White & White
[2007] FamCA 400
•17 April 2007
FAMILY COURT OF AUSTRALIA
| WHITE & WHITE | [2007] FamCA 400 |
| FAMILY LAW – APPEAL – PROPERTY – JOINT VENTURE AGREEMENT - Whether trial Judge erred in determination of the matrimonial property pool and assessment of the parties’ contributions to it – Whether trial Judge erred in failing to find that the husband had wilfully dissipated certain matrimonial assets – Whether trial Judge erred in failing to include a licence agreement negotiated prior to separation but settled after separation as a notional asset –Whether trial Judge erred in failing to ‘add-back’ to the pool monies utilised by the husband since separation – Conclusions reached clearly open to trial Judge – Asserted errors by trial Judge not established. FAMILY LAW - SPOUSAL MAINTENANCE – Arrears in spousal maintenance – Whether trial Judge erred in finding that the wife’s claim for arrears of maintenance was “abandoned” – Trial Judge did not make this finding – Trial Judge instead proceeded on basis claim for future spousal maintenance was abandoned – Trial Judge entitled to do so– Whether trial Judge erred in determining the husband’s capacity to pay maintenance – No error by trial Judge in discharging maintenance arrears and order. FAMILY LAW – PROPERTY - SECTION 75(2) MATTERS – Whether trial Judge erred in adjustment made on account of s 75(2) factors – No failure by trial Judge to have regard to any s 75(2) matters relied on by the wife in support of her claim - No merit in these grounds of appeal. Appeal dismissed. |
Family Law Act 1975 (Cth)
Kowaliw v Kowaliw (1981) FLC 91-092
Browne and Green (1999-2000) 25 Fam LR 482
Townsend and Townsend (1995) FLC 92-569
Gronow v Gronow (1979) FLC 90-716
| APPELLANT: | Mrs White | |
| RESPONDENT: | Mr White |
| FILE NUMBER: | DNF | 188 | of | 2001 |
| APPEAL NUMBER: | NA | 72 | of | 2004 |
| DATE DELIVERED: | 17 April 2007 |
| PLACE DELIVERED: | Canberra |
| JUDGMENT OF: | Finn, Coleman and Boland JJ |
| HEARING DATE: | 23 February 2006 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 October 2004 |
| COUNSEL FOR THE APPELLANT: | Ms Pagani |
| SOLICITOR FOR THE APPELLANT: | Michael Whelan & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Waters QC |
| SOLICITOR FOR THE RESPONDENT: | Povey Stirk Lawyers & Notaries |
Orders
That the appeal against the orders of 15 October 2004 with respect to property settlement be dismissed.
(a) That within 28 days of the date hereof each party be at liberty to file and
serve any written submissions in relation to:
(i)the appeal by the wife against the order for costs made on 18 March 2005, and
(ii)any application for costs in relation to the appeal against the orders of 15 October 2004 with respect to property settlement.
(b) That each party have a further 28 days in which to file and serve any
written submissions in answer to any submissions filed by the other party.
(c)That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as White and White.
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 72 of 2004
File Number: DNF 188 of 2001
| Mrs White |
Appellant
And
| Mr White |
Respondent
REASONS FOR JUDGMENT
This is an appeal by the wife against orders for property settlement made by Moore J on 15 October 2004 in proceedings between the wife and the husband.
The effect of her Honour’s orders was to divide the value of the parties’ property, which she had found to be $857,003, equally between them.
Also subject to the appeal is a further order made by her Honour on 15 October 2004 whereby she discharged an interim order for spousal maintenance made in the Federal Magistrates Court on 19 December 2002 in favour of the wife together with arrears accrued under that order.
It is necessary to begin these reasons for judgment not only with a history of the parties’ marriage as found by her Honour, but also with a history of what her Honour described in paragraph 2 of her reasons as the “unusual – and rare – course” of the hearing before her. This is because the course of that hearing has significance for the issues which arise on the appeal.
Relevant history of the marriage
Given the scope of the issues which we have to determine, we need only provide a relatively brief history of the marriage, at least up until the time of separation.
As her Honour found, the parties (who were both 57 at the time of her judgment) were married in 1966 when they were both 19. They had three children born in 1967, 1968 and 1979. They ultimately separated in February 2000 and were divorced towards the end of 2001. The wife remained in the family home at K in the Northern Territory and had not re-partnered by the time of the trial. Since January 2001 the husband had lived with a new partner Ms M. (Paragraph 6 of her Honour’s reasons; the paragraph references at the end of the following fifteen paragraphs are also to paragraphs in her Honour’s reasons.)
Her Honour found that neither party had any assets of significance or real value when they married. The husband at that time was employed in the quarry business and he continued to be employed in that work in various places in the Northern Territory until late 1974. (Paragraphs 8 and 49.)
In 1974 the parties established their first business, … Transport, using an inheritance of $5,000 which the wife had received from her father’s estate and $22,000 lent by her mother and with some initial assistance from her brother. Then in 1984 the parties extended their business interests using the plant and equipment of … Transport, into a quarry operation partnership in K, which was conducted through a company known as TAS Pty Limited. In 1986/87 the husband received $48,000 from his father’s estate which he contributed towards the business and family expenditure. (Paragraphs 11, 14 and 15.)
Meanwhile the wife and children had been for the most part living in Darwin where in addition to caring for the children, and doing the books for … Transport, she had had at various times outside paid employment. At the end of 1984 the family moved to live in K. Their final matrimonial home was constructed there on land purchased in 1994. (Paragraphs 9, 10 and 13.)
In 1985 the parties established an apparel retail business in K in which the wife worked until its sale in March 2000 just after separation. (Paragraphs 16 and 17.)
In about 1988 the interest in TAS was sold, and the proceeds used in part to acquire a one-third share in a company, M Pty Limited which leased a service station in K. The parties’ interest in that company was increased to a half share in 1992. With the other half-owner of the company, a Mr P, a block of land was purchased in K in 1993 on which a large commercial building was constructed. An automotive retail service was conducted from these premises. In 1997 the parties were able to acquire Mr P’s half share in M Pty Limited and in 1999 they acquired Mr P’s interest in the commercial building; as at the time of the trial that property was held by the parties’ superannuation fund. (Paragraphs 18-20 and 22-23.)
In early 1997 the husband together with a Mr C formed, and acquired equal interests in, a company, TC Pty Limited, to undertake contract crushing in Western Australia. That operation lasted until about the time of the parties’ separation in early 2000. (Paragraphs 21 and 24.)
Her Honour found (at paragraph 24) that at the time of their separation, the parties owned the family home in K, had the lease of the service station business, the equipment used in Western Australian operations and a “miscellany of other chattels”, and their superannuation fund had the commercial building. Her Honour further found that once the Western Australian equipment was sold shortly after separation, they were virtually debt free save for a mortgage on an investment unit in Darwin. By the conclusion of the property settlement proceedings, that unit had been sold. (Paragraph 34.)
After the parties separated, the lease on the service station expired in May 2002 and thus the husband’s involvement in that business came to an end.
In 1998 the husband had had discussions with a Mr B in which they agreed to try to locate suitable rock for use as ballast on the then proposed rail link from Alice Springs to Darwin. (Paragraph 36.)
In late 1999 suitable rock was found on a property outside K owned by Mr G and, for a fee of $3,000 which was paid by Mr B, Mr G granted an option to take up a licence to extract the rock. (Paragraph 38.)
In December 2000, that is nearly a year after the parties separated, the husband signed an agreement with Mr G under which a ten year licence to extract rock from his property was granted in return for the payment of royalties. However in June 2001 Mr G died and a further licence agreement had to be negotiated with his family. (Paragraph 38.)
In October 2001 the husband signed an agreement with Roche Mining for the supply of ballast to that company for the construction of the rail link (which had been announced in May 2001). The royalties received for the supply of the ballast were to be paid through a unit trust (the BW Trust) and distributed as to 60% to the G family, 20% to Mr B and 20% to the husband or his nominee. (Paragraph 38.)
In April 2002 the husband and his new partner, Ms M, established PMC Pty Limited. Her Honour found that the company was established for two purposes: first, to receive royalties from Roche Mining (through the BW Trust); and secondly, to operate a small crushing plant for the waste stockpile left behind from the material quarried by Roche Mining on the G land. (Paragraph 30 and 38.)
In March 2003 Roche Mining ceased operation and the last royalty payment was made around May 2003. Her Honour recorded that it was accepted that PMC had received some $217,000 in royalty payments which, according to the husband, was spent on purchasing and repairing equipment and living expenses for himself and Ms M. (Paragraph 38.)
In September 2003 the husband commenced negotiations with Readymix to sell the assets of PMC (its crushing operation in respect of the waste stockpile having not been successful) and also his interest in the ten-year licence agreement with the G family for a total price of $550,000, but subject to the condition that the licence be extended to 15 years. These negotiations were unsuccessful, and in March 2004 the husband sold the company’s plant and equipment (except for one crusher) to R Quarry for $155,000 and at the same time assigned his interest in the licence over the G land to R Quarry for $105,000.
