were based, I think it is important to consider some of the alternative bases on which the trial Judge indicated he could have reached a similar result.
I agree with Finn J (at paragraph 99) that the reasons for the orders of the trial Judge under s 106B “could well be read as not ultimately depending on a notional setting aside of the 1983 Deed”, as a consequence of what was said by the learned trial Judge in paragraphs 129.4.27, 129.4.30, and 129.4.34:
129.4.27 Next, even if the 1983 instrument remains in place I consider that it is still open to find that the assets of the Trust can be treated as the property of the parties or one of them.
…
129.4.30 … Even if clause 2 of the 1983 instrument remains in place the husband is still the person who solely determines whether and if so who of the class of beneficiaries will benefit from the income and capital of the Trust. …
…
129.3.34 Thus, I consider that even if clause 2 of the 1983 instrument remains the husband sufficiently controls the [Stephens] Trust such that once the instruments and dispositions of 7 December 1998 and 18 January 2002 are set aside the assets of the Trust can be treated as the property of the husband.
I agree with the conclusions of Finn J at paragraphs 136 to 137 inclusive, that control of the Stephens Trust (“the Trust”) in the absence of beneficial entitlement was insufficient to permit the assets of the Trust to be treated as the property of the party having that control. I rely upon the cases cited in paragraph 137 of the judgment of Finn J, namely Ashton and Ashton (1986) FLC 91-777; Davidson and Davidson (1991) FLC 92-127; Goodwin and Goodwin-Alpe (1991) FLC 92-192; Webster and Webster (1998) FLC 92-832; JEL & DDF (2001) FLC 93-083; Milankov and Milankov (2002) FLC 93-095 and the discussion in Kelly and Kelly (No. 2) (1981) FLC 91-108.
Warnick J reaches the same conclusion at paragraph 259 of his judgment where he says that:
…I disagree with his Honour that the assets of the [Stephens] Trust could be treated as the property of the husband “even if the 1983 instrument remains in place”, unless his Honour meant “remained in place” but was overtaken in its effect by a further declaration or deed.
However, Warnick J goes on (at paragraph 260) to conclude that as the trial Judge found the 1983 Deed could be circumvented, his Honour’s considerations of these alternative positions did not render the result erroneous.
Warnick J, for the reasons expressed in his judgment, concludes that the trial Judge was not in error in finding that the 1983 Deed could be circumvented. Finn J reaches a different conclusion.
I consider, as do Warnick and Finn JJ, that the crucial issue as it emerged in the appeal is the 1983 Deed and whether the husband can, by some means, be lawfully reinstated as a beneficiary of the Trust, and if so, the effect of a finding that he has a capacity to be reinstated.
The 1983 Deed is a deed between the husband as settlor, the husband as trustee and the wife. Although not stated, I infer that the wife was a party because she was to be the trustee on the death or resignation of the husband.
The effect of the Deed is that the husband as settlor abandons and renounces his beneficial interest or rights in the Trust (as beneficiary, not as settlor), and the husband as trustee (and the wife as a potential trustee) accepts that release and abandonment.
I infer that the intent was that thereafter (unless and until the husband could again resume his position as one of the class of beneficiaries) the trustee would thereby be prevented by the Deed from making any distribution of capital or income to the husband.
Interestingly, this Deed did not prevent the husband from making distributions to himself at a later date. At paragraph 88 of his affidavit filed 31 May 2005 the husband said:
I note that seventeen years after the Deed of Variation was released from escrow, stamped by the Stamps Office and duly acted upon two merely nominal distributions were inadvertently credited to me. …The error arose by reason of the long time that had elapsed since 1983 and the fact that land tax matters had been fully resolved in 1986, so that being extremely busy I had not given the Deed of Variation recent thought.
It seems curious to me that the husband, in making distributions in his capacity as trustee, could overlook the effect of the Deed, which in many ways was the lynchpin of his case for the exclusion of the Trust assets from consideration by the Court. But, as this aspect was not pursued before us, I take the point no further.
It does however in my view tend to support the findings of the trial Judge that the husband “controlled the Trust, its operations and its finances and did not see the need to keep the wife informed of anything very much about the Trust” (at paragraph 120), and to support his acceptance of the evidence of the wife that there was no agreement that the assets were being accumulated for the benefit of the children to the exclusion of the parties. The decision of the husband (as trustee) to make distributions of income to himself, apparently forgetful of the fact he had renounced his entitlement to receive such benefits, shows a desire to benefit himself and not just the children.
Commencing at paragraph 207 of his reasons for judgment, Warnick J discusses the relevant authorities cited in support of the husband’s contention that the 1983 Deed was irrevocable. In relation to In re Beesty’s Will Trusts [1966] Ch 223 at 232-233 per Wilberforce J, I agree with Warnick J that the passage supports the proposition that a deed by its nature is an irrevocable instrument.
I also agree with his Honour’s conclusion that (at paragraph 208):
[T]he consequence referred to was that “an appointment by deed is irrevocable unless in the deed there is contained power to revoke it” … Wilberforce J may well not have been intending to review all of the circumstances in which a deed itself might be revoked or cancelled. (Warnick J’s emphasis)
In relation to In re Gulbenkian’s Settlements (No. 2) [1970] 1 Ch 408 upon which reliance is also placed, I agree with Warnick J that the case discussed “both the consequence of a release by the beneficiary of a discretionary trust of his position and, though less directly the irrevocability of that release” (at paragraph 209 herein). In particular Warnick J cites the following extract from the judgment of Plowman J at [1970] 1 Ch 418:
I therefore hold that as from the date of the Lisbon agreement Mr. and Mrs. Gulbenkian ceased to be objects of the discretionary trust, and that consequently as from that date it was no longer competent for the trustees to exercise their discretion in favour of Mr. and Mrs. Gulbenkian either directly or indirectly.
I should perhaps emphasise that the release which I am considering was a release for valuable consideration and I am not concerned to consider whether a different result might have followed if the release had been a voluntary release not under seal.
I agree with Warnick J’s conclusion that it follows from that paragraph that Plowman J left open the question of whether, had the release not been for valuable consideration, it might have been withdrawn or revoked whereupon the releaser might have resumed the position of beneficiary. I also agree with Warnick J that the “paragraph also seems to imply that, if the release was not for valuable consideration but was under seal, a different position would have pertained” (at paragraph 211). The short point, however, is that the case was concerned with the capacity of a beneficiary to release the trustees from considering him as an object of the trust, not a consideration of whether a beneficiary having done so, could revoke or cancel that release.
In support of the proposition that the 1983 Deed is irrevocable, reference was also made to the decision in Re Paradise Motor Co. Ltd [1968] 2 All ER 625, a decision of the Court of Appeal delivered by Danckwerts LJ. At paragraph 218, Warnick J notes that in that case the donee of an attempted gift inter vivos disclaimed it. The following extract (at 632) from that judgment is cited:
The second argument was based on decisions that in a case of disclaimer of a benefit under a will, a disclaimer may be withdrawn if no-one else has changed his position of the faith of it. We do not decide whether these decisions (or dicta) are correct: they are Re Young, Fraser v. Young and Re Cranstoun’s Will Trusts, Gibbs v. Home of Rest for Horses. It seems to us, however, that disclaimer of an attempt inter vivos to make a gift cannot be withdrawn. Maybe a will remains an outstanding offer of a gift; but surely this is not so when the proposing donor, rebuffed, is still alive. (footnotes omitted)
Again, in my view the point is that the position of the donee of a gift inter vivos is different from the position of a beneficiary, among a class or classes of beneficiaries in a discretionary trust.
At paragraph 220 of his reasons for judgment, Warnick J refers to Halsbury’s Laws of Australia and notes that under the heading “Discharge and Cancellation” in the “Deeds and Other Instruments” chapter, the decision of Banque Nationalle de Paris v Falkirk Developments Ltd (1977) 136 CLR 177 (per Mason J at 186), is cited for the proposition that a deed may be cancelled with the consent of all parties to it, and cancellation of the deed does not mean that the deed is void from its inception.
At paragraph 222 of his reasons, Warnick J cites the statement in Halsbury’s Law of England which he notes is to similar effect. In particular, I note the passage:
When a deed is cancelled it becomes void, and no action can thereafter be maintained on any covenant or promise contained in it. The cancellation has, however, no retrospective operation; it does not make the deed void ab initio… (footnotes omitted)
I agree with the reasoning of Warnick J in paragraphs 223 to 254 inclusive.
I differ from Warnick J in that I do not consider that having executed the Deed, the husband could simply “reverse his election” (using the words used by Warnick J). However I consider that it remains, and has at all relevant times since 1983, remained open to the husband and wife as parties to the Deed to cancel it.
Consequently I do not agree with the submission made on behalf of the trustees and the children that there was any impediment to the cancellation of the 1983 Deed by agreement between the parties, who were, in their various capacities, the husband and wife. The parties to the 1983 Deed could cancel the Deed and as from the date of cancellation the husband could once again become an object for the potential exercise of the trustees’ discretion to distribute capital and income to him.
I do not consider that the submission made on behalf of the trustees that “the notion of an agreement of the kind suggested, between the husband and the wife, is fanciful”, is correct. There may be circumstances in which the husband and wife would wish to cancel the deed, particularly if the 1998 and 2002 instruments are set aside. In such circumstances, it may well be that the husband and wife would reach agreement. I do not consider that it is fanciful to suggest that they might not, in circumstances where it could be in the husband’s interests and not contrary to the wife’s to do so.
Is there any reason why it would be contrary to law or public policy for the husband to once again assume membership of the class of beneficiaries of the Trust?
To reinstate the husband as an object of the Trust could not affect the rights of other beneficiaries who have no interest in the corpus or income of the Trust other than an expectation or hope that the discretion will be exercised in their favour: Gartside v Inland Revenue Commissioners [1968] AC 553 at 607 per Lord Reid and at 615 per Lord Wilberforce.
Further the class of beneficiaries is not closed. It can be extended by virtue of the terms of the Trust, by addition of the husband’s spouse if he were to remarry, and by the addition of further children, if he were to have them. The definition of “issue” referred to by the husband is wide enough to encompass remoter members of the husband’s family. The husband at paragraph 56 of his affidavit filed on 31 May 2005 refers to his sister and her children, and his deceased sister’s child, as being members of the class of beneficiaries.
There is no revenue implication in the husband once again becoming an object of the Trust without retrospective operation (see Commissioner of Taxation (Cth) v Ramsden [2005] FCAFC 39). It remains for the trustee to determine in the exercise of his discretion how distributions of income and capital are to be made.
Hence, in my view, there is nothing to prevent the parties to the Deed from agreeing to its cancellation. But it follows that I do not consider that such a course is amenable to an order. However, the husband possesses the capacity to bring about an agreement and orders could be framed to protect him in the event that the wife withheld her consent. Thus, in my view, the 1983 Deed presents no impediment to the husband being returned to the position he was in prior to the 1983 Deed.
Prior to the execution of the 1983 Deed, the husband was both a beneficiary and a trustee of the Stephens Trust. It is settled law that a person who is a trustee and a beneficiary can be treated as controlling the assets of the trust sufficient to treat the trust property as belonging to him or her and, in appropriate cases, to make orders directly affecting the trust property.
