VC and GC & Ors

[2011] FCWA 89

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: VC and GC AND ORS [2011] FCWA 89

CORAM: CRISFORD J

HEARD: 17, 18, 21 & 22 JANUARY & 15, 16, 17 & 18 JULY 2008 & 28 FEBRUARY 2011 & 1, 2, 3, 4, 8, 9, 10, 11, 14 & 17 MARCH 2011

DELIVERED : 9 DECEMBER 2011

FILE NO/S: PTW 4624 of 2006

BETWEEN: VC

Applicant Wife

AND

GC
Respondent Husband

AND

LB & AC (As Executors of the Estate of DC)
Second Respondents

AND

XYZ PTY LTD
Third Respondent

AND

LB
Fourth Respondent

AND

AC
Fifth Respondent

Catchwords:

PROPERTY SETTLEMENT - Pool of assets - trust property - how to categorise and deal with - early vesting sought under Part VIIIA of Act - third party interests - contributions - s 75(2)

Legislation:

Family Law Act 1975 (Cth)
Family Law Rules 2004

Category: Not Reportable

Representation:

Counsel:

Applicant Wife : Mr M Berry

Respondent Husband : Mr P Dowding SC

Second Respondents : Mr W Elder and Dr R Ingleby

Third Respondent : Mr W Elder and Dr R Ingleby

Fourth Respondent : Mr W Elder and Dr R Ingleby

Fifth Respondent : Mr W Elder and Dr R Ingleby

Solicitors:

Applicant Wife : E Wiese & Assoc

Respondent Husband : Gibson & Gibson

Second Respondents : Kim Wilson & Co

Third Respondent : Kim Wilson & Co

Fourth Respondent : Kim Wilson & Co

Fifth Respondent : Kim Wilson & Co

Case(s) referred to in judgment(s):

B Pty Ltd and Ors & K and Anor (2008) FLC 93-380

Bergman & Bergman (2009) FLC 93-395

BP & KS (2003) FLC 93-157

[VC] & [GC] & Ors [2008] FCWA 148

[VC] & [GC] [2009] FCWA 119

[VC] & [GC] [2009] FCWA 42

Duff and Duff (1997) FLC 90-217

FCT v Vegners (1989) 90 ALR 547

Harris and Harris (1991) FLC 92-254

Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93‑143

Hughes-Kempe and Kempe and Bocampe Pty Ltd & Ors (2005) FLC 93-237

Hunt v Hunt and Others (2007) 36 Fam LR

Jones v Skinner (1835) 5 LJ Ch 87

Kelly and Kelly (No. 2) (1981) FLC 91-108

Kennon v Spry (2008) 238 CLR 366

Kennon v Spry (2008) FLC 93-388

Kowaliw & Kowaliw (1981) FLC 91-092

Milankov & Milankov (unreported, Family Court of Western Australia, Penny J, 1 February 2001)

Pittman & Pittman (2010) FLC 93-430

Reynolds v Reynolds (unreported decision of the Full Court of the Family Court of Australia delivered on 27 April 1990)

Saunders v Vautier (1841) 41 ER 482

Steinbrenner and Steinbrenner [2008] FamCAFC 193

Stephens & Stephens [2005] FamCA 1181

VC & GC & Ors (2010) FLC 93-434

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1I am required to determine financial issues between the husband, [GC], and the wife, [VC]. A complicating factor is the nature of any interest they have in a trust known as the [XYZ] Trust (“the Trust”).

2The Trust was settled on 28 June 1985 and is due to vest on 30 June 2064. The original guardian and appointer was the husband. The original trustee was the husband’s late father. [XYZ] Pty Ltd (“XYZ”) is now the corporate trustee of the Trust. The specified beneficiaries are the husband, wife and their three children. It is accepted by all parties that the husband’s parents were general beneficiaries with effect from the 1986 income year.

3The possible impact of any interest the parties may have in the Trust consumed most of the time at trial.

The parties to the proceedings

4The wife, who is the applicant, is aged 51 years and works part-time in a food outlet. The husband is aged 57 years and is a real estate agent. He is the first respondent.

5The executors of the estate of the husband’s father are the second respondents. They are [LB] and the husband’s mother, [AC], who was married to the deceased. The husband’s father died [in] 2008 aged 80 years.

6XYZ is the third respondent.

7LB is the fourth respondent. He is a director of the accounting firm [BP] Pty Ltd and the accountant for the third and fifth respondents. He is also a director of XYZ having been appointed in 2006.

8The fifth respondent is the husband’s mother. She turned 80 years of age in September. She was appointed a director of XYZ in December 2006 and along with LB is an executor of her late husband’s estate.

9[RE], the daughter of the husband’s parents and thus his sister, is not a party to the proceedings. Originally, she made an application on 31 January 2011 to intervene as a sixth respondent. Subsequently, through Dr Dickey QC, one of her Majesty’s counsel, RE only sought leave to be heard in relation to orders the wife is seeking for an early vesting of the Trust. RE is a general beneficiary of the Trust.

Brief background

10The husband and wife married [in] 1979. They separated in February 2005, but continued to live in the former matrimonial home [the H Property], until the husband moved out in November 2006. The marriage was dissolved in May 2007.

11The husband and wife have three children. [E] is now aged 30 years and the twins, [K] and [S], are now aged 28 years. E manages a real estate business. K is a [student] and S is a [physiotherapist]. All children live in the H Property with their mother. The children are estranged from their father and their paternal grandmother.

12The husband commenced proceedings in August 2006. Since that time there have been numerous court events, including trials. Relevantly, on 17 December 2008 I published a judgment dealing with an application made by the wife pursuant to s 106B of the Family Law Act1975 (Cth) (“the Act”) that 13 transactions made by or on behalf of the husband be set aside ([VC & GC & Ors] [2008] FCWA 148 (“the s 106B hearing”). The wife appealed this decision to the Full Court, which published its judgment on 29 March 2010 (VC & GC & Ors (2010) FLC 93-434).

13There are two judgments relating to the payment of spousal maintenance to the wife ([VC & GC] [2009] FCWA 42, VC & GC] [2009] FCWA 119The husband currently pays $500 a week to the wife.

14All these judgments have relevance here and I make reference to them. The s 106B hearing itself dealt with evidence relevant to the current determination.

Positions of the spouses at trial (including late amendments)

15The wife says that by virtue of their status as specified beneficiaries, the husband and the wife have an interest in the Trust that can be categorised as the “property of the parties to the marriage or either of them” for the purpose of s 79(1)(a) of the Act. She argues that the Court should make an order changing the vesting date of the Trust from 2064 to the present pursuant to clause 1(12)(a)(ii) of the XYZ Trust Deed of Settlement dated 28 June 1985. She argues the Court has jurisdiction to order a timely vesting of the Trust pursuant to Part VIIIAA of the Act and in its discretion should do so. This is a pivotal part of her case as it will have the effect of substantially increasing the immediately available asset pool.

16From the beginning the wife has amended her case on numerous occasions. She adopted various approaches. At times this has given her case an air of artificiality. However, the potential difference in outcome between the spouses could be a substantial amount. The wife has traditionally been the party without any financial control.

17The wife filed a minute of the orders she sought at trial on 21 February 2011. This minute contained a fresh set of orders relating to the spouses’ children. Her counsel handed another minute to the Court seeking to further amend these orders on 1 March 2011.

18This last amendment was sought after the commencement of the trial and was that, upon the various undertakings of the children, the Court be at liberty to distribute the entire trust fund solely between the parties to the marriage. This is based on the Court bringing forward the vesting date of the Trust. In effect, the children say they want to relinquish their own interests in the Trust and thus increase the funds available for division between the spouses. The amendment was opposed by the trustee of the Trust and the husband.

19I do not intend to allow the wife’s amendment on this occasion for the following reasons:

•The amendment was sought very late in the proceedings, after the trial had commenced. It was made in the context of a continuing series of amendments. Although it may have been “flagged” at an earlier stage it was only presented with precision on the third day of trial.

•The wife failed to join the children as parties to the proceedings so their position could be thoroughly addressed. Although they had obtained legal advice on the effect of the amendments sought and gave evidence in support of the wife, I am concerned they were not seriously considered as separate identities for the purpose of these proceedings in which their potentially not inconsiderable entitlements were sought to be dealt with. This is not simply a matter of an early vesting of the Trust but a complete relinquishment of entitlements. In these circumstances r 6.02 of the Family Law Rules 2004 makes joinder mandatory.

•If orders were made without joining the children as parties and they then sought to withdraw their revocation of rights under the Trust, it could cause unnecessary difficulty.

•The children are closely aligned with their mother. If the Trust vests she can likely access the money they purportedly seek to relinquish by other means. In short, the amendment is not necessary to achieve her purpose or the purpose put forward on her behalf.

•The question of whether all parties who may be affected by the amendment had been given appropriate notice was raised. This relates to the general beneficiaries. They were given notice in relation to the early vesting order the wife seeks. I am unsure whether they needed to be given further notice given the nature of the particular amendment and the fact only one has shown any interest as a result of the earlier notice. However, there may be some substance in this argument as the general beneficiaries are potentially involved in the Trust distributions. When this argument is coupled with the other matters already mentioned I do not intend to allow any further amendment.

20The wife’s position is that if the Court orders an early vesting of the Trust, then on a contribution basis there would be a percentage division of 55/45 in the husband’s favour. In relation to the matters to be considered pursuant to s 75(2) of the Act, there would be a 2.5% adjustment in her favour. Her position is different if the Court is not prepared to order an early vesting of the Trust. In that case the wife says on a contribution basis there should be a percentage division of 52.5/47.5 in the husband’s favour, however, thereafter there should be an adjustment of 20-40% in her favour for primarily prospective factors.

21The wife seeks to retain the H Property. She wishes to retain this home unencumbered. She wants the husband to pay out the mortgage registered over the property which is in relation to their joint borrowings. She also wants him to discharge her debt to a litigation funder, [AF] Ltd (“[AF]”), for her legal fees, living expenses and ensuing compound interest on outstanding amounts. There are some other liabilities she wants him to discharge on her behalf.

22She seeks a splitting order in relation to the G & S [C] Superannuation Fund such that she is paid 50% of the value of the fund pursuant to s 90NT(1)(b) of the Act.

23The wife seeks a weekly payment of $613 from the husband for spousal maintenance with effect from 9 June 2008. This amount is to be reduced by sums he has already paid pursuant to interim spousal maintenance orders I have previously made.