History of the proceedings before the trial judge
The proceedings for property settlement which were ultimately heard by Moore J were commenced by an application filed on behalf of the husband on 8 March 2001, that is, just over twelve months after separation. A response was filed on behalf of the wife on 22 May 2001.
The hearing of the proceedings commenced before her Honour in Darwin on 9 April 2003 and continued for the following two days (10 and 11 April). They continued for a further two days on 23 and 24 July 2003 when, as her Honour recorded in paragraph 2 of her reasons for judgment, “the evidence was completed and a timetable set for submissions to be made in writing”. As her Honour further recorded:
2.…The submissions of Ms Pagani, counsel for [the wife], were received on 6 August [2003] and those from Mr Waters QC, counsel for [the husband], on 13 August [2003]. However, accompanying Ms Pagani’s submissions were other documents, including a further report from Mr [BC], an expert engaged by [the wife], and a copy of two memoranda from Mr [BD], an expert engaged by [the husband]. Without expressly saying so or making any application to re-open, this obviously sought to introduce fresh evidence at that late stage. While it was said the further report had been prepared by agreement between counsel, there was no confirmation of that from [the husband’s] solicitors and I considered it prudent to have this confirmed by them, yet attempts to do so brought no response. [The husband] then made an application to re-open the case on the basis of a significant development to his financial circumstances, that was granted, and further directions were made about discovery, amongst other matters, to enable the case to proceed in light of those changes. It was not until yesterday [14 October 2004] that the hearing could be concluded. …
Thus it will be seen that the final day of the trial was 14 October 2004. On that day the husband continued to be represented by Mr Waters QC. However the wife was represented not by her original counsel Ms Pagani (who also represented her at the hearing of the appeal), but by another counsel, Mr White. The husband gave further oral evidence on that day and was cross-examined, and there were oral submissions from counsel for both parties.
Her Honour delivered her reasons for judgment the following day and made her orders which are the subject of this appeal.
Findings and conclusions of the trial judge relevant to the appeal
In her reasons for judgment, having explained the unusual course of the proceedings and the applications which were before her, and having set out in considerable detail the financial history of the parties’ marriage, her Honour outlined the “recent evidence” given by the husband in relation to the sale by him of his interest in the licence agreement with the G family and of the assets of PMC, and then discussed the submissions made in relation to those matters.
Her Honour ultimately concluded (at paragraph 44) that she would not include in her calculation of the parties’ property any “notional” asset representing the licence agreement or the assets of the company, nor otherwise take into account these matters in a way favourable to the wife (as the wife had sought).
Then having observed that “[o]therwise” (that is, apart from the joint venture matters) “the parties agree about the composition and value of their assets”, her Honour set out the following table of the parties’ assets (at paragraph 45):
Assets:
K home 260,000
Furniture and mower 15,085
Mazda 626 vehicle 12,000
287,085
… Superannuation Fund
Building O Street, K 390,000
Cash invested 179,918
Shares Nominal 569,918Total assets: 857,003
Her Honour next referred (paragraphs 46 and 47) to the debts of both parties, and explained why she would not take into account any of the debts in her calculation of the value of the property available for distribution between the parties.
In relation to the contributions of the parties (required to be considered under s.79(4)(a), (b) and (c) of the Family Law Act 1975 (Cth) (“the Act”)), her Honour reached the following conclusion in relation to the contributions made up to separation:
54.The assets they had at the time of their separation were built up over their long marriage by efforts that tended to be complementary. Taken as a whole and seen in a global way, there may be a view that [the husband’s] greater inheritance entitles him to some additional weighting overall but if the broader view of their many years together is taken then there would be nothing to distinguish the efforts of one over those of the other. I would assess their contributions up to separation as approximating equality, though perhaps with some weighting in [the husband’s] favour by reason of the inheritance factor.
Then having considered the contributions made after separation, her Honour concluded:
59.In my assessment, none of the developments after their separation signal a shift away from the equality of contribution assessment - perhaps with some weighting in [the husband’s] favour as discussed - up to the time of their separation.
It was in the context of considering the parties’ post separation contributions that her Honour determined that she would be not require the payment of arrears under the interim maintenance order and that she would discharge that order.
As to whether an adjustment was then necessary to the contribution based assessment on account of the matters contained in s.75(2) of the Act, her Honour concluded (emphasis added):
64. Overall, when one stands back and views the prospects for their future broadly it is my assessment that to the extent that there ought to be an adjustment between them it ought to be such as to remove the weighting that favours [the husband] by reason of the inheritance factor so as to now divide their assets equally between them. Such an outcome would entitle them each to receive assets to the value of $428,500.
Her Honour achieved this equal distribution by making orders whereby the wife would receive or retain the former matrimonial home and its contents and the Mazda car. In addition she was to be allocated a base amount of $138,415 out of the parties’ superannuation fund (with the appropriate splitting order being made).
The issues raised on the appeal
In her amended notice of appeal, in which she sought to be allocated a further $293,000 (approximately) from the superannuation fund, the wife relied on 25 grounds of appeal. In her written outline of argument, counsel for the wife, Ms Pagani, was able to group the grounds of appeal into six categories.
The first four categories related to the joint venture agreements which the husband entered into for the purpose of supplying ballast for the Adelaide to Darwin rail link. The fifth category related to the trial judge’s conclusion in relation to the s.75(2) matters, and the sixth concerned the discharge of the interim maintenance order.
the joint venture agreements
At paragraph 38 of her reasons her Honour provided a “summary record” of developments concerning the joint venture agreements to provide ballast for the Adelaide to Darwin rail link. We have earlier in paragraphs 15 to 21 summarised that record as provided by her Honour and we have also referred in paragraph 27 above to her Honour’s conclusions in relation to the wife’s claims in relation to the joint venture. But it will be useful at this point to set out in full her Honour’s “summary record”, before considering in detail the submissions made to her Honour on behalf of the wife concerning the joint venture, and her Honour’s conclusions.
Her Honour’s summary record was as follows (emphasis added for later reference):
·The efforts of [the husband] and Mr [B] to locate suitable rock were to no avail until their meeting in late 1999 with Mr [G] who owned property outside [K]. It was agreed they could take rock from his property and test for its suitability. This was successful and towards the end of 1999 for an annual fee Mr [G] granted an option to take up a licence to extract the rock. The fee of $3,000 was paid by Mr [B] who had agreed to provide necessary set up funds while they awaited the outcome of the proposed project, still speculative at this stage. He would be repaid if and when the project came to pass and they managed to secure a contract. Nothing sinister, in my assessment, arises from the fact that [the husband and the wife] had more than $3,000 in savings at the time.
·[The husband], who had the requisite experience in this area, was left to attend to the necessary authorisations and to position them in a state of readiness to enter a supply contract should the project eventually proceed, keeping Mr [B] full informed along the way. This he did from that time on though, as later developments demonstrate, it was obviously not without its complexities or without effort. Though it was to be a joint venture, all agreements subsequently signed were entered into in [the husband’s] name for reasons explained by Mr [B].
·During 2000 (after the parties’ separation) they approached the preferred tenderers for the supply of ballast, including Roche Mining Pty Limited (‘Roche Mining’). On 31 December 2000 [the husband] signed an agreement with Mr [G]. Amongst other things, this granted a 10 year licence to extract rock from the [G] property in return for payment of royalties to be reviewed in certain circumstances.
·In May 2001 it was announced the rail link would proceed.
·Then in June 2001 Mr [G] was involved in an accident and passed away. It was necessary for further arrangements to be negotiated with members of his family and to secure the requisite extraction mineral lease. That was achieved later in the year and a further agreement was entered between members of the [G] family and [the husband].
·On 16 October 2001 [the husband] signed an agreement with Roche Mining. The terms are of no particular relevance here though, contrary to the initial idea, the agreement provided for Roche Mining to supply their own crushing plant to produce the ballast and transport it from the site. [The husband] and Mr [B] were left with a right to receive royalties.
·After signing with Roche Mining, [the husband] and Mr [B] moved to formalise their partnership. This resulted in December 2001 in the establishment of a Unit Trust, the [BW] Trust ([the husband] and Mr [B] as the unit holders), and a corporate trustee, PJ [W] Pty Limited ([the husband] and Mr [B] as directors and equal shareholders). The royalties received from Roche Mining were to be paid to the [BW] Trust and, consistent with the arrangement between themselves and with the [G] family, distributed from there as to 60% to the [G] family, 20% to Mr [B], and 20% to [the husband] or his nominee.
·In April 2002 [the husband] and [his new partner Ms M] established [PMC] of which they became directors and equal shareholders. This company was [the husband’s] nominated recipient for his share of the Roche Mining royalties paid through the [BW] Trust.
·Around that time the crushing and delivery of ballast began and royalties were thereafter paid to the [BW] Trust and distributed in the proportions indicated. Mr [B] did the bookwork for the venture, including receipt of the royalties and payment out to those entitled. The set up costs, paid by Mr [B] between 1999 and 2001, were repaid to him from revenue.