In Ashton (supra) Strauss J, with whom Ellis and Emery JJ agreed, said at pages 75,652-653:
It was conceded throughout that the husband was in full control of the assets of the trust, and the evidence made it clear that he was applying them and income from them as he wished and for his own benefit. Having regard to the admissions made during the hearing, there are good grounds for saying that the trust is no more than the husband’s alter ego. However, even on the construction of the trust deed in the light of the relevant facts, it would seem that the husband has power to appoint himself as trustee. It is apparent that by the deed the husband was, in fact, appointed trustee and that he acted as such in accordance with the terms of the deed. In my opinion, in all the circumstances, the proper construction of the deed is that the husband himself can be both appointer and trustee, but that other persons cannot hold both offices. It may be that the husband cannot become a named beneficiary under the deed, but, in my view, the fact that he is not one of the named beneficiaries does not preclude him in practice from receiving the full benefit of the settlement. As has been seen, para. (8) and (11), setting out the names of beneficiaries, include a company in which, for instance, a child or other relative of the husband may have a shareholding, or a trust in which a child or other relative of the husband may have an interest. There is nothing to prevent the husband from holding the overwhelming majority of the shares in such a company or from having the greater interest in such a trust. Furthermore, as long as the distribution is made to the company or the trust, the husband can get the full benefit of such a distribution.
In the result, having regard to the powers and discretion which the husband has, and having regard to what has in fact taken place, for the purposes of sec. 79, the husband’s power of appointment, and all the attributes it carries with it, amounts to de facto ownership of the property of the trust. His Honour’s order that he should appoint himself trustee so as to make a requisite payment was not contrary to the trust deed on its proper construction, nor did it require the husband to deal with property which was not his own….
No person other than the husband has any real interest in the property or income of the trust except at the will of the husband. Cf. Kelly and Kelly (No. 2) (1981) FLC 91-108.
In Davidson and Davidson (supra) the Full Court comprising Simpson, Murray & Nygh JJ, said at pages 78,365-366:
The wording of the provisions of the M.A.V.K. Trust deed which have been cited above, coincides closely with those of the Ashton Family Trust considered in some detail by Strauss J. when delivering the judgment of the Full Court in Ashton and Ashton (1986) FLC 91-777. As was the case in Ashton the trustee of the M.A.V.K. Trust is a company of which the husband is ostensibly an equal shareholder but which the learned trial judge described as “the creature” of the husband. We are of the view that on the evidence this finding was open to him.
Moreover, as was also the case in Ashton (at 75,652) the list of beneficiaries in paragraph (8) includes a company in which the husband’s present wife, child, or other relative of the husband has a shareholding and there is nothing in the deed to prevent the husband from holding the overwhelming majority of the shares in such a company and from receiving the full benefit of a distribution to that company. The husband in the present case therefore has an ability through Lestato Pty. Ltd. to distribute capital or income to himself through a company in which, say, his present wife or one of his children is a minority shareholder.
It was argued that such a manipulation of the provisions of the Trust would amount to a breach of the fiduciary duty of the husband as appointor relying on the decision of Kay J., in In re Skeats’ Settlement (1889) 42 Ch D 522. Whatever may have been the position one hundred years ago, Australian courts today have to look at the reality of the situation and the purpose which family trusts serve today. A limitation as to the husband’s power to control the assets and income of the trust in accordance with the provisions of the trust deed, is inconsistent with the reasoning of the Full Court in Ashton. Leave to appeal from that decision was refused by the High Court on 5 December 1986 by a bench composed of Gibbs CJ, Wilson and Brennan JJ. Whatever might be the remaining effect of Skeats’ case, it is not authority for the proposition that the husband is prevented from appointing a trustee who is compliant to his wishes.
It is our view, therefore, that if the husband were to follow the procedure outlined above, it will not render him liable to any other beneficiary.
…
On the question of distribution of capital, senior counsel for the husband submitted that no notice had been given to any of the potential beneficiaries to enable them to intervene and be heard. Each has a right, he argued, to have due administration of the trust. In our view however, of the terms of the deed set out above, particularly those set out in Cl. 23 and 24, we cannot see how the trustee could be in breach or liable for a breach of trust if it caused a distribution of the sum ordered to be paid to be made in either of the manners set out. We do not regard the lack of notice therefore, as in any way warranting interference with the order. In any event it is not disputed that both trustee companies had been served with the wife’s amended application and neither chose to intervene.
We adopt the words of Strauss J. when dealing with the Ashton Family Settlement deed, that no person other than the husband has any real interest in the property or income of the M.A.V.K. Trust except at the will of the husband, and that therefore he has the de facto ownership of the trust property. We are of this view notwithstanding the existence of a valid trust. The reality of the matter is that the husband can lawfully benefit directly any of the potential beneficiaries at any time or, indirectly, himself…
In Goodwin and Goodwin- Alpe (supra) the Full Court, comprising Nicholson CJ, Simpson and Finn JJ, at page 78,272-274 said:
Senior counsel for the husband argued that this material was insufficient to support his Honour’s conclusion that the trust was an alter ego of the husband.
He first said that no attempt was made by expert evidence or cross-examination of the husband to suggest that the trust was the alter ego of the husband. It is, however, clear from the above passage that there was cross-examination of the husband directed to this issue and, in our opinion, the husband’s answers supported his Honour’s conclusions.
We can see no reason why expert evidence must be called in cases of this nature since the Trial Judge is perfectly able to interpret Trust Deeds and to assess their legal effect. Similarly, he or she is more than capable of making findings of fact as to the actual administration of the trust.
Senior counsel for the husband argued that the real basis for his Honour’s finding lay in the fact that the husband had a power of appointment of a trustee. He said that this power should be regarded as a fiduciary power to be exercised for the benefit of the trust and not for any particular beneficiary. In this regard he relied upon cases such as Re Skeats’ Settlement (1889) 42 Ch D 522, Re Crawshay (deceased) (1948) 1 Ch 123 and the decision of this Court in Shaw and Shaw (1989) FLC 92-030. He further argued that his Honour had misapplied the principle stated by this Court in Ashton and Ashton (supra).
In considering this submission it is, we think, appropriate to refer to the decision of this Court in [R and R] (unreported) delivered 27 April 1990. This case was not cited in argument by either counsel but we directed their attention to it during the course of argument. In that case the Court said, at page 27:
“We do not find the decisions in Re Skeats Settlement and Re Crawshay (deceased) of any real assistance. These cases were dealing with trusts and powers of appointment of a completely different nature and were decided in circumstances which bear no resemblance to the present proceedings. In particular the power of appointment in the present case is not a fiduciary power but a power which, by the terms of the Deed, the husband may exercise for the purposes of controlling the trust for his own benefit if he so chooses.”
With that statement we respectfully agree and consider that it is applicable to the facts of this case.
The Court, in its judgment, also distinguished Shaw and Shaw on its facts and referred with approval to the comments of Strauss J. in Ashton and Ashton which included inter alia the following:
“The powers which the husband has in the Ashton Family Settlement give him control of the trust either as trustee or through a trustee which is his creature, and at the same time he is able to apply all the income and property of the trust for his own benefit. In my opinion, in a family situation such as the one here, this Court is not bound by formalities designed to obtain advantages and protection for the husband who stands in reality in the position of the owner. He has de facto legal and beneficial ownership... No person other than the husband has any real interest in the property or income of the trust except at the will of the husband.”
In [R and R] the Court therefore concluded as follows:
“However, once again we emphasise that the question whether the property of the trust is, in reality, the property of the parties or one of them, or a financial resource of the parties or one of them, is a matter dependent upon the facts and circumstances of each particular case including the terms of the relevant Trust Deed.”
If those statements of principle are applied to the facts of this case we have no doubt that his Honour was entitled to find that the trust property was, in reality, the property of the husband in the present case. The husband had the sole power of appointment of the Trustee, which was a creature under his control, and he was a beneficiary to whom the Trustee could make payments exclusively of other beneficiaries as the husband saw fit….
We would add that even if, contrary to our view, the trust property in this case was to be characterised as a resource of the husband as distinct from his property, we do not believe, on the facts of this case, that the result would be likely to be any different. We say this because the husband has ample assets to otherwise satisfy the judgment, and his control of the “resource” is such as to enable him to direct the income and capital from the trust entirely for his own benefit should he choose to do so, regardless of any moral obligation which he may or may not have to the other beneficiaries.
In Webster and Webster (supra), which in my view is not a case dissimilar to the present, the Full Court comprising Ellis, Finn and Gee JJ said at page 85,527:
106. The correctness of the authorities to which we were referred on behalf of the husband was not challenged before us. However, on behalf of the wife, it was submitted that the consensus between the parties established by the evidence as to the constitution of the trust and the use of the trust funds distinguished this case from a case where a spouse, who controls a discretionary trust holding much of the wealth acquired by the parties during a marriage, attempts to use the trust as a shield by contending that the trust must be preserved for the benefit of undetermined beneficiaries.
And further at paragraph 109 (at page 85,528):
109. If the statements of principle enunciated by Strauss J. in Ashton and Ashton (supra) at 75,653 and by the Court in [R & R] (unreported, Full Court, delivered 27 April 1990) at 30 are applied to the facts of this case, it may have been open to the trial Judge to find that the trust property was to be treated, in the circumstances of this case, as the property of the wife. However, given that it was the intention of both the husband and the wife that the children would have an interest in the property or income of the trust and the undisputed factual matters to which we have been referred by senior counsel for the wife, it was open to the trial Judge, in the somewhat unusual circumstances of this case, to conclude that the trust property should be taken into account in the proceedings as a financial resource of the wife and not as her property. See also Davidson and Davidson (1991) FLC 92-197 at 78,366. In so doing, the trial Judge certainly was not excluding the assets held by the Trust from her consideration.
I observe that in this case his Honour rejected the evidence of the husband that there was an agreement between the parties that the assets of the Trust were to be for the benefit of the children to the exclusion of the husband and wife.
In JEL & DDF (supra) the majority of the Full Court, per Holden and Guest JJ, at paragraphs 187 to 192 said:
187. Clearly, her Honour's conclusions were open to her on the evidence: see Harris (supra); Ashton and Ashton (1986) FLC 91-777 and Davidson and Davidson (1991) FLC 92-197. In the latter two cases, the High Court refused special leave on this specific issue.
188. Counsel for the husband submitted that there was a real risk that the husband would face legal proceedings brought by the other beneficiaries of the Trust if he used his position as Controller to regularly advance his own interests.
189. Considerable reliance was placed on the decision of the New South Wales Court of Appeal in Thurlstane (Aust) Pty Ltd v Andco Nominees Pty Ltd (unreported, 27 October 1997). That case was said to stand for the proposition that whilst the Family Court might treat trust assets as the husband’s “de facto” property, other Courts in the country may not.
190. The Thurlstane case was the sequel to Davidson (supra). The Family Court had ordered inter alia Mr Davidson to pay an amount of $700,000 to Mrs Davidson. She had considerable difficulty in enforcing that order and ultimately succeeded in having Andco Nominees Pty Ltd appointed as Trustee of a discretionary trust. The previous Trustee attacked the appointment in the Supreme Court of New South Wales on the basis that to pay to the wife the $700,000 would involve a breach or possible breach of a fiduciary duty owed by Andco.
191. During the course of his judgment, Meagher JA said:
“It is common ground that the MABK Trust was a discretionary trust of the normal kind and it is also common ground that it is not a sham. In this regard it is a little difficult, as Mr Greave QC pointed out, to know what to make of the Family Court's findings that the Trust assets were de facto Mr Davidson’s assets. Nor is the task of discovering what is, made any easier by the fact that the Family Court apparently thought that the payment [sic] $700,000 from the assets of the Trust would be perfectly proper and would discharge the obligation which arose under the Family Court order. Nor is the fact made any easier by the fact that the High Court seems to have endorsed this argument.”