24The husband says that in the event the Trust is held to be an asset of the spouses the percentage division should be 80/20 in his favour. If not, he seeks a percentage division of 65/35 in his favour.

25The husband seeks that the H Property be sold by public auction. From the proceeds of sale he seeks to discharge the joint mortgage registered over the home. He then seeks the balance of the sale proceeds be divided 80%/20% to him. He seeks the wife be solely responsible for the payment of her borrowings to AF for her legal fees, living expenses and interest.

26He also seeks that the wife transfer her 38% share in the real estate business he operates, [S H] Pty Ltd (“[S H]”), to him and that she attempt to procure their son, E, to transfer his 24% shareholding in the business to him also. If this is not possible, he originally sought to be able to sell all of the rent roll of the business. He now seeks to be able to sell some or all of it. I will refer to this shortly.

27He proposes that he transfer the wife’s interest, which his counsel says is about 17%, in the G & S C Superannuation Fund to the trustee of a fund nominated by her.

28The husband seeks the wife’s application for spousal maintenance be dismissed. As a result of an order of the 10 September 2009 he pays her $500 a week. This varies a previous order of 29 April 2009 that he pay her $350 a week. He wants the existing order discharged.

29The trial commenced on 28 February 2011. On 14 March 2011 the husband wanted to amend the orders he was then seeking. Firstly, he now wants to be able to sell all or only some of the rent roll of S H. Secondly, in the event E seeks to claim against either of the parties in relation to his shareholding in S H or a trust in which he had an interest and which was established by the husband in 1983, both spouses share in the payment of any costs or judgment sum ordered against them. Lastly, he seeks some minor procedural amendments to facilitate the transfer of the wife’s interest in the superannuation fund.

30The amendments were opposed by the wife.

31I do not propose to allow the amendments as they relate to the first and second matters identified. These amendments were sought very late in the proceedings. The amendments were sought after the wife and E had completed their evidence. In my view, the matters were not squarely raised with them in this hearing. The husband has already sought to sell the business if E will not transfer his shares to him.

32I consider the third to be relatively minor. Although it is sought late in the day, it does not, in my view, create prejudice to the wife.

33The second to fifth respondents jointly seek the sale of the H Property. From the proceeds of sale they are seeking repayment of the mortgage registered over the property in favour of XYZ for $860,000. They are also seeking repayment of the wife’s loan accounts in the Trust in the amount of $111,243.21. Over and above this they are seeking their legal costs be paid on an indemnity basis as a result of their unwilling participation in these proceedings.

34They seek other orders that will allow for the proper management and administration of the Trust.

Applicable law

35The approach to be taken in relation to an application for property settlement pursuant to s 79 of the Act is a four step process (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93‑143). Those steps are:

•to make findings as to the identity and value of the assets and liabilities of the parties;

•to identify and assess the contributions made by the parties within s 79(4)(a), (b) and (c);

•to identify and assess the s 75(2) factors, together with any matters relevant pursuant to section 79(4)(d)-(g); and

•consider whether the proposed orders are just and equitable.

Pool of Assets

36Although the parties were able to provide a schedule to the Court agreeing the identity and value of most of the assets, there were some items in dispute. I will now deal with those issues.

37By far the most contentious of the issues is that of the Trust. I intend to deal with all aspects of it here as the pivotal question about it is the impact it has, if any, on the pool of assets.

•XYZ Pty Ltd as trustee for the XYZ Trust

38The present value of the Trust has been agreed in accordance with the report of [Mr P], forensic accountant, dated 23 February 2011. Mr P was appointed a single expert witness by a court order of 25 November 2010. His report assumes that all loans to and from various specified beneficiaries are paid or received prior to the distribution of the trust fund. It assumes payment of debts such as mortgages. There is no actuarial value of the Trust on the nominated vesting date in 2064.

* Categorisation of the parties interest in the Trust

39The first question the Court has to consider is whether the spouses or each of them has an interest in the Trust which can be categorised as property for the purpose of s 79 of the Act. It is necessary to look at the nature of the trust deed itself and the position of the spouses as objects of this particular Trust.

40The nature of the spouses’ interest in the Trust is a question of fact (Reynolds v Reynolds unreported decision of the Full Court of the Family Court of Australia delivered on 27 April 1990).

41The respondents hold a variety of views about the issue of whether the interest of the husband and wife can be termed property. Not surprisingly, Mr Berry, for the wife, says it is. He terms it an “interest vested in interest” meaning “it is an indefeasible present right to the enjoyment of the trust fund upon vesting.”

42RE, through Dr Dickey QC, concedes that the spouses interest in the Trust constitutes property for the purpose of s 79 of the Act even though its value cannot be realised at present.

43Counsel for the second to fifth respondents, Dr Ingleby, concedes the spouses have a proprietary right, “a chose in action constituted by their right to compel the trustees to administer the Trust properly”. He says each has an interest of 20% in whatever is left in the fund at the expiration of the 53 years remaining until it vests.

44At the other end of the spectrum the husband, through his senior counsel Mr Dowding SC, argues the Trust is “clearly” not property. He appears to accept it is a resource.

45The history of the Trust has been canvassed in earlier judgments. This information is largely uncontroversial. I will give a brief overview here but return to the history in more detail later in the judgment.

46On 28 June 1985 a discretionary trust known as “The XYZ Trust” was settled. The appointor and guardian of the Trust was the husband and the specified beneficiaries were the spouses and the three children. There has never been any amendment to the composition of the specified beneficiaries. The trustee of the Trust was originally the husband’s father.

47On 30 August 1985, by Deed of Appointment, the husband exercised his power of appointment and removed his father as trustee. A corporate trustee, XYZ, was substituted. The husband and his father each held one of the two issued shares in XYZ. They were the directors of the company. XYZ remains the trustee of the Trust.

48On 15 June 1986 the trust deed was amended to allow for the expansion of the class of general beneficiaries to include the parents of each spouse. Thereafter the husband’s parents received distributions from the Trust. The Trust financial statements record beneficiary loan accounts in their names.

49On 27 February 1997 the husband resigned as appointor and guardian of the Trust and as a director of XYZ. Prior to his resignation he did not appoint another appointor or guardian. Since this date the Trust has not had an appointor or guardian.

50Commencing in April 2001 the shareholding of XYZ was expanded in favour of the husband’s father. By 1 January 2004 the entire shareholding which then comprised 12 shares was held by the husband’s father.

51On 8 December 2006 the husband’s mother and LB were appointed additional directors of XYZ. The sole shareholdings in XYZ passed to AC when the husband’s father died in 2008.

52A discretionary trust is a trust coupled with a special power of appointment. The beneficiaries are not determined at the moment of creation of the trust – either as to identity or quantum of interest – and the choice of beneficiary, or determination of the extent of his or her interest, or both, is left to the trustee to decide (Jacobs, K Jacob’s Law of Trusts in Australia, Fifth Edition, Butterworths North Ryde, 1986 at [2916]).

53The impact of the husband’s resignation as appointor and guardian of the Trust in 1997 is that the office remains vacant. For the purpose of this judgment that vacancy has consequences.

54Of particular relevance is clause 10 of the trust deed which provides relevantly:

10. SUBJECT always to any express provision to the contrary herein contained every discretion vested in the Trustees shall be absolute and uncontrolled and every power vested in them shall be exercisable at their absolute and uncontrolled discretion PROVIDED that notwithstanding anything contained in this Deed -

(1)the Trustees may before exercising any discretion or power vested in them or making any determination hereunder consult the wishes of the Guardian (if any);

…

(3)subject to sub-clause (5) of this clause the Trustees shall not when there is a Guardian exercise the reserved powers or the restricted powers except with the consent of the Guardian;

(4)where a Guardian is named in the Schedule and there ceases to be a Guardian the Trustees shall not-

(a)exercise the reserved powers; or

(b)exercise the restricted powers in such manner as to impair or diminish the expectations of any Specified Beneficiary or of any other person or persons upon whom in the events which happen or pursuant to any appointment validly made pursuant to clause 4 hereof the Trust Fund is to devolve on the Vesting Day;

PROVIDED NEVERTHELESS that the Trustees shall have power to make a declaration pursuant to the second provisos to clauses 1(2) or 1(3) hereof in respect of any General Beneficiary who is adult and sui juris and who requests them to do so;

(5)the Guardian may at any time by instrument in writing revocably or irrevocably declare that thenceforth all or any of the reserved powers or the restricted powers –

(a)shall cease to be reserved powers or restricted powers as the case may be and after any such declaration the Trustees shall be entitled to exercise such power or powers as though no Guardian had been named in the Schedule; or

(b)shall be prohibited to the Trustees and after any such declaration the Trustees shall not be entitled to exercise such power or powers;

…

55Clause 10(7)(a) defines the reserved powers and includes the power to:

•exclude a person from the class of general beneficiaries;

•declare a person falls within an excluded class;

•enlarge the class of general beneficiaries;

•declare that a person shall not become a guardian or appointor if nominated in the husband’s will;

•amend the trust deed; and

•appoint the trust fund upon the vesting day.

56Clause 10(7)(b) defines the restricted power and includes the power to:

•transfer capital to any beneficiary;

•lend money to any beneficiary; and

•distribute income to any beneficiary.

57The trustee’s powers in relation to the appointment of trust capital and income upon vesting are constrained. Clause 10(4)(b) refers to Clause 4 of the trust deed:

4. AS from the Vesting Day the Trustees shall stand possessed of the Trust Fund and the income thereof –

(1)in trust for such of the beneficiaries for such interests and in such proportions and for one to the exclusion of the other or others at such age or time or respective ages or times if more than one in such shares and with such trusts and powers for their respective benefit maintenance advancement and education (including discretionary trusts and powers exercisable over capital or income at the discretion of the Trustees or of any other person or persons) as the Trustees may subject to clause 10 hereof by instrument in writing revocable or irrevocable and without offending the rule against perpetuities before the Vesting Day appoint provided that any revocable appointment shall be revocable only until the end of the day proceeding the Vesting Day when it shall become irrevocable;

58As can be seen, this is a reserved power and therefore not a present power of the trustee by virtue of there being no guardian. Thus, the position now of the trust fund is:

(2)insofar as any part of the Trust Fund shall not have been disposed of in accordance with sub-clause (1) of this clause then –

(a)if one Specified Beneficiary is named or described in the Schedule and that Specified Beneficiary is in existence on the date of this Deed or comes into existence after the date of this Deed but before the Vesting Day in trust for such Specified Beneficiary absolutely and if more than one Specified Beneficiary are so named or described and at least one of such Specified Beneficiaries is in existence on the date of this Deed or comes into existence after the date of this Deed but before the Vesting Day in trust for the Specified Beneficiaries who are in existence on the date of this Deed or who come into existence before the Vesting Day as tenants-in-common in equal shares absolutely;

(b)where there is no Specified Beneficiary in existence on the date hereof and no Specified Beneficiary comes into existence before the Vesting Day then in trust for the persons (but excluding every member of the excluded class) who would have comprised the statutory next of kin of the Guardian firstly named in the Schedule hereto on the hypothesis that such Guardian (whether or not he is in fact alive on the Vesting Day) had died on the day immediately preceding the Vesting Day domiciled in the place of residence of the Trustees hereinbefore names and described (whether or not those Trustees are the Trustees hereof on such day) and if more than one then as tenants-in-common in equal shares absolutely any resulting trust to the Settlor or to any person claiming under or any right of the Settlor or to any notional Settlor or to any person claiming under or in right of any notional Settlor being hereby expressly negatived.

