Turner & Turner and Anor - [2016] FamCAFC 121

FAMILY COURT OF AUSTRALIA

TURNER & TURNER AND ANOR

[2016] FamCAFC 121

FAMILY LAW – APPEAL – PROPERTY – Undefended hearing – Where there was a substantial property pool – Where the husband’s refusal to participate in the trial made it difficult to value the property pool – Where the husband was involved as both a shareholder and director in a number of companies – Where the trial judge ordered the husband pay the wife a cash – No discount or allowance was made for disposal of shareholdings or taxation – Where the husband was a minority shareholder and would need to dispose of or encumber shareholdings to meet his obligations – Where taxation and realisation costs would be incurred – Where an absence of evidence did not justify the orders made – Where no other inference could be drawn other than there would be a sale of shares – Where two grounds of appeal were conceded by the wife, being an indemnity costs order and an error in the valuation of the husband’s interest in a property – Error established and appeal allowed.

FAMILY LAW – APPEAL – SPOUSAL MAINTENANCE – CHILD SUPPORT – Where it is alleged the trial judge failed to have regard to the husband’s financial circumstances in making spousal maintenance and child support orders – Where the husband argued he did not have the capacity to pay – Where orders were previously made by consent for spousal maintenance – Where the husband has a high income and earning capacity – Where the orders made were appropriate on unchallenged evidence – These grounds were established.

FAMILY LAW – APPEAL – COSTS – The husband sought costs in his favour as the appeal was allowed – The wife resisted a costs order and sought a certificate under the Federal Proceedings (Costs) Act 1981 (Cth) – Where the husband’s conduct in the trial did not assist the judge and there are no circumstances to justify a costs order in his favour – Where it is not appropriate to order costs or a certificate in favour of the wife – No order as to costs.

Child Support (Assessment) Act 1989 (Cth) ss 117(1), 117(4), 124(1)
Family Law Act 1975 (Cth) ss 79(4), 79, 117(1), 117(2A), Part VIII
Federal Proceedings (Costs) Act 1981 (Cth)

Bassingthwaite v Leane (1993) FLC 92-410
Chang and Su (2002) FLC 93-117
Elgin & Elgin [2015] FamCAFC 155
Gyselman and Gyselman (1992) FLC 92-289
Hendy v Deputy Child Support Registrar and Anor (2001) 27 Fam LR 641
Kannis & Kannis [2002] FamCA 1150
Medlow & Medlow (2016) FLC 93-692
Rosati v Rosati (1998) FLC 92-804
Weir and Weir (1993) FLC 92-338

APPELLANT:

Mr Turner

FIRST RESPONDENT:

Ms Turner

SECOND RESPONDENT:

Turner Pty Ltd

FILE NUMBER:

MLC

5928

2013

APPEAL NUMBER:

SOA

2015

DATE DELIVERED:

8 July 2016

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Melbourne

JUDGMENT OF:

May, Ainslie-Wallace & Cronin JJ

HEARING DATE:

15 October 2015

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

29 May 2015

LOWER COURT MNC:

[2015] FamCA 483

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr North SC, with Mr Wilson

SOLICITOR FOR THE APPELLANT:

Saxbys Lawyers

COUNSEL FOR THE FIRST RESPONDENT:

Mr Glick QC with Mr Puckey

SOLICITOR FOR THE FIRST RESPONDENT:	Taussig Cherrie Fildes
SOLICITOR FOR THE SECOND RESPONDENT:	Kenna Teasdale Lawyers

Orders

The appeal against Orders (2), (4), (5) and (17) of the orders of Macmillan J made on 29 May 2015 is allowed and the applications for property settlement proceedings together with the issue of the costs of the matter before Macmillan J be remitted for rehearing before a judge other that Macmillan J.
Leave to appeal from Orders (3), (11), (12) and (13) is refused.
The appellant’s application for costs is dismissed.
The respondent’s application for a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) is dismissed.

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

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

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SOA 43 of 2015
File Number: MLC 5928 of 2013

Mr Turner

Appellant

And

Ms Turner

First Respondent

And

Turner Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

Mr Turner (“the husband”) appeals from orders made by Macmillan J on 29 May 2015. The orders arose out of property, spousal maintenance and child support proceedings brought by Ms Turner (“the wife”). Save for two matters, the wife opposes the appeal.
There were a number of unusual features in the proceedings. The husband failed to participate in any meaningful way before the trial judge. He failed to comply with directions, did not participate in the corporate valuation exercise and ultimately, did not attend the final hearing. Having warned that she would do so, the trial judge determined the matter in the absence of the husband. Unsurprisingly, it is submitted on behalf of the wife that the husband had his opportunity to participate and he should not now be heard to complain about the outcome.
Relying on the evidence of the expert forensic accountant, Ms B, the trial judge found that the parties’ assets were valued at just over $25 million of which sum, the wife was in possession of assets to the value of $1 million.
After considering the relevant provisions of s 79(4) of the Family Law Act 1975 (Cth) (“the Act”), the trial judge determined that the husband should pay to the wife the sum of $12 million.
The husband was given 30 days to make that payment and in default, interest was to accrue. In addition, it was ordered that within seven days of default the husband was to offer his shares in a family company for sale to existing shareholders, and if the shares could not be sold the husband was to transfer sufficient shares to the wife to satisfy the sum owing.
Her Honour also made a general indemnity order that the husband be liable for, pay and indemnify, the wife against a variety of liabilities including relevantly, any taxation arising from or consequent upon any transaction required by the orders.
Although there is an obvious financial overlap, we propose to deal with the property matters first before turning to the spousal maintenance appeal and child support appeal for which leave is required.