192. In our view, rather than indicating that the husband faced real risks, this case demonstrates why the husband has nothing to fear. The Supreme Court of New South Wales seems to have accepted that the husband's trustee was not going in with any pre-arranged ideas but would administer the Trust according to law. Furthermore, difficult as it may have been for the Court, it accepted that the High Court seemed to have endorsed the argument that there was nothing wrong with the Family Court making orders, the effect of which would be to cause the husband who controlled the Trust, to use trust moneys to satisfy the judgment. In any event, the appeal was ultimately dismissed.
In Milankov and Milankov (supra), Kay J with whom Nicholson CJ and Buckley J agreed said as follows (at paragraph 139):
139. It was strongly submitted to us that even if it was open to her Honour to find that the husband was likely to regain control of the Milankov Family Trust assets after the death of his father, that it was inappropriate to treat those assets then as the husband’s own assets. It was submitted that at its strongest the husband would be in the position of a trustee of the trust and would owe fiduciary duties to the beneficiaries of the trust, who included not only himself but the other named primary and general beneficiaries.
140. It was submitted to us that in the cases that have so far discussed the concept of the manner in which the assets of a discretionary trust can be treated for Family Law Act purposes as the assets of a party, there had been a lengthy history in each of those cases of the appointor actually treating those assets as though they were his own (see Ashton and Ashton (1986) FLC 91-777, 11 FLR 457; Goodwin and Goodwin Alpe (1991) FLC 92-192, 14 FLR 801; Davidson and Davidson (1991) FLC 92-197, 14 FLR 817; and JEL and DDF (2001) FLC 93-075, 28 FLR 1).
141. Mr [sic] Dickey submitted that the appointor of a trust was subject to fiduciary duties towards the beneficiaries of the trust. He referred us to Lord Vestey's Executors v IRC (1949) 1 All ER 1108 at 1115 per Simonds LJ, where his Lordship said:
“... this power... must be that it is a fiduciary power to be exercised with a single eye to the benefit of the beneficiaries.”
He said that as there was no evidence that the husband had ever breached any fiduciary duty in respect of any trust, nor any evidence that he was likely to breach his fiduciary duties in the event that he became the appointor of the Milankov Family Trust, it was not open to her Honour to treat the assets of the trust in the hands of the husband as effectively a resource totally available to the husband.
142. In my view, this submission ignores the terms of the discretionary trust. It provides (inter alia):
“3.1 TRUSTS OF INCOME
THE Trustee shall in each accounting period until the Vesting Day determine to pay apply or set aside the whole or such part (if any) as he shall think fit of the net income of the Trust Fund of that accounting period to or for the benefit of or for all or such one or more exclusive of the other or others of the General Beneficiaries and for such charitable purposes in such proportions and in such manner as the Trustee in his absolute discretion (and whilst there is a Guardian in existence with the consent of the Guardian) shall think fit.
...
6.1 POWER OF ADVANCEMENT, ETC.
...
(a) at any time or times and from time to time before the Vesting Day out of the capital of the Trust Fund held on trust as aforesaid but not out of any moneys referred to in paragraph 6.2(a) raise any sum or sums and pay the same in addition to any income or share of income to which he or she may from time to time be entitled to any person being one of the General Beneficiaries for his or her own use and benefit or apply the same to or for the benefit of such person in such manner as the Trustee in his absolute discretion shall think fit;”
143. Once the husband becomes the appointor or trustee of the Milankov Family Trust I see no impediment in the terms of the trust deed to the husband then exercising his powers as trustee of the trust to distribute the income and/or corpus of the trust to himself. In those circumstances, I find little fault with her Honour's ultimate finding at paragraph 158 that the husband “will receive at least $2.8m after the death of Lazo”.
These cases are in my view authority for the proposition that, at least on its face, and absent any other factors, a party who is the trustee of a discretionary trust, or has the capacity to appoint himself as trustee, and is also a beneficiary, or who has the capacity to become a beneficiary or become a majority shareholder in a company (who is or can become a beneficiary) can have the assets of the trust treated as if they are his or her own property. This has been the jurisprudence in the Family Court at least since Kelly & Kelly (No.2) (supra) was decided.
Were it otherwise, it is obvious that a party could, by simply acquiring or placing assets in a discretionary family trust, effectively avoid an order being made which would enable the other party to share in the property owned by the trust.
The jurisprudence on this issue is not limited to Family Court authority. In Re Richstar Enterprises Pty Ltd & Ors; Australian Securities & Investments Commission v Carey and Ors (No.6) (2007) 233 ALR 475; (2006) 153 FCR 509, French J had to consider whether the Court had power under s 1323 of the Corporations Act 2001 (Cth) to appoint a receiver to property held by a third party on a trust, whether discretionary or otherwise, of which the relevant person was a beneficiary.
French J noted (at page ALR 480) that in Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547, Gummow J at page 552 described the power of the trustee in a discretionary trust as a “special or hybrid power” and said:
[A] power exercisable in favour of any person including the donee of the power would be a general power and thus would be tantamount to ownership of the property concerned….
French J said at page 481:
At least by analogy it may be observed that a beneficiary who effectively controls the trustee of a discretionary trust may have what approaches a general power and thus a proprietary interest in the income and corpus of the trust.
I agree with the comments of the Full Court in Webster (supra), particularly that each case must be determined on its own facts.
In this case the facts were clearer than in some of the authorities to which I have referred. Prior to 1983, the husband was the trustee and one of the beneficiaries of the Trust. In 1983 he removed himself as a beneficiary of the Trust by virtue of the 1983 Deed to minimise or avoid the incidence of land tax which would otherwise have flowed.
Whilst his Honour did not find that the Trust was the husband’s alter ego, it was not necessary for him to do so. At paragraph 129.4.31 of the reasons for judgment, the trial Judge said:
Looking at the history of the Trust, the husband has clearly had the benefit of the Trust assets. For example, he has resided in the [Suburb B] property owned by the Trust and he has both directly and indirectly benefited from the distribution of income to meet what can be described as family expenses. He has also clearly shown a propensity to continue this practice given that he has done so but to a lesser extent with the children’s trusts, ie, those Trusts pay the school and University fees of the children and meet various of their other expenses thus relieving the husband financially.
At paragraphs 129.4.35 to 129.4.36 his Honour says:
However, in the alternative there can be no question that the level of control that the husband has is such that the assets of the Trust can be treated as a financial resource of the husband. The effect of that of course is not to include these assets in the pool of assets even notionally, but in determining what percentage entitlement the parties should have to their assets the fact of the husband having this financial resource would need to be taken into account.
As I have said the nature of the husband’s interest in the Trust property is a question of fact, and it seems that what is required to treat the assets as a financial resource is the ability of the husband to control the affairs of the Trust and to financially advantage or benefit himself or others on his behalf (KELLY and KELLY (No. 2) (1981) FLC 91-108). The extent of this ability will then determine the degree to which this is taken into account under Section 75(2)(b) of the Act.
At paragraph 129.4.38 his Honour went on to say:
Here, as referred to already, the husband has historically benefited from the assets and income of the Trust and that can continue certainly via the children. Further, he is clearly able to benefit the children directly. Thus, I find that at the very least the Trust assets can be taken into account as a financial resource of the husband, but of course that is not the basis on which I proceed. (emphasis added)
I have come to the same conclusion as Warnick J, albeit for slightly different reasons, that the husband could be reinstated as a beneficiary notwithstanding the 1983 Deed. This is the conclusion Strickland J reached as well and although I do not agree with his reasons, I agree with Warnick J that it was an error without consequence. I am also conscious of the fact that the members of the Full Court had the benefit of much more extensive argument on this point than Strickland J had and that the issue assumed more prominence on appeal.
Once it is accepted the effects of the 1983 Deed can be reversed, this is a case like many others where assets are held in a discretionary trust and the husband has “control” as trustee and is capable of having the capital and income distributed to him as a beneficiary.
The jurisprudence of this court since Kelly and Kelly (No. 2) (supra) has taken account of the modern discretionary trust as a common vehicle in which people choose to accumulate assets and income and then to distribute those assets and income in ways which benefit them from time to time. Often this is a legitimate means of minimising income or other taxes. Sometimes, it can provide a legitimate shelter from creditors. In the circumstances discussed, it enables control to be maintained and allows the property to be used and distributed for the benefit of family members. In the pursuit of justice and equity between parties, when their relationship has broken down and they are seeking a division of assets, the Court has been rightly cautious about permitting assets to be excluded from the definition of “property of the parties”, simply because they are owned by a trust and not the parties themselves.
In the facts of this particular case, the trial Judge rejected the husband’s evidence of an agreement to accumulate assets solely for the children, and it was a matter for the trial Judge to determine whether he treated the assets of the Trust as notional assets to be considered as part of the pool of property of the parties (as he did) or financial resources to be considered under s 75(2). That is part of the wide discretion he had.
Conclusion
In all other respects I agree with the reasons of Warnick J and conclude that the Appeal should be dismissed with costs.
FINN J:
Introduction
On 30 November 2005 Strickland J made orders with respect to property settlement in proceedings under the Family Law Act1975 (Cth) (“the Act”) between the husband, [Mr] Stephens, and the wife, [Mrs] Stephens. The Trustees of the W Stephens Trust, the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust (“the children’s trusts”) had intervened in the proceedings, as also had the four children of the husband and the wife, being W, X, Y and Z Stephens.
His Honour’s Orders included the following:
2.That pursuant to the provisions of Section 106B of the Act the [Stephens] Trust Instrument of Variation dated 7 December 1998 be set aside.
3.That pursuant to the provisions of Section 106B of the Act the instrument entitled “The [Stephens] Trust” dated 18 January 2002 and the dispositions made pursuant thereto whereby the husband:
3.1. Forgave and released all amounts owing by him to the said Trust;
3.2. Forgave and released all amounts owing by the wife to the said Trust; and
3.3Applied all of the income and capital of the trust fund of the said Trust;
3.3.1as to one quarter thereof to the [W Stephens] Trust
3.3.2as to one quarter thereof to the [X Stephens] Trust;
3.3.3as to one quarter thereof to the [Y Stephens] Trust;
3.3.4as to one quarter thereof to the [Z Stephens] Trust;
be set aside.
4.That on or before 28 February 2006 the husband pay to the wife the sum of $2,182,302.00.
…
6.That the wife do retain as her sole property absolutely free of any claim, demand, interest, right or entitlement of the husband the following:
6.1The proceeds of the sale of the house property at… [Suburb A];
6.2… all shares in public companies in respect of which she is registered as owner;
6.3 Her [motor vehicle];
6.4 The furniture and chattels in her possession;
6.5 Her jewellery and personal possessions;
6.6Her interest in the … Superannuation Fund;
6.7 All monies standing to her credit in any bank account.
7. Subject to compliance with [order 4] the husband do retain as his sole property absolutely free of any claim, demand, interest, right or entitlement of the wife the following:
7.1The unit property situated at… [Suburb B] registered in his name;
7.2 The furniture and chattels in his possession;
7.3 His library and personal effects;
7.4The proceeds of his interest in the … Superannuation Fund;
7.5All shares in public companies in respect of which he is registered as owner;
7.6 All monies standing to his credit in any bank account;
7.7The … motor vehicle registered in his name.
The husband has appealed against Orders 2, 3, 4, 6, and 7, and the trustees of the children’s trusts (who are [Mr J] and the husband) have appealed by way of cross-appeal against Order 3. These reasons for judgment relate to the appeal and cross-appeal.