59In summary, the trust deed, relevantly permits the trustee:

•in each accounting period to pay, apply, set aside or accumulate net income of the trust fund for any general beneficiary provided that any payments on the first occasion be subject to clause 10 (which is defined to include but is not limited to the specified beneficiaries), and failing such determination the income shall be dealt with as an accretion to the capital of the trust fund.

•to deal with the trust fund in a manner which does not impair or diminish the expectations of any specified beneficiary.

•to vest the Trust on or before 30 June 2064 in favour of such of the surviving specified beneficiaries as tenants-in-common in equal shares absolutely, and if there are no such surviving specified beneficiaries then in favour of the named guardian’s statutory next of kin.

60Considering the nature of discretionary trusts Gummow J in FCT v Vegners (1989) 90 ALR 547 at 551-2 said:

There was some discussion by counsel of the term ‘discretionary trust’ and related terms. A fixed trust is used to describe a species of express trust where all the beneficiaries are ascertainable and their beneficial interests are fixed, there being no discretion in the trustee or any other person to vary the group of beneficiaries or the quantum of their interest. The expression ‘discretionary trust’ is used to identify another species of express trust, one where the entitlement of beneficiaries to income, or to corpus, or both, is not immediately ascertainable. Rather, the beneficiaries are selected from a nominated class by the trustee or some other person and this power may be exercisable once or from time to time.

61Although it can be misleading to label a trust as “fixed” or “discretionary” the terms do give a sense, for present purposes, of the changes brought by the vacant office of appointor and guardian of the Trust. By virtue of the provisions of the trust deed the position of the specified beneficiaries is virtually frozen or fixed. Although the value of their interest upon vesting is not presently ascertainable each specified beneficiary does have a discrete entitlement to the corpus of the Trust on a vesting.

62In Duff and Duff (1997) FLC 90-217 the Full Court comprising of Watson FJ, Murray and Wood JJ held the definition of property should not be narrowly construed. Their Honours adopted at 76,133 the following definition of property by Lord Langdale MR in Jones v Skinner (1835) 5 LJ Ch 87 at 90:

Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.

63The circumstances in which assets of a discretionary trust may be brought into a divisible property pool for family settlement proceedings have progressively broadened (Kennon v Spry (2008) 238 CLR 366 see French C J at [77-79], Gummow and Hayne JJ at [124]).

64The fact of uncertainty of ultimate value is not a reason for failing to categorise an interest as property. As the Full Court (Bryant CJ, Finn and Thackray JJ) stated in Pittman & Pittman (2010) FLC 93-430 at [64]:

It is true that there is a possibility (perhaps best described as a theoretical possibility) that the husband’s one quarter share of the capital might ultimately be diluted by the appointment of other beneficiaries. But he would still be entitled to some share in the capital. It is only the value of his share that might change (indeed it might increase on his mother’s death). The values of all items of property which are the subject of s 79 proceedings are likely to change between the time of such proceedings and the time when such items are eventually realised. Uncertainty of ultimate value cannot provide a reason for not categorising an item as property, and the submissions of senior counsel for the husband to the contrary must be rejected.

65The Full Court at [63] further stated:

We consider that the PFT interest was property because whatever the original nature of that trust and the husband’s interest in it, the various amending instruments have resulted in a situation where the husband has irrevocable entitlements not only to income, but also to a share of capital.

66As in this case, albeit by a different route, the husband and wife have a fixed and irrevocable entitlement to a share of capital upon a vesting of the trust.

67I have little difficulty in categorising the entitlement of the husband and the wife in the Trust as property for the purpose of s 79 of the Act.

* How should the interest be treated?

68Given that I have categorised the husband and wife’s respective interests in the Trust as property, how then should the Court treat this property. Are the spouses’ interests capable of being altered by an order under s 79 of the Act?

69It is clear that a distinction needs to be drawn between notionally treating trust property as “property of the marriage” and the Court making practical orders in relation to that property. As Warnick J noted in BP & KS (2003) FLC 93-157 at 78,595:

[To include the assets of the trust in the pool] is a notional step and a process of reasoning, as distinct from the executive nature of a Court order dealing with trust assets.

70In order to allocate a present value to the parties’ entitlements to the Trust property and circumvent the dilemma posed by Warnick J the wife seeks:

The trustee of the [XYZ] Trust exercise its powers pursuant to clause 1(12)(a)(ii) of the [XYZ] Trust Deed of Settlement dated 28 June 1985 to appoint 30 June 2010 or such other date as determined by the Court, as the vesting date for the [XYZ] Trust.

71In summary, on a vesting the value of the property is ascertainable. The question for the Court is whether it can take steps to bring the property entitlement into existence.

* Part VIIIAA of the Act

72The parties have identified “whether the Court has jurisdiction to make the orders sought by the wife against the third parties” as an issue for the Court to determine. The wife refers to and relies upon Part VIIIAA of the Act to support an early vesting of the Trust.

73Mr Berry made it clear the wife was not seeking to avail herself of s 78 of the Trustees Act 1962 (WA) or the rule in Saunders v Vautier (1841) 41 ER 482.

74The provisions of Part VIIIAA, which confer on the Court power to bind third parties in financial and injunctive proceedings commenced on 17 December 2004. The Explanatory Memorandum which accompanied the amending legislation sets out:

General Outline

In line with the Government’s ongoing reform agenda in Family Law, this Bill makes a range of amendments to the Family Law Act1975 (the Act). In particular the Bill makes a range of reforms to clarify those provisions of the Act dealing with property and financial interests.

Of particular importance are the provisions in the Bill that provide clear power for courts exercising jurisdiction under the Act to make orders binding on third parties when dealing with property settlement proceedings under the Act. The provisions make it clear that within defined limits courts will have power to make orders binding on persons such as creditors to one party to a marriage and companies to do certain things.

…

Allow for orders and injunctions to be binding on third parties

Schedule 6 of the Bill provides for the Family Court to be given power to bind third parties in order to give effect to property settlement. This will apply for any creditor of a party to a marriage irrespective of whether the creditor is a friend, relative or financial institution. Procedural rights will be given to third parties to ensure that the changes do not affect the underlying substantive property rights of the creditor.

75However, as O’Ryan J in Hunt v Hunt and Others (2007) 36 Fam LR noted:

… when consideration is given to s 90AE(2)(b) and s 90AF(2)(b) the Parliament, in clear and unambiguous words, has expressed an intention to give power to deal with the rights and interests of third parties and not simply procedural rights and interests.

76Pursuant to s 90AA, the object of this Part of the Act is to allow the Court to make an order under s 79 or s 114 or to grant an injunction under s 114 that is directed to, or alters the rights, liabilities or property interests of a third party. The power given to the Court is entirely discretionary.

77Pursuant to s 90AB an order under this Part is binding on a third party, meaning a person who is not a party to the marriage. It is a wide definition. YWB comes within this definition as do beneficiaries of the Trust. Pursuant to s 90AC any order so made prevails over any other contradicting law, trust deed or other instrument.

78Specifically, the wife relies upon s 114 of the Act to accelerate the vesting of the Trust. Section 114 is a power to be exercised in aid of jurisdiction.

Section 114 Injunctions

(1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:

…

(e)an injunction in relation to the property of a party to the marriage; or

…

79Division 3 of Part VIIIAA deals with orders and injunctions under s 114. It reads:

90AFCourt may make an order or injunction under section 114 binding a third party

(1)In proceedings under section 114, the court may:

(a)make an order restraining a person from repossessing property of a party to a marriage; or

(b)grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.

(2)In proceedings under section 114, the court may make any other order, or grant any other injunction that:

(a)directs a third party to do a thing in relation to the property of a party to the marriage; or

(b)alters the rights, liabilities or property interests of a third party in relation to the marriage.

(3)The court may only make an order or grant an injunction under subsection (1) or (2) if:

(a)the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

(b)if the order or injunction concerns a debt of a party to the marriage—it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and

(c)the third party has been accorded procedural fairness in relation to the making of the order or injunction; and

(d)for an injunction or order under subsection 114(1)—the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and

(e)for an injunction under subsection 114(3)—the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and

(f)the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).

(4)The matters are as follows:

(a)the taxation effect (if any) of the order or injunction on the parties to the marriage;

(b)the taxation effect (if any) of the order or injunction on the third party;

(c)the social security effect (if any) of the order or injunction on the parties to the marriage;

(d)the third party’s administrative costs in relation to the order or injunction;

(e)if the order or injunction concerns a debt of a party to the marriage—the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;

Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.

Example: The capacity of a party to the marriage to repay the debt would be affected by that party’s ability to repay the debt without undue hardship.

(f)the economic, legal or other capacity of the third party to comply with the order or injunction;

Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party’s legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).

(g)if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters—those matters;

Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

(h)any other matter that the court considers relevant.

80Section 90AH relating to protection for a third party, provides that a third party is not liable for loss or damage suffered by any person because of things done or not done in good faith by the third party in reliance on an order or injunction in accordance with Part VIIIAA.

81Service of documents on a third party is covered by s 90AI, which provides that if a document is required or permitted to be served for the purposes of the Part on a third party, it may be served in any of the ways in which a document may be served under the applicable rules of the Court, in addition to any other method of service permitted by law.

82The Explanatory Memorandum indicates that Parliament intended to cover a wide range of possible interests which a party to the marriage may have. As can be seen from the actual terms of the provisions the range of orders available to the Court is very broad.