·Roche Mining ceased operation around March 2003 and the last royalty payment was made around May 2003. It was accepted that [PMC] had received some $217,000 in royalty payments and, according to [the husband], were spent purchasing equipment, repairing it, or on living expenses for himself and [his partner]. There is no reason to doubt that. Roche Mining have since dismantled their crushing plant and left the site without taking any steps to realise any value left in the waste stockpile. The value of that waste stockpile – or the value of the licence agreement with the [G] family and therefore access to the stockpile – was the subject of extensive evidence across this hearing. But that has all become redundant more recently because [the husband] has sold his interest in the licence and with it the entitlement to process/sell the waste stockpile over the remainder of its term of 6 or so years.
·In October 2003 the company sold to Adrail 4,000 tonnes of ballast left by Roche Mining on the quarry site (nothing to do with the waste stockpile) for $15 per tonne. This derived an income of $66,000 (including $6,000 GST) and the company was then obliged to pay Roche Mining a royalty of $10 per tonne in accordance with an agreement to that effect. After some credit for looking after their crushing plant, Roche Mining reduced the debt to $33,000. According to the submission for [the husband], and there was nothing to gainsay it, that debt has now been compromised and disposed of.
·While Roche Mining were extracting and processing the material they required and since they have left the site [PMC] were engaged in an ancillary crushing operation established there from around September 2002, the intent being to continue operation after the Roche Mining contract was satisfied by using the waste stockpile. To establish the operation, [the husband] and [Ms M] borrowed money to acquire the necessary plant and equipment and they were both involved full-time in the venture from the time the lease expired on the service station in May 2002. As [the husband] explained it in his earlier evidence, the intention was to sell crushed rock to the general public for use on driveways, for concrete aggregates and the like and while they recognised the enterprise was inherently risky there was some optimism about its future. As time progressed, however, that outlook diminished and the company struggled to meet its financial commitments, debts accrued, temporary extension for the company overdraft limit became necessary, and neither he nor [Ms M] were drawing a wage for their efforts. On his evidence, the plant has been unsuited to the material, it wore out too quickly, did not produce the quantity or quality he anticipated, and borrowed plant to continue crushing broke down and had to be repaired. The income derived from the Roche Mining royalties having dried up, the company’s position became untenable.
·Around the end of March this year [2004] there was a sale of the company’s plant and equipment, save for one crusher which [the husband] considers worthless and he volunteered to give it to [the wife] if she wished to have it. The purchaser was R Quarry in K and the price was $155,000. At the same time [the husband] assigned to R Quarry his interest in the licence over the G land for $105,000.
The wife’s submissions at trial in relation to the joint venture
It will be recalled that the trial before her Honour commenced in April 2003, that is, at about the approximate time when Roche Mining ceased operations and the last royalty payment was received by the husband. However the husband still held the licence from the G family and was still operating the company PMC, and this was still the situation when the evidence given in the first part of the trial concluded in July 2003.
In the written submission of the wife’s counsel, Ms Pagani, which were filed on or about 6 August 2003 (Appeal book pp 186 – 207), the following claims were made on behalf of the wife in relation to the joint venture:
The parties were married for more than thirty years. They had pooled together during that time, and worked for the advancement of their family, in the quarrying business. Most of their joint efforts were directed to this course, as well as the raising of their family. The husband seeks to have the wife excluded from the fruits of the [G] contract, on the basis that, although it was proposed and discussed well prior to separation, in the normal course of the parties’ business, the contract itself did not finalise (due to the delay in the formal announcement of the railway project) until after separation.
The following matters are not disputed, or where disputed, have been admitted by the husband in cross-examination:
· Knowledge of the [G] rock to both of the parties well prior to separation;
· The rock was always perceived as being valuable, in the course of the parties’ business endeavours, for the proposed Adelaide-Darwin railway from the outset of the announcement of the proposed railway;
· The parties had operated quarries and related businesses during the entire course of their marriage, and that the husband’s primary role was the furtherance of this quarrying enterprise, assisted by the wife;
· The wife had the primary role in raising the children, often with long absences of the husband;
· The husband utilised the company’s assets and funds to further exploration of the [G] contract, in the usual course of the parties’ business endeavours;
· The husband has had the sole use and benefit of the company assets, and the quarry, from the time of separation, and has never accounted to the wife for the use of such assets, or shared with her the income from such assets;
· The purported ownership of the quarry material by the company [PMC] has no basis at law or in equity;
· The husband will have the unfettered use of the quarried material for a further eight years, to sell either as unprocessed rock, or as processed if he chooses to continue his crushing business.
However, it is submitted that the husband’s allegations that, because the final contracts were not settled until after separation, the wife has no entitlement to the quarried material, it not justified or justifiable in fact or in law. It is consistent with the husband’s admitted goal of reducing the value of the matrimonial pool, and thereby the wife’s entitlements thereto.
Then under the heading “Husband’s contributions which have had a negative impact on the matrimonial pool available for distribution”, Ms Pagani’s submissions to her Honour continued (emphasis added):
The husband, without the consent or knowledge of the wife, transferred 20% of his interest in the royalties for product mined by Roche, for minimal valuable consideration, to a third party. The husband alleged that he required the partnership with [Mr B] because he had insufficient funds for the initial outlay of $3,000.00. However, under cross-examination, the husband admitted that he and the wife had considerably more funds than that amount in savings at the time. Further, the husband admitted that he did not consult the wife, nor enquire of her as to the state of the parties’ funds, prior to allowing [Mr B] to contribute $3,000.00.
The husband alone executed the agreement with [Mr G], and subsequently, amended the agreement with the beneficiaries of the estate of Mr [G]. He alone executed the agreement between himself and Roche Mining. At no time was [Mr B] or any other person a party to either of these agreements. There is no plausible reason why the husband chose to pass to [Mr B] a portion of this significant matrimonial asset. At no previous time had the husband entered into such agreements without the knowledge and consent of the wife, and without entering into the agreements in either the name of the husband and wife, or various of the family’s companies.
The husband also set up a company with his present partner for purporting to gift to her a 50% interest in matrimonial assets. The husband has admitted that there was no reason why he could not have set up a company in his own name for the purposes for which [PMC] was set up.
The husband’s post separation conduct has resulted in significant diminution and unreasonable dissipation of matrimonial assets. It is submitted that, in accordance with the admissions made by the husband and the factual situation regarding the quarry, that the whole of the quarried material, in both its raw and processed state, after allowance is made for the husband’s personal exertion labour in the former case, and the cost of processing in the latter case, should be brought into account as a matrimonial asset.
Further, it is submitted that the husband’s inclusion of [Mr B] as a partner in the Roche and [G] contracts, without [Mr B] having entered into any of the relevant contracts, is a matter of some significance which the court ought to take into account when weighing the respective contributions of the husband and wife to the matrimonial pool. The husband has been paid approximately $200,000.00 for rock quarried by Roche, to which the husband has sole entitlement (according to the agreements between the husband and [G]), and the husband and Roche). The payments to the husband from Roche would have been double that amount had he not entered into the agreement with [Mr B], as he did, without the knowledge or consent of the wife.
Then under the heading “Add-Backs to Matrimonial Pool”, Ms Pagani’s written submissions continued further (emphasis added):
It is submitted that the current assets (Schedule 1) ought to include, by way of adding back monies utilised by the husband since separation, the following (in addition to an allowance being made in favour of the wife for the husband’s dissipation of matrimonial assets to [Mr B]) as outlined above:
·Monies received from Roche Mining by way of royalty payments for the rock quarried by the latter company pursuant to an agreement between [G], Roche Mining and the husband, to the extent of approximately $190,000.00;
·Monies received by the husband from the sale of unprocessed waste material, as evidenced by the husband’s invoices, and calculated by Mr [BC] (after allowance for personal exertion labour of the husband for loading, and assuming all of the product was loaded by the husband and none by the purchasers of the product, in the sum of .50 per tonne, according to the evidence of the husband) (see Schedule 1). This material did not require processing or working of any kind, save for the assumption that it was all loaded by the husband, and proper allowance being made for that aspect.
·Monies received by the husband from the sale of processed waste material, as evidenced by the husband’s invoices, (after allowance for processing of the material, which, according to the unchallenged evidence of Mr Rowling, was between $6 and $8 per tonne, and adopting therefore an average cost of $7.00 per tonne). (See Schedule 1).
·Legal fees, including experts fees, expended by the husband, and paid for partly out of superannuation funds in the name of the husband and wife, less the sum of $20,000.00 allegedly owing to [Mr B] for loan monies borrowed for the purpose of paying legal fees. (See Schedule 1)
Some further submissions then followed in relation to the valuation of the remaining waste pile (on the G land), to royalties alleged to be payable on the waste pile, and to the treatment in the proceedings between the husband and the wife of PMC.