At the hearing of the appeal and cross-appeal (and indeed subsequent to that hearing), submissions were made not only on behalf of the appellant husband, the cross-appellant trustees and the respondent wife, but also on behalf of the children as third, fourth, fifth and sixth respondents to the appeal and the cross-appeal.
Before explaining the issues which the appeal and cross-appeal raise, it is necessary to explain in some detail the factual background to this case as found by the trial Judge and also to provide a summary of his other findings and conclusions.
The factual background as found by the trial Judge
The factual background as found by the trial Judge (at paragraphs 8 to 83 of his reasons for judgment of 30 November 2005) and in so far as it is relevant to the appeal and the cross-appeal is as follows:
· The husband was born on … 1940 and the wife on … 1956. They married in … 1978. Their four [children] were born [between 1980 and 1987].
· On 21 June 1968, the Stephens Trust (“the Trust”) was created orally. The husband was settlor and also the trustee of the Trust. The husband made all of the financial contributions to the Trust. The beneficiaries were limited to the issue of … (the husband’s father) and all persons “married” to such issue.
· In 1969 the husband purchased a house at [Suburb C] for about $30,000.00, and in 1973 he purchased a house at [Suburb D] for approximately $65,000.00.
· At the time of the parties’ marriage in … 1978, the husband … [was a successful professional] and the wife was working full-time … and was in the final year of an arts degree course.
· Following the marriage, the wife moved into the husband’s house property at [Suburb D]. She then completed her degree and gave up her employment in late 1979/early 1980, just before becoming pregnant with the parties’ first child.
· On 23 December 1979, the Trust purchased a house at [Suburb B] for about $152,000.00, the purchase price being funded in full from the husband’s pre-marriage savings. Between 1980 and 1983 the [Suburb B] property was rented to third parties by the Trust. In 1983 the family moved into that property.
· On 15 October 1981, an instrument of trust in the terms of the parole trust created on 21 June 1968 was executed and stamped. The instrument of trust provided as follows:
Clause 1 – The trustee of this trust (hereafter called “the trustee”) shall be [THE HUSBAND] (HEREAFTER called “the settlor”) and any other person or persons as he may from time to time appoint. [THE HUSBAND] is empowered from time to time to remove any person or persons, being trustees, as he in his absolute discretion sees fit. After the death of the settlor, the trustee shall be the trustee then existing together with the eldest male issue of the settlor from time to time alive.
Clause 2 – The settlor may at any time vary the terms of this trust, but not in such a manner as to increase in any way his rights under the trust to the beneficial enjoyment of the fund.
Clause 3 – Hereafter “the fund” shall mean the trust fund from time to time in existence.
Clause 4 – Hereafter “the beneficiaries” shall mean all issue of [THE HUSBAND’S FATHER] and all persons married to such issue; and “the date of distribution” shall mean either one hundred years from 21 June 1968 or 21 years after the death of the last survivor of all children alive at 21 June 1968 of […], whichever is the earlier date.
Clause 5 – At any time this trust may be terminated if all the beneficiaries then alive and being sui juris unanimously so consent; and none of the fund shall in such event be paid or applied for the settlor, but it shall be distributed equally amongst the male beneficiaries.
Clause 6 – The Trustee shall have the power from time to time, as he in his absolute discretion sees fit, to apply all or any part of the income and/or capital of the fund to or for all or any of the beneficiaries, either by making payments or applications for the benefit of the beneficiary in question or payments to a trust set up substantially for the benefit of such beneficiary; and income not from time to time lawfully paid or applied shall be accumulated.
Clause 6A – No part of the income of the fund shall at any time be paid or applied for the settlor in repayment of any debt owed to him by the trustees; nor shall any such income be accumulated for the settlor.
Clause 7 – At the date of distribution the fund shall be divided amongst such of the beneficiaries as the trustee thinks fit and, in default, amongst all male beneficiaries equally with the exception of the settlor.
· On 4 March 1983, a deed was executed by the husband as settlor, the husband as trustee and the wife, which (in Strickland J’s words) “excluded the husband as a beneficiary of the Trust”. This was done to prevent the property owned by the Trust being aggregated for the purpose of the assessment of land tax with the properties owned personally by the husband. The wife remained a beneficiary as to the capital and/or income of the Trust. The deed provided:
Clause 1 – The settlor hereby releases all his rights to be repaid moneys which have from time to time been lent by him to the trustee and all other rights to or in respect of moneys lent to the trustee and agrees and acknowledges that as from the execution hereof no amount is or remains owing to him by the trustee or in relation to the trust fund of the said trust and that he has no rights to or interest in the trust fund or the income thereof.
Clause 2 – The settlor hereby releases and abandons all and any beneficial interest or rights held by him or which may hereafter be held by him under the trust instrument or under the said trust or in the trust fund or income thereof and confirms that by reason hereof he ceases to be a beneficiary of the trust or a person to whom or for whose benefit all or any part of the trust fund and income thereof may be applied.
Clause 3 – For the purpose of removing doubts it is confirmed that the expression “issue” used in the said instrument includes all descendents however remote, and not merely children; that appointments by the settlor of a trustee or trustees may be revocable or irrevocable; and that any variation of the trusts of the said instrument shall be invalid to the extent which it purports to confer directly or indirectly any right or benefit upon the settlor.
Clause 4 – For the purpose of removing doubts it is confirmed that at time of the execution hereof no loans to the trustee by [THE WIFE] or any other person are outstanding.
Clause 5 – The settlor hereby appoints [THE WIFE] to be trustee on his death or resignation and W Stephens after the death or resignation of [THE WIFE], provided that this appointment is revocable by the settlor at any time.
Clause 6 – In all other respects the trusts of the said instrument are confirmed.
· In November 1986, the husband executed his first post-marriage will providing, inter alia, for the wife to receive such amount as may be necessary to bring her net assets up to $500,000.00.
· In or about 1991, the wife became aware that the husband was having an affair with a [Ms R]…
· In 1992, because of the issues surrounding the [Ms R] affair and concerns about the husband’s career, the wife returned to University and commenced a Graduate Diploma course in …. She duly completed that course and obtained her Diploma in 1993. In 1994 she commenced part time employment …, moving to another [place of employment] in 1998.
· In March 1992, a house at [Suburb A] was purchased in the name of the wife. The purchase price of about $405,000.00 was wholly paid for by the husband from his savings. This property was then rented out until … 1994, when the family moved in.
· In about 1993, the husband executed a second will providing, inter alia, for the wife to receive such amount as may be necessary to bring her net assets up to $1,200,000.00.
· In 1996 the husband sold the [Suburb C] property.
· In about 1996, the husband executed a third will providing, inter alia, for the wife to receive such amount as may be necessary to bring her net assets up to $1,500,000.00.
· The husband retired … on … 1998.
· On 7 December 1998, an instrument of variation was executed by the husband as settlor of the Trust. This excluded the husband and the wife as to the capital of the Trust (It should be noted that at the hearing of the appeal it was explained by Senior Counsel for the husband that the husband was already excluded by the 1983 Deed, but what was done in the 1998 instrument “was at least done out of an abundance of caution”).
· The instrument of 7 December 1998 provided:
Clause 1 – After the death or resignation of the settlor as trustee the trustees shall be jointly the settlor’s two eldest [children], [W Stephens] and [X Stephens]. If the settlor ceases to be trustee, no payment or distribution or application of the income or capital of the fund or exercise of powers under Clause 6 or 7 of the trust instrument shall be made during his lifetime without his prior consent in writing.
Clause 2 - The power of variation set out in clause 2 of the trust instrument is hereby varied so that (a) it may be exercised by the settlor either in writing during his lifetime or by his will, and (b) any exercise of that power of variation may be either revocable or irrevocable (but unless expressly stated to be irrevocable any such exercise shall be revocable).
…
Clause 4 – Clauses 6 and 7 and the other terms of the trust set out in the trust instrument are hereby varied so that no power or discretion to pay or apply the capital of the fund or any part thereof shall be exercised in favour of the settlor or [THE WIFE] or in favour of any trust in which either of them has any interest, right or possibility and the settlor and the said [THE WIFE] are hereby excluded absolutely and irrevocably from all and any interest, rights and possibilities in the capital of the fund. The variation made by this clause 4 of this instrument shall be irrevocable, and no future purported variation purporting to amend this clause 4 or purporting to confer any interest, right or possibility in the capital of the fund on the settlor or on the said [THE WIFE] shall be valid in any way.
· According to the husband, this instrument of 7 December 1998 accorded with the agreement that he had with the wife that the Trust capital would be passed to the four children and for that reason he did not tell the wife about this document. According to the wife, this instrument was executed by the husband at a time when he knew, or should have known, that the marriage was in serious trouble and either did, or should have, anticipated an order being made.
· In the late 1990s or early 2000s, two distributions were made to the husband from the Trust in the total sum of $46,724.00.
· On 14 March 2000, the husband executed a fourth will which made no provision for the wife. According to the husband that was because the wife’s assets at that time exceeded $1,500,000.00.
· On 13 May 2001, the wife told the husband that she wanted a divorce. On 30 October 2001 the parties separated with the husband leaving the matrimonial home.
· In December 2001, the husband, without notice to the wife, took his entitlements in the … Superannuation Fund. He received the sum of $116,828.16.
· In December 2001, again without giving notice to the wife, the husband instructed agents to sell the [Suburb D] and [Suburb B] properties.
· On 20 December 2001, after the wife became aware of the proposed sales, the husband gave an undertaking through his solicitors that he would keep the wife advised of all developments in relation to the sale of the properties, including providing her with copies of contracts of sale and not otherwise disbursing the proceeds without the wife’s written consent or Court order.
· On 18 January 2002, the husband, without informing the wife, set up the W Stephens Trust, the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust (“the children’s trusts”). The trust instrument for each of the children’s trusts provided:
Clause 1 – In this Trust Instrument “the Trustees” shall mean the Trustee or Trustees from time to time. [THE HUSBAND] shall be a Trustee from the commencement of this Trust, and on his death he shall be succeeded as a Trustee by such person or persons (each being a solicitor or accountant) as is specified in his will and, in the absence of such specification or if no such person remains a Trustee, by [THE WIFE]. In addition, [the child] shall become a Trustee on attaining 32 years. [The child] and [THE HUSBAND] jointly, and on the death of either, the survivor, and on the death of the survivor, the Trustees, shall be entitled to appoint or remove Trustees from time to time.
Clause 2 – Herein “the Fund” shall mean the capital and income of the Trust Fund from time to time; and “the Beneficiaries” shall mean the Primary Beneficiary (the child) and [his/her] children, grandchildren, sisters, nephews and nieces and the spouses of all of the foregoing …
…
Clause 8 – [The child] and [THE HUSBAND] jointly, or on the death of either, the Trustees, may from time to time amend the provisions of this Trust Instrument, including the provisions of this Clause 8, provided that no amendment shall add any further beneficiary or enable any further beneficiary to be added, or amend Clause 9 below or enable Clause 9 to be amended.
Clause 9 – [THE HUSBAND] is excluded absolutely from any interest or benefit in or from the Fund, and neither the Fund nor any part thereof shall be paid or applied for his benefit in any way whatsoever, directly or indirectly, or for the benefit of any company or trust in which he may have any beneficial interest or from which he may receive any benefit.
·On 18 January 2002, the husband, again without informing the wife, executed a document in his personal capacity and in his capacity as trustee of the Stephens Trust, which provided for the forgiveness and release of all amounts owing to the husband and to the wife by the Trust (although it appears there were no such amounts owing – see Strickland J’s reasons for judgment paragraph 129.4.12) and for the application of one quarter of the income and capital of the Trust to each of the trusts set up for the children.