83Writing extra-curially, Brereton J, in 2005 just after the amendments had commenced, suggested one of the possible uses of Part VIIIAA could include:

…

(IV) Under s 79, in the context of family trust, orders which fix a vesting date, or convert a discretionary trust into a fixed trust, or require the trustee to exercise its discretion in a particular manner, or add a beneficiary, or acquire a distribution to a spouse or upon divorce cease to be a beneficiary;

…

(The Honourable Justice Paul L G Brereton RFD ‘Recent developments in Family Law: bankruptcy, third parties in other matters’ (speech delivered to the NSW Young Lawyers, 21 September 2005)

84This is the position adopted by the wife. It is strongly opposed by all the other parties to these proceedings. The husband’s counsel raises the issue of a lack of procedural fairness being accorded to third parties. The other respondents, in the main, simply say the Court has no power to make such an order.

85To date, there has been some limited judicial pronouncement on Part VIIIAA.

86In Stephens & Stephens [2005] FamCA 1181 Strickland J reviewed Part VIIIAA. An attempt was made very late at first instance to introduce a claim under Part VIIIAA. His Honour noted the wide terms of s 90AE(2) (or as here, s 90AF(2) proceedings). In that case the wife contended s 90AE(2) empowered the Court to make orders directing the husband personally and in his capacity as trustee of certain trusts, and another trustee, to effect a payment to her from the assets of the trust to give effect to the orders of the Court.

87His Honour said the object of the Part referred to altering the rights, liabilities or proper interests of the third party, in relation to the property of a party to the marriage (emphasis added), and that the construction of s 90AE(2) that promoted that object was to the effect that s 90AE(2)(b) applied only where the rights, liabilities or property interests are in relation to the property of a party to the marriage (emphasis added), which would also be consistent with the requirement that s 90AE only applies in s 79 proceedings. He saw the phrase “in relation to the marriage” as limiting the reach of the paragraph in terms of “the rights, liabilities or property interests of the third party”.

88His Honour also noted the apparent conflict between the Explanatory Memorandum and the words of the Act as to whether the provisions were substantive or procedural.

89His Honour concluded that s 90AE was not available in the particular case before him, because potential beneficiaries had not been given notice and s 90AE(4) matters had not been adequately addressed. On appeal to the Full Court of this court the wife succeeded on other grounds and thus the judgment offers limited assistance in the interpretation of this part of the legislation. The High Court did not need to deal with it either.

90The Full Court in B Pty Ltd and Ors & K and Anor (2008) FLC 93-380 found that the evidence presented by the wife in that case was insufficient to found her proposed claim against third parties under s 90AE of the Act.

91This case has been referred to and relied upon by Dr Ingleby, counsel for the second to fifth respondents, as showing that Part VIIIAA of the Act is not applicable to this case. The Full Court said at [63]:

In our view, the correct conclusion was that, as the wife set out her proposed claim, she did not show that the power conferred by s 90AE could arguably be engaged. Any order made pursuant to s 90AE(2)(b) must be for the purpose of effecting a division of property between the parties. The order that the wife proposed was for the purpose of increasing the property of the parties, by an unknown amount and on unknown principles.

92The facts of the case are not dealt with in great detail by the Full Court or at first instance which is reported at Hughes-Kempe and Kempe and Bocampe Pty Ltd & Ors (2005) FLC 93-237. Essentially the wife made an application to join additional respondents and to claim relief against some third parties who were already respondents. Some of the third parties were trustee corporations and some were, with the husband in some instances, among appointors of discretionary trusts of which the husband was a member of the class of beneficiaries.

93Relevantly the court said that in its view what s 90AE(2)(b) (here s 90AF(2)(b)) does is to enable the court to adjust the property interests of the third party for the purpose of effecting a division of the present property of the parties to the marriage between those parties. The court stated at [28]:

… only in the sense that altering interests may leave a bundle of rights or interest that are consequent upon the alteration, may the exercise of power create interests, but these “new” interests will be the residue of what already existed at law. Except in this sense, the subsection does not create a new cause of action derived from rights not previously known to the law. In this sense, the subsection resembles a machinery provision, though in our opinion it is more than that.

94The court drew the distinction between the “restructuring” of a third party’s rights and an attempt to increase or decrease those rights or the property available for division between the parties.

95These limitations were earlier identified by O’Ryan J in Hunt & Hunt (supra) where he said at [113]:

… it is clear that what is contemplated is not some arbitrary invasion of the rights of a third party, but an alteration of those rights where they are sufficiently connected to the division of the property between the parties to a marriage.

96In B Pty Ltd and Ors & K and Anor (supra) an order was sought that the trustee in its discretion vest capital in one object of a discretionary trust. It appears there was a connection between the interest of a discretionary beneficiary and the marriage but no connection between the husband’s interest in the trust assets and the marriage.

97I do not accept that as a result of the reasoning in B Pty Ltd and Ors & K and Anor (supra) that the wife’s application in this case should likewise be excluded. I will return to this later.

98In Bergman & Bergman (2009) FLC 93-395 the Full Court was asked to determine an appeal against the trial Judge’s refusal to grant a husband (through his case guardian) leave to join third parties in the property proceedings between himself and the wife and leave to amend a response to seek orders pursuant to Part VIIIAA of the Act. Again the Full Court emphasised that the powers under s 90AE to make orders under s 79 binding on third parties (or under s 90AF to make orders or injunctions under s 114 binding on third parties) are not independent heads of power in the sense they can be exercises outside of proceedings between parties to a marriage under s 79 (or s 114). It said the Part VIIIAA powers can only be exercised as part of the exercise of what can be termed the wider provisions of s 79 (and s 114).

99All the authorities referred to adopt an approach of limitation rather than expansion in the use of Part VIIIAA of the Act. Despite this, the Court is of the view, that in appropriate circumstances power to make orders for an accelerated vesting of a trust deed could come within the scope of s 90AF. Unsurprisingly, it very much depends on the circumstances of each case and the nature of the trust in question.

* Effect of an early vesting

100The likely practical effect of an early vesting of the Trust is that the trustee, pursuant to clause 1(12)(a)(ii) of the trust deed, would be directed to take steps to enable such an early vesting. It is noted that the power to appoint an earlier date for the vesting of the Trust exists even if there is no guardian. The Trust’s net assets would be divided equally between the specified beneficiaries. Each of the five specified beneficiaries would receive 20% of the net assets of the Trust. It is common ground four of the five specified beneficiaries want this course to take place.

101There are also a number of general beneficiaries of the Trust. According to the trust deed the general beneficiaries include:

•specified beneficiaries;

•brothers, sisters, spouses, widows, widowers, children and grandchildren of the specified beneficiaries;

•the spouses, widows, widowers, children and grandchildren of such brothers and sisters spouses children and grandchildren; and

•entities:

othe trustees of any eligible trust, (“eligible trust” means any trust or settlement under which any beneficiary or class of General Beneficiary has any interest);

oany eligible corporation, (“eligible corporation” means any corporation at least one share in which is beneficially owned or held by any beneficiary, including the trustees of any eligible trust);

oany other legal person at least one share or other interest in which is beneficially owned or held by any beneficiary,

oany charity, (“charity” means established wholly for charitable purposes and the trustees of any trust or settlement established wholly for charitable purposes).

•such other persons corporations and trustees if any as named in the schedule as additional members of the class of general beneficiaries.

102The effect on other beneficiaries of an early vesting is they will miss out on being considered for a distribution of any income received by the Trust in the next 53 years. Clause 3(1)(a) of the trust deed sets out that until the vesting date the trustee may pay net income to one or more of the general beneficiaries. Clause 7(15) of the trust deed gives the trustees the power to determine whether any real or personal property or any increase or decrease in value of property shall be treated as and credited or debited to capital or income.

103On 19 May 2010 the wife, through her solicitors, sent letters to the three children of the parties attaching a copy of the amended final orders she was seeking at that stage. Relevantly, the orders included an order for an early vesting of the trust fund. As noted, the children do not oppose the early vesting.

104On 14 December 2010 she sent differently worded letters to 17 individual general beneficiaries. She also sent that letter to the children. The letters sent relevantly state:

You are a beneficiary of the [XYZ] Trust. As a beneficiary you are entitled to be considered by [XYZ] Pty Ltd as Trustee of the [XYZ] Trust to be paid a distribution of money from the Trust.

Our client is seeking an order from the Family Court to wind up the [XYZ] Trust. You should seek independent legal advice as to the effect this order will have on your entitlements.

If you seek to be heard by the Family Court you should seek to do so as soon as possible as the matter is listed for trial to commence on 28 February 2011.

105It is as a result of this letter that RE originally sought to intervene in the proceedings.

106Turning to Part VIIIAA of the Act there are a number of possible third parties in this matter (s 90AB). Relevantly, the third and fifth respondents, the Trust and the husband’s mother fall within this definition as does RE who opposes an early vesting of the Trust. The spouses’ children are included. Additionally there are the other general beneficiaries who fall within that definition.

107Since the inception of the Trust various distributions have been made to the beneficiaries.

108Between 1986 and 1998 inclusive the spouses received capital drawings of $919,310. The husband’s parents received $708,345 and the parties’ children, together, received $155,540. As at 30 June 1998 the husband had a total loan amount owing to him of $609,879.

109The documents then show the spouses receiving income distributions in 1999 but nothing at all since then. In 2000 the husband’s parents, [G] Investments Pty Ltd and the spouses’ children received income distributions. In the years following 2000 no distributions were made at all until 2006.

110It is to be noted that G Investments Pty Ltd is the only corporate beneficiary of the Trust. This company was incorporated on 11 May 1987 with the husband and his father as directors. The husband resigned his directorship on 25 June 1997.

111The husband’s father originally owned the 12 shares on issue in G Investments Pty Ltd. These are now held by the husband’s mother and she is the sole director of the company. The only assets of the company are loans owing to it from the Trust.

112It was not until 2006 the husband’s parents received any further income distributions. Since then few distributions have been made. Between 2008 and 2010 the husband’s mother received $327,566. Then in 2010 it is deposed that RE’s daughter [SW] received $5,000 and in 2011 RE and the new born son of SW received $10,000 and $2,000 respectively.

113In the 25 years between the inception of the Trust and the wife first signalling her intention to seek a vesting of the Trust in her minute of orders dated 16 April 2010, it was only the spouses, their children, the husband’s parents and G Investments Pty Ltd who received distributions.