The schedule of assets attached as Schedule 1 to Ms Pagani’s submissions of August 2003, included figures expressed to be in the alternative and ranging from $253,622 to $278,694 being the “(v)alue of that portion of sales of unprocessed stockpile” (items 13 and 14) and from $238,674 to $262,268 being the “value of that portion of sales of processed product” (items 15 and 16); an estimated figure of $190,000 for the husband’s retained royalty payments from Roche Mining; and a figure of $96,468 for the husband’s retained monies from sales of waste product.
For the reasons explained by her Honour in paragraph 2 of her reasons (see paragraph 23 above), there was a re-opening of the hearing on 14 October 2004. On that occasion the husband gave evidence (as recorded by her Honour in paragraph 39 of her reasons) of his unsuccessful negotiations in September 2003 to sell the assets of PMC and his interest in the licence agreement with the G family to Readymix for $550,000, and also of the ultimate sale in March 2004 to R Quarry of the company assets for $155,000 and of his interest in the licence for $105,000.
It emerges from the following passage of the transcript of the re-opening on 14 October 2004, that prior to that date her Honour had been sent a revised schedule of assets by the wife’s solicitors (Transcript 14/10/04 at p 447):
HER HONOUR: … And then in addition to that, there is the list of the assets and liabilities that have come from your instructor and that is undated, but it has got eight items, the last of which is superannuation funds not known to the wife as husband has details.
…
MR WHITE [Counsel for the wife]: It came with a letter to your Honour’s associate of 15 September 2004. That was the joint schedule of family assets and valuations at trial, August 2004.
HER HONOUR: Well I have got the list of the assets…
…
HER HONOUR: …what I am keen on getting Mr White is the list of assets and liabilities to which your client contends.
MR WHITE: Your Honour, we contend for that list that was dated August 2004.
It seems clear that the list of assets dated “August 2004” which was before her Honour and which represented the wife’s then position in relation to the parties’ assets was as follows:
JOINT SCHEDULE OF FAMILY ASSETS AND VALUATIONS AT TRIAL – AUGUST 2004
No.
Details
Husband
Wife
1.
Former matrimonial home at K
$260,000.00
Agree
2.
Furniture and ride-on mower at K home in wife’s possession – agreed value
$15,085.00
Agree
3.
Mazda 626 in wife’s possession – agreed value
$12,000.00
Agree
4.
Dividends from TC
$15,000.00
5.
Frequent Flyer points (436,362 – to be divided)
Agree
Agree
6.
Investment unit, Darwin – sold (shortfall)
$3,720.00
Agree
7.
Shares sold by husband
$15,000.00
Superannuation Funds
8.
Superannuation funds not known to wife as husband has details
However, it also emerges from the following further passages of the transcript that notwithstanding the contents of the schedule just set out, the wife continued to contend also for a notional figure to be included in the assets on account of the licence agreement with the G family (Transcript 14/10/04 at pp 448-449):
MR WHITE: So that the only issue that I am aware of that is in contention and that will require your Honour’s adjudication is a valuation of the interest in the quarry, if I might call it that. The [G] agreement that was entered into.
HER HONOUR: And what do you mean by that?
MR WHITE: Your Honour, negotiations for that commenced during the course of the relationship. There was an option agreement that was signed. If I recall correctly it was a couple of weeks prior to the separation agreement.
HER HONOUR: Yes, I am sorry. Forgive me for interrupting. Yes, I know that. But you have read [the husband’s] affidavit where he says what has been sold.
MR WHITE: Yes. Your Honour, and we say that that had a valuation and it is a valuation which should be brought into account, and the fact that [the husband] may have engaged in [PMC] and through bad business judgments or whatever lost his money, that is nothing to do with us, but that asset had a value and indeed it was sold, and sold for a sum of $105,000. We say its value, your Honour, was greater than that.
…
MR WHITE: I am going to suggest your Honour is going to have to put a valuation on it, and using the best you can do in the circumstances, I am going to urge your Honour to put a valuation of $250,000 on that. The value of the agreement---
HER HONOUR: You mean instead of 105 it will be 250.
MR WHITE: 250 is the value that I---
HER HONOUR: And then the assets of the company, PMC---
MR WHITE: I am---
HER HONOUR: ---be sold for 155.
MR WHITE: I am not interested in those assets, your Honour.
HER HONOUR: So it would be 105 would go to 250, according to your case?
MR WHITE: That is the submission I will make to your Honour, yes.
Following the conclusion of the brief oral evidence given on that final day, Mr White informed her Honour (at Transcript 14/10/04 at p 479) that he was “going to adopt the submissions that [had] been made in writing to [her] Honour, by Ms Pagani.” (There would seem to be no dispute that Mr White was referring to the written submissions of Ms Pagani, passages from which we have previously set out).
Having said that he would adopt Ms Pagani’s written submissions, Mr White continued (Transcript 14/10/04 at pp 479; 483-4) (emphasis added):
MR WHITE: The only matter that I was going to address your Honour on was the value that your Honour might put on the interest in the quarry agreement.
HER HONOUR: The lease?
MR WHITE: The lease.
HER HONOUR: The licence, the lease.
MR WHITE: The licence agreement, the quarry agreement, all of those things that grew out of the option agreement that was signed a few weeks prior to separation.
…
MR WHITE: Your Honour, the only matter I wanted to address you on is in relation to bringing into account the interest in the agreement with [G]. It’s my submission, your Honour, that it is clearly a family asset – a matter that had to be brought into the pool. A value has to be put on that. It’s very difficult to do so. Your Honour will recall the evidence of the husband in April 2003 when he put a ballpark – a fire sale value on the waste at $250,000. The amount that was paid for the assignment of the interest in the [G] Quarry agreement by Mr [R] was $105,000.
HER HONOUR: Well, that’s central to it, isn’t it? He says he sold his lease for $105,000. That’s the component of the 260 that he sold to Mr [R].
MR WHITE: Yes.
HER HONOUR: Well, where would the evidence be to gainsay that? I mean, I’ve got evidence of $105,000. You want to say it’s worth 250 and is the evidence that would support that is what [the husband] thought on the ---
After further discussion between her Honour and Mr White, the following submission was made in an attempt to explain the notional figure of $250,000 sought by the wife to be included in the parties’ assets (Transcript 14/10/04 at p 487):
MR WHITE: Well, that’s – the amount that [the husband] received from Roche should be brought into account as a valuation for that agreement, your Honour, because [the husband] has received $217,000 from Roche plus a further $66,000 from Roche and then $105,000 from [R].
HER HONOUR: And all of that would add up to $250,000 going on the balance sheet rather than 105,000.
MR WHITE: I would submit that that’s so, your Honour, that – that it would not be proper simply putting 105 because that would not be taken into account, any of the near $275,000 that [the husband] has received in addition to the $105,000. I’m sorry I can’t be more precise with that, that’s the nature of the (indistinct) doesn’t allow us to be anymore precise with that, your Honour, and so I can simply ask your Honour to take a – to exercise your Honour’s discretion and choose an appropriate amount which would reflect and be fair to both [the husband] and [the wife]. And that’s why I say $250,000 would be an appropriate to take into account.
HER HONOUR: Because he has got nothing left of the 260, has he?
MR WHITE: But he has had it, and he has used it and he has spent it, and he hasn’t shared it with [the wife]. He has 275,000 plus another 105. He has $375-380,000 which he hasn’t shared one penny with [the wife]. And they have been in the rock crushing business – well, throughout their married life. …
Following submissions made by Mr Waters on behalf of the husband, Mr White asked to be further heard, with the following exchange then occurring (Transcript 14/10/07 pp 495-496) (emphasis added):
MR WHITE: Thank you, your Honour. Would your Honour also allow me to say something in relation to my learned friend’s suggestions that – suggestion, I mean, he made that [the husband] is wilfully dissipating the assets. Your Honour, I hope I haven’t made that because – or given you – your Honour, that impression because ---
…
HER HONOUR: He – it was – his submission was entirely the opposite. He was saying you haven’t made that case. You haven’t contended that there’s been some wilful dissipation of the assets.
MR WHITE: Well, perhaps, as I understood his (indistinct) because I hadn’t made that case against his – or that his client hadn’t done that, he shouldn’t have to bring into account those moneys in relation to the [TC], the shares that were sold, or the money from the quarry agreement.
Your Honour, I’m not saying that he’s wilfully dissipated the assets. I’m simply saying they should be brought into account because they’re moneys that he has received and had and used for his own purposes. And he hasn’t paid his maintenance because he’s used his money to invest it into [PMC].
The trial Judge’s determination of the wife’s claims in relation to the joint venture
Her Honour’s discussion in her reasons for judgment of the submissions in support of the wife’s claims in relation to the joint venture and her conclusions with regard to those claims were then as follows:
40. It was the submission of Mr White on behalf of [the wife] yesterday that the component of the sale price attaching to the licence agreement, as distinct from the assets of [PMC], should be taken for present purposes as $250,000 and not $105,000. The $250,000 should be adopted, it was said, because it was the figure [the husband] gave back in April 2003 as representing a ‘fire sale’ price for the waste stockpile. But that could not possibly support such a finding. In circumstances where efforts were made to sell it to Readymix to no avail, where there is a fairly limited market in any event, and where there has been nothing whatsoever presented to impugn or cast doubt upon the arms length nature of the transaction between [the husband] and the ultimate buyer, there could be no finding other than that the sale price of $105,000 represented its fair market value. Of course the price was considerably less than had been under discussion with Readymix, but of course those negotiations were based upon quite a different arrangement in that the Readymix price had factored into it a condition that the licence over the [G] land be extended to 15 years whereas the sale to [R] had no such condition and the purchaser was left to make his own arrangements with the [G family] about any extension past the currently agreed term.
41. I should say at this point that having allowed the re-opening of the case following the assignment of the licence and the sale of the assets of [PMC], a direction was made for a joint list of assets and liabilities to be prepared and filed by each party. The intent was to ascertain and have clarified prior to the resumed hearing, in light of the assignment and sale, the areas of agreement and disagreement about what was to be brought to account for present purposes and for what amount. There were delays that need not take time here, but the list provided by [the wife’s] legal representatives made no reference at all to any item or figure related to the value of the licence agreement or associated entitlements. This contrasted starkly to the earlier submissions of Ms Pagani which sought to introduce large figures, expressed to be in the alternative, as set out in items 13 to 16 inclusive of Schedule 1 to her written submissions. Yet all of this was absent from the revised list directed to be made available and there was no mention of including a figure of $250,000 for the value of the licence. The submission that $250,000 should be brought to account as an asset was made in the context of a further submission that this was ‘clearly a family asset’ and therefore ought to be included as available for division. Having rejected the proposition that the sale price of $105,000 should be considered here to be $250,000, it will be convenient now to deal with the latter proposition i.e. it is a ‘family asset’ and therefore ought to be available to be distributed in part to [the wife].
42. As the potted history of the [Adrail/G/Roche/BW/PMC] enterprise makes clear, prior to the parties separation [the husband] and Mr [B] discussed the prospect of positioning themselves to supply ballast should the rail project proceed and they tried to locate suitable material in the district - to no avail until they came across the [G] land just prior to the separation when an option fee was paid to Mr [G]. That is the extent of what occurred up to the point of separation. Subsequently and until May 2002 [the husband] was occupied in running the service station business. There was no announcement the rail project would proceed until May 2001, some 15 months after their separation, and all of the activity related to the signing of the agreement with Mr [G] and then with his family after his death, as well as the agreement with Roche Mining, occurred after separation.
43. [The husband] pursued a business opportunity after separation. It was one that he had thought about and pursued to an extent with Mr [B] prior to separation and it can be said that some of the resources of M were used in that pursuit early on – vehicle and petrol driving around looking at locations for example. But ultimately it was [the husband], quite some time after separation, who followed through that opportunity and made the efforts to realise it. Having done so, he made the decision to share the income from that opportunity with his partner, [Ms M], by nominating their company to receive his entitlements to the royalties from Roche Mining. As it happens, over $217,000 was received over the time Roche Mining were operating on the [G] land. That income was used by [the husband] and his partner (through their company) to fund not only their own living expenses after [the husband] no longer had the service station lease from which to earn his living but also to pursue jointly a further business venture involving ancillary crushing operations at the [G] quarry site. They obviously had hopes for success but that enterprise – like the Roche Mining royalties – came to an end. The assets of the company have been sold and it is now virtually a shell but still owing some debts. The $155,000 received for the company’s assets and the $105,000 received by [the husband] for the assignment of the licence over the [G] land have been spent meeting debt – the details are as provided by [the husband] in his affidavit – so the venture did not produced a surplus of capital. Expressed another way, [the husband] put the income from the royalties to which he became entitled after the Adrail project was given the go ahead and after the chain of agreements were in place to give him access to the rock on the [G] land towards a business venture with his partner and that venture has failed. Had it been a success, [the husband’s] shares in the company would have attracted some value and no doubt that would have been an asset to be evaluated overall in determining entitlements here. But it has not been a success, the royalty income has long since finished, and now the assets of the company have been sold to meet debt. The most recent financial accounts (exhibit 29) show the picture as at 30 June 2004 after the sale of assets: liabilities, current and non-current, total $30,801 and there are no assets to offset it.
44. I can see nothing in what [the husband] did that would warrant bringing to account here a figure to represent a ‘notional’ asset of his so as to advantage [the wife] when no such asset exists. The circumstances of his efforts at establishing a business following the expiration of the service station lease, assisted by the income from royalties to which he was entitled as a result of his own efforts after separation, do not fall into the category of cases discussed in Kowaliw and Kowaliw (1981) FLC 91-092, later affirmed by the Full Court in Browne and Green (1999-2000) 25 Fam LR 482, and nor into the category of case such as Townsend and Townsend (1995) FLC 92-569. I see no need in light of this finding to deal specifically with various submissions made by Ms Pagani on this topic which I regarded as unmeritorious.
45. I have already determined the three issues of difference in the composition of the asset list: the two add-backs proposed by [the wife] and the contention on her behalf that the sale price of [the husband’s] interest in the licence agreement with the [G family] should be notionally elevated from $105,000 to $250,000 and included for distribution at that figure. Otherwise, the parties agree about the composition and value of their assets. They are as follows: …
Her Honour then set out the list of assets which we have earlier set out at paragraph 28 above and which totalled $875,003. It will be observed that her Honour’s list omitted a number of items in the wife’s revised list set out in paragraph 47 above. The omission of the relatively substantial items numbered 4 and 7 were explained by her Honour is paragraphs 32 and 33 of her reasons. We do not understand any issue to arise before us about those matters.
grounds of appeal directed to the arrangement with Mr B
The first group of grounds of appeal (Grounds 9 and 10) argued by counsel for the appellant wife related to the husband’s agreement with Mr B and were summarised in counsel’s written Outline of Submissions as follows:
A.The failure of the trial judge to make any contribution allowance for the wastage/ dissipation of an asset or opportunity (the husband’s divesting himself of the rights to both the [G] Agreement and the Roche Agreement, to [Mr B] – Grounds 9, 10.
The essential submission in relation to this matter was that it had been unnecessary for the husband to bring Mr B into the joint venture agreement at all given that the husband could have paid the initial $3000 (which Mr B paid), but that by having involved Mr B, the husband had reduced the royalties which he would receive by $217,000; thus in the context of the assessment of contributions, the husband should have been found to have wasted or dissipated assets, and therefore to have made a “negative contribution” with reliance being placed on Kowaliw v Kowaliw (1981) FLC 91-092.
It may well be that when at the conclusion of the hearing on 14 October 2004, Mr White stated that he was not saying that the husband had “wilfully dissipated the assets”, that he was in effect abandoning the case made in Ms Pagani’s written submissions (see paragraphs 41 and 42 above) for the Court “to take into account when weighing the respective contributions of the husband and wife to the matrimonial pool” the husband’s inclusion of Mr B as a partner in the Roche and [G] contracts (see paragraph 41 above) or for an allowance to be “made in favour of the wife for the husbands dissipation of matrimonial assets to [Mr] [B]” (see paragraph 42 above). But it seems that her Honour did not understand this to be so because she made certain findings concerning the husband’s arrangements with Mr B. It is therefore necessary for us to address this issue of the involvement of Mr B.
It should be noted that the wife’s complaint on appeal concerning the husband’s involvement of Mr B must be seen as limited to the fact that her Honour took no account of this matter in assessing the husband’s contributions. There could be no question that some notional amount should have been included in the pool of property on account of this matter given that the schedule of property put before her Honour on behalf of the wife prior to the re-opening of the hearing did not contain any item in relation to Mr B.
It will be seen from certain of the emphasised passages from paragraph 38 of her Honour’s judgment (contained in paragraph 38 above) that her Honour was aware that the husband and the wife would have been in a position to pay the initial fee of $3,000, but she considered there was nothing “sinister” in that fact, and inferentially therefore, in the fact that Mr B paid that fee. Similarly it will be seen that her Honour was also aware that all contracts were in the husband’s name, but she accepted Mr B’s explanation for that occurrence. It has not been established that her Honour erred in reaching the conclusions which she did regarding these matters.
Then in paragraphs 42 to 43 of her reasons for judgment, her Honour can be seen as addressing and rejecting the submissions made on behalf of the wife seeking both the add-back of notional property and also some adjustment in the wife’s favour in the contribution assessment on account of matters relating to the joint venture agreement, including Mr B’s involvement. It will be useful to here repeat the relevant passages in those paragraphs of her judgment (emphasis added):
42. … [P]rior to the parties separation [the husband] and Mr [B] discussed the prospect of positioning themselves to supply ballast should the rail project proceed and they tried to locate suitable material in the district - to no avail until they came across the [G] land just prior to the separation when an option fee was paid to Mr [G]. That is the extent of what occurred up to the point of separation. …There was no announcement the rail project would proceed until May 2001, some 15 months after their separation, and all of the activity related to the signing of the agreement with Mr [G] and then with his family after his death, as well as the agreement with Roche Mining, occurred after separation.