·The consequence of the husband’s actions was that each of the children’s trusts acquired assets to the value of approximately $875,000.00 which included $1,188,000.00 being the net proceeds of sale of the [Suburb B] property.
·On 20 January 2002, the husband, also without informing the wife, executed a document entitled “Benefaction by [the Husband] to [W, X, Y and Z Stephens]” (“the Benefaction”), by which he assigned shares held by him beneficially to the four children and declared himself trustee for them of such shares. The effect of this transaction was that each child personally received assets to the approximate value of $125,000.00, i.e. a total of $500,000.00. Of this $500,000.00, $97,000.00 represented funds already held beneficially for the children, being an inheritance from the husband’s father held by the husband on trust for them, and the remaining amount was the value of the husband’s own assets that were transferred. The document also recorded that shares to the value of $54,000.00 were to be held by the husband specifically for X, Y and Z, to be transferred to them, and this was done on the basis that the husband at this time had purchased a motor vehicle for W for $18,000.00.
·On 26 January 2002, the Trust sold the [Suburb B] property for $1.23 million and the husband sold the [Suburb D] property for $1.4 million. According to the wife, the [Suburb B] property was sold without her knowledge or consent and in breach of the husband’s undertaking given through his solicitors on 20 December 2001.
·On 19 April 2002, the wife instituted the proceedings which were eventually heard by Strickland J in August 2005 and which resulted in his Orders of 30 November 2005.
·On 20 May 2002, [Mr J], solicitor, was appointed a further trustee of the children’s trusts as from 1 July 2002.
·In May 2002, the husband purchased a unit in [Suburb B] for $640,000. The wife agreed to the husband’s undertakings being varied to enable him to complete the purchase and carry out certain works to the new property.
·The decree nisi of dissolution of the parties’ marriage became absolute on 17 February 2003. According to the husband, the wife ceased to be a beneficiary of the Trust from this date.
·The wife sold the [Suburb A] property on 22 February 2003 for $1,060,000.00.
·On 1 April 2003, the trustees of the children’s trusts were granted leave to intervene in the proceedings.
·On 30 October 2003, the three older children were given leave to intervene in the proceedings and, on 10 November 2003, a next friend was appointed for the youngest child, who was also given leave to intervene in the proceedings.
As to the parties’ arrangements at the time of the hearing before Strickland J in August 2005, his Honour found (at paragraphs 84-93 of his reasons) as follows:
·The wife was living in rented premises at [Suburb D]. She remained employed part-time as a … at an income of $12,500.00 per annum. In addition she had investment income of $1,800.00 per week, although this fluctuated. The youngest child, Z, who was still at school, was residing with her.
·The Z Stephens Trust paid Z’s school fees and various other expenses including income tax, and paid the wife $170.00 per week for her maintenance. Z also had part-time employment and had sufficient income to pay for … personal expenses. [Z] also received approximately $175.00 per week by way of dividend income from … shares.
·Z was seeing [the husband] regularly, usually staying with him one night each week and for one half of all school holiday periods. The other children were spending time with their mother on a regular basis.
·The husband was residing in his property at [Suburb B]. His only income was from his investments and from royalties, receiving a total of $560.00 per week. W and X were living with him.
·W was completing part-time a Bachelor [degree], and working part-time. X was working full-time but completing part-time a Bachelor [degree].
·The husband received weekly amounts from the W Stephens Trust and the X Stephens Trust by way of maintenance for W and X. Those trusts also paid any university fees and certain miscellaneous expenses. The husband was accommodating W and X and providing them with their meals. They paid no board despite having their own income from employment and share dividends.
·The other adult child, Y, was completing a full-time [double Bachelor] degree and was a resident at a university residential college. She spent time with both the husband and the wife and [the Y Stephens Trust] paid $100.00 per week to each of them for [Y’s] maintenance. [Y] also was working part-time and had … income, including from share dividends.
The issues before the trial Judge and a summary of his findings and conclusions
The property available for distribution
In his reasons for judgment Strickland J recorded at paragraph 94 that “the primary issue” in dispute was “what the pool of assets for distribution should comprise”.
The cases of the wife and of the husband in relation to this primary issue were summarised by his Honour in the following way:
94. … The wife says that [the pool] should include the assets of the children’s trusts as well as the shares that the husband assigned to the children. Alternatively the wife says that those assets should be notionally added back to the pool of assets. In the further alternative the wife says that these assets should be taken into account in determining the parties’ respective entitlements to property settlement. The husband says that those assets should not be included on any basis and nor should they be taken into account.
In relation to the first intervener, being the trustees of the children’s trusts, his Honour explained that they:
96. … took the same stance as the husband in relation to the assets of the Trusts and the application of Section 106B and Part VIIIAA of the Family Law Act. They say that Section 106B and/or Part VIIIAA do not apply, that the assets of the Trust cannot be treated as the property or even a resource of one or both of the parties to the marriage, and for the trustees to make a payment to the wife for the benefit of one of those parties would be a breach of trust and a fraud upon the trustees’ powers. …
I will later explain the provisions of s 106B and Part VIIIAA.
In relation to the children, as the second, third, fourth and fifth interveners, his Honour explained that they:
97. … took the same stance as the husband and the first interveners in relation to the Trusts’ assets. They also took the same position as the husband in relation to the shares that the husband assigned to them in January 2002, namely they should not be part of the asset pool.
His Honour then further explained:
98. There was one other issue in dispute involving the children and their trusts. At the conclusion of the 2004/2005 financial year the trustees allocated a total of $114,000.00 to the children from the income of their trusts. The wife says that that should be brought back into the pool of assets but the husband, the trustees and the children say otherwise.
In relation to what he had identified as the “primary issue”, being whether the assets of the children’s trusts and the shares which the husband had assigned to the children, should be included in the pool of property available for distribution between the husband and the wife, or whether those assets and shares should at least be taken into account in determining the parties’ entitlements to property settlement, his Honour concluded (after a lengthy consideration at paragraphs 128 - 190 of his reasons) that pursuant to s 106B of the Act:
189.1.1. The instrument executed by the husband as settlor on 7 December 1998 should be set aside. The effect of this is that subject to the 1983 instrument the husband remains a capital and income beneficiary of the [Stephens] Trust.
189.1.2. The instrument executed by the husband as trustee on 18 January 2002 whereby the income and capital of the [Stephens] Trust was applied to the four children’s trusts should be set aside. The effect of this is to return the capital and income of the children’s trusts to the [Stephens] Trust.
189.1.3. The instrument executed by the husband on 20 January 2002 whereby he assigned to the four children shares held by him beneficially can be set aside to the extent of the assignment of those shares. The effect of this would be to return to the husband all of the shares save and except those which were the subject of the inheritance to the children from the husband’s father. However, given that the assets of the Trust will be available for distribution between the parties there is no need to in fact apply Section 106B, and these assets can be notionally added back to the pool of assets pursuant to the principles espoused in [Townsend and Townsend (1995) FLC 92-569].(Emphasis added).
His Honour then stated that because he had concluded that the provisions of Part VIIIAA of the Act could not be applied to the trust assets in this case, he would:
190. … notionally at least include the assets of the Trust in the net pool of assets for distribution between the parties, apply the respective percentage entitlements of the parties, take into account what each party is to retain and then determine if there is any payment required by one party to the other. If there is, and if it is a payment by the party who can be treated as being entitled to the Trust assets, then an order would be made that he pay the required amount and he would then have to satisfy that order from the assets that were available to him including if necessary the assets of the Trust. …
It is convenient to mention at this point that his Honour’s findings (at paragraphs 197 - 200 of his reasons) as to the property of the parties as at the date of the hearing before him (August 2005) were as follows:
· the wife had assets of $2,530,466.80 ($2,254,113.80 of which was represented by a share portfolio);
· the husband had assets of $1,790,108.15 (constituted principally by his home unit valued at $730,000.00 and a share portfolio worth $937,831.00);
· thus the parties held assets in their own names totalling $4,320,574.95;
· the wife held 14,600 Westpac shares (valued at $288,788.00) as nominee for the trusts, which together with dividends and interest on dividends, were valued at $308,084.00;
· the four children’s trusts had a total net value of $4,646,152.00, although his Honour also found that it would be appropriate to include in the pool available for distribution an additional $114,000.00 representing accrued but unpaid distributions of income to the beneficiaries – resulting in a total value for the trusts of $4,760,152.00;
· the shares which had been transferred by the husband to the children (but not taking into account those inherited from the husband’s father) had a value of $429,333.42.
Much later towards the conclusion of his reasons, his Honour stated (at paragraph 266) that “[t]he net asset pool comprises a monetary equivalent of $9,818,144.37” (which is the sum of all amounts mentioned in the last paragraph).
It should, however, be mentioned in this context that it was common ground in the written outlines of argument of the husband and of the wife that the value of the children’s trusts had included the value of the Westpac shares held by the wife as nominee for the trusts and that thus there had been a double counting (in the material which had been provided to his Honour) which required the value of the pool to be reduced to $9,527,356 (with the wife’s share being reduced to $4,574,091 and the required payment to her to $2,043,684). As Warnick J suggests in his reasons this matter could be appropriately addressed by a consent order.
The contributions of the parties
As to the issues, other than the issue of the identification of the pool of assets for division, his Honour recorded (at paragraph 99 of his reasons) that the husband and the wife were “also at odds over the assessment of their respective contributions” (that is, the matters to be taken into account under s 79(4)(a), (b) and (c) of the Act), with the wife asserting that contributions should be equal and the husband asserting that his contributions should be assessed at between 57.5 per cent and 60 per cent.
So far as the parties’ financial and non-financial contributions made directly and indirectly to their property were concerned (s 79(4)(a) and (b)), his Honour, having set out in detail in his reasons (at paragraphs 202-206) such contributions, concluded that:
206. … there is no doubt that the contributions of the husband pursuant to Section 79(4)(a) and (b) outweigh the contributions of the wife. Of major importance are the husband’s initial contributions as well as his greater financial input during the marriage.
However, having considered the parties’ contributions to the welfare of the family (s 79(4)(c)), his Honour concluded (at paragraph 217) that such contributions by the wife “substantially outweigh the contributions of the husband”, and “must be given significant weight”.
Then having considered the parties’ post-separation contributions and the submissions made on behalf of each party as to what would be an appropriate contributions assessment, his Honour concluded:
231. … even according great weight to the wife’s contributions I consider that the husband’s contributions exceed the wife’s, but only marginally and only because of the significance of his initial input. I find that their respective contributions should be assessed at 52%/48% in the husband’s favour. …
The section 75(2) matters
There was also dispute between the husband and the wife, as recorded by his Honour at paragraph 100 of his reasons, as to whether there should be any adjustment to the contribution based division on account of the matters referred to in s 75(2) of the Act (and required to be considered under s 79(4)(e)), with the wife asserting that if her contributions were assessed at less than 50 per cent, there should be an adjustment in her favour to bring the final percentage division up to 50 per cent / 50 per cent and the husband contending for a 5 per cent adjustment in his favour.
In paragraphs 232 to 260 of his reasons his Honour considered, at some length, the various matters contained in s 75(2) on which each party had relied in support of his or her claim for some adjustment in his or her favour. Ultimately he determined that no adjustment was warranted on account of any of those matters, nor on account of the matters contained in s 79(4)(d), (f) and (g) of the Act (on which no reliance appears to have been placed by either party).