* Is an early vesting appropriate in this case?

- Earlier proceedings

114I now turn to consider the particular circumstances here. The parties have identified this issue as being whether the Court should order an early vesting of the Trust.

115An issue the wife sees as pivotal is who actually has control of the Trust. It assumes some significance here given she is seeking to direct the trustee of the Trust to do something in relation to the property of a party to the marriage.

116There is not only the issue of the husband’s interest in the capital of the Trust on a vesting, but also the nexus between the Trust property itself and the husband or the spouses.

117Originally in the s 106B hearing the wife argued her claim based on the husband having legal control and ownership of the Trust assets between 1985 to 1997 and, at least, de facto control from 1997 to 2001. She said all the transactions she sought to be set aside were entered into by the husband with the intended result of frustrating the operation of the Act by distancing himself in every possible way from the Trust assets. If that was not so intended it has, in effect been the practical result.

118Mr Berry referred to the Full Court decision in Harris and Harris (1991) FLC 92-254 at 78,708:

In our opinion, the husband’s interest as a beneficiary under the trust in combination with his rights and powers as appointor and guardian place him, for the purposes of section 79 of the Family Law Act1975, into the position of an owner of property which property is constituted by his interest and his rights and powers under the trust. This property is properly evaluated as equivalent to the value of the assets of the trust.

119He said that the extent of the husband’s power established him as the owner of the Trust in the sense of Harris.

120Given my findings in the s 106B hearing in relation to the transactions revolving around the husband’s resignation as appointor and guardian of the Trust in early 1997 and the Full Court upholding these findings the wife’s emphasis at this trial has been on the impact of the husband’s resignation.

121In his closing Mr Berry says three aspects of the Trust need to be considered - control, management and ownership. He argues that ownership of the underlying assets of the Trust “trumps” the other two issues indentified. Thus, he says the fact that the spouses have a proprietary interest in the Trust equates to ownership of the underlying assets.

122He then identifies factors he says supports the wife’s earlier contention that there is a strong nexus between the Trust assets and the spouses over and above the fact of their proprietary interest pursuant to the trust deed itself.

123The Court will examine the nexus, if any, between the Trust assets and the parties, especially the husband. The backdrop to all this is the trust deed itself.

124In carrying out this exercise it is necessary to consider the evidence presented at the earlier s 106B hearing and also comments made by the Full Court in relation to those proceedings. The Full Court found a number of determinations I had made were premature as findings of credibility are best made when all the evidence is before the Court. In particular I found:

144.I am not satisfied to the relevant standard that in 1985 or at any time thereafter [GC] was the controller and owner of the [XYZ] Trust.

145.I see the following as being important to my determination:

•In 1985 the Trust was established based largely on assets acquired since the mid 1950s by [J] and [S];

•In 1985 the family was unaware of and indifferent to the nomenclature relating to trust structures;

•Although [GC] did most of the front running in relation to the business associated with the Trust and [J] relied on him as a good businessman, ultimate control of financial matters rested with [J];

•Within this family although there was considerable financial largesse extended to [GC], it did not equate to ultimate financial control. This is evidenced by the argument over the sale of [S H] properties which I accept took place. I accept the evidence of [GC] and [J] in that regard. This evidence is also consistent with [GC]’s explanation about the exchange of offers and his own financial aspirations; and

•There is no evidence to support that in 1985 it was intended most of [J] and [SA]’s assets were to be “given” to [GC] despite his lack of direct financial contributions.

146.Despite the fact that [GC]e from time to time treated the Trust assets as his own I am satisfied his father was the ultimate controller and patriarch no matter what was said and done by [GC].

125The Full Court stated:

8.Why the s 106B proceedings were determined as they were is understandable when regard is had to the circumstances which confronted the trial Judge. However, we discern many of the issues which have arisen in this appeal could probably have been avoided if the wife’s application under s 106B had not been “severed” from the substantive proceedings under s 79, and we think it is appropriate we should express our view that it is generally undesirable to have a discrete hearing of a s 106B application. This is especially so where, as was the case here, findings of credibility are likely to be important. The Judge may well make a favourable or unfavourable finding in determining the s 106B questions but, in the light of what subsequently transpires in the balance of the s 79 proceedings, wish that he or she had not done so.

126I made findings about the control of the Trust and what could be read into the executing of certain instruments and dispositions the wife sought to be set aside.

127This was further remarked on by the Full Court:

196.In his oral submissions, senior counsel for the husband submitted, if the husband, by reason of power under the power of attorney granted by his mother was controller of the trust, that was a matter for trial. (emphasis added) He further submitted:

The fact that Her Honour said that so far as she was concerned the trust was in the gift of [the husband’s mother], does not bind the husband, does not bind the Court. That was simply the way the Judge perceived the situation to be when it was before her and it clearly was not a s 106B matter. These are matters that can be relitigated at trial. There is no estoppel here at all. (Transcript, 22 October 2009, p 55)

…

241.In respect of the statement by the trial Judge that the husband’s father had ultimate control, we accept, as did senior counsel for the husband, that statements made in the context of the 106B application have not concluded the issue which is to be determined at the final hearing. (emphasis added)

128All the evidence is now before the Court. With this in mind it is of use to revisit, where relevant, the history of the acquisition of the Trust assets and the part played by the spouses in the Trust to the present day. Most of this evidence was dealt with at the s 106B hearing.

129At the time of the s 106B hearing the evidence was, to a certain extent, evolving. Significantly, powers of attorney were disclosed during trial. There was little real understanding of the impact on the Trust of the office of appointor and guardian being unfilled. The husband’s mother had not given evidence. The Court now has a more complete picture of each of the spouses and how they ran their lives over an extended period. The husband’s late father’s affidavit has been considered in light of the comments made by the Full Court. I have made limited reference to his evidence. I am aware it has not been the subject of cross-examination. In the main I have used it where it is corroborated by other evidence or it involves admissions against interest.

130A number of matters the subject of the s 106B hearing have resolved. This relates to the setting aside of transactions which occurred after the institution of property settlement proceedings. It is accepted by all parties that a number of these transactions are invalid as a result of the Trust not having an appointor and guardian. Other transactions originally sought to be set aside are simply no longer pressed by the wife.

- History of the Trust and its assets

131It is now appropriate to canvas the life of this Trust in some detail. The history was canvassed in detail at the s 106B hearing.

132The present assets of the Trust are identified by Mr P in the adjusted balance sheet at 30 June 2010. This is attached to his valuation. The significant assets are:

•[The] S H [Properties];

•[The W Lot];

•3 properties at [V P]; and

•[The G Properties].

133There are some shares, cash at bank and related party/entity loans. However, the real estate identified constitutes the assets of most value.

134In 1977 the husband and his parents purchased the business known as the [Y] Wine Bin and Liquor Store. It was intended to be a family business they would operate in partnership. It was purchased with a 10 year lease over premises from which the business was operated. The purchase price was paid by the husband’s father in the form of a cash deposit of $40,000 and borrowings from the bank of $100,000. The husband’s father used investment units he owned in Y as security for the borrowings. The cash flow from the business provided the loan repayments.

135The husband left his relatively junior position as an accountant with [Company A] to work in the liquor store for a salary. His parents also worked in the store.

136On 17 December 1980 the husband and his parents purchased the land and buildings where the Y Wine Bin was situated. The premises were rebuilt. The purchase price was borrowed using the husband’s parents’ home and the spouses’ [K Property] as security.

137On 28 June 1985 a discretionary trust known as the XYZ Trust was settled. The appointor and guardian of the Trust was the husband and the specified beneficiaries were the husband, the wife and their children. The trustee of the Trust was the husband’s father.

138The Y Wine Bin and Liquor Store business became an asset of the Trust.

139On 30 August 1985, by Deed of Appointment, the husband exercised his power and removed his father as trustee of Trust and substituted in lieu a corporate trustee, XYZ. The husband and his father were directors and each held one of the two issued shares in XYZ.

140By Deed of Variation dated 15 June 1986 the definition of “General Beneficiaries” was amended to include:

•such other persons as the Trustee at any time may (subject to clause 10) declare in writing to be added to the class of General Beneficiaries.

141By Deed of Variation dated 15 June 1986 the class of “General Beneficiaries” was expanded to include:

•the mother and father of [GC]; and

•the mother and father of [VC].

142Both deeds of 15 June 1986 were signed by the husband and his father.

143The husband’s parents entered into a contract to purchase the commercial [properties] at [S H] on 30 March 1987 for $795,000. They utilised the proceeds of sale of shops they owned in G as a deposit of $93,016 to purchase the property. The S H property was registered in the name of XYZ as trustee for the Trust.

144The husband and wife guaranteed a loan by XYZ to acquire the S H property. The husband’s parents advanced an additional $110,000 thereby increasing an existing mortgage they had over flats they owned in Y.

145In November 1988, the husband’s father signed a mortgage document in respect of a purchase by the Trust of a property at V P. The spouses guaranteed a loan for $200,000 obtained by the husband’s parents to purchase this property. This property was sold on 7 January 2004.

146Two other properties were bought in V P in 1989 and 1990 by XYZ with funds provided by the husband’s parents.

147In about 1989 the Y Wine Bin and Liquor Store business was sold. The husband received one third of the profits and his outstanding loan of $82,432 was forgiven. After the sale of the liquor store business the husband commenced working in real estate and he continues in that occupation today. He continued to manage the Trust assets.

148The W Lot was a property bequeathed to the husband’s father and aunt by their parents. The husband’s father purchased his sister’s share and on 18 June 1993 the property was transferred to XYZ as trustee for the Trust for $52,000.

149In August 1994 XYZ purchased units in the [B] Unit Trust ([W C] Holdings Pty Ltd) known as [W C] Farms, which is situated in [N], for $30,000.

150The Y Wine Bin and Liquor Store premises were sold in 1995.

151In January 1995 the spouses signed a director’s report of the Trust for the year ending 1994. It is not in dispute that the wife was never a director of XYZ.

152In 1995 a further property in V P was purchased by XYZ when the Y Wine Bin and Liquor Store business was sold. The husband’s parents provided the funds. There are three properties at V P which remain today.

153On 26 June 1995 the spouses’ then matrimonial home in K was security for borrowings of $2,100,000 to XYZ as trustee for the Trust. The K property was sold in October 1996.

154The G Properties was purchased in 1995 by XYZ, again when the liquor store premises were sold.