Background

The parties married in 1993. They separated in October 2012. The wife is 51 years of age and primarily engaged in home duties. There is one child, who is now 17 years of age and the focus of the child support dispute. He currently attends a private school in Melbourne and lives with the wife.
The husband is 53 years of age. He is Chairman of the Board, director, employee and shareholder of Turner Holdings Pty Ltd (“TH”). He is also a director, shareholder and Company Secretary of Turner Pty Ltd (“TPL”), a private investment company.

Valuation issues

An essential aspect of the appeal is the value of the husband’s interests and the control he holds within the companies. Some information about the husband’s family companies was provided in an affidavit filed by him on 4 October 2013. The judge referred to this in her Reasons. There was no argument in the appeal that she ought not to have relied on this information.
TPL is a family-owned private company. Its principal activity is investment, holding investments in listed companies and ownership of real estate. The four shareholders are the husband, his two siblings and his mother. It would seem uncontroversial that the husband’s mother holds the majority of the shares as a consequence of her husband’s death but no formal transfers had taken place at the time of trial. It is also not controversial that the husband’s mother suffers from dementia leaving decision making to the husband and his siblings. The husband (at [29] of his affidavit) said that “the right to transfer shares in [TPL] is restricted and subject to the approval of the directors of [TPL] at their discretion”.
TH is a different structure. It is a unlisted public company with 48 shareholders. Whilst the husband holds approximately 27 per cent of the total shares, TPL has 58.7 per cent. According to the husband’s same affidavit, some of the original co-operative members still own shares in TH. TH was described as a holding company in a group which consists of 16 entities some of which are active and some of which are not. Citing cash flow difficulties, the husband deposed that TH did not declare or pay dividends for the 2009, 2010, 2011 or 2012 financial years.
On any view, the husband has a minority shareholding in TPL and TH. Prior to trial, orders had been made for the valuation of the various entities. The report of Ms B, dated 17 March 2015, valued the husband’s interests in the entities as at 31 December 2013 and also noted the difficulties she had in obtaining correct financial information from the husband.
For example, an interlocutory order had been made for real properties to be valued to assist Ms B in her report. Because the husband did not pay his half of the costs, the exercise was not undertaken and Ms B had to rely on book values in the 2013 financial statements of the various entities and some 2012 valuations prepared for TH and TPL. Referring to those matters, at [56] her Honour found that the valuation she accepted was likely to be conservative.
Ms B acknowledged she was unaware of the relationship between certain companies and did not have all of the necessary financial statements. Key issues were whether and to what extent a discount should be applied for the husband’s minority interest and liquidity constraints considering the unknown position of the husband and his family as to whether he would dispose of his shares. Both entities were valued on a net asset backing basis.
After referring to the husband’s interests in both entities as minority interests, Ms B provided four scenarios for property distribution. There were also two columns described as Scenario A and B to which we need not refer further, save for observing that the trial judge accepted the highest value being Scenario 1, in Scenario A. In the four scenarios, three applied a discount to the notional value and the other, where the husband did not sell his shares, had no applicable discount. In essence the four scenarios are as follows:
a)Husband to retain interests – no discount;
b)Sale to Mr AA Turner and/or Ms UU Turner (the husband’s brother and sister) – 5-10 per cent discount;
c)Sale to employee and/or other family member – 15 per cent discount;
d)Sale to unrelated party – 40 per cent discount.
The difference in value between these possibilities as recorded in the report is $24,156,941 at the highest and $14,426,941 at the lowest.
The opinion expressed by Ms B in her report is as follows:
2.13In my opinion it is arguable that a minority (control) discount is not necessary in view of the involvement of the Husband in the activities of the various entities and his close relationship with the other directors and investors, predominantly members of his family.
2.14However, as I am not aware of the intentions of the Husband, or the other equity holders, regarding the holding or realisation of most investments, I have prepared my report under various scenarios as to the appropriate discount to be considered by the Court in relation to the liquidity of the investment, i.e. how easily it can be converted to cash. Should the Husband seek to realise his investment, it is evident that the realisation of the interests held in the entities would take some time, in terms of asset realisation, refinancing, or finding a buyer for the equity interest, and as such it is appropriate to consider a liquidity (lack of marketability) discount. I have assumed that some level of liquidity discount would be appropriate in certain circumstances, but subject to the intentions of the Husband, and the other shareholders, as to the realisation of the investment.
The judge accepted the first scenario, which involved no discount.
It is also important to appreciate what Ms B said about tax liability:
2.27I have not considered the effect of future Capital Gains Tax (CGT), income tax or Goods and Services Tax (GST) on the realisation of the assets of the entities (with the exception of the CGT calculation in respect of the sale of the property at [WW Town]), or the Husband’s interests in the entities. Should assets be sold or transferred between the parties as a consequence of these proceedings, the tax consequences and any other realisation costs must be considered prior to the finalisation of any orders.