(iv) The justice and equity of the proposed orders
It will also be convenient at this point to set out his Honour’s conclusion in relation to the orders required to give effect to his 52 per cent / 48 per cent division and also his consideration of whether those orders would be “just and equitable” (as required under s 79(2)):
264. The net assets of the parties should be divided 52%/48/% in the husband’s favour. As a result, and to return to a previous point, it is necessary to exercise the discretion to set aside the instrument and disposition of 18 January 2002. The assets of the Trust need to be actually in the asset pool for division to allow the wife to receive her entitlement as the figures will shortly indicate.
…
266. The net asset pool comprises a monetary equivalent of $9,818,144.37. Thus, the effect of my decision is that the husband is entitled to net assets to the value of $5,105,435.00 (in round dollars) and the wife is entitled to net assets to the value of $4,712,709.00 (in round dollars).
267. The wife has or has had the benefit of net assets totalling $2,530,406.80 and the husband has or has had the benefit of net assets totalling $1,790,108.15.
268. Thus, the husband will have to pay to the wife the sum of $2,182,302.00 (in round dollars). Where that will come from though is entirely up to the husband. On the figures he has assets to the value of $1,790,108.15 less $57,727.15 being the amount he has paid for legal costs, but I have found that the assets of the [Stephens] Trust can be treated as his property once the relevant instruments and dispositions are set aside, and thus that is a source of funds for the husband. My orders though will not permit the husband to apply the assets that he assigned to the children because he himself successfully argued that the discretion to set aside that disposition should not be exercised where the husband has the ability to otherwise meet the order. That of course will not prevent the husband reaching some arrangement with the children about this given that I have still notionally added back these assets to the net asset pool of the parties.
269. The husband’s position as a result of my proposed orders is therefore somewhat unclear given that it will depend on what he does in relation to the [Stephens] Trust and its assets. However, that is entirely a consequence of the husband’s own actions in attempting to remove assets from the reach of the wife and the Family Court, and this cannot prejudice the position of the wife in any way. In any event, on the basis of the applicable figures the proposed orders leave the husband with substantial assets but, of course, with a large proportion of those assets being assets in the [Stephens] Trust. To repeat, it is entirely up to the husband what he then does about this.
The issues raised on the appeal and the cross appeal
By his appeal the husband asserts error on the part of the trial Judge in the following four broad areas.
First, in his treatment of the Trust assets and of the children’s shares; secondly, in his assessment of the parties’ contributions; and thirdly, in his failure to make an adjustment in favour of the husband on account of the s 75(2) matters. The husband also takes issue with certain criticisms made by his Honour of the husband’s evidence and conduct.
The trustees in their cross appeal also challenge his Honour’s treatment of the Trust assets, and they are supported in this regard by the children. The children also challenge the appropriateness of comments made by his Honour at the conclusion of his reasons concerning their intervention in the proceedings between their parents.
The assets of the trusts and the share transfers to the children
In order to appreciate the challenges raised by the appeal and the cross appeal to his Honour’s orders made under s 106B setting aside the instrument of 7 December 1998 (which excluded the husband and the wife as capital beneficiaries under the Trust), and the instrument and dispositions of 18 January 2002 (which applied the income and capital of the Trust in equal quarter shares to the four then newly created children’s trusts), it is necessary to analyse at some length his Honour’s reasons for those orders.
The reasons for the s 106B orders
Subsections 106B(1) and (3) relevantly provide:
(1) In proceedings under this Act, the court may set aside… the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made… to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
…
(3) The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
His Honour began his discussion of the wife’s application to set aside, pursuant to s 106B, the instruments and/or dispositions of 7 December 1998 and 18 January 2002 by satisfying himself as to the elements of that section (as they applied to both those instruments) saying:
129.1 There must be existing or completed proceedings under the Act. That is clearly satisfied here.
129.2 There must be an instrument or a disposition. In my view that is also satisfied here. The instrument dated 7 December 1998 is a relevant instrument…. The other instrument dated 18 January 2002 is the one whereby the husband applied the assets and income of the [Stephens] Trust to the four children’s trusts. That is also clearly a relevant instrument and it is also a relevant disposition. …The first interveners in their outline of submissions have implied that to be caught by Section 106B there needs to be a “disposition” and that would not apply to the first instrument…. This of course overlooks the fact that there only need be an instrument or a disposition (DAVIDSON and DAVIDSON (No. 2) 1994 FLC 92-469; COVENTRY and COVENTRY and SMITH (2004) FLC 93-184).
129.3 The instruments or the dispositions must be made by or on behalf of, or by direction or in the interest of the party. On the evidence there is no doubt that this is satisfied here as well. The husband was in complete control of the [Stephens] Trust and each of the children’s trusts, and on his own evidence these instruments and dispositions were made in order to further his grand plan agreed to he says by the wife to pass the assets of the Trust to the children.
129.4 The instruments or dispositions must be made to defeat an anticipated order in the proceedings or which, irrespective of intention is likely to defeat any such order. The test of whether an order can be said to be “anticipated” is an objective test… PLUGRADT and PLUGRADT (1981) FLC 91-052, (at p. 76,429 – 76,430).
His Honour then turned to consider separately the instruments made on 7 December 1998 and on 18 January 2002.
In relation to the instrument made on 7 December 1998, his Honour set out in paragraphs 129.4.1 to 129.4.5 of his reasons, a number of matters which led him to the conclusion in paragraph 129.4.6, that as at 7 December 1998:
… the state of the marriage was such that a reasonable person in the husband’s shoes would have contemplated or foreseen that an order dealing with the property of the parties would be made in due course.
However, as his Honour went on to acknowledge in paragraph 129.4.6, “the instrument must still be made to defeat that order or irrespective of intention to defeat that order”. For reasons that he then gave, he found:
129.4.8 … that the husband made this instrument in the knowledge that the marriage was in trouble and that an order dealing with the property of the parties including the assets of the Trust was likely. On that basis he wanted to remove the assets of the Trust from the reach of the Family Court and he considered that this instrument would achieve this result. In other words he was looking to defeat an anticipated order for property settlement.
I accept the submissions for the wife and find no merit in this ground.
Should the shares that the husband had declared himself to hold as trustee for the children have been included as notional property?
Grounds 10 and 12 read:
10. That the learned trial judge erred in holding that the current value of shares assigned to the children on 20 January 2002 be at least notionally added back to the pool of assets for distribution between the parties or treated as a financial resource of the husband.
…
12. That there was no reasonable basis on which the learned trial judge could make the holdings referred to in the two paragraphs preceding this paragraph.
In relation to the application by the wife to set aside the instrument (dated 20 January 2002) whereby the husband assigned shares to the four children, the trial Judge noted that:
6. The court was informed during the course of the opening by the wife’s senior counsel that the wife was not seeking that these shares be actually transferred back to the husband, but rather that their value “be added notionally back into the pool” for the purposes of determining the respective entitlements of the parties to property settlement.
Then, later his Honour said:
129.4.67 The husband did not adequately explain why it was that this transfer of shares had to take place at this time. In his affidavit he suggested that the two eldest children had reached the age at which it was appropriate that they should have assets of their own and in these circumstances it was only fair that the other two children receive assets of an equivalent value as well. However, it is again instructive to reflect on the ages of the children at this time and it again beggars belief that at a time when the parties had recently separated and there was an expectation that there would be orders made dealing with the property of the parties the husband suddenly decides that it is appropriate to divest himself of shares to the value of $500,000.00 by assigning them to the children.
In my view there is no doubt that the husband intended to defeat an anticipated order at the time he entered into the transaction, …
…
It is clearly appropriate that the current value of the shares which the husband assigned to the children in January 2002 should at least be notionally added to the pool of assets for distribution between the parties. If this can be done pursuant to the principles established in KOWALIW and KOWALIW (1981) FLC 91-092 or in TOWNSEND and TOWNSEND (1995) FLC 92-529, then there is of course no need to even consider the step of setting aside the disposition pursuant to Section 106B. I will shortly be considering the principles established in KOWALIW and TOWNSEND and I will re-visit this issue at that time.
…
The instrument executed by the husband on 20 January 2002 whereby he assigned to the four children shares held by him beneficially can be set aside to the extent of the assignment of those shares. The effect of this would be to return to the husband all of the shares save and except those which were the subject of the inheritance to the children from the husband’s father. However, given that the assets of the Trust will be available for distribution between the parties there is no need to in fact apply Section 106B, and these assets can be notionally added back to the pool of assets pursuant to the principles espoused in TOWNSEND.
I was not assisted by argument in relation to this ground. I discern no error in the trial Judge’s findings and conclusions.
Whether orders impacting on the (restored) assets of the Stephens Trust would constitute a breach of trust?
Ground 8 relates to this question:
8. That the learned trial judge erred in law by holding that by applying the assets of the Trust in the husband’s favour or to satisfy or fund an order for payment to the wife the husband would not be acting in breach of trust or in the fraudulent exercise of his powers as trustee.
His Honour specifically addressed the question of whether, by the “act” of including the assets of the Trust as the property of the parties, a breach of trust and/or fraud on the powers of the trustee and/or the appointor arose.
He said:
129.4.39 …To return to the issue of treating the assets of the trust as property of the parties it is necessary to consider whether the process in reaching that position and/or the application of these assets in accordance with that finding constitutes a breach of trust and/or a fraud on the powers of the trustee and/or the appointor. This issue was raised in the cases of ASHTON and DAVIDSON and of course it has been raised by the intervenors here:
129.4.40 A fraud on a power is an exercise of the power “for a purpose or with an intention beyond the scope of or not justified by the instrument creating the power” (VATCHER v PAULL (1915) AC 372 at p. 378). For example, cases such as RE SKEATS SETTLEMENT (1889) 42 Ch. D 522, at p. 526, and RE CRAWSHAY (DECEASED (1948) 1 Ch. 123) are authority for the proposition that a power such as a power of appointment should not be exercised for an improper purpose namely to benefit a person who is not an object of the power. The appointor is said to have a fiduciary duty to only exercise the power of appointment for the benefit of the Trust and not for any particular beneficiary. However, this principle has been held to be inapplicable in a number of Family Court decisions on the facts in those cases. For example, in the unreported Full Court decision of [R and R] referred to above the Court said this at p. 27:
“We do not find the decisions in Re Skeats Settlement and Re Crawshay (deceased) of any real assistance. These cases were dealing with trusts and powers of appointment of a completely different nature and were decided in circumstances which bear no resemblance to the present proceedings. In particular the power of appointment in the present case is not a fiduciary power but a power which, by the terms of the Deed, the husband may exercise for the purposes of controlling the trust for his own benefit if he so chooses.”
129.4.41 This was then followed and applied in GOODWIN and GOODWIN-ALPE, supra, at p. 78,273, and in DAVIDSON, where the husband had the ability through a corporate trustee to distribute capital or income to himself through a company in which a beneficiary was only a minority shareholder the Full Court said this, at pp. 78,365 – 78,366:
“It was argued that such a manipulation of the provisions of the trust would amount to a breach of the fiduciary duty of the husband as appointor relying on the decision of Kay J, in In Re: Skeats’ Settlement (1889) 42 Ch D 522. Whatever may have been the position 100 years ago, Australian Courts today have to look at the reality of the situation and the purpose which family trusts serve today. A limitation as to the husband’s power to control the assets and income of the trust in accordance with the provisions of the trust deed, is inconsistent with the reasoning of the Full Court in Ashton. Leave to appeal from that decision was refused by the High Court on 5 December 1986 by a bench composed of Gibbs CJ, Wilson and Brennan JJ. Whatever might be the remaining effect of Skeats case, it is not authority for the proposition that the husband is prevented from appointing a trustee who is compliant to his wishes.