155In February 1996 the husband’s parents gifted him the sum of $500,000. This amount was then lent to the Trust by the husband.

156On 20 June 1996 the G & S C Superannuation Fund was created. XYZ was the trustee.

157On 3 July 1996 the spouses purchased the H Property.

158As a result of a dispute between the husband and his father about the sale of the S H Properties, on 27 February 1997 the husband resigned as a director of XYZ and as appointor and guardian of the Trust. He also relinquished his directorship in G Investments Pty Ltd.

159In March 1997, the wife’s brother separated from his wife. There were discussions between the husband and the wife’s brother about the brother’s family law proceedings which included the structure of trusts.

160In May 1997 the husband signed income tax returns for the Trust as director and in July 1997 ASIC received the annual return.

161On 6 August 1997 the wife’s then solicitors Holden Barlow wrote to the husband advising him the wife believed that the marriage had irretrievably broken down. The letter recorded there had been no communication between the spouses for some weeks prior to the wife instructing solicitors in July 1997. In her cross-examination, the wife said the husband had not spoken to her for “two, maybe more” months.

162In September 1997 the husband had further discussions which continued on and off until about July 1998, with his brother-in-law about family law matters, including the relevance of the role of an appointor of a discretionary trust.

163On 13 July 1998 the directors of XYZ resolved to pay the husband $15,000 per annum and expenses for working for the Trust.

164On 1 February 2001 the wife’s brother’s Family Court judgment was published. The husband knew of the judgment. He accepted he was aware of the effect of a trust and an inheritance on the entitlements of his brother-in-law’s wife.

165In April 2001 the husband wrote to the then accountant of the Trust about his father’s will. Further shares in XYZ were allocated to the husband’s father such that the husband retained his one share and his father had six shares. XYZ remained the trustee of the G & S C Superannuation Fund.

166On 6 December 2001 the husband instructed solicitors to prepare two enduring powers of attorney to be executed by his parents in his favour. The powers of attorney were executed by the husband’s mother on 11 December 2001 and the husband’s father in April 2002. The two powers of attorney were not disclosed and only came to light during the s 106B hearing. The power of attorney from the husband’s mother was revoked at the end of Mr Berry’s closing submissions in the s 106B hearing.

167At about the same time the husband sought advice from the solicitor about the position of the XYZ Trust should a matrimonial “split” take place between him and the wife. Section 106B of the Act was discussed.

168On 10 December 2001, a Deed of Variation of the Trust was executed. By this deed the husband’s father was appointed sole guardian and appointor of the Trust with purported effect from 27 February 1997. It is common ground this Deed of Variation is invalid.

169On 4 November 2003 the wife’s then solicitors, Alexander Lawyers, wrote to the husband asserting the marriage had broken down irretrievably. The husband’s lawyers responded, but denied the marriage was in trouble.

170On 1 January 2004 the husband transferred his one share in each of XYZ and G Investments Pty Ltd to his father. His father was issued a further five shares giving him a total of 12 shares. The husband deposes that his father told him he would bequeath three of those shares to each of the spouses’ children and the remaining three to the husband.

171On 6 January 2004 E was gifted 144 shares in S H . The husband accepted he told E the spouses were having difficulties, but the children would be taken care of.

172On 16 August 2004 the husband was appointed as power of attorney for XYZ, as trustee of the Trust and as trustee of the spouse’s superannuation fund. On the same date the husband’s father executed an unlimited enduring power of attorney to the husband to act on his behalf in respect of his personal affairs.

173In June 2005 the husband negotiated a loan of $2,700,000 for XYZ from a lending institution, Members Equity Pty Ltd. The spouses gave joint and several personal guarantees in respect of this entire loan. The wife did not receive independent legal advice before signing the guarantee and the husband acknowledged that the purported witness to the wife’s signature had not been present when she signed the document.

174The loan funds were utilised to discharge three existing loans of the spouses from the National Australia Bank registered over the title of the H property. The balance was applied for the needs of XYZ. As a result of the transaction:

•The spouses borrowed $707,000 from XYZ;

•The terms of the loans as minuted at a meeting of XYZ signed by the spouses were that:

-The spouses’ three existing NAB loans would be discharged;

-The terms of the loan would apply to any additional loans and any current and future beneficiary loans from XYZ; and

-Repayment of the loan is required on the occurrence of specified events, including the parties divorce;

•XYZ registered a first mortgage over H property in July 2005. Pursuant to the Deed of Guarantee and indemnity a collateral mortgage was to be registered over the H property but no such mortgage has been registered.

175The husband concedes he prepared the minute recording the terms of the loan which was signed by the spouses.

176The husband commenced proceedings on 18 August 2006. On 4 October 2006 the wife filed a response seeking to set aside transactions in which the husband purported to resign as appointor and guardian of the XYZ Trust.

177On 23 November 2006 XYZ and the husband’s father revoked the unrestricted powers of attorney in favour of the husband of 16 August 2004. XYZ and the husband’s father then executed powers of attorney in favour of the husband’s mother and LB.

178On 27 November 2006 the husband’s father signed a letter of wishes in which he says he did not wish to make any provision for the husband in his will because of the expense of the family law proceedings and by reason of what he had given the husband during his lifetime.

179On 8 December 2006 XYZ, with the purported consent of the husband’s father as appointor of the Trust, appointed the husband’s father and mother as beneficiaries of the Trust. On the same day XYZ, with the purported consent of the husband’s father, excluded the spouses as beneficiaries of the Trust.

180On 8 December 2006 the directors of XYZ resolved that the husband’s mother and LB be appointed as additional directors of XYZ and that they be irrevocably appointed as succeeding guardians and appointors of the Trust.

181On 21 January 2007 XYZ resolved to remove the husband as a signatory on its bank accounts. Historically, from about 1979, all business and related accounts had been signed by the husband and his father. At times the husband’s mother had also been a signatory. On 15 March 2007 XYZ resolved that all further communications with Members Equity Pty Ltd would be through LB, that no further distributions of income be made to the husband, and that XYZ resign as trustee of the [G and S C] Superannuation Fund.

182On 30 June 2007 XYZ resolved to distribute the income of XYZ equally between the husband’s parents.

* Discussion

183All the properties forming part of the Trust assets were acquired prior to the husband’s resignation as appointor and guardian in 1997. There is no real dispute that the funds used to purchase these properties originated from the husband’s parents. Both the husband’s parents and the spouses had other assets in the form of real estate and which did not form part of the Trust assets.

184There are a number of matters which need to be considered in looking at the issue of ownership and control of the Trust.

185I accept the Trust was set up on the advice of an accountant, albeit a less than punctilious one. The husband was instrumental in this. He played and continued to play a leading role in liaising with accountants, lawyers and lending institutions. He provided all the investment advice, which was invariably followed. Sometimes the investments were unsuccessful. However, he continued to be the driving force behind every action of the Trust even after February 1997.

186At the inception of the Trust the husband was appointor and guardian, a specified beneficiary and shortly thereafter an equal shareholder in the trustee company. The spouses were the recipients of significant distributions between 1986 and 1999. The distributions they received outstripped those of the husband’s parents.

187The Full Court said at [136]:

The husband’s father’s affidavit is explicit in that he acknowledges Mr F telling him “that it was a good idea” to appoint the husband as appointor and guardian “in case something happened to [him]”. He referred to the fact, in paragraph 78 of his affidavit, that on the husband’s death his (the husband’s) personal representative was to become the guardian and appointor of the trust. This evidence is clear and unequivocal. The husband’s appointment as guardian and appointor was not a mistake.

188The husband also confirmed at the s 106B hearing that the Trust was set up on his father’s instructions.

189Between 1985 and February 1997 the husband was legally entitled to control the affairs of the Trust. This included vesting the Trust if he wished and appointing all the capital to himself (clause 21 of the trust deed).

190The spouses and their children were the sole specified beneficiaries. It is clear they were intended to benefit from the Trust. They benefited from the Trust in a substantial way over an extended period of time. I find that absent these proceedings they would have continued to receive substantial benefits, in accordance with the Trust’s financial ability to do so.

191Apart from completely managing the Trust and its assets the spouses made other contributions. On 26 June 1985 their home in K, along with other properties of the husband’s parents, was used as security for borrowings of $2,100,000 to XYZ. They guaranteed a loan by XYZ to acquire the S H property in March 1987. In 1988 the spouses guaranteed a loan of $200,000 obtained by the husband’s parents to purchase a property for the Trust at V P. In February 1996 they lent the Trust $500,000 which had been gifted to the husband by his parents. In June 2005 the spouses gave joint and several personal guarantees in relation to a loan of $2,700,000 acquired by XYZ from Members Equity Pty Ltd. The only portion of this loan that related to their personal borrowings was $707,000. Despite the attempt to remove the spouses as specified beneficiaries the husband, at trial, appeared unfazed by this continuing and substantial guarantee.

192In about 2001 the husband made efforts to distance himself from the corporate structures surrounding the Trust. His shareholding in XYZ was diluted when his father was allocated further shares. However, late in 2001 he was appointed power of attorney for each of his parents.

193On 16 August 2004 XYZ granted a power of attorney to the husband for him to act on behalf of XYZ. In referring to the making of this power of attorney the husband’s father deposes that it was he who asked for it to be prepared.

194In about February 2005 the spouses experienced further matrimonial problems. The wife says they separated at that time although both remained living at the H property.

195In the middle of June 2005 the husband was instrumental in negotiating a loan on behalf of XYZ with Members Equity Pty Ltd.

196He deposes that:

The loan owed to [XYZ] Pty Ltd by [VC] and me becomes payable immediately upon the occurrence of a number of events, including the divorce of [VC] of me [sic]. As is set out more fully below, [VC] and I were having some marital problems at this time and accordingly, I inserted ‘divorce’ as one of the events triggering repayment of the loan as I did not want my father’s Trust to become entangled in any disputes between [VC] and me.

390It is also the husband’s case that the wife has been obdurate in trying to reduce her other expenses. I have also previously referred to the issue of her large motor vehicle when a smaller, more appropriate vehicle would have saved her some money.

391The wife has prevaricated about finding employment. She does have some experience in real estate and hairdressing. She says she has the skills to work in D C. She simply says “I will do what I am going to do once this matter is settled”.

392She has been criticised for not agreeing to the sale of the former matrimonial home prior to the conclusion of the substantive hearing. I did not accede to an application the home be sold prior to the conclusion of these proceedings. It is extremely unfortunate that these spouses did not agree between themselves to sell that property when the market was more buoyant.