Pre-Trial Events

It is necessary to briefly set out the history of the husband’s lack of involvement to appreciate in part why the wife resists the appeal being allowed. It also explains why the judge took the unusual step of making orders in the absence of the husband. In any event, no complaint is raised by the husband about procedural fairness – that the judge should not have made orders on an undefended basis in the absence of the husband.
The wife commenced the proceedings on 19 July 2013. On 4 October 2013, the solicitors for the husband filed a response. As previously noted, in the months that followed, various discovery and valuation tasks were pursued by the wife but the husband did not co-operate.
On 24 October 2014, the husband did not attend a directions hearing conducted by the trial judge. A few days before the hearing the wife filed an application seeking to proceed on an undefended basis. The judge referred to previous directions requiring the husband to file documents including his response setting out the order he sought and affidavits containing the evidence upon which he would wish to rely. Liberty was given to file an application seeking that the matter proceed on an undefended basis. The wife complied with the orders.
After setting out the history of the litigation at length in Reasons delivered 29 October 2014, and having found that the husband had not participated in the proceedings “in a meaningful sense”, her Honour struck out his response. Thereafter, the husband had no extant application.
The husband had nevertheless filed two affidavits in the proceedings, both of which were read and relied upon by the wife, particularly in relation to the structure and holdings of the two companies. The first was sworn 3 October 2013 and filed on 4 October 2013, and the second was sworn and filed on 28 March 2014.
TPL was named by the wife as a party to the proceedings but the company did not file a response. TPL had been joined for the purposes of the enforcement of orders. As late as March 2015, TPL through its solicitor, advised the court it was aware of the orders sought by the wife and did not intend to participate in the final hearing.
On 4 March 2015, the matter was listed before the trial judge for directions. The husband appeared. He advised the court that he did not intend to file any affidavits but would attend the final hearing on his own behalf.
The trial judge listed the matter for final hearing on Monday 30 March 2015.
In the days immediately prior to the trial, the husband contacted the court saying that he wanted to “talk” about the case. By email to the case

co-ordinator, he said that he was intending to apply for an adjournment on grounds that he was being “treated unfairly by not being allowed to participate at the hearing”. He said that he had been severely disadvantaged by not having the financial resources to obtain legal representation and that with the limited knowledge the trial judge had, it was not possible for her Honour to make a fair judgment. He then said:
If this is the case the matter will then go to appeal which will only delay settlement and add further costs and stress to all parties. …
On 30 March 2015, the husband did not appear at the trial. His sister was in court but did not ask to appear for him. No application was made by her for an adjournment or any other order. Inquiries were made and the husband was said to be somewhere near his office in central Victoria. Her Honour presumed that the husband had no intention of appearing and decided that if the wife was not permitted to proceed, it would be of significant prejudice to her.
The trial judge heard the wife’s counsel’s submissions and reserved judgment.
Prior to the delivery of judgment, the trial judge gave notice of her intention to relist the proceeding on 28 May 2015, to inquire about a liability. The husband attended. Her Honour said she would not allow the matter to be re-litigated because she had heard all of the evidence but reiterated that the husband had a right to reopen his case or “to participate in the case” on written application. The trial judge then warned the husband that she was intending to hand down the judgment on the following day to which the husband replied that he had not submitted any evidence but if he was able to do so, he would reopen his case. He said he would make an application and, in response to a question about what was needed, her Honour said that he would have to file an application with an affidavit explaining why he had not participated.
No application was filed by the husband and the trial judge delivered judgment on 29 May 2015.

Uncontentious Matters in the Appeal

The husband was ordered to pay to the wife just over $12 million from what her Honour found to be a “pool” of assets totalling $25,421,327. He was also ordered to pay the wife’s costs on an indemnity basis. Those two orders gave rise to two grounds of appeal which have been conceded by the wife.
The parties agree the orders are affected by two errors. The first error (Ground 9) was that the trial judge made an order (at [17]) in the following terms:
The husband pay the wife’s costs of, and incidental to, this application on an indemnity basis.
No reasons were given for this order; the wife conceded that this was an error.
Initially by his Notice of Appeal, the husband sought an order that the costs issue be remitted for determination by the trial judge. However, Mr North SC for the husband submitted that the costs issue should be considered by another judge. Mr Glick QC for the wife did not disagree. Given that we have decided that the outcome of the appeal is to remit the whole of the property proceedings, it would not be appropriate to remit part of the matter, being the costs issue to the trial judge and the rehearing to another.
The second error was identified in a Ground of Appeal added by consent and with leave, at the appeal. The ground is as follows:
10.Her Honour erred in determining that the Husband’s interest in [Turner] Holdings Ltd was $10,667,000 in that in so finding her Honour erroneously accepted that property owned by that company … was valued at $4,372,000 when its value was no more than $2,250,000.
Counsel provided their agreed written position with various consequential calculations based on the four scenarios contained in the report of Ms B. The common position of the parties was that the single expert made the double counting error, overstating the value by $2,122,000. The husband’s interest in the entity, being 25 per cent, the difference is agreed at $530,500.
The tenth ground having been conceded, the appeal must be allowed, the orders either set aside or the amount recalculated. Because we are of the view that the appeal succeeds on other grounds, the entire property proceedings must be reheard.

The fundamental issues in the appeal

Grounds 1, 2 & 6 – The value of the husband’s interests

The husband challenges two main findings of the trial judge. First, that the husband could access funds sufficient to pay the sum ordered whilst still retaining his shareholdings, so it was not necessary to apply a discount. Secondly, that he would most likely have the support of the other shareholders for the purposes of implementing the payment to the wife. If those two findings were not open on the evidence, the husband inevitably would need to dispose of, or encumber, some shareholdings in the two entities and consistent with the evidence of Ms B, a discount should have been applied. There then would also be taxation and realisation costs and other implications.
In the Reasons, the trial judge acknowledged that due to the husband’s lack of participation she had “no way of knowing how he proposes to meet his obligation to the wife or arrange his affairs.” (at [93]).
The relevant Grounds of Appeal are 1, 2 and 6, which are as follows:
1.In deciding to make the order for payment of $12,042,312 to the Wife (order 2. a.) her Honour erred at paragraphs 46 to 56 of her reasons for judgment:
(a)by concluding, when it was not reasonably open on the evidence to do so, that the most likely scenario was the Appellant Husband would retain his shares in the entities on a long term basis;
(b)by concluding, when it was not reasonably open on the evidence to do so, that it was not necessary to take:
(i)a minority or liquidity discount; and/or
(ii)capital gains tax (“CGT”); and/or
(iii)realisation costs;
into account in valuing the Appellant Husband’s interests in the [Turner] Group of entities;
(c)by accepting that evidence of the existence of assets held by entities which:
(i)were found not to be solely controlled by the Appellant Husband; and
(ii)in which the Appellant Husband held only minority interests and the intentions of the other shareholders were unknown;
was a sufficient basis to find or assume that the Appellant Husband had the capacity to satisfy the orders sought by the Wife without the necessity of selling his interests or part thereof in the entities;
(d)by accepting that an absence of evidence as to an intention to realise a particular asset to give effect to what the Wife sought meant that:
(i)CGT and/or realisation costs need not be taken into account;
(ii)the risk of CGT and/or realisation costs could not be taken into account;
in valuing the Appellant Husband’s interests in the [Turner] Group of entities or determining a just and equitable outcome.
(e)in failing to find that the only assets controlled by the Husband out of which he could satisfy an award of that magnitude were his personal shareholdings in [TPL] and [TH];
(f)in failing to find that the evidence before her was such that a “fair market value” as opposed to a “value to owner” was the appropriate value to be adopted for the Husband’s shares in [TPL] and [TH].
2. Her Honour erred in failing to infer or conclude that:
(a)it was likely that the Husband would sell his interests or part of his interests in [TPL] and [TH] in order to satisfy an award in the Wife’s favour;
(b) the evidence before her was such as to be incapable of giving rise to a likelihood that any such sale would occur other than to an unrelated party.
…
6.Her Honour erred in failing to order that the Wife indemnify the Husband with respect to 51.6% of any taxation or realisation costs occasioned to the Husband by taking reasonable steps to satisfy the award in favour of the Wife.
It is necessary that the findings of the trial judge and the evidence before her Honour be carefully considered. The trial judge accepted the submission that TPL was controlled by the husband and his siblings.
In referring to the discount scenarios, the trial judge noted the submissions of counsel for the wife that:
50. …
•The husband’s involvement and level of control in the various activities of entities and the close relationship between he and the other directors and investors, they being predominantly members of his family; and
•That neither the husband or the second respondent had adduced any evidence as to any intention on the husband’s part to sell his interests in the entities or any part thereof and on that basis the most likely scenario is that the husband will retain his shares in the various entities on a long term basis;
The trial judge was urged by counsel for the wife to accept the first of the expert’s scenarios, which assumed the retention of the shares by the husband with no discount. No allowance was made other than “in a general sense” (at [54]) for realisation costs and taxes because there was no anticipated disposal or realisation.
Her Honour considered the evidence about discounting the value of the shareholdings and said:
47.Ms [B], in reaching her conclusions, considered whether it was necessary to apply a minority or liquidity discount to the value of the husband’s interest. Counsel for the wife submitted that the husband, by virtue of his interest in [TH] and his interest in [TPL], held a little over 40 per cent and that no other shareholder controls more than 19.37 per cent of the shares in [TH]. Ms [B] also said that in her “opinion it is arguable that a minority (control) discount is not necessary in view of the involvement of the husband in the activities of the various entities and his close relationship with the other directors and investors, predominantly member of his family”. I accept her evidence.
As to the possible cost of realisation, the trial judge concluded:
54.In this case there is no evidence as to the realisation of a particular asset or evidence which would lead me to conclude that there is a risk that a particular asset will have to be sold to give effect to the orders the wife seeks. In those circumstances, I am satisfied that is not necessary, even if it were possible, to take CGT into account in valuing the husband’s interest in the [Turner] Group. I am also not satisfied, in circumstances where there is no evidence based upon which I could assess the risk of a particular asset being sold in the short to mid-term, that I can take such a risk into account as a relevant s 75(2) factor as the Full Court said in Rosati and Rosati (1998) FLC 92-804 other than in a general sense.
Insofar as it was the wife’s case that the husband could rely on the co-operation of his family to access the necessary money, the trial judge adopted the submission of counsel for the wife saying:
42.Ms [B] in her report has apportioned value by reference to the Memorandum and Articles of Association on the basis of the ownership of shares which give the owners of those shares the right to participate in the distribution of surplus assets and profits of the company in the event of a winding up. She also concludes, and I am satisfied rightly so, based upon the husband’s evidence that his mother suffers from dementia, that the company is controlled by the husband and his siblings. It was submitted that this is significant in terms of the husband’s capacity to access his interest in the company for the purposes of satisfying any order made in the wife’s favour.
Having calculated the shareholding value without any discount and making no provision for tax or realisation costs, the value was then added to the list of assets for division between the parties.
At [73], the trial judge found that the total value of the property, excluding superannuation and the wife’s inheritance from her father’s estate, was $25,421,327. It is not entirely clear to us how the trial judge arrived at that figure (notwithstanding her Honour’s description) but it is immaterial to this appeal. At [56], her Honour accepted the expert’s valuation of the husband’s interest in TPL at $10,667,000 and his interest in TH at $13,657,000. The parties’ assets were otherwise limited to just over $1.12 million (excluding superannuation and the inheritance) of which the wife already had $1.05 million. Thus, excluding the company interests, the husband’s interests otherwise were minimal. From the “total pool”, the trial judge allowed a cash adjustment to the wife of $12,042,312 (at [93] and Order (2)(a)).
Mr North’s submission is that the trial judge drew an inference that there would be no sale. He submits her Honour was in error in so doing because of the quantum of the order, that $12 million could not come from any source other than through the disposal of shares.
Mr North submitted that the absence of evidence could not support the positive conclusion that the husband would retain the shares. There was no evidence of the voting entitlements of the shareholders of TH and no basis to assume that they were other than in accordance with their proportionate interests. As a minority shareholder, it was submitted it was not open to conclude the husband could access money other than through dealings with his shareholdings and there was no evidence of what the other shareholders would do to assist.
With the combination of those two concepts, Mr North submitted that the only inference open to the trial judge was that the husband would have to sell or alternatively borrow (and that would require co-operation of the other shareholders). It is correct that there were no other assets that could possibly provide the sum as ordered by the trial judge.
Thus, notwithstanding his absence from the proceedings before the trial judge, the husband argues that the trial judge did not come to a just and equitable determination.
As to the finding that there was no need to take into account realisation costs and consequential tax because there was no evidence of a sale or borrowing, Mr North submitted that the trial judge could only have made such a finding if there was evidence that the husband’s siblings would actively assist him to meet the obligations under the order without the necessity of selling shares.

It was submitted, and in our view correctly, there was no such evidence.
Similarly, it was submitted that the lack of co-operation by not just the husband but also the second respondent, could not be used by the trial judge to reach the required evidentiary standard on the balance of probabilities, that the husband would not have to sell or encumber the shareholdings.
Mr North observed that in part the problem arose because the wife had sought a lump sum. It is no doubt correct that if the wife had brought a claim for a sale and division on a percentage basis, the argument that the orders were not just and equitable would have been more difficult.
It was submitted that no onus fell to the wife in undefended proceedings to establish that tax and realisation costs would not occur. Mr Glick submitted that the trial judge had correctly considered potential liabilities and had rejected that potential.
The wife argues there was no onus on her to produce evidence about a possible sale of shares because the husband knew of the proceedings and on the basis of the evidence available to the court, the trial judge exercised her discretion appropriately. Referring to the very broad discretion to divide property under s 79 of the Act the wife’s submission was that an appeal court should not interfere and the husband had failed to show the trial judge erred.
Mr Glick submitted that the findings of the trial judge were open on the evidence. It was submitted they were the only findings available because the husband had not provided any evidence and as such, her Honour was entitled to conclude he would retain the shareholdings. Mr Glick submitted that the husband had been given the opportunity to participate and chosen not to. He submitted there was no onus on the wife to establish that any costs and taxes would be incurred because all litigants have an obligation to make full and frank disclosure of their financial positions and the husband had been deliberate in his avoidance.
Mr Glick pointed to the husband’s statement made immediately prior to the trial that if he did not get what he wanted, he would appeal. It was submitted that the court (and indeed civil society) ought not countenance an approach whereby the husband could take advantage from his own flouting of the rules.
Mr Glick referred to, and relied upon Rosati v Rosati (1998) FLC 92-804, to support the reasons of the trial judge to which we have referred.
It was also the submission of Mr Glick that the trial judge had been entitled to be “generous” in respect of findings about the assets of the parties relying upon Chang and Su (2002) FLC 93-117, Weir and Weir (1993) FLC 92-338 and Kannis & Kannis [2002] FamCA 1150 at [49] - [51] and because the husband had presented no evidence, the tax and realisation costs could be ignored. In our view, the trial judge did more than err on the side of generosity as may be allowable in non-disclosure cases.
The non-disclosure cases are somewhat applicable here to the extent that they refer to a deliberate refusal to disclose assets making it impossible for trial judges to know the wealth of the particular parties. That was not the situation here where there was no dispute about the existence of the assets. This case was in part about the practicability of just and equitable orders.
The absence of evidence does not, in these circumstances, permit a positive conclusion that one of a number of consequences will follow. Absent evidence as to how the family would deal with the husband’s request for such a large sum of money, no other reasonable inference was open other than that there would necessarily be a sale of shares.
Reference was made by counsel for the respondent to Elgin & Elgin [2015] FamCAFC 155 (“Elgin”), submitting that a trial judge had no obligation to consider tax consequences of making a particular order unless asked to do so. It was submitted that venturing into that area meant that the trial judge would be intruding upon, or making assumptions about, the decisions of the parties and their representatives. As the plurality (Thackray and Ryan JJ) observed at [203], in the absence of evidence, it was impossible for the trial judge to be satisfied that the proposed orders were just and equitable. It is also useful to refer to [156] in the Reasons of May J in Elgin, where it was said in a similar vein as follows:
156.Despite the well-articulated arguments on behalf of the wife, and the apparent failures of the husband to conduct his case, it cannot be regarded as just and equitable to uphold orders that do not take into account such a serious misstep as failing to allow for taxation consequences of a significant sum and ordering the husband to be responsible for the payment. Such an order cannot be said to be just and equitable…
Such a result will not always be the case but in our view, it occurred here.
Thus, in our view, there was some onus on the wife seeking orders in an undefended hearing to establish on the balance of probabilities that the fixed money order could be met from sources other than the sale of the shares if she was urging the court to ignore otherwise probable deductions.
The wife had also submitted to the trial judge that there was ample equity in assets owned by the entities which showed surplus assets. It is evident from the submissions put to the trial judge by counsel for the wife that attention was being drawn to the equity held in specific assets of the entities as distinct from the parties as individuals. That can be seen (at [51]) where the trial judge referred to the various values of real property. Even allowing for the assertion of the husband’s control and the family nature of the holdings, those assets were owned by the entities and any disposal had to be with the concurrence of the other shareholders.
The trial judge noted that TH had surplus assets of more than

$28 million, but the judge failed to note that access to any or all of that required co-operation from the other shareholders. Even if the wife’s entitlement was to be satisfied from the surplus of TH and the concurrence of the shareholders was forthcoming, that would only occur through a distribution of dividends and whilst it might be inferred that tax consequences would follow, there was no evidence.
In summary, the trial judge was in error in concluding that no discount should be applied and further in error in finding that it was not necessary to allow for costs of disposal. If orders had been fashioned on a net percentage basis this issue would have been avoided. However, it was not the order sought by the wife.
Having found merit in Grounds 1 and 2 we will briefly deal with Ground 6. That ground asserts error in not requiring the wife to indemnify the husband in relation to the tax and realisation costs according to the relevant percentage of the division.
On their face, the orders place all of the risk upon the husband because as a default order, the sale of the shares to satisfy the entitlement of the wife, left her to dispose of them as she saw fit rather than at the value that the trial judge had applied. Whilst that could be viewed as an oversight, the outcome read literally means that the wife could ultimately control what the husband would receive. That was not the intention of the trial judge in making an order that was just and equitable to both parties.
Ground 6 has merit. Thus in respect of the property orders, the husband’s appeal must succeed.
We will now deal with the remaining grounds in relation to the property settlement orders.

Grounds 3(a) and (b)

Grounds 3(a) and (b) assert errors on the basis that there was not sufficient evidence to make the findings about the contributions of the parties at the time their relationship commenced and about the acquisition and conservation of the husband’s interests in TPL thereafter.
Unlike the other assertions of the husband that the only inference open was of a sale of shares, the distinction here is that the husband had the evidence of the wife and had chosen not to respond to it. Her Honour was entitled to accept that evidence as being unchallenged and in our view, what was said by the trial judge sufficiently illuminates the path of reasoning to the conclusion of equality.
Mr North did not address the issue in either his oral submissions or the written outline other than to indicate that in a re-hearing it would not be conceded that the parties’ contributions were equal. If this matter is to be remitted it is not appropriate that we deal further with this ground, other than to observe that on the evidence before the judge the exercise of discretion appears correct.
The finding of the trial judge as to the contribution was open based on the evidence before her Honour, and we find no merit in Ground 3.

Grounds 4 and 5

Grounds 4 and 5 assert that the husband was not given sufficient time to satisfy the order to pay the wife $12 million, and that no specific reference was made in the orders as to the value at which the shares upon a default were to be transferred to the wife. Both of these grounds address circumstances where the trial judge had said that the realisation of the husband’s interests in TPL and TH would take “some time”.
The husband submitted that these orders were simply onerous and unfair. They provided for interest to accrue after 30 days. They further provided that the husband offer his shares in TPL for sale and failing his finding a purchaser within seven days, they be transferred to the wife for her to attempt to sell them for an undefined period of time. It was submitted that the timing both as to the transfer and as to any sale could not be regarded as just and equitable.
On behalf of the wife, it was submitted that the second respondent had agreed to register any transfer of the husband’s shares and to have discussions about the implementation of orders. The wife’s submission is that these were simply enforcement provisions.

Whilst the onerous nature of the order may have come about as a result of the husband not participating in the proceedings and the transfer value question appears to have simply been an oversight, having regard to the finding of the trial judge that any such realisation would take some time, we consider the orders were onerous and unfair. Other than her Honour indicating that the second respondent had agreed to implement any orders by registering the relevant transfers, no reason was given as to why such a limited period could be justified.
These grounds also have merit.

The grounds relating to spousal maintenance and child support

Ground 7 – Spousal Maintenance

In Ground 7 it is contended:
7.In making order 3 her Honour erred in that she failed to have any or any proper regard to the circumstances that the occurrence, frequency or quantum of dividends or advances from either [TH] or [TPL] are matters beyond the husband’s control.
Order 3 required the husband to pay spousal maintenance of $4,000 per month pending the receipt by the wife of the capital sum.
The trial judge explained that historically the husband had been solely responsible for the family finances during the marriage. As a result of his unilateral action in changing the financial support in May 2013, the wife filed proceedings. Orders were made on 4 October 2013, by consent that the husband pay the wife $4,000 per month to include child support. Orders were subsequently made providing for the continuation of those payments together with non-periodic child support related to the child’s education and health needs. Her Honour noted that the payment of $4,000 was still being made at the time of the judgment in May 2015.
The trial judge specifically noted (at [117]) that the wife was pursuing spousal maintenance not including child support, until the husband satisfied the orders for property settlement.
Her Honour set out the relevant provisions of the Act and made the finding (at [121]) that the wife is unable to adequately support herself and that the husband had the capacity to pay the sum of $4,000 per month (at [124]). It is not correct that her Honour did not take into account the prospective financial circumstances of the wife (at [122]).
The contention is the trial judge did not properly consider the husband’s capacity to pay such sum together with the child support.
In oral submissions in support of Ground 7, counsel for the husband drew our attention to what appears to be an error in the trial judge’s reasoning. Her Honour at [123] relied upon Ms B’s evidence to indicate that TH was capable of generating future maintainable earnings of $2.54 million per annum and bearing in mind that the husband had a significant portion of those shares, his income would be higher than his salary alone. The husband’s salary was $155,000 per annum. Counsel observed that Ms B was not referring to capitalised earnings but the net asset backing valuation. In addition, Mr Wilson submitted that there was no evidence of payment of dividends to the husband nor did he have control over the entities.
It should be recalled the current test for leave to appeal interlocutory orders is contained in the Full Court decision of Medlow & Medlow (2016) FLC 93-692 at 81,086:
57.We are of the opinion that, subject to the caveat just discussed, the test to be applied in applications for leave to appeal under s 94AA of the Act is whether, in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
(Original emphasis)
Section 74 of the Act requires the Court to make such orders as it considers proper. There had been a history of orders including those made with the husband’s consent. The husband’s income was found to be high. With a multi-million dollar asset base, it was open for the judge to conclude that he had the ability to find $4,000 per month. At [120] of the judgment, her Honour adopted the view in Cronin J’s interim judgment dated 7 October 2013 that “[the parties] were able to access funds beyond the income stream of the husband”. Her Honour considered the evidence and the law and decided it was proper to make the order. It could not be seen that the husband suffered a substantial injustice.
There is no merit in Ground 7.
We are conscious that in dismissing the appeal against Order 3, the order as it remains provides that the husband pay $4,000 per month until “the Payment” as defined in the orders. The setting aside of Order 2 means that there is no extant payment. However, we would note that it was not suggested that the husband would not be obliged to make the payment of $4,000 per month if this ground did not succeed.

Ground 8 – Child Support

The orders made by the judge in this respect are as follows:
(11)Pursuant to ss 116(1)(b) and 117(2) of the Child Support (Assessment) Act 1989 (Cth), there be a departure from the assessment of Child Support dated 29 January 2015 issued in respect of [the child] effective from the date of the order and the husband pay or cause to be paid to the wife for the support of the child:
a.Pending payment in full of the Payment the sum of $1,120 per week to be adjusted annually in accordance with Consumer Price Index upward movements on 1 July each year commencing 1 July 2016; and
b.Upon payment in full of the Payment the sum of $600 per week to be adjusted annually in accordance with the Consumer Price Index upward movements on 1 July 2016.
(12)Pursuant to s 124(1) of the Child Support (Assessment) Act 1989 (Cth) the husband pay the following by way child support in a form other than periodic amounts for the child:
a.all educational expenses at [the] School or at such other private school(s) as the child may attend by agreement of the parties inclusive of tuition fees, compulsory levies, uniforms, books, stationery, computer requirements, camps and excursions;
b.all private tutorials and extra-curricular activities;
c.private health insurance and out of pocket medical, dental, optical and . orthodontic expenses; and
d.all out of pocket medical, dental and optical expenses.
(13)In relation to the payment of the expenses specified in paragraph 12 herein, the husband provide to the wife a supplementary credit card for her to use with an available credit of not less than $10,000 at all times and the wife be permitted to draw cash advances to pay any expenses which cannot be paid by credit card on the basis that the wife account to the Husband for the expenditure of funds within 7 (seven) days of each advance.
The husband acknowledged that leave to appeal is necessary. The basis for leave is that “The orders…involve substantive liabilities in relation to child support and result in a substantial injustice to the [husband].” The ground directed to the Child Support issue is Ground 8:
8.Leave to Appeal should be granted to the Appellant because in making orders 11, 12 and 13 her Honour erred:
(a)in determining that it was just and equitable and otherwise proper to require the Husband after the property settlement to meet approximately 70% of the total sum expended by the Wife on the child…;
(b)in that she failed to pay any or any proper regard to the likelihood that the order for property settlement would reduce the dividend income capable of being earned by the Husband in the event that [TPL] or [TH] were in the future to declare dividends in his favour;
(c)in that she failed to have any or any proper regard to the circumstances that the occurrence, frequency or quantum of future dividends, or advances from either [TH] or [TPL] are matters beyond the Husband’s control.
The orders with which we are concerned are first, pending the property settlement payment, the husband pay weekly child support of $1,120. Second, that the husband pay all educational expenses, tutorials, health insurance costs and medical, dental and optical expenses for the child.
In respect of the leave issue, in Hendy v Deputy Child Support Registrar & Anor (2001) 27 Fam LR 641 this Court said at 648-649:
39.An appeal from a single judge of the Family Court exercising jurisdiction under the Child Support (Assessment) Act 1989 lies only with the leave of the Full Court: s 102...[but] orders arguably arise under an exercise of the Family Law Act jurisdiction and may be the subject of an appeal as a right.
…
43.Finally In the Marriage ofWild and Ballard (1997) 22 Fam LR 291; (1997) FLC 92-771; the Full Court said at FLC 84,488 (citations omitted):
As already indicated s 102 of the Child Support (Assessment) Act provides that an appeal from a single judge of the court exercising jurisdiction under that Act lies only with the leave of the Full Court. In In the Marriage of Gilmour the Full Court (Ellis, Finn and Maxwell JJ) endorsed suggestions made in both Bassingthwaite v Leane and In the Marriage of Best that leave applications under this legislation ought be approached less restrictively than were this an application from an interlocutory order. The court said that if a party’s substantive rights have been significantly affected by an error at first instance, then it would be appropriate to grant leave to appeal under the section. It is appropriate then to examine whether the appellant has had his substantive rights significantly affected by any error of principle made by the trial judge.
44.We shall approach our task of determining whether to grant leave bearing in mind that we should not be too restrictive if we perceive there has been any error of principle which has affected the applicant's substantive rights.
We approach the husband’s application for leave the same way to see whether there has been any error of principle which has affected his substantive rights.
It is also helpful to remember that an order for departure is not made from the administrative assessment per se but by reference to the provisions of the Act relating to administrative assessment of child support (Bassingthwaite v Leane (1993) FLC 92-410). Reference to the formula is useful but it does not restrict what a court may or should do. In this case, the trial judge referred to the assessment issued on 29 January 2015 but there were also orders made on 1 April 2014 to which the husband consented which mirrored what the wife was seeking before the trial judge and indeed more or less what the trial judge ordered. That is relevant because the husband knew of the assessment for the periodic payments but still consented to the higher non-periodic payments in April 2014.
Like the argument about spousal maintenance, Ground 8 asserted that the trial judge failed to have regard to the circumstances under which the husband could access the dividends of TPL or TH particularly as the property settlement favouring the wife would reduce the income stream of the husband.
When pressed about the nub of the husband’s complaint, his counsel maintained that it was unjust and inequitable and that it was “just too much”.
The husband’s submission was that he should pay one half of the child’s costs and expenses having regard to the financial position of the wife. In particular, by reference to what she ultimately will receive in property entitlements. That is, as both parties would be wealthy, there should be no distinction between them.
Section 117(1) of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”) requires that an applicant for departure from the administrative assessment show that there are grounds for such a departure but also that in the special circumstances of the case the administrative assessment would result in an unjust and inequitable determination of the level of child support to be paid.
The approach was succinctly set out in Gyselman and Gyselman (1992) FLC 92-279 at page 79,064:
…Section 117 is the critical provision.
The structure of that section is that s 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear three-step process.
1.Whether one or more grounds of departure in s 117(2) is established.
If so:
2.Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order.
3.Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
It is clear from the careful way in which s 117 has been structured that the Court must address each of those three separate issues.
Whilst the provisions of the legislation have been altered since 1993, those principles still hold good.
The trial judge accepted the evidence that the wife and the child had special needs which were explained in the Reasons. Her Honour also found that the administrative assessment resulted in an unjust and inequitable determination of the level of child support payable by the husband. Bearing in mind the disparate incomes and financial circumstances of the parties, that is clearly correct.
The assessment by the child support registrar had been based on

a provisional income of the husband of $94,641. Her Honour accepted that he had not filed a tax return for some years. The formula also relied upon the wife’s income. Her Honour noted that the assessment disregarded the “husband’s substantial interest in the profits” of the group of entities. The trial judge therefore found that the assessment did not produce a just and equitable assessment. The judge was assisted by the expert evidence of Ms B as to what the husband was earning to make those findings. In our view, the finding of the trial judge was clearly open.
The trial judge considered the evidence of the costs of maintaining the child which were unchallenged.
The trial judge found that after the wife received her property settlement she would be “a wealthy woman in her own right” but then noted that the husband spent limited time with the child and the wife was primarily responsible for his daily support.
The husband’s argument was that the trial judge failed to have regard to the fact that once the wife was provided with her property entitlement, there was no justifiable reason for anything other than each parent paying one half of the financial expenses of the child.
Notwithstanding the legislation provides that parents with like financial capacity provide a similar financial contribution, the trial judge was obliged to consider whether the requirements of s 117 had been satisfied.
Section 117(4) of the Assessment Act provides that in determining the question of the justice and equity for both parents and child, the court is obliged to consider, relevantly, the income, property and financial resources of each parent but also the direct and indirect costs incurred in providing care for the child. The trial judge found that the wife had the greater role in the care of the child and that justified the order.
The trial judge made reference to the limited time that the child spent with the husband by comparison to the wife. Her Honour found that 70 per cent of the cost was a justifiable order to make because of the wife’s significantly greater obligation to support the child on a day to day basis which included providing him with housing.
To the extent that Ground 8 was otherwise directed to the question of the access by the husband to dividends and indeed capital, it is a matter of little consequence for two reasons. First, the provision of child support at least in respect of departure and substitution orders, is not dependent upon income alone. Secondly, after the property proceedings are re-heard and after the payment of the capital sum the order may need to be re-considered.
The second order made by the trial judge was pursuant to the provisions of

s 124(1) of the Assessment Act which permits payments to be made in a form other than a periodic payment. This particular order covered educational expenses, health expenses and insurances for the child.
The reasoning of the trial judge was clear and unequivocal. In our view, for the same reasons that concern the departure from administrative assessment, the determination was well within the range of her Honour’s discretion.
There is no merit in Ground 8 and, as no substantive right of the husband has been affected, we would not grant leave.

Conclusion

As the husband has succeeded in respect of the grounds referred to above in relation to the property matter, Orders 2, 4 and 5 are set aside. The costs order contained in paragraph 17 is also set aside. The application of the wife for property settlement and costs of the various proceedings before Macmillan J must be remitted to be reheard before a judge other than Macmillan J. No doubt the issues of costs of the trial before Macmillan J will be a significant aspect in the future proceedings before a new judge.

Costs

The husband’s submission was that he had already succeeded on two conceded grounds and if he was successful generally in the appeal, the wife should pay his costs.
The wife’s submission was that if the husband was unsuccessful, he should pay the costs but if the appeal was successful, she should be granted a certificate under the Federal Proceedings (Costs) Act 1981 (Cth).
Section 117 of the Act provides that in proceedings of this nature, each party shall bear their own costs unless there is a justifiable reason to depart from that principle. If the Court is intending to depart from the principle, it must contemplate the matters set out in s 117(2A) of the Act.
It is sufficient for us to say that even though the appeal must be allowed, the husband’s conduct in the proceedings below together with his complete failure to comply with orders for the preparation of the trial and to attend at the trial did nothing to assist the trial judge. There is no justifying circumstance to make an order for costs in favour of the husband against the wife. Nor are there circumstances which would justify a certificate in his favour.
In relation to the wife’s application for a certificate, accepting that her lawyers did their best in difficult circumstances, but having regard to the way in which the case was argued on her behalf before the trial judge, we do not see a certificate should be ordered in this case.

I certify that the preceding one hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Ainslie-Wallace & Cronin JJ) delivered on 8 July 2016.

Associate:

Date: 8 July 2016