It is our view, therefore, that if the husband were to follow the procedure outlined above, it will not render him liable to any other beneficiary.”
Later his Honour referred to statement statements of the Full Court in Ashton and Ashton (1986) FLC 91-777 at 75,653 as follows:
The powers which the husband has in the Ashton Family Settlement give him control of the Trust either as trustee or through a trustee which is his creature, and at the same time he is able to apply all the income and property of the Trust for his own benefit. In my opinion, in a family situation such as the one here, this court is not bound by formalities designed to obtain advantages and protection for the husband who stands in reality in the position of the owner. He has defacto legal and beneficial ownership . . . no person other than the husband has any real interest in the property or income of the Trust except at the will of the husband.
Many of the submissions for the husband, the trustees and the children about “frauds on the power” and “breach of trust” were premised on the 1983 Deed remaining in effect. In view of my conclusion about the trial Judge’s finding about that, I consider that I need not deal with those submissions.
However, the trustees also attacked the following statements by Strickland J:
129.4.32 The husband’s ability to control the Trust and its assets can not be overstated. It would enable him to distribute capital and income to a beneficiary over whom he in turn could exercise control, for example one of the children. As was said in ASHTON (p. 75,763):
“No person other than the husband has any real interest in the property or income of the Trust except at the will of the husband.”
129.4.33 The husband also has the ability to distribute capital and income to a Trust set up substantially for the benefit of a beneficiary of the [Stephens] Trust (clause 6 Trust Deed), and indeed this is what he did in January 2002. Importantly though as long as the Trust substantially benefits a beneficiary there is nothing to prevent the husband or some other person or entity controlled by him also being a beneficiary of that Trust. It is of course necessary that the payment to the new Trust be for the benefit of the beneficiary of the [Stephens] Trust and not a non-beneficiary. However, that cannot determine in all circumstances what then might subsequently happen to that payment including preventing it from ultimately being used either directly or indirectly for the benefit of the husband. Certainly there is nothing to prevent the husband indirectly benefiting from such a payment via the primary beneficiary of that Trust and particularly in the circumstances that that beneficiary would be one of his own children.
For the trustees it was submitted:
10. It is well established that where a trustee makes a distribution that involves a benefit to himself he is not entitled to retain that benefit, but holds it on a constructive trust and must disgorge it to the trust: see for example the authorities cited in paragraph 9 above.
11. In the present case if [the husband] as the trustee of the Trust were to attempt to confer a benefit on himself (by for example distributing trust assets to himself via another trust set up for the benefit (or “substantial benefit”) of a beneficiary) this principle would apply. He would be obliged to account to the Trust and return the trust assets as a constructive trustee.
…
12. …
12.4 Paragraph 129.4.32 (AB 52) again confused control and beneficial rights, and the reference to Ashton and Ashton was inappropriate.
12.5 Re paragraph 129.4.33 (AB 52-53):
(1) The power in the Trust Instrument to make distributions to trusts set up substantially for the benefit of a beneficiary merely confirms the principles laid down in re Pilkington’s Will Trusts [1964] A.C. 612 and numerous subsequent authorities which decide that a distribution may be made for the benefit of a beneficiary despite the fact that, for example, non-beneficiaries also may incidentally benefit. (A power to make distributions for the benefit of a beneficiary applies to all trusts. In Jacobs, Law of Trusts in Australia, 6th edition, at page 70, it is noted that “in all States there is implied a statutory power of advancement” (such as in sections 37 and 38 of the Trustee Act (Vic.), and such powers expressly extend to applying trust property for the “benefit” of a beneficiary. Under an advancement considered in Pilkington v. Inland Revenue Commissioners [1964] A.C. 612 the trustees proposed to settle part of the share of an infant in a trust fund upon trusts, interests under which would be taken by other relatives as well as by the child. This was held valid by the House of Lords.)
(2) The Pilkington line of authorities confirms that a disposition is for the benefit of a person if it is substantially for his benefit, although non-beneficiaries may also benefit incidentally. This principle applies to all trusts, whether discretionary or fixed: see for example sections 37 and 38 of the Trustee Act, discussed supra.
(3) Further, in addition to the statutory powers that apply to all trusts, all standard discretionary trusts (and also many non-discretionary trusts) provide expressly that distributions may be made “for the benefit” of the relevant beneficiaries.
(4) “Benefit” is a term of the greatest width. “Benefit is the widest possible word one could have”: per Danckwerts J. in Re Moxon’s Will Trusts [1958] 1 W.L.R. 165 at page 168, approved in Snell’s Equity, 13th edition, paragraph 12.50, page 311: and see also Re Garrett [1934] Ch. 477, Re Hastings-Bass [1975] Ch. 25 at page 39 and Pilkington v. Inland Revenue Commissions [1964] A.C. 612.
(5) These principles are of course in any event subject to the strict rule that a trustee may not exercise his powers so as to benefit himself in the absence of a clear indication to this effect: see paragraph 9 above. It would clearly be a breach of trust and fraud on a power for the trustee to distribute to his child or other beneficiary on an understanding that he would subsequently receive a benefit from that distribution. There is in any event no basis whatsoever in the evidence for concluding that [the husband] has had any such purpose. No such purpose was put in cross-examination of [the husband] (or any of the children, who were not cross-examined). ([The husband] no longer having a beneficial interest in the Trust, his duties as Trustee are no different in these regards to those of a commercial trustee company, such as the Permanent Trustee Co. Ltd. If the Permanent Trustee Co. Ltd. were the Trustee of the Trust, clearly it could not obtain the Trust property indirectly or benefit itself indirectly, and [the husband]’s previous beneficial interest cannot obscure the fact that the same restrictions now apply for him as for other trustees. If the reasoning of the learned trial judge were correct the Permanent Trustee Co. Ltd. and other listed trustee companies would require to disclose amongst their assets the assets of trusts of which they are trustees, as their own beneficial property. Further, if the Trust assets were to be regarded as [the husband]’s there would be the extraordinary consequence amongst others that on another person succeeding [the husband] as Trustee, that other person (although completely unconnected with the [Stephens] family) would be entitled to obtain the Trust property indirectly, and would also have the Trust property treated as his own.)
(6) If a trustee sought to obtain directly or indirectly to benefit from the Trust, he could be removed by the Court as trustee at the instance of any beneficiary, and would be required to disgorge the benefit.
In conclusion:
(a) the words “substantially for the benefit of such beneficiary” merely confirm long-established general principles relating to “benefits” that are applicable to all trusts;
(b) in any event, the power to make payments to another trust is completely subject to, and restricted by, the basic equitable principles that a trustee must not benefit himself directly or indirectly, in the absence of clear words entitling him to do so;
(c) if the Trust were regarded as the trustee’s property, this would apply equally to all other trusts, whether discretionary or fixed (see for example sections 37 and 38 of the Trustee Act (Vic.));
(d) in any event, the 1983 Deed has the effect inter alia that the obtaining of a direct or indirect benefit by the trustee would be in breach of obligations under that Deed and would require to be disgorged and accounted for fully.
I consider that there is merit in these submissions. However, as Strickland J was only here considering an alternative argument, the basis of the orders is not undermined.
(xiii) Did the trial Judge exceed his judicial role in making certain findings about the husband’s conduct?
Ground 20 read:
20. That the learned trial judge erred by taking into account incorrect and irrelevant findings about the husband’s conduct.
The written submission in relation to these matters commenced:
This analysis relates to a series of assertions by Justice Strickland about [the husband]. These comments were incorrect and inappropriate. It also deals with miscellaneous errors of fact by Justice Strickland.
Some of the matters then addressed are repetitive of arguments in support of grounds, though expressed in this part of the submissions in surprisingly emotive terms, for example:
(1) For example, as to matters of law, errors made by Strickland J. included the bizarre holdings that (a) the 1983 release was revocable (AB48-49) and (b) control on the part of a trustee causes the trust assets to be regarded as his own (AB50-54).
(2) For example, as to matters of fact, Strickland J. made a series of unsupportable findings, and did so in such a way as to damage [the husband]’s reputation substantially and repeatedly…
…
AB48. The judge’s assertion that the release is revocable was absurd. (original emphasis)
In so far as these matters relate to appeal grounds, they are dealt with in the pertinent discussion.
I readily appreciate that litigants may be stung by criticism in judgments and that judges ought guard against findings and opinions extending beyond those essential to the disposition of the cases before them. To fail to do so invites disrespect for the courts and the law and can amount to a misuse of judicial power. Perhaps when the litigant is or was a [professional] the response to criticism may be more acute. The submission further reads:
· Strickland J.’s adverse statements have severely damaged [the husband]’s reputation.
· …
…
· The judgment of Strickland J. is available to the public and is able to be used by any person who wishes to discredit [the husband].
I do not regard it as a necessary function of this Court, beyond the scope of grounds of appeal, to address complaints about the fashion in which the judicial function, on a particular occasion, has been discharged. Accordingly, in so far as I consider any matter pertinent to a ground of appeal, I will or have dealt with it. Beyond that, however, at the highest, to entertain such complaints must be optional.
The husband did not argue that we could edit Strickland J’s reasons. They will stand whatever we now say. For us to embark upon an enquiry into whether every expression to which the husband takes exception will, at best for the husband, lead us to disagree with the opinion of the trial Judge and (possibly) state that the finding was superfluous to the determination of the dispute.
A surprising number of the submissions amount to no more than debate about the weight Strickland J gave some evidence over other evidence.
Some of the complaints are of “omissions” of matters to which the trial Judge might have referred, with the possible implication that a balanced approach required him to do so, but there was no argument otherwise in respect of such a point. Some assert factual error without any argument about the consequences if error is found. Some are merely complaints that the trial Judge accepted Mrs Stephens’s evidence over his.
In all these circumstances I decline to take up the invitation to comment in the vein requested.
Many of the trial Judge’s statements which the husband finds objectionable were made in the course of his Honour’s rejection of the husband’s case about the “agreement” as to the future of the Stephens Trust’s capital. The husband’s argument is that the trial Judge was wrong in opinions reached about the husband, because he should have found that the agreement existed. I have already rejected the ground challenging the trial Judge’s conclusion about that, save if he was wrong on his findings about credit.
There can be no doubt that the trial Judge used his observations of the husband and his analysis of the husband’s evidence to form a view of his credit. In that analysis he has used terms such as “hypocritical” in respect of the husband’s stance. While the term may be pejorative, it also conveys inconsistency, a relevant factor in assessing the reliability of evidence.
I have considered each of the statements complained of by the husband, but do not see that even if unnecessary, the fact that they were made, or that the opinion expressed was reached, affects the soundness of the trial Judge’s conclusions on credit.
Did the trial Judge err in his assessment of contributions and s 75(2) factors?
Grounds 4, 15, 16 and 17 read:
4. That the learned trial judge erred in law in holding that the assets of the Trust did not constitute a financial resource of the wife.
…
15. That the learned trial judge erred in holding that the husband’s contribution for the purposes of section 74(2) was only 52 per cent and in not holding that it was 60 per cent or some other amount greater than 52 per cent.
16. That the learned trial judge erred in holding that no adjustment should be made for section 75(2) factors and should have held that an amount of five per cent or some other amount should have been made in favour of the husband.
17. That there was no reasonable basis on which the learned trial judge could make the holdings referred to in the two paragraphs preceding this paragraph.
Strickland J said:
Conclusion on Contributions
227. The wife says that the contributions should be assessed as being equal but the husband says that his contributions should be assessed at between 57.5 per cent and 60 per cent.