393The husband says in his papers for the judge that the wife’s failure to meet any of the outgoings on the home or to carry out reasonable maintenance, coupled with her failure to agree to the sale of the home when she could not meet those ongoing commitments, should represent a 2.5% adjustment in his favour.

394The value of the former matrimonial home has decreased markedly since the commencement of proceedings. Market forces have not favoured the spouses in this regard. The wife says she acted on legal advice in ultimately opposing a sale of the home. At the time she did not know the extent of the asset pool. She was not in possession or control of all the detail of the husband’s financial position. She said it required a final court determination. She did not agree with a proposition put to her by Mr Dowding SC that the spouses would necessarily have been better off financially if the house had been sold. She was of the view the money would have been used in any event. Given the attitude of both spouses to their spending since separation, this may well have been the case.

395I am not satisfied that in all these circumstances this is the sort of behaviour that was identified by Baker J in Kowaliw (supra). I do not accept there is evidence to support the wife has deliberately set out to minimise the effective value of the home, was negligent or that the downturn in the economic climate was necessarily going to coincide with the final trial. If the economic climate had been more favourable the husband would not have given the wife credit for any delays or her refusal to sell.

396The husband has had far more money available to him post-separation. He made some contribution to preserving the joint assets of the home. He did not continue to pay the XYZ mortgage after November 2007. The wife utilised some of the funds she received from the husband’s Supreme Court action to pay rates over the home.

397The next issues to consider are matters the husband says impact on him such that there should be an adjustment in his favour.

398It is common ground that 24% of the shareholding in S H was gifted to E by the spouses in 2004. The husband seeks an adjustment as a result of what he says is E’s adverse attitude to him and the effect this may have on the value of the business and the husband’s ability to sell it. He makes no secret of the fact he would like to retire and sell the business to DB.

399I have already noted that after separation a draft contract prepared by the husband for the sale of the business did not reflect E holding any shares in it nor did an asset schedule he prepared in mid 2005 show E’s interest. In the s 106B proceedings it appears to have been assumed by the husband that E’s shares would simply revert to the spouses or to him. E has made it clear, especially during the earlier hearing, that he would not be prepared to simply hand back those shares. He said he would do so eventually, but not for free.

400There is now recognition by the husband that his attempt to have the wife persuade or encourage E to return the shares to him will not result in the outcome he had hoped to achieve.

401There has been a valuation of the rent roll of D C, but not of the shareholdings in S H. The valuation of the rent roll does not take into account the different shareholdings and, the minority shareholder’s antipathy towards the husband. E would not give a clear indication of his position when he was questioned in the witness box at this hearing. He was what I consider to be less than open about his intentions. However, he has not sought to interfere in the running of the business since he received his gift of shares. At some stage he will need to be paid for his interest, which appears to be appropriate. E’s evidence at the beginning of the s 106B hearing, when asked what he expected to get for the shares, indicated “normal commercial” value. The husband may want to or need to continue working in the short term in any event.

402Mr Dowding SC also raises what he considers to be another issue. On 5 October 1983, the date upon which the husband made a declaration of trust in favour of the girls in relation to the G, he also made a like declaration of trust in favour of E for the spouses’ K property. The husband was the trustee and the vesting date was 1 July 2006. When the K property was sold the proceeds of sale went into the spouses’ current home, the H property. . The husband is concerned that, albeit late in the day, E will take the same route as the girls and seek to recover his entitlement. The husband wanted to amend the orders he was seeking in that regard. I refused such amendment as this potential issue was well known after the s 106B hearing, but no action was taken until the commencement of this trial.

403When questions were put to E by Mr Dowding SC about his intentions, he again gave answers that were simply equivocal. He would not make his intentions known.

404Each of the spouses will have to pay debts, over and above their legal fees. These are debts not included in the asset pool. I do not consider these debts warrant any adjustment for either party. I anticipate that after this settlement they will be able to pay such debts. It may mean they have less money to invest or each may need to work, but they will be able to pay the debts each has incurred.

405The husband’s debts are $478,274. Some of his legal fees of at least $500,000 (as contained in his notification as to costs of 11 March 2011) are reflected in that.

406The wife has debts associated with borrowings from AF. She owes $612,905 for legal fees, an additional $133,023 for living expenses, and $496,171 in interest.

407Turning now to the issues that impact on the wife.

408I have pointed out that the wife and the children are significantly aligned. The children have involved themselves in these proceedings and, at the last minute, sought to relinquish their interest in the Trust if it was to vest. The wife sought an amendment in this regard and I have already dealt with that at the commencement of this judgment. I was not persuaded I should grant the wife’s amendment. However, as was correctly identified by Mr Berry, the children’s interest in the Trust is something that can be taken into account as a factor favouring the wife in the future.

409One of the reasons I did not grant the wife’s amendment was that the children had not been made parties to the proceedings. I considered there could be difficulties in enforcement if the children had a change of heart about relinquishing their interest in the Trust at a later stage. Once the children actually receive their entitlement they may not be so willing to simply hand over the whole amount or even half that amount to their mother.

410Over and above the children’s interests as specified beneficiaries in the Trust the girls have an interest in real estate in W. The wife was able to secure some of her AF borrowings over that land. The children are aware of the consequences for them if the wife is unable to pay her legal fees from any matrimonial settlement. However, the children’s support of their mother has been unflinching. At the commencement of the proceedings they were willing to relinquish their interest in the shares to the spouses.

411I am satisfied there will be some funds available to the wife if and when she requires them from the children.

412Mr Dowding SC referred to the M Family Trust as “the elephant in the room”. I took this to mean he considered the wife had a substantial resource by virtue of her interest as a beneficiary of this trust but that she had chosen to ignore providing the Court with detail about it.

413This trust was established by deed in 1987. The wife is a general beneficiary and the wife’s brother is a specified beneficiary. The wife has never received any distributions. She does not have any beneficiary loan accounts with the trust. She has an equitable right to due consideration and administration of the trust.

414In a letter of wishes prepared by the wife’s father on 19 October 1999 he expressed that he wanted his children to share equally in his estate.

415In the judgment of Penny J delivered 1 February 2001 between the wife’s brother and his wife, her Honour noted the wife’s mother’s intention to leave her estate to all the children. Her Honour did not doubt this would take place, but doubted whether the children would benefit equally (Milankov & Milankov (unreported, Family Court of Western Australia, Penny J, 1 February 2001).

416The wife has been estranged from her mother for a considerable length of time. After her father’s death in February 2002 her brother resumed control of all their father’s assets with their mother’s total support and approval. There is considerable antipathy between the wife and her brother. This is of long standing. They have no relationship.

417According to her mother’s most recent will made 17 December 2009, the wife will get $25,000 and some keepsakes and jewellery.

418The wife has consistently adopted an attitude in relation to most things that she will do what is needed to be done once the proceedings are over.

419The Full Court in Kelly and Kelly (No. 2) (1981) FLC 91-108 at 76,803 stated:

…. there are circumstances in which the property of a third party can be taken into consideration as a financial resource of a party to the marriage, and that the extent to which that party can control the property in question is relevant to this question.

420In the husband’s papers for the judge the question of whether the wife’s interest as a general beneficiary in the M Trust can be categorised as the property of the wife was posed. In response the husband notes “yes probably - or possibly”. There appears to be little foundation for the husband’s belief in this regard. His position is that his own interest as a specified beneficiary of the XYZ Trust in circumstances in which there is no appointor or guardian is “clearly not property”, yet he says the wife’s position in more diluted circumstances is “probably - or possibly” property.

421On the evidence I am not satisfied that any adjustment of substance should be made against the wife in relation to any possible resource she may have in the M Family Trust.

422Despite the husband, who is aged 57, wanting to retire, he does have a far greater earning capacity than the wife. He has been able to successfully operate D C. He can continue to do this. At least in the short term, he will be in a position to continue to generate a very comfortable income. The wife, who is aged 51, will not be in the same position. Although I am critical of her failure to maximise her income earning capacity, even if she does so, it is unlikely to match that of the husband. She will not be in the same position as the husband in this regard. However, she has more ability to earn an income than she is willing to acknowledge or she is presently willing to put into action.

423Another matter that needs to be mentioned here is the fact the wife does have some superannuation that she acquired through her sole efforts post-separation. She has failed to make adequate disclosure of this. I accept it is very likely to be of nominal value only. However, she had an obligation to provide the information to the husband and the Court. I have found that she is entitled to 50% of the spouses’ superannuation fund. I have made no specific finding in relation to her own fund. It is simply not possible on the evidence available, but I do take the fact she is a member of another fund with some small contributions into account in a general sense here.

424As can be seen, there are a variety of factors that need to be considered and which will impact on the parties’ future lives.

425One matter I consider to be of some moment is the issue of the value of the husband’s interest in S H given the difficulties with a minority shareholder. I accept that some consideration should be given for this issue. The husband is in a very amicable work situation at present. The potential purchaser of the business has been involved in business with the husband since around March 2005. Given his evidence that he is content to continue to operate with the husband as they currently do “within reason”; I accept it is an issue, but not of the magnitude suggested by the husband.

426The most important factor in this case is the disparity in the earning capacity of the spouses. It has been a long relationship with the wife being primarily responsible for three children. She may have taken certain courses during the marriage, but she has not had the same opportunity to cement or improve her position in the workforce simply because of the marriage. She had a completely different role for its duration and this was accepted by both spouses. The husband has been able to establish himself as a successful businessman. There is no reason advanced, which I accept, he needs to retire before age 65 despite his desire to do so. The wife has a much longer work life than the husband, but is unlikely to ever earn the amount he can even in a greater period of time. Balanced against this is the fact the wife, in my view, will be able to access some funds from her children. This is a significant resource.

427When I marry all these different considerations together I propose to make an adjustment of 5% in the wife’s favour. In an asset pool of this size the differential is 10% and in real terms this reflects $535,113. I do not see this as being inappropriate in the circumstances of this case.

428The wife will therefore receive 38% of the assets (excluding superannuation), or $2,033,431. The husband will received 62% or $3,317,704. I do not consider that the 5% adjustment should also apply to the otherwise equal division of superannuation assets as my view is the wife’s likely future and other requirements can be met by the adjustment being made simply on the non-superannuation assets.

Justice and equity

429It is now important to stand back and look at the result of these adjustments and how it affects the orders I will make.