43. [The husband] pursued a business opportunity after separation. It was one that he had thought about and pursued to an extent with Mr [B] prior to separation and it can be said that some of the resources of [M] were used in that pursuit early on – vehicle and petrol driving around looking at locations for example. But ultimately it was [the husband], quite some time after separation, who followed through that opportunity and made the efforts to realise it. …
44. … The circumstances of his efforts at establishing a business following the expiration of the service station lease, assisted by the income from royalties to which he was entitled as a result of his own efforts after separation, do not fall into the category of cases discussed in Kowaliw and Kowaliw (1981) FLC 91-092, later affirmed by the Full Court in Browne and Green (1999-2000) 25 Fam LR 482, and nor into the category of case such as Townsend and Townsend (1995) FLC 92-569. I see no need in light of this finding to deal specifically with various submissions made by Ms Pagani on this topic which I regarded as unmeritorious.
It is clear from her Honour’s references to Kowaliw and to Browne and Green that she was here addressing and rejecting the submissions made on behalf of the wife to the effect that aspects of the husband’s involvement in the joint venture agreement, including his involvement of Mr B, should be taken into account against the husband, that is, in a negative way, in the assessment of his contributions.
The principle stated by Baker J in Kowaliw (which was endorsed by the Full Court in Browne and Green) is as follows:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.
Before us Ms Pagani conceded that in this case she could not argue either negligence or recklessness on the part of the husband, and that she could only argue “wantonness” in the sense that the wife was excluded from an asset in the quarry business which she had shared in throughout the marriage.
Given her Honour’s clear findings concerning the limited development of the joint venture arrangement prior to separation, the activity which had then occurred after separation, and the husband’s efforts in relation to the joint venture after separation, there can, in our view, be no substance in the wife’s claim that her Honour erred by not reducing the assessment of the husband’s contributions on the ground that he had chosen to involve Mr B in the joint venture agreement.
The grounds of appeal directed to the husband’s involvement with Mr B in the joint venture must therefore fail.
Remaining grounds of appeal directed to the joint venture agreements
The remaining groups of grounds of appeal directed to issues related to the joint venture agreements were summarised in the written outline of argument on behalf of the wife in the following terms:
B.The trial judge’s exclusion from the matrimonial pool of the value of the [G] and Roche Agreements; the income received by way of royalties from the Roche Agreement; and the income earned by the husband from the sale of waste products (both raw and processed) – Grounds 1, 2, 5, 7, 11, 12, 14, 15.
C.The trial judge’s error in failing to consider and make finding in respect of the value of the waste pile in the hands of the husband prior to its sale; and the failure to consider the evidence of [BC] as to the income earned by the husband from the waste pile up to the date of the initial completion of the hearing in July 03 and assess that income for the purposes of valuing the parties’ assets (at least on a notional basis); or to have regard to the further usage of the remaining waste pile by the husband from the date of the first completed hearing (July 03) to the date of the final completed hearing (October 2004); and the trial judge’s error in finding that the fair market value of the residual stockpile was $105,000.00 when the husband did not adduce any evidence of marketing the property – Grounds 6, 13, 16.
D.The failure of the trial judge to take into account, when valuing the pool, any value for the rock crusher retained by the husband, or the expenditure of royalties payments by the husband in purchasing equipment for his company, in circumstances where her Honour took into account the liabilities of that company when assessing the value of the pool – Grounds 13, 18, 19, 20.
One of the principal purposes for our earlier extensive examination of the written submissions to the trial Judge of Ms Pagani, and of the oral submissions of Mr White on the re-opening on 14 October 2004, was to demonstrate how the wife’s case in relation to the treatment of aspects of the joint venture agreements changed from the submissions made on her behalf immediately following the first part of the hearing and those made when the hearing was reopened.
Put simply, no claim was made in the revised schedule of assets submitted on behalf of the wife prior to the re-opening for the rock crusher retained by the husband. Any claim in relation to the assets of the company, PMC, was expressly abandoned by Mr White. The only claim made orally by Mr White (but not included in the revised written schedule of assets) was for a figure of $250,000 “to be brought into the pool” representing “the interest in the quarry agreement”. That interest was explained by Mr White as “all of those things that grew out of the option agreement that was signed a few weeks prior to separation.”
Mr White later endeavoured to explain the figure of $250,000 on the basis of royalties of $217,000 and $66,000 which the husband had received from Roche and the $105,000 received from R for the sale of the licence.
Against the background of the case as finally put to her Honour on behalf of the wife, it is only now possible for the wife to assert before us that her Honour erred in not including in the pool of property available for division between the parties, a notional figure of $250,000 on account of the royalties ($217,000 and $66,000) which the husband had received under the licence agreement from Roche and the sale price of the licence ($105,000) received from R.
It can be seen from paragraphs 40 to 45 of her Honour’s judgment (which we set out in full earlier in paragraph 53 of these reasons) that her Honour rejected the submission that she should insert a notional figure of $250,000 into the pool of account of the quarry or licence agreement and that she did so on two bases.
First, she rejected the proposition that the sale price for the licence should be considered to be $250,000, rather than the $105,000 actually received. Her finding in relation to the actual sale price received was as follows:
40. … In circumstances where efforts were made to sell it to Readymix to no avail, where there is a fairly limited market in any event, and where there has been nothing whatsoever presented to impugn or cast doubt upon the arms length nature of the transaction between [the husband] and the ultimate buyer, there could be no finding other than that the sale price of $105,000 represented its fair market value.
This conclusion was, in our view, clearly open to her Honour.
Her Honour then went on to consider and ultimately also reject the further proposition that the licence and the royalties which had come from it was “a family asset” which should be available for distribution between the parties at a value of $250,000.
In rejecting this second proposition, her Honour referred (in paragraph 42 of her reasons) to the limited extent of the development of the project “up to the point of separation”. She then referred (in paragraph 43) to the husband’s efforts to pursue and realise this “business opportunity after separation”, and his use of the royalty income to fund living expenses and the new crushing business carried on through PMC. Her Honour finally explained that that new business had not been a success, and that no assets remained.
Against this factual background her Honour concluded (in paragraph 44) that there was nothing to warrant the bringing into account of a figure to represent a notional asset so as to advantage the wife. Again, in our view, these conclusions were clearly open to her Honour given the broad discretion which she was exercising.
Her Honour also concluded that cases such as Kowaliw and Browne and Green (concerning the wasting or dissipation of family assets) or Townsend (1995) FLC 92-569 (concerning the premature distribution of family assets) had no application in this case. We agree with that conclusion.
Finally in relation to the groups of grounds under consideration, it should be observed that in the summary of these groups (provided in Counsel’s written outline), there is considerable emphasis, as there was at the hearing of the appeal, and also in the schedule of assets attached to Ms Pagani’s written submissions to her Honour, on the issue of the waste stockpile on the G land and its value.
However as explained by her Honour in paragraph 38 of her reasons, access to that stockpile (and its value) was an aspect of the licence agreement (and its value). While issues of the value of the stockpile and hence of the licence were substantial issues at the hearing, they because ‘redundant”, as her Honour explained once the licence, with its entitlement to the waste stockpile was sold by the husband.
This may explain why in Mr White’s final submissions to her Honour, nothing appears to have been put by him, at least expressly, in relation to the value of the waste stockpile.
Accordingly, the errors on the part of the trial Judge which are asserted in the second, third and fourth groups of grounds of appeal contained in the written outline of counsel for the wife have not been established.
The grounds of appeal directed to the s 75(2) matters and the discharge of the maintenance order and arrears
Although in her written and oral submissions counsel for the wife addressed the grounds directed to her Honour’s assessment of the s.75(2) matters before addressing the grounds directed to her Honour’s discharge of the interim maintenance order and the arrears which had accrued under that order, we consider that it be useful for us to address first the maintenance order issue and then the s.75(2) determination. We note that the trial Judge also adopted this approach in her judgment.
Maintenance
At the commencement of her reasons her Honour recorded that the orders sought in relation to maintenance by each party in the submissions filed on his or her behalf after the conclusion of the first part of the hearing (August 2003), were:
· by the husband: “The interim spousal order made 19 December 2002 be discharged as at 10 June 2003”;
· by the wife: “That the husband pay to the wife the sum of $200 per week by way of periodic spousal maintenance, and that the husband pay to the wife such further sum as ordered by the court being arrears of maintenance pursuant to the orders of Federal Magistrate Brown made in Darwin to the date of these orders.”
In recording the order sought by the wife in relation to maintenance, her Honour added at the end of the order in brackets the words “(since abandoned)”.
There can be little doubt that her Honour added those words against the background of the following exchange which had occurred between herself and Mr White on the previous day (14 October 2004) when the hearing had re-opened before her (Transcript 14/10/04 pp 456-457):
MR WHITE: … But, your Honour, could I say one thing I did omit in the debts, there is – the wife is claiming arrears of maintenance. Your Honour will be – recall that there was a maintenance order in this case?
HER HONOUR: Yes.
MR WHITE: And there is 64 weeks at $570 per week (indistinct) that ---
HER HONOUR: Just a minute till I find the document please? Arrears of maintenance, 64 weeks ---
MR WHITE: At $570 per week, that’s $37, 480.
HER HONOUR: Is she still seeking spousal maintenance as a result of the conclusion of the litigation?
MR WHITE: No, your Honour, we ask that that be taken into account in your Honour’s orders in the distribution for property.
HER HONOUR: All right. So, she formally withdraws, does she, her spousal maintenance claim?
MR WHITE: Seeking it – she seeks a winding up of their affairs between the two of them and asks your Honour to take into account her entitlement to spousal maintenance in the distribution of property.
HER HONOUR: So, she would say – she doesn’t want periodic maintenance, but when I’m looking at the 75(2) factors, I should take into account her position so far as her work capacity ---
MR WHITE: That is correct, your Honour.
HER HONOUR: --- compared with [the husband’s] capacity to pay ---
MR WHITE: That is so, your Honour.
HER HONOUR: --- and adjust it in s75(2) distribution?
MR WHITE: Yes, your Honour, that’s the submission that I would make to you.
HER HONOUR: You’re not asking for lump sum maintenance?
MR WHITE: No, simply to take it into account in that way.
HER HONOUR: Well, I’ll note that your client’s application for periodic spousal maintenance is withdrawn.
MR WHITE: Thank you, your Honour.
While the application for future periodic maintenance had been abandoned, it is clear from the following exchanges between her Honour and both counsel in final submissions that the matter of the maintenance arrears remained a live issue which both parties ultimately decided they wanted her Honour to determine (Transcript 14/10/04 pp 492-496) (emphasis added):
MR WATERS [counsel for the husband]: … So your Honour, the only other live issue that perhaps I should raise is how you should treat my learned friend’s submissions concerning the arrears of payments of maintenance.
HER HONOUR: Yes.
MR WATERS: My friend takes the view that this should be taken into account. I mean my initial reaction was to say well, wait a minute, there has been no enforcement orders. …
Your Honour does have the power to deal with the matter and I – I’m thinking that there’s been – there was so much evidence about the failing circumstances of the husband led, and cross-examined upon during the course of the proceedings, that your Honour could well [make] a determination on the material you’ve got, as to whether or not it’s appropriate to let any portion of those arrears be treated as taken – be taken into account or not. Our submission would be that – firstly, it’s only formed part of her (indistinct) because, of course, she’s had the continuing use of the family home.
But the balance of the evidence – and it was fairly specific, led you to the view that there was no wilful refusal to pay the maintenance, it was simply that there was no funds available to do so and that indeed – well, we’ve got both of them borrowing money, Mr [B] and the wife borrowing money. There’s clear evidence that they were – by the time the maintenance was ceased, they were both in totally strained circumstanced. I accept that as true of the wife.
I’m not trying to suggest that she was (indistinct) too, but they were both in a bind and – if the evidence was – it’s once again coming back to this idea that if the evidence was that he was living high on the hog or wilfully dissipating the assets from which this money could be paid, different story. But what you’ve got to say – and perhaps a sort of bird’s eye – an intimate view is, of an endeavour to set up and – a business in good faith, which I want to be (indistinct) and we know all the ins and outs of it from the word go.
So, perhaps, a better way to (indistinct) your Honour to approach the – and it’s certainly within your power to do so, would be to invite you to look at the evidence as to the respective circumstances of the parties at about the time that the maintenance was ceased. And, of course, from the husband’s point of view, it was all downhill after that. I mean, they really – he was living in – and still living under the – a very, very limited (indistinct) which would entitle him to pay any – make any contribution.
The wife, of course has had – she should have the benefit of a Social Security payments since then, and that really, if my friend wishes to take an amount into account, we say that the amount should be zero, or close to it.
…
HER HONOUR: Mr White, you haven’t really addressed on the arrears of maintenance ---
MR WHITE: No.
HER HONOUR: --- so I’ll give you an opportunity ---
MR WHITE: Thank you, your Honour.
HER HONOUR: --- to close by responding to Mr Water’s submission on that point, if you wish.
MR WHITE: Thank you, your Honour. Would your Honour also allow me to say something in relation to my learned friend’s suggestions that – suggestion, I mean, he made that [the husband] is wilfully dissipating the assets. …
…
Your Honour, I’m not saying that he’s wilfully dissipated the assets. I’m simply saying that they should be brought into account because they’re moneys that he has received and had and used for his own purposes. And he hasn’t paid his maintenance because he’s used his money to invest it into [PMC].
Now, if – your Honour is perfectly correct, that the husband could’ve made an application to discharge that maintenance order, but he didn’t do so. Your Honour – and he can’t be taken by surprise because it’s referred to on the final page of Ms Pagani’s submissions that were back in August of 2003. That these are moneys that he’s had and he’s not shared them with [the wife], when she’s entitled to a share. And she’s entitled to that maintenance, but he’s spent it on [PMC]. Your Honour, I don’t believe there’s anything more I can say. She hasn’t been able to get the benefit of social services either.
MR WATERS: An affidavit says she’s getting the benefit.
HER HONOUR: Oh, no ---
MR WHITE: Oh, I’m sorry (indistinct).
HER HONOUR: --- I don’t think that’s right.
MR WHITE Your Honour, I think, originally she couldn’t get it and I – it might be recently now. I do apologise. I withdraw that comment.
Her Honour then did deal with the arrears issue in the following paragraphs of her reasons and she did so, understandably in our view, after her assessment of the parties’ contributions and before her consideration of the s.75(2) matters:
56. It is the case that [the husband] was obliged under the interim order to pay spousal maintenance to [the wife] and there are now arrears amounting to $36,480. The question arises as to how those arrears are to be dealt with and the impact of that upon any assessment of their post-separation contributions. The answer to that, in my opinion, depends upon the parties’ respective financial circumstances – need and capacity – in the period since the arrears have accrued; namely, since June 2003.
57. As for [the wife]’s need for additional financial support, her evidence does not fully cover that topic. Her most recent financial statement puts her income from a government benefit at $200 per week and she has had some casual employment since July last year. Her income, in any event, is modest from all sources. I should say I accept that her age and limited work skills do inhibit her capacity to support herself and while she has obtained some work over this past year it could not reasonably be said in all the circumstances that she was able to support herself adequately from her earnings. Her personal expenditure in her most recent financial statement totals $289 but that does not include day to day living expenses. Obviously when her government benefit is put to one side, as the law requires, she does have a need for financial support. Probably that has been the case in the period since the spousal maintenance ceased though her case does not allow any precision to be brought to bear in making the assessment of any particular amount.
58. The other aspect, of course, is [the husband’s] capacity to pay maintenance in that period. His only income earning activity has been through [PMC] until the shut down of its operations and sale of its assets and more recently in his son’s [business] in K where he has been paid for part-time employment at rates that have varied between $100 and $200 and more recently $50 and $60 per week. Earlier in the year he was ill and unable to work. The income of the company over the period under review is apparent from exhibit 29. Income totalled $130,099 from sales and profit on sale of assets and expenses totalled $174,149 to bring about a loss of $44,050. None of those expenses include wages – paid either to [the husband] or to [Ms M]. If one adds back the depreciation item of $52,290 as not representing a call on cash, the result for the year would be a small income of some $8,000. Even if all of this could be considered to be [the husband’s] – rather than to be distributed between two shareholders – it remains a very modest sum and when his income from his son’s business in more recent times is added to that it becomes apparent that what [the husband] has had available should be considered necessary to his own support. It follows that he has had no capacity to pay spousal maintenance in the relevant period. In the result, I do not propose making any provision for payment of arrears accrued under the interim order and will formally discharge the order to the date upon which it stands paid.
The grounds of appeal which challenge her Honour’s order that the interim spousal maintenance order (made by the Federal Magistrates Court on 19 December 2002) “be discharged as and from the date upon which it stands paid” were summarised in the written outline on behalf of the wife in the following terms:
F.The trial judge’s error in finding firstly, that the wife’s claim for arrears of maintenance was “abandoned”; and the failure to consider the evidence as to the actual income of the husband from the waste pile (husband’s invoice books) when determining the husband’s capacity to pay maintenance from the period of the breach of the Orders for Maintenance made in the Federal Magistrates Court; and instead adopting only the figures declared by the husband in his taxation return for one taxation year when the arrears period spanned three taxation years (2002-3, 2003-4, 2004-5); and the findings made that the husband did not have capacity to pay which was against the weight of the evidence, and in particular husband’s admissions as to his gambling and holiday travel expenses – Grounds 8, 17, 24, 25.
Two of the claims made in the above summary can be disposed of briefly.
First, her Honour did not find that the wife’s claim for arrears of maintenance was “abandoned”. Rather to the contrary she determined that claim in the paragraphs (56 to 58) of her judgment which we have just quoted. However her Honour did clearly proceed on the basis that the wife’s claim for future spousal maintenance was abandoned, and she was entitled to do so given the exchange with the wife’s counsel, Mr White, on the final day of the hearing and which we set out in paragraph 85 above, and indeed we understood Ms Pagani to concede as much before us.
Secondly, as to the assertions to the effect that her Honour erred in finding that the husband did not have the capacity to pay the arrears because of his admissions as to gambling and holiday travel expenses, her Honour had much earlier in her reasons considered and found no substance in this complaint against the husband, saying:
33.… Despite a case run for [the wife] to the effect that there has been (in effect) profligate spending by [the husband] on luxury accommodation and the like, there was nothing sufficient at the end of the day to support such a finding and nor is it a case where there could be any finding of money hidden away or not disclosed by him. In short, there is not just case for taking the step of now bringing directly to account fund received by him earlier and since spent.
The complaint then becomes limited to whether her Honour was in error to consider only one financial year of income for the husband (or his company) when the arrears of maintenance had accrued over the period June 2003 to October 2004 which covered three financial years. The reality is, however, that there was but one month remaining of the first financial year (2002-2003) and only three and a half months of the then current year (2004-2005). In these circumstances we consider her Honour was entitled to focus on the greater part of the period of the accumulation of the arrears, being the 2003-2004 financial year.
In determining the husband’s income position in that year, in other words, his capacity to pay, it will be seen from paragraph 58 of her reasons that her Honour relied on figures in a document that was Exhibit 29. Criticisms were made before us by Ms Pagani in relation to the adequacy of the figures in that document and to the absence of tax returns for the relevant period. However a consideration of the written submissions of Ms Pagani to her Honour on the question of the maintenance arrears also reveals that such criticisms were not raised before her Honour. Similarly, it will be seen that her Honour expressly invited Mr White in his final submissions to address the arrears of maintenance issue. But with respect to Mr White, little of assistance was put to her Honour by him.
Accordingly we have not been persuaded that her Honour erred in discharging the maintenance arrears and order.
It was, however, submitted to us by counsel for the wife that having discharged the maintenance arrears and knowing that future maintenance was not being pursued, her Honour should have taken into account those matters in her consideration of the s75(2) matters, which is the matter to which we now turn.
The trial judge’s assessment of the s 75(2) matters
It will be recalled that in paragraph 64 of her reasons (see paragraph 33) her Honour reached the conclusion that having regard to the parties’ “prospects for their future”, the weighting that favoured the husband’s contribution assessment because of his inheritance should be removed so as to divide the parties’ assets equally between them. In other words, her Honour concluded that the s.75(2) matters which she had discussed at some length, favoured the wife and thus counterbalanced the husband’s contribution of his inheritance.
However in the summary of the fifth group of grounds of appeal, it is asserted by the wife’s counsel that her Honour erred “in finding that the husband’s and wife’s s.75(2) factors were about equal which findings were against the weight of the evidence – Grounds 3, 4, 18, 21, 22, 23.”
We observe in passing that we do not think this description of her Honour’s finding is entirely accurate given the actual words used by her in paragraph 64 of her judgment.
But however that may be, in support of the grounds directed to the s.75(2) adjustment, it was submitted that her Honour had not accorded sufficient weight to the wife’s reliance on social security, to her lack of maintenance, to her limited employment history and health, and to the fact that the husband would retain the income-earning commercial building and that he had the financial benefits of a new partner.
In our view when regard is had to the following paragraphs of her judgment, it cannot be said that her Honour did not have regard, either expressly or by necessary implication, to all the matters relied on by counsel for the wife before us – although we acknowledge that some s.75(2) matters were canvassed by her Honour in the context of her consideration of the maintenance matters and then later in her assessment of the justice and equity of her proposed orders:
57.As for [the wife’s] need for additional financial support, her evidence does not fully cover that topic. Her most recent financial statement puts her income from a government benefit at $200 per week and she has had some casual employment since July last year. Her income, in any event, is modest from all sources. I should say I accept that her age and limited work skills do inhibit her capacity to support herself and while she has obtained some work over this past year it could not reasonably be said in all the circumstances that she was able to support herself adequately from her earnings. Her personal expenditure in her most recent financial statement totals $289 but that does not include day to day living expenses. Obviously when her government benefit is put to one side, as the law requires, she does have a need for financial support. Probably that has been the case in the period since the spousal maintenance ceased though her case does not allow any precision to be brought to bear in making the assessment of any particular amount.
…
61.The parties are both 57 years of age and nearing the end of their working life.
62.On the case presented by [the wife], her ability to undertake paid work is hampered by her health (more particularly a knee replacement operation and problems with her other knee) her age, and lack [of] qualifications, all of which mean she has little or no prospect of re-entering the workforce in the future. Certainly she has not been without her health problems. In his evidence Professor [C] spoke of her recovery from surgery to her left knee and the diagnosis of arthritis in her right knee which might, in the future, require similar surgery. In the meantime, it is very probable that this does inhibits her ability to stand for any period of time and this in turn limits her choice of work, even if something did become available in [K] for which she is qualified. I accept these are considerations relevant to any assessment now about her future earning capacity. But all that said, she has undertaken some casual or part time work over the past year in [K] and so the future may well involve for her an ability to supplement her entitlements from other sources – investment of the cash she will receive for example – with some paid work. At age 57, therefore, she should be seen as nearing retirement age but able to supplement her capital with some paid work from time to time.
63.As for [the husband], his is not a dissimilar situation despite his long work history. Without a business to operate he is left to use the skills he has built up over the years by finding other work around [K] and he has not been without his own health problems. Yet he has been able to take up work with his son and there is no suggestion that will not continue into the future or, if it comes to an end, that he will not be able to find other work for which he is suited. At age 57 he, too, is nearing retirement age but he should be seen as able to supplement his capital with paid work. That is likely to be wages related to unskilled work, and therefore relatively modest earnings, unless he re-organises his capital after these proceedings are over to start again in some business venture. In that he would have the support of [Ms M], as their history together demonstrates.
64.Overall, when one stands back and views the prospects for their future broadly it is my assessment that to the extent that there ought to be an adjustment between them it ought to be such as to remove the weighting that favours [the husband] by reason of the inheritance factor so as to now divide their assets equally between them. Such an outcome would entitle them each to receive assets to the value of $428,500.
65.There is then the question of how that assessment is to be applied to their existing assets. There is no dispute about [the wife] being entitled to retain the family home, the contents and her motor vehicle. To receive her 50% entitlement of $428,500, therefore, she will need to receive a further $138,415. It is plain that there will have to be a splitting order applied to that Fund for her to achieve that. The formal orders sought by both parties contemplated a split, though the form in which those orders were drafted could not effectively bring about that result. It is also apparent from the entitlement assessment that [the wife] cannot retain both the home and the [O] Street property as her application contemplates but she will receive the home and other assets and the balance will come from her entitlement to superannuation out of the cash component of the fund. In any event, it is a more fair arrangement that they each retain one of the two pieces of real estate they have acquired, directly or indirectly, over the years. Of course the [O] Street property is income earning in that the lease generates in the order of $2,500 per month for the Fund and that would be to [the husband’s]’s advantage were he to eventually retain the property on retirement. On the other hand, the home to be retained by [the wife] is a substantial property and provides her with the advantage of relatively superior accommodation no longer available to her former husband.
66.The splitting order, set out below, will apply to the cash component of the Fund and [the wife] will be free to take such steps as she is advised about rolling over the money into another fund or taking her entitlement upon retirement.
67.After a long marriage and having regard to their contributions overall and to their future, an equal distribution of their current assets is the result. They will each have realty – either home or commercial property in [K] – and some cash funds. Also they will each be free to work according to their capacity, given health and age considerations. In my opinion, the orders proposed will bring about a just and equitable result overall.
In our opinion her Honour has not failed to have regard to any of the s.75(2) matters now relied upon by the wife in support of her claim that the award to her should have been greater on account of such matters. We are not troubled regarding the precise order or context in which her Honour referred to such matters, given that she had to determine the maintenance arrears issue, and this was obviously best done ahead of reaching a conclusion on an appropriate s.75(2) adjustment.
Ultimately, however, the wife’s challenge to her Honour’s s.75(2) adjustment is one based purely on matters of weight. The difficulties that such a challenge to a discretionary judgment will always face are well known (see for example Gronow v Gronow (1979) FLC 90-716), and we have not been persuaded that such a challenge can succeed in this case. Accordingly the grounds which attack the weight given to s.75(2) factors have not been established.
Conclusion
As none of the six categories of grounds of appeal have succeeded, the appeal must be dismissed.
Costs
It was agreed that the appeal by the wife against an order for costs made by Moore J on 18 March 2005, and also any application for costs in relation to the appeal against the property settlement orders should be the subject of further submissions after delivery of our judgment in relation to the property settlement appeal.
We will make the necessary directions for such submissions.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 17 April 2004
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