228. The husband’s senior counsel suggests that apart from the greater initial contribution by the husband there is nothing particularly remarkable about the contributions of either party. However, he says that given the significance of the initial contributions, the fact that those contributions provided the foundation for the accumulation of assets during cohabitation and the fact that they were used for the welfare of the family, it is appropriate that the husband’s contributions overall be assessed at a greater percentage than the wife’s.
229. The wife says that although there was the greater initial contribution by the husband, when all the contributions of the parties over the full length of the marriage and post-separation are weighed up neither party can be considered to have contributed more than the other.
230. In my view there is substance in the husband’s argument but I do not agree that the disparity in their contributions created by the husband’s initial input is such that the husband’s contributions should be assessed at between 57.5% and 60%. In weighing all the contributions of the parties as I must do in accordance with authorities such as PIERCE and PIERCE (1999) FLC 92-844, I cannot overlook the wife’s significant contributions as homemaker and parent and particularly her contributions in the form of the support to the husband in those difficult times surrounding the [Ms R] affair. Obviously the husband’s major contributions have been his direct financial contributions which include his initial input, but there is a danger in comparing contributions that can be quantified in money terms such as the husband’s with contributions which cannot, such as the wife’s. There can be a tendency to discount the latter contributions by highlighting the former simply because they cannot be quantified. This has been recognised in leading cases such as MALLET and MALLET (1984) FLC 91-507 and in FERRARO and FERRARO (1993) FLC 92-335, and the message is that even though they cannot be quantified in money terms great weight should still be accorded to contributions such as those of parent and homemaker. Indeed, there is nothing to say that parent and homemaker contributions cannot outweigh direct financial contributions.
231. This has been a long marriage and there have been many and varied contributions made by the parties over time. It is necessary to weigh each of these contributions in arriving at a result, and in my view, even according great weight to the wife’s contributions I consider that the husband’s contributions exceed the wife’s, but only marginally and only because of the significance of his initial input. I find that their respective contributions should be assessed at 52%/48% in the husband’s favour. The effect of this is that the first 4% of the net asset pool will be treated as having been contributed by the husband whilst the parties have contributed equally to the remaining 96% of the pool (THOMASETTI and THOMASETTI (2000) FLC 93-023). Given the size of the pool, 4% is still a significant amount and it certainly caters for the greater contribution of the husband.
In relation to the assessment of contributions, Mr Myers highlighted the disparity in initial contributions (some $550,000 by the husband compared to $10,000 by the wife) and the husband’s well-established [professional] practice ….
Mr Myers also highlighted contributions during cohabitation, seemingly putting those contributions comparative to those of the wife more highly than the husband’s counsel at trial put them. Mr Myers referred to the husband’s financial contributions from 1988 to retirement as approximately 70 times the wife’s financial contributions. He argued that [the husband]’s contributions arose from his special abilities. The various aspects of contribution for which the husband contended at trial were repeated. In relation to the weight to be given to particular types of contribution, particularly initial contributions, Mr Myers referred to the decisions of Pierce and Pierce (1999) FLC 92-844 and Money and Money (1995) FLC 92-485. However there was little focus on any asserted errors made in the assessment of contributions by the trial Judge.
In essence, the challenge to the assessment of contributions is simply that the trial Judge’s assessment of 52 per cent to the husband was outside a reasonable range of discretion.
Of the more particular arguments I say:
(i)Though some stress was placed upon the preference shown by the husband for the growth of assets in the name of his wife as against himself, I think nothing turns on that aspect.
(ii)In so far as it was submitted that [the husband]’s [professional practice] as established at the date of marriage ought have been taken into account, of such an argument, I said in D and D [2003] FamCA 1356:
50. Earlier in his written submissions, senior counsel for the husband had said:
“4.2 Whilst there are no cases of which I am aware where a very substantial future earning capacity created almost entirely prior to marriage has been treated as an ‘initial contribution’, it must (we submit) on first principles to be so considered. If instead of spending many years of study to attain the position of a specialist anaesthetist, the husband had built a business that was capable of producing similar profits/earnings there could be no question that the ‘business was an initial contribution’.”
51. In his arguments on this point, counsel for the wife also used analogies or hypotheses.
52. While these devices can be useful as a means of distillation of principle, their use also has dangers both because the hypothetical facts necessarily are different from the facts of the case under discussion (which is the only case which must be decided) and because the hypothetical facts are generally not considered in a broad factual context, which in an actual case may well encourage a particular perspective of the facts material to the narrower issue.
…
56. The husband generated large income by the application of long and arduous work in the pursuit of that for which he was qualified. Those qualifications came mostly as a result of efforts prior to cohabitation. The long years of effort in both study and work prior to cohabitation were of the nature that would bear fruit at the end, after the qualification was obtained. It seems to me that these are all circumstances, account of which can be taken in addressing the weight to be given to the actual contributions made during cohabitation. It is not a matter of somehow crediting pre-cohabitation “contributions”, whether so described or whether described as “initial contributions”. It is not a matter of crediting “potential”. The fact that the husband had worked at obtaining qualifications before marriage is simply a feature of the contribution he made during marriage, using those qualifications.
There is much potential for double counting if weight is given to an established income earning capacity at marriage, as well as the income produced by that capacity during marriage.
As to the essential challenge, the weight which might appropriately be given to initial contributions is connected with the significance of other contributions. While the husband made very significant financial contributions during cohabitation, the wife, as the trial Judge found:
207. …was the primary caregiver to the four children of the marriage during cohabitation. Indeed, the husband conceded this, but it is still instructive to assess precisely what this entailed. After a year of marriage the wife ceased her employment by agreement with the husband and over the next seven years had four children. The wife says and I accept that when the children were babies she cared for them virtually without any assistance from the husband.…After the wife resumed her study and then resumed employment, nothing changed in relation to the responsibility for the children, namely it remained with the wife.…Thus, the care of the children at these times was left entirely to the wife. Indeed, even after his retirement, it was still the wife who was responsible for the care of the children including virtually all transportation.
208. I find that the wife also attended to the majority of the household duties as well as caring for the children.…
209. I also accept the evidence of the wife that in addition to caring for the children, maintaining the household and later studying and then working, she took an interest in and was very supportive of the husband and his career. She proof-read two editions of his book, she was always prepared to discuss his clients, …, and his interests, she also listened when he talked about his work and she provided support when he was having difficulties.
210. The wife’s support never became more apparent nor more necessary than when the husband became involved with [Ms R].…
…
212. In all, this episode in its various forms lasted for over six years and during this time the wife stood by the husband and supported him both behind the scenes and up front.
…
214. The wife’s contributions in supporting the husband and his career and particularly in the difficult times during the [Ms R] episode is a significant contribution and needs to be accorded great weight.…
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217. It is apparent that the wife’s contributions under this heading substantially outweigh the contributions of the husband, and they must be given significant weight (MALLET and MALLET (1984) FLC 91-507; FERRARO and FERRARO (1993) FLC 92-535).
I bear in mind the broad range available to a trial Judge in these circumstances. As Brennan J said in Norbis and Norbis (1986) 161 CLR 513 (at 540):
The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.
I are not satisfied that his Honour erred in his assessment of contributions.
As to s 75(2) factors, his Honour said:
Conclusion on Section 75(2) factors
257. The wife’s senior counsel submitted that if contributions are assessed as being equal then there is no basis for any adjustment pursuant to Section 75(2) of the Act. However, if the husband is assessed as having a greater percentage entitlement for contributions then the Section 75(2) factors should be considered and an allowance made to bring the final percentage division up to 50%/50%.
258. I have assessed the parties’ respective contributions at 52%/48% in the husband’s favour and thus the effect of the wife’s submission is that there should be an adjustment of 2% in her favour pursuant to any relevant Section 75(2) factors. The primary factor that she points to is that she still has the care of Z.
259. The husband’s senior counsel submits that there should be an adjustment of 5% in the husband’s favour primarily because the disparity between the income of the parties and their respective earning capacities.
260. In my view there should be no adjustment for any Section 75(2) factors. The circumstances of the wife having the care of Z is offset by the disparity in their respective income and earning capacities, once the disparity in their property is factored in.
A summary of facts relevant to s 75(2), taken from the judgment, follows.
At the time of trial the wife occupied rented premises. The youngest child Z resided with her. She was in Year 11 at school. The wife was employed part-time as … with an income of $12,500.00. In addition she received investment income of $1,800.00 per week, although that income fluctuated. She had enrolled in a Masters degree at … University. The Z Stephens Trust paid Z’s school fees and various other expenses and paid the wife $170.00 per week for Z’s maintenance. Z also had part-time employment and sufficient income to pay … personal expenses. [Z] also received $175.00 by way of dividend income from shares. Z saw the father regularly and usually stayed with him one night each week and half of school holidays.
The husband resided in property purchased at [Suburb B] post-separation and the adult children, W and X, lived with him. The husband’s only income was from investments and royalties totalling $560.00 per week. However, he also received weekly amounts from the trusts in respect of W and X by way of their maintenance. Those trusts also paid any university fees and miscellaneous expenses. However, the husband provided the accommodation for W and X including their meals. Y spent time with each parent and her trust paid $100.00 per week to each parent for Y’s maintenance. [Y] also worked part-time and had … income including some share dividends.
Mr Myers argued:
• That the husband had retired and had no income earning capacity;
• Even after the property division as ordered his income would be less than that enjoyed by the wife;
• To the extent that the trial Judge took account that the husband would receive or be entitled to benefit from Trust assets, he was in error;
• It should have been held that Z would spend half …time with the husband and half with the wife; and
• Furthermore, it should have been held that the wife would receive the greater benefit by way of the defraying of children’s expenses from the Trusts.
In relation to financial resources constituted by the Trust, the trustees submitted:
The learned trial Judge should have held that if the [Stephens] Trust or the Children’s Trusts constituted financial resources of the parties (by for example paying school or university fees of the children or other expenses), by reason of her greater resources and income and a corresponding greater financial obligations Mrs Stephens would receive a greater benefit than [the husband], and there was no reasonable basis upon which the learned trial judge could reach a conclusion.
I was not taken to any evidence that persuaded me that Strickland J should have found that in the future the child Z would spend equal time with each parent.
As to the children’s trusts and the Stephens Trust constituting a greater resource to the wife, by way of meeting expenses of a child or children when in her care, both parties received “relief” from those sources and I think any difference unclear and certainly not established as a significant matter.
But in any event the orders that Strickland J proposed by way of property settlement and pursuant to s 106B would probably alter the availability of the “relief” concerned.
In my view, Strickland J addressed the relevant factors and did not take into account any irrelevant factor.
Again, I am not satisfied that Strickland J’s assessment of s 75(2) factors was outside his range of discretion.
Conclusion
In summary, I am of the view that the trial Judge correctly:
• found that the release by the husband in the 1983 Deed of his entitlements as a beneficiary of the Stephens Trust could be rescinded;
• set aside the 1998 instrument and the 2002 dispositions;
• found that the assets of the Stephens Trust could then be included in the pool of assets for division; and
• made orders that did not require of the husband any fraud on the powers that the husband could exercise in respect of the Stephens Trust.
In so far as the trial Judge reached erroneous conclusions or made unnecessary findings, those did not affect the reasons for the orders made.
I conclude that the appeal should be dismissed.
Costs
In light of the submissions made, which effectively were that costs follow the event, the financial circumstances of the parties, and mindful of the other factors referred to in s 117(2A) of the Family Law Act 1975 (Cth) I consider that the appellant and cross-appellants ought jointly pay the respondent’s costs of the appeal.
I certify that the preceding three hundred and seventy-four (374) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court
Associate:
Date: 13 July 2007
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