430In my view, the spouses will need to sell the home. The wife sought to retain it, but with the vesting of the Trust, unless there is some agreement, I consider it will be sold. Along with the monies received from the vesting of the Trust, I am satisfied that each party will be in a position to move forward if the funds are managed wisely.

431The husband will retain his business, which is not only a valuable source of income, but a valuable asset in itself. Whilst I have taken into account the fact he may have some difficulty in a sale of that business, I do not see this as impacting to any great extent on the intrinsic worth of it to him.

432The wife will need to rehouse into much more appropriate accommodation. However, she will have some money to invest and will be in a position to genuinely and realistically apply herself in the workforce. She has debts, but I am satisfied she will have or can access funds to satisfy those debts, even if over time.

433I again consider the appropriateness or otherwise of the vesting order given I have now arrived at the percentage division of the parties’ assets. Without a vesting of the Trust the spouses’ assets available for division would be less. This, in turn, would have impacted on the wife’s ability to support herself and live a standard anticipated during marriage.

434In all the circumstances I consider the orders I will make to reflect a just and equitable outcome. The orders in relation to a vesting of the Trust are proper in all the circumstances.

Spousal maintenance

435The husband has vigorously resisted paying spousal maintenance. His application to discharge my earlier spousal maintenance order was adjourned to trial.

436The wife wants the husband to pay her $613 per week with effect from 9 June 2008. She accepts that the husband should be given credit for any payments he has already made pursuant to interim orders I have made.

437The wife deposes that after the husband left the home he started to pay her $613 a week. He also paid the mortgage and other outgoings on the home. She says the husband has not paid any outgoings on the home since November 2006. She had paid the insurance and other maintenance costs. She has also paid water rates. Despite the lump sum payment of outstanding land rates made after the Court order of 28 October 2010, the balance remaining as at 27 January 2011 is apparently $10,028.

438The husband ceased making voluntary spousal maintenance payments in June 2008. The wife commenced an application for spousal maintenance out of time and pursuant to an order on 29 April 2009 the husband was ordered to pay her $350 a week. On 10 September 2009 this order was varied to a payment of $500 a week.

439The husband has made the following maintenance payments to the wife:

Date	Amount
2 June 2009	1,400
26 June 2009	1,400
9 November 2009	9,200
15 April 2010	11,500
Total	$23,500
23 June 2010 (Court order)	25,000

440Given the orders I have made for settlement of the spouses’ property, I am left with some uncertainty about the likely reasonable future expenses of each party. I would like this information before varying or discharging the current order. I intend to adjourn this aspect of the proceedings pending the outcome, in a financial sense, of the vesting of the Trust and a sale of the property. I will not discharge or vary the current order in the meantime as it will not be until either, or both, of these happen that the financial situation will be clear.

441I will hear from counsel about the form of orders I intend to pronounce. There may need to be some consideration given to the vesting date and timing of certain orders. There are other machinery orders that may be required. Counsel can address me on these issues in due course.

Orders

1The net assets of the parties (excluding superannuation) as set out in the schedule contained at paragraph 346 of these reasons be divided between the wife and the husband as to 38% to the wife and 62% to the husband.

2The Trustee of the [XYZ] Trust exercise its powers pursuant to clause 1(12)(a)(ii) of the [XYZ] Trust Deed of Settlement dated 28 June 1985 (the trust deed) to appoint 30 June 2010 as the vesting day for the [XYZ] Trust.

3Upon the vesting of the [XYZ] Trust the trustee distribute the trust fund and income in accordance with clause 4(2)(a) of the trust deed.

4Subject to any submissions of counsel, prior to any distribution referred to in paragraph 3 hereof the fifth respondent is to receive the sum of $338,000.

5In order to facilitate implementation of these orders the husband and the wife do all acts and things and sign all documents necessary to forthwith place the property at [H] (“the H property”) which is comprised in Certificate of Title Volume[x] Folio[x]on the market for sale on the following terms and conditions:

(a)[M H & A] or such other agent as is agreed between the parties be appointed the exclusive agent for sale;

(b)The wife do facilitate the agent inspecting the [H] property within 7 days for the purpose of providing a marketing proposal to [XYZ] Pty Ltd;

(c)The [H] property be offered for sale by public auction or private treaty, as recommended by the agent for sale;

(d)The reserve price be fixed by agreement between the husband and the wife on the recommendation of the agent or failing which, there be liberty to apply to the Court on short notice; and

(e)The wife do join in and facilitate the sale of the [H] property and do all things reasonably necessary to allow inspections in accordance with requests by the agent or agents appointed for the sale.

6Upon settlement of the sale of the [H] property, the proceeds be disbursed as follows:

(a)In payment of agent’s commission, settlement agent’s fees and reasonable costs of sale;

(b) In discharge of the mortgage to [XYZ] Pty Ltd;

(c)In repayment of the loan account of [VC] to [XYZ] Pty Ltd as trustee for [XYZ] Trust in the amount of $111,243.21; and

(d)The balance then remaining to be divided between the wife and the husband as they may agree or as ordered by the Court, and be retained in an interest bearing account in the names of the husband and the wife in the interim.

7The wife transfer to the husband her shareholding in [S H] Pty Ltd.

8Pursuant to s 90MT(1)(b) of the Family Law Act 1975 (Cth), whenever any splittable payment becomes payable in respect of the husband's interest in the G & S C Superannuation Fund, the wife is entitled to be paid 50% of each splittable payment and there be a corresponding reduction in the entitlement of the husband.

9 Paragraph 8 has effect from the operative time.

10 The operative time is the date of these orders.

11The Trustee of the G & S C Superannuation Fund do all such acts and things and sign all such documents as may be necessary to:

(a)calculate, in accordance with the requirements of the Family Law Act 1975 (Cth), the entitlement created in paragraph 8 of these orders; and

(b) pay the entitlement whenever a splittable payment becomes payable.

12This order is binding upon the Trustee of the G & S C Superannuation Fund.

13The wife transfer to the husband her interest in all other property in the husband’s possession, custody or control and the husband transfer to the wife his interest in all other property in the wife’s possession, custody or control.

14The parties’ respective applications in relation to spousal maintenance be adjourned pending compliance with these orders with either party having liberty to apply in relation to a relisting.

15Each party is responsible for payment of their individual debts, save that the husband is also responsible for the tax debt of $16,457 in the name of the wife.

Addendum

442On 5 October 2011 I sent counsel for the parties and RE a copy of the lengthy judgment in this matter. It was my intention to give everyone a short period of time to consider both the content of the judgment and the likely orders to be made when it was published.

443On 10 November 2011, the day before I had allocated a special appointment for the purpose of formally publishing my reasons and pronouncing orders, I received a document from the wife’s solicitors entitled “errata in judgment delivered 18 October 2011”.

444Broadly speaking that document refers to certain errors in my judgment, some of which were typographical and were unfortunately not identified prior to the circulation of the judgment. In respect of these errors the earlier judgment will be amended.

445The letter also covers matters which require some expansion and clarification. In this respect I incorporate this addendum into the judgment.

Spousal maintenance

446In paragraph 13 of the judgment I identify that the husband currently pays $500 a week to the wife by way of spousal maintenance. What is not included in this paragraph or any subsequent paragraph of the judgment is that this periodic spousal maintenance order was suspended by paragraph 3 of orders made on 23 July 2010. The husband does not currently pay spousal maintenance.

447The wife’s application for trial, as set out in paragraph 23 of this judgment, is she be paid $613 a week with effect form 9 June 2008. This amount is to be reduced by sums already paid to her by the husband. At the trial the wife did not agitate for a discharge or variation of the suspension pending judgment or orders.

448I note that the wife has now filed another application in relation to spousal maintenance and that can be dealt with as a separate issue.

Paragraph 253

449In line with paragraphs 248, 249 and 441 (in order 4) the amount of $336,000 in paragraphs 253 and 346 will be amended to $338,000. This typographical amendment results in changes to some of the figures in other parts of the judgment (paragraphs 253, 254, 374, 381 and 385).

Paragraph 382

450The wife suggests the figure of 64% should be inserted in this paragraph in lieu of the 67% I allocated to the husband’s contributions. Although not specifically stated, the wife appears to suggest a mathematical error has been made.

451The superannuation asset, as set out in paragraph 377, is to be divided equally.

452In arriving at a calculation reflecting the contributions of each party to the non-superannuation assets I have used a percentage figure as a general guide only. I have done this to give some clarity and to provide a plank upon which the final outcome on contributions is assessed.

453The starting point in paragraph 381 is the net asset pool excluding superannuation. As set out “roughly” 53.5% is comprised of what I have referred to as joint matrimonial assets and as set out in paragraph 382, the balance of “approximately” 46.5% is represented by trust assets.

454I assess contributions to the trust assets to be “about” 80% in favour of the husband and then an equal contribution to the other joint matrimonial assets. I then arrive at an overall division in the husband’s favour of 67%. This is considering all matters. When I refer to all matters I am referring to matters I have canvassed throughout the judgment, but do not specifically repeat or summarise in paragraph 382. However, they are matters which I consider warrant further recognition on behalf of the husband. These matters include, in particular, the fact the husband’s parents from the very beginning of their son’s relationship provided support to the parties on every level. Although the length of the marriage has seen a myriad of other different contributions, especially given the parties had three children, I consider the financial opportunities afforded by the husband’s parents, at times at their own expense, need to be fully recognised. I find that 67% reflects all the contributions by or on behalf of the husband and reflects an appropriate percentage split.

455If my calculations had been definitive or exact 63.9% or, as the wife rounds it up, 64% could reflect the husband’s entitlements. (If one uses a slightly different calculation, 65% is the accurate figure.) However, that was not the intention as is clear from the less than definite wording used. The additional percentage increase for the husband was arrived at using my discretion, but based on the matters now identified and others outlined in the judgment.

Paragraphs 427 and 428

456The wife’s position is that the 5% adjustment referred to relates to the whole pool comprising net joint trust assets, matrimonial assets and the superannuation assets.

457In order to make the Court’s position very clear those paragraphs have been replaced.

Justice and equity

458The parties will each retain 50% of the superannuation asset. This accords with what the wife seeks in her orders. I consider it to be just and equitable in all the circumstances as I have now found them to be.

Conclusion

459I have published this additional short judgment as an explanation for changes made between the earlier circulation of my judgment and the formal publication of it. Any changes made are identified and, for the sake of transparency, explained.

I certify that the preceding [459] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate