Zabarac and Zabarac & Anor

[2016] FamCAFC 186

FAMILY COURT OF AUSTRALIA

ZABARAC & ZABARAC AND ANOR [2016] FamCAFC 186

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the grounds asserted error in the trial judge’s contribution assessment and s 75(2) of the Family Law Act 1975 (Cth) adjustment – Where the trial judge erred in ‘double counting’ a debt owed by the wife by including it as both a liability in the balance sheet and a factor in the s 75(2) adjustment – Where this ‘double counting’ was a material error that caused the trial judge’s discretion to miscarry in assessing the s 75(2) factors – Appealable error demonstrated – Appeal allowed on this basis.

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the husband asserted that the trial judge erred in her acceptance of the single expert’s evidence as to value – Where it was open to the trial judge to accept the single expert’s evidence over that of the adversarial expert – Where the husband argued that the trial judge failed to order the sale of a property to ascertain its value – Where the trial judge had accepted evidence as to the property’s value and no sale was necessary –  Where the trial judge accepted the value of the husband’s life insurance policy as asserted by him in a sworn document – Where the husband failed to produce further evidence – Where it was open to the trial judge to accept the husband’s evidence of value – Where the husband asserted that the orders made were not just and equitable – Where the trial judge’s reasoning process was not flawed or inadequate – No appealable error demonstrated.

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the husband asserted the trial judge erred in ordering the wife retain the balance of the proceeds of sale of properties rather than a percentage split – Where the orders did not reflect the trial judge’s stated intention and gave rise to potential unfairness – Where if not for the appeal succeeding on different grounds the error would have been rectified pursuant to the slip rule.

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT– Where the husband asserted that the orders relating to the taxation debts did not reflect the trial judge’s findings and stated intentions – Where this failure had no adverse impact on the husband as the percentage division of the property settlement was not affected.

FAMILY LAW – APPEAL – SPOUSAL MAINTENANCE – Where the orders provided that the husband pay spousal maintenance to the wife pending full implementation of the orders for alteration of property interests – Where the structure of the orders does not contemplate the wife’s partial receipt of her entitlement – Where the trial judge found that the husband  had the capacity to pay spousal maintenance – Where the trial judge had already taken these funds into consideration as part of the wife’s entitlement in the property settlement – Appealable error demonstrated.

Family Law Act 1975 (Cth) ss 75(2), 117(2)
Family Law Rules 2004 (Cth) rr 1.15, 17.02

Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343
CDJ v VAJ (1998) 197 CLR 172

De Winter and De Winter (1979) FLC 90-605

Gronow v Gronow (1979) 144 CLR 513

House v The King (1936) 55 CLR 499

Little and Little (1990) FLC 92-147
Metwally v University of Wollongong (1985) 60 ALR 68
Noetel and Quealey (2005) FLC 93-230
Phillips and Phillips (2002) FLC 93-104
Sinclair & Sinclair [2002] FamCA 262
Smith and Smith (1991) FLC 92-261
Tomasetti and Tomasetti (2000) FLC 93-023

APPELLANT: Mr Zabarac

FIRST RESPONDENT:	Ms Zabarac
SECOND RESPONDENT:	Commissioner of Taxation for the Commonwealth of Australia

FILE NUMBER: SYC 3820 of 2012

APPEAL NUMBER: EA 64 of 2014

DATE DELIVERED: 14 September 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Bryant CJ, Ainslie‑Wallace and Watts JJ

HEARING DATE: 7 December 2015

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 7 May 2014

LOWER COURT MNC: [2014] FamCA 296

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Schonell SC

SOLICITOR FOR THE APPELLANT: Brown & Brown Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE FIRST RESPONDENT: McLachlan Thorpe Partners

SOLICITOR FOR THE SECOND RESPONDENT: Mr Shizas

Orders

1. The appeal against the orders of Stevenson J made on 7 May 2014 is allowed and the orders of Stevenson J are set aside.

2. Leave is granted to the appellant to file the application to adduce further evidence dated 7 December 2015.

3. The application to adduce further evidence on the appeal is dismissed.

4. The matter is remitted to the Family Court of Australia to be reheard by a judge other than Stevenson J.

5. There is no order as to costs.

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

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

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 64 of 2014
File Number: SYC 3820 of 2012

Mr Zabarac

Appellant

and

Ms Zabarac

First Respondent

and

Commissioner of Taxation for the Commonwealth of Australia
Second Respondent

REASONS FOR JUDGMENT

1. By Amended Notice of Appeal filed on 30 July 2014, Mr Zabarac (“the husband”) appeals against orders for property settlement and spousal maintenance made by Stevenson J on 7 May 2014 in proceedings between him and Ms Zabarac (“the wife”). For the sake of convenience in these reasons when referring to the husband and wife together we shall refer to them as “the parties”.

2. The Commissioner of Taxation of the Commonwealth of Australia (“the Commissioner”) intervened in the proceedings, asserting that the husband, the wife and two corporate entities associated with the parties (D Pty Ltd and U Pty Ltd) owed significant sums in unpaid tax, late payment penalties and general interest. The Commissioner sought orders that the court take into account these taxation liabilities. Neither the husband nor wife contended that the orders sought by the Commissioner not be made.  The issue as between the husband and the wife was how the taxation liabilities should be borne. 

3. The Commissioner appeared on the appeal but made no submission.

4. At the commencement of the appeal hearing, the husband sought leave to file an application to adduce further evidence. The application was opposed by the wife. We indicated that we would reserve our decision in relation to that application and accordingly we deal with it below.

Background

1. So as to give context to this appeal, it is necessary to set out some background facts.

2. The husband was born in 1969 and the wife was born in 1972. The parties married in 1996 and separated in May 2011. There are two children of the marriage: C, who was born in 2002, and E, who was born in 2004. Since separation the children have lived with the wife and spent time with the husband on one day each week.

3. The husband also has a child from another relationship who was aged two at the date of the hearing.  Although the husband pays child support for him, he has no other contact with this child.

4. During the parties’ marriage the wife was initially employed as a financial services professional at Westpac Bank and became a financial professional in 1999. The husband worked as a property salesman except for the period between 1997 and 2004 when he conducted a retail business. The wife left her employment at Westpac in 1998 and went to work at the husband’s then property business.

5. The parties, individually and jointly, purchased a number of properties in the local area before and during their marriage. Those still in possession of the parties at the time of the trial included:

   ·H Street, Suburb V (“the Suburb V property”), purchased by the parties in 2003 in the wife’s sole name for $2,915,000. The parties borrowed $2,600,000 from the National Australia Bank and the balance was advanced by a silent partner; and

   ·Commercial premises at T Street, Suburb B (“the Suburb B property”) purchased in 2007 for approximately $935,000.

6. The husband commenced employment on commission as a salesman with LBP in 2004. In 2005, he established a trust which later became known as the Q Trust (“the Trust”), of which the corporate trustee is Q Pty Ltd. The Trust purchased a 20 per cent interest in LBP for $600,000 in 2005, an interest of four per cent in 2010 for $150,000 and then a further interest for $192,449 in 2012. The husband was due to settle the purchase of a further 1.5 per cent interest in LBP on 14 December 2014, a date after the conclusion of the hearing before the trial judge, which, if completed, would have brought the Trust’s total interest in LBP to 30 per cent. The Trust’s interest in LBP at the date of trial was 28.5 per cent. 

7. After separation, in May 2011 the husband caused the incorporation of a company called SY Pty Ltd which has since received all distributions due to the husband from LBP. The husband is the sole director and shareholder of SY Pty Ltd.

8. In August 2012, again following separation, the husband purchased a property at O Street, Suburb R (“the Suburb R property”) for $1,015,000. The purchase price was made up of $960,000 borrowed from ING and the balance from his post separation income.

9. Interim orders were made on 21 November 2012 by Ryan J after an application was filed by the wife. In summary these orders:

   ·Required the husband to pay interim spousal maintenance to the wife of $1,063 per week;

   ·Restrained the husband from causing any profits or dividends from LBP to be distributed to any entity other than SY Pty Ltd;

   ·Restrained the husband from encumbering, assigning or dealing with his interest in LBP without providing notice to both the wife and the partnership;

   ·Restrained the husband from disposing of or distributing any assets of SY Pty Ltd; and

   ·Restrained the husband from drawing money from SY Pty Ltd in excess of $2,600 per week for his reasonable personal expenses, or for compliance with court orders or payment to the Australian Tax Office.

10. The parties also consented to orders that the husband service the mortgages in respect of the former matrimonial home and the parties’ investment properties pending finalisation of the proceedings.

11. As we have said, the Commissioner appeared and sought orders in the matter. The taxation liabilities of the parties and the related companies were set out by the trial judge at [2].

12. Her Honour noted that neither party disputed either the liability for, nor the quantum of the taxation owed. 

Trial judge’s reasons

1. In the proceedings before the trial judge, the parties submitted a joint balance sheet which set out the assets and liabilities of the parties or each of them. Their net assets were said to be either $2,692,563 according to the wife or $1,370,383 according to the husband.

2. Her Honour observed that while there was no dispute as between the parties about the value of their liabilities, there was a dispute about the value of some of the parties’ assets, namely:

   ·The wife asserted the value of the Suburb R Property to be $1,300,000 while the husband contended it to have a value of $1,150,000. There was no expert evidence regarding this property and the trial judge accepted the husband’s valuation at [55]. There was no challenge to this finding on appeal;

   ·The value of the Trust’s 28.5 per cent interest in LBP; and

   ·The value of the husband’s life insurance with American Express.

3. As to the value of the interest in LBP held by the Trust, a single expert, Mr K, was appointed to value the Trust’s share in the business. He found the value of the interest to be $1,258,000. 

4. On the first day of the hearing the husband sought to rely on a valuation obtained from an adversarial expert, Mr H, who valued the Trust’s interest at $322,000.

5. Her Honour gave leave to the husband to rely on the valuation.

6. Her Honour said:

   9. …In addition to non-compliance with the Rules, I had concerns as to the limited time frame allowed to the wife and those who advise her to consider the proposed evidence from Mr [H]. The wife’s solicitor received Mr [H’s] report on 19 December 2013 and his “critique of Mr [K’s] valuation” on 13 January 2014. Essentially, I acceded to the husband’s application because I was concerned at the very large discrepancy in the valuation figures and the consequent prospect of a significant injustice to one of the parties. Accordingly, I determined that the preferable course was to receive the evidence of both Mr [K] and Mr [H] and then determine which valuation appeared to be more reliable in all of the circumstances. For reasons which appear below, I prefer the evidence of Mr [K] to that of Mr [H] in any event.

7. When her Honour came to deal with the disagreement between the two experts as to the value of the interest in LBP, she noted:

   57.As outlined above, it was apparent from the outset that there was a significant failure to comply with the Rules in terms of instructions given to Mr [H]. As his cross-examination progressed, these difficulties were compounded to an extent which suggested as to the safety of his evidence.…

8. The difficulties to which her Honour referred included that Mr H received no written instructions from the husband or his solicitor; that he said that he had “about half a dozen chats” with the husband and “about half a dozen” conversations with the husband’s solicitors; that he had not recorded any of these conversations in his report; that he “played a part” in the formulation of questions put to Mr K on behalf of the husband during the hearing and that the husband may have informed him of Mr K’s valuation figure but he had no recollection of him doing so.

9. Her Honour found at [58] that neither the court nor the wife and those appearing for her knew what instructions and information had been given to Mr H on which he could base his valuation.

10. Turning then to the assessment of the valuation evidence, her Honour noted at [60] that while both Mr K and Mr H adopted a future maintainable earnings means of valuing the interest, Mr H applied a multiplier of one while Mr K proposed the appropriate multiplier be 5.9. Her Honour recorded Mr H justifying his multiplier of one on the basis that it represented the “goodwill” component of a sale which accorded with his experience. Her Honour noted that while Mr H said that his experience was informed by the sale of one hundred industry businesses or components of industry businesses, it was only in respect of five sales that a goodwill component was included and Mr H had only been involved in three of those five sales. Her Honour concluded that Mr H’s experience was limited at [63].

11. Her Honour then considered Mr K’s rationale for using a multiplier of 5.9 and said that he offered a persuasive explanation for using that multiplier and provided a thorough analysis of his reasons. She concluded that

    
    

    Mr K’s opinion was based on research in the field at [66].

12. As to the way in which both valuers used the maintainable earnings calculations, her Honour preferred the approach adopted by Mr K who looked at the previous five years trading and considered the profit and loss over those years, arriving at a weighted average over three years.  Her Honour recorded that ultimately, during his evidence, Mr H agreed that Mr K’s approach was more likely to be the correct one.  Thus her Honour accepted Mr K’s approach.

13. Her Honour identified a further area of dispute between the valuers being the appropriate discount to be applied for lack of shareholder control (the Trust being a minority shareholder in the business) and discount for a lack of marketability of the Trust’s interest. Her Honour noted that Mr K discounted for lack of control but applied no discount for marketability. In coming to that view, her Honour observed that Mr K relied on the terms of the partnership agreement. Mr H discounted the value of the Trust’s interest for both lack of control and lack of marketability, and her Honour noted that he derived from those considerations an overall discount of 30 per cent at [71].

14. Her Honour further found that while marketability for the Trust’s interest might be limited, the market existed in reality. She thus found that the discount applied by Mr K was likely to be more accurate than that of Mr H at [71].

15. Finally, Mr H applied a further discount to reflect the imminent departure from the partnership of Mr FF, said to be the highest fee earner at LBP.  Rather than apply a further discount for that fact, Mr K said that he had taken Mr FF’s departure into account in his assessment of the future maintainable earnings on the basis that reduction of sales income in the partnership was more likely to be affected by external economic conditions rather than the loss of the earnings from the outgoing partner.  Her Honour said:

    74.Again, I am persuaded that Mr [K’s] methodology is to be preferred to that of Mr [H]. A combination of these considerations and non-compliance with the Rules persuade me that the evidence of Mr [K] is more reliable than that of Mr [H]. I thus find that the value of the interest of the [Q Trust] in the [LBP] partnership is $1,258,000.

16. As to the final asset in dispute, the husband’s American Express life insurance policy, the husband had included it as an asset in his Financial Statement filed 9 January 2014 with an estimated value of $100,000. At trial, it was contended that the insurance policy had no present value, and would only have value on the husband’s death. The insurance policy was not before her Honour and there was no evidence as to its terms or conditions. Her Honour rejected the submission and included it in the husband’s list of assets.

17. Thus her Honour found the parties’ net assets inclusive of superannuation to be $2,584,122 at [77].

18. Her Honour discussed the parties’ contributions at [78] to [100] noting that both parties had brought assets into the marriage. Though the husband contended that his initial contributions exceeded those of the wife, the trial judge did not accept this submission. Her Honour found that the husband was the primary income earner and the wife was the primary homemaker and carer at [85], though the wife had also been engaged in paid employment.

19. Her Honour also addressed the husband’s admitted gambling problem in respect of which she said at [90] that, although the husband expressed an intention to produce a schedule showing funds won and lost in relation to his gambling, he had not.

20. The wife however had produced a schedule and her Honour said at [91] that the documents demonstrated that between June and December 2010, the husband had spent $119,250 on gambling, with bets of about $1000 per day being made.

21. It was contended for the husband that the parties’ contributions ought to be found equal at the date of separation and that there should be a slight adjustment in the husband’s favour due to his financial contributions for the benefit of the wife and the children between separation and the trial. However her Honour found that, in the period between separation and trial, the husband had spent “relatively little” time with the children and concluded that the payments made by the husband for the benefit of the wife and children after separation did not warrant a contribution finding in his favour, particularly taking into account the wife’s care of the children in that period. Her Honour found that the contributions of the parties were equal at the date of trial at [100].

1. Turning to the factors in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”), her Honour took into account that the husband’s earning capacity was far greater than that of the wife and that it was highly likely that he would

   
   

   re-establish himself financially following a distribution of the parties’ assets. Though the wife contended that her capacity to engage in paid employment was limited by her severe anxiety following the breakdown of the parties’ marriage, her Honour found that she was likely to recover and enter the workforce in the relatively near future at [103].

2. Her Honour took into account that the wife will continue to be responsible for the care of the children and that the husband has a responsibility to pay child support for his infant son. Her Honour also noted at [108] that the wife is required to repay loans advanced to her by her parents since separation.

3. Her Honour concluded at [92] that it was impossible to quantify the net losses or gains resulting from the husband’s gambling, and in light of the paucity of evidence produced by the husband on this issue, it was “safest” to have regard to the husband’s gambling within the context of s 75(2) of the Act.

4. As to the issue of the husband’s gambling, her Honour found:

   109. …The effect of the husband’s own evidence was that his gambling reduced the funds available to the parties during the marriage.  I reject the suggestion on behalf of the husband that I should ignore his gambling because the wife was complicit in these activities.  I do not accept that she was aware or approved of the extent of the husband’s expenditure on gambling…

5. Her Honour also took into account that the husband disposed of shares after separation but had not accounted for the proceeds at [110].

6. Ultimately, she found that an adjustment of 15 per cent in favour of the wife was warranted. Thus her Honour concluded that the property of the parties or each of them should be divided in the proportions of 35 per cent to the husband and 65 per cent to the wife at [113].

7. Her Honour turned to the application of the Commissioner and considered that the interests of justice required that the parties’ pre-separation taxation debts should be dealt with separately from their post-separation debts at [115]. The reason for this being the wife’s concession that up until separation she was aware of the parties’ financial situation but after separation the husband had channelled his income into a corporate entity without input from the wife, and that before separation the parties had enjoyed “fruits of the husband’s employment”. Her Honour indicated that she would make orders in relation to the 2008, 2009, 2010 and 2011 debts at [117]. Her Honour then concluded that the parties’ 2010 and 2011 personal tax debts, totalling $518,612, should be paid from the sale proceeds of the Suburb V property.

8. Finally, her Honour considered and rejected the husband’s proposal that the parties sell the Trust’s interest in LBP at [119].

9. Thus her Honour recast the balance sheet to reflect the payment to the Commissioner and found the net value of the parties’ assets and superannuation to be $2,584,122, with the wife’s 65 per cent entitlement equating to $1,679,679 and the husband’s 35 per cent entitlement being $904,443. For the purposes of considering the disposition of the assets and superannuation in accordance with her findings, her Honour assumed at [123] that:

   ·the parties will each bear half of the liability of $137,146 to the wife’s parents

   ·the wife will bear sole responsibility for the debt of $221,572 to her parents

   ·the parties will each assume responsibility for half of the outstanding school fees to [M College]

   ·the wife will take the entire benefit of the parties’ jointly–owned superannuation fund, in the absence of sufficient realisable assets to satisfy her entitlement without resort to a sale of the Trust’s holding in [LBP].

10. As to the assets to be retained by the husband, her Honour concluded that the husband would receive assets totalling $2,741,956 at [124]. In that assessment her Honour included the American Express life insurance policy valued at $100,000 and anticipated that the husband would retain the Suburb R property. The other assets included two motor vehicles, bank accounts, the interest in LBP, a share portfolio, a loan, furniture and contents and paid legal fees. Her Honour then concluded that he would retain the following liabilities:

    ·Mortgage on the Suburb R property of $958,748;

    ·Lease on Porsche motor vehicle of $87,941;

    ·Taxation debt of $185,094;

    ·Taxation debt of D Pty Ltd of $63,391;

    ·Taxation debt of U Pty Ltd of $85,535;

    ·50 per cent of debt to wife’s parents of $68,573;

    ·50 per cent of debt to M College of $24,500;

    ·HSBC loan of $4,000;

    ·American Express credit card of $16,009; and

    ·Westpac MasterCard of $1,983.

11. Based on this division the wife would receive net assets to the value of $1,337,939, falling short of her 65 per cent entitlement by $341,740 which she would thus require as an additional payment from the husband. The orders ultimately made by her Honour provided that both the Suburb V property and the Suburb B property be sold with the wife to retain the balance proceeds of the sale after the discharge of mortgages and the payment of tax, but that the husband could retain the Suburb R property, unless it was required to be sold in order to pay to the wife the additional $342,000 owing to her.

12. Her Honour concluded by dealing with the wife’s application for spousal maintenance. She found that as the wife had the care of the children and is currently seeking to re-enter the paid workforce, the wife “is temporarily unable to support herself adequately for the purposes of section 72 of the Act” at [129]. Having regard to the fact that the wife would have access to funds in the sum of approximately $1,300,000 once the property orders were executed, her Honour considered it appropriate that the spousal maintenance order should operate for a limited period between the date of the orders and their full execution. On the basis that the wife’s reasonable expenses totalled $792 per week and that the husband had deposed to an average gross weekly income of $8,605, her Honour concluded that the amount of $800 per week as spousal maintenance would be appropriate at [132].

The Appeal

1. The husband asserted 28 grounds of appeal in the Amended Notice of Appeal filed on 30 July 2014.  Grounds 5, 6 and 18 were not pressed on appeal.  Counsel for the husband argued the grounds grouped under issues and we propose to consider them in the same way.

Ground 1: the valuation of the Trust’s interest in LBP

1. The first issue to which the appeal was directed related to the valuation of the Trust’s interest in LBP.

2. It was contended that her Honour erred in accepting the valuation of

   
   

   Mr K rather than that of Mr H. In particular, this error was said to arise after her Honour found there was a lack of marketability of the husband’s interest in circumstances where Mr K did not discount his valuation to take into account a lack of marketability.

3. Counsel for the husband contended that the thrust of this ground concerned whether there should have been a discount for marketability of the interest in the partnership.   

4. In their respective reports Mr K applied no discount for marketability, while Mr H applied a discount of 10 per cent, the difference being that

   
   

   Mr H limited the market of potential purchasers to the other partners of the partnership and existing staff members (Joint Expert Report at SF6) whereas Mr K accepted that the market extended to both other partners and people working in the industry.

5. It was uncontroversial that the husband’s work in LBP was bound by a partnership agreement which, relevant to this ground, provided for a mechanism by which an outgoing partner disposed of his or her shares.

6. Clause 23 of the Partnership Agreement provided that the remaining partners have first option to purchase the shares, and if they decline, the shares can be offered on the open market.  If the shares are not sold in that way, the agreement provides for the derivation of a purchase price to be paid by the other partners for the shares.  In this case, again uncontentiously, that price was called a “floor price” and was $455,000 for a retiring partner.  That is the lowest price at which the partners could buy the Trust’s shares.

7. To aid understanding of the argument, it is necessary to traverse some of

   
   

   Mr K’s evidence.

8. As we have said, Mr K did not discount his valuation on the basis of a lack of marketability of the Trust’s interest in the partnership.  He said that the initial market for the shares consisted of the other partners as provided by the partnership agreement (transcript 16 January 2014, page 276 lines 1-5). Mr K agreed that if the shares were then put on the open market for purchase by a third party then this market would be limited to someone working in the industry who was acceptable to the partners (transcript 16 January 2014, page 275 lines 39-43; page 276 lines 11-25).  He agreed that these factors “potentially” limited the market available for the interest in the partnership (transcript 16 January 2014, page 276 line 47).

9. Counsel then appearing for the husband asked Mr K why, in such circumstances, he did not apply a discount to his valuation to take into account the limitations on the marketability of the shares (transcript

   
   

   16 January 2014, page 277 lines 1-3). He referred in his reply to the partners’ options to purchase the remaining shares and said:

   On top of that, as it is a 28 and a half percent interest and there are other partners in the business with a 28 and a half per cent interest in the business, I – when I was giving weight to whether I would apply a discount for limited market, I looked at the fact that there would very potentially be somebody in – within the partnership who would then be able – would have control and, there, a control premium, if they were to buy the -
   [the husband’s] shares.

   (Transcript 16 January 2014, page 277 lines 30-35)

10. Her Honour said of the issue of marketability:

    71. …Another area of difference between the valuers was their respective discount rate for lack of control and limited marketability. They seemed to agree that the appropriate range is 15% to 30%, with Mr [K] selecting 15% and Mr [H] 30%.  In his oral evidence, Mr [K] said that he discounted only for lack of control and not for lack of marketability. The partnership agreement (exhibit 10) makes provision for a retiring member to dispose of its interest (see particularly clauses 14 and 23). I infer that marketability may well be limited but exists in reality.

11. Counsel for the husband submitted that her Honour’s findings at [71] were inconsistent with her acceptance of Mr K’s methodology and, in particular in not discounting the value for lack of marketability.

12. It was first contended that in fact, Mr K conceded that there should be a discount for marketability based on an answer in which he said, apropos the floor price:

    …that flaw [sic] price doesn’t impact my valuation in any way in that all that we’re talking about in respect of my valuation is the lack of marketability and is there a market for it and do I apply a lack of marketability discount? No. And the – for the reasons outlined in the rest of my report and the fact that the control interest – the potential control interest for someone particularly - - - … they’ll get that premium; yes, that’s correct.

    (Transcript 16 January 2014, page 279 lines 15-24)

13. Mr K observed that the other partners with 28.5 per cent interest would be “much more motivated buyers than, say, someone in the general public” (transcript 16 January 2014, page 279 lines 35-36). 

14. We reject the foundational premise that Mr K’s evidence demonstrates that he accepted the necessity for a discount for marketability.  His evidence when read as a whole makes it clear that he distinguished the floor price necessarily payable to the exiting shareholder if the shares cannot otherwise be sold as dictated by the partnership agreement with the market for those shares both inside and outside the partnership.

15. Counsel again referred to her Honour’s finding at [71] and submitted that what her Honour was there finding was that there was a market but not one at the value of the shares ascribed to them by Mr K. Thus, it was said that in so finding, her Honour concluded that there was a limited market for the shares and her acceptance of Mr K’s valuation without a discount for marketability was erroneous.

16. We reject this submission.  It is clear from her Honour’s reasons on this issue when read in their entirety and her analysis of Mr K’s evidence, that she is referring to his evidence that there was a market for the purchase of the shares at the valuation at which he arrived and is a reference to his evidence as to what that market will be. 

17. Counsel further contended “if you’re identifying that there’s a limited market, then that must attract a discount.”  (Appeal transcript 7 December 2015,

    
    

    page 25 lines 34-35).

18. That the sale of the parties’ shares in the partnership might be necessarily limited to people with experience in the industry does not dictate a discount and counsel did not point to any evidence that supported this bald proposition.  Indeed, Mr K identified the existing market for the shares; the existing partners who may be prepared to pay a premium to gain a controlling share and the market comprised of those with industry experience.

19. We reject the proposition and find no substance in this ground.

Ground 2: sale of the Trust’s interest in LBP

1. The husband sought an order for the sale of the Trust’s interest in LBP.  Her Honour declined to make this order and said:

   119. I will not accede to the husband’s proposal that the parties effect a sale of the interest of the [Q Trust] in the [LBP] partnership. Effectively, the terms of the partnership agreement impose a restrictive covenant on the husband’s trading as a [property salesman] in the [local area]. Such a sale would be nothing less than a sacrifice of an historically lucrative career. As noted, I am satisfied that the husband’s position and experience in [the industry] in the [local area] will enable him to re-establish himself financially within a short time-frame.

2. We can immediately reject the first contention in the summary of argument for the husband, that her Honour gave no reasons for declining to order the sale.  The above paragraph makes her reasoning clear.  The written argument further said:

   Whilst the Court is not bound to adopt the proposal of either party, at no time during the course of the hearing did the Trial Judge foreshadow to the parties the prospect of an Order that the Husband would be compelled to retain the interest.

   (Husband’s summary of argument at [2.2])

3. It seems that the husband’s position in regard to the Trust’s interest in LBP was somewhat fluid.  It was uncontentious that the minute of order first filed by the husband did not seek orders for the sale of the interest nor was it referred to in his trial affidavit. 

4. When cross examined, the husband confirmed that he wished to retain the interest in LBP despite the value attributed to it (transcript 15 January 2014, page 129 lines 20-25).  The next day, 16 January 2014, the husband filed a minute of orders seeking the sale of the interest if her Honour accepted the value of Mr K. No mechanisms or draft orders were proposed by the husband as to how that sale might be effected.

5. In submissions to her Honour, counsel then appearing for the husband addressed the issue of the sale of the interest in LBP and submitted that if her Honour acceded to the wife’s proposals, the husband would have little in the way of assets, would assume considerable debt and would have to sell the interest in LBP.  Counsel continued and submitted that such a sale would result in the husband losing his present income and his future earning capacity because of the restrictive trade covenant contained in the contract.  Counsel however conceded that if the husband retained the interest, he would have an earning capacity significantly greater than that of the wife (transcript 11 February 2014, page 28 lines 45-47). 

6. Turning then to the submissions of counsel for the husband in the appeal, it was contended that her Honour ought to have ordered the sale of the Trust’s interest in LBP because there was a controversy about its value and because the husband did not wish to retain it. 

7. The proposition that the husband sought the sale of the Trust’s interest in LBP because he did not want it is inconsistent with the submissions made to the trial judge by the husband’s then counsel. It was clear that the husband’s position in relation to selling the interest depended on the trial judge’s orders for property settlement and the apportionment of debt.  That is, any sale was conditional on the nature of her Honour’s orders and the husband’s capacity to pay a sum of money to the wife and to assume responsibility for significant debt.

8. It was certainly not submitted to her Honour that the interest in LBP should be sold because of the controversy over its value, although it was sought to be contended on appeal.

9. It was argued on appeal that her Honour ought to have ordered a sale of the interest in LBP because it would definitively determine the value of that interest.  Counsel argued:

   So in relation to ground 2, we contend that where there’s an asset that one party doesn’t wish to retain and seeks to sell, where there’s an issue as to value raised on the material, the court, we would contend, needs to give clear reasons why a party would be left with that asset at what is clearly, on one view of the evidence as advanced by the husband, a controversial value in circumstances where he seeks its sale.

   (Appeal transcript 7 December 2015, page 30 lines 35-40)

10. Thus, counsel submitted that the determination of value of the Trust’s interest was sufficiently complex such that her Honour ought to have ordered its sale in order to find its value.

11. We reject that contention.

12. Where ascertainment of the value of property is “difficult and complex” (Little and Little (1990) FLC 92-147 at 78,020), “hazardous and uncertain” (Smith and Smith (1991) FLC 92-261 at 78,759) or “too difficult and complex” (Phillips and Phillips (2002) FLC 93-104 at 88,983), it may be open to a judge to order a sale of property in order to determine its value.

13. No such conditions prevailed before her Honour.  There were two, albeit competing, opinions as to the value of the Trust’s interest and the evidence before her Honour allowed her to conclude the issue and, in the result, prefer the valuation of Mr K in an entirely orthodox application of principle.

14. Counsel for the husband further relied on Noetel and Quealey (2005) FLC

    
    

    93-230 at 79,806 – 79,807 in support of his contention.  There, the Full Court in considering the orders of the trial judge said:

    143. The practice of drafting orders based on a percentage entitlement rather than a fixed sum to achieve fairness between parties in the event of a sale is subject of many authorities. Those authorities were subject of comprehensive review in Sinclair and Sinclair [2000] FamCA 262. We take this opportunity to repeat that summary and emphasise the importance of the well established principle:

    108.    A long line of authority in this Court (Waters and Waters (1981) FLC 91-019 at 76,208; Williams and Williams (1988) FLC 91-959 at 76,940; Docters van Leeuwen and Docters van Leeuwen (1990) FLC 92-148 at 78,024; Little and Little (1990) FLC 92-147 at 78,020; Smith and Smith (1991) FLC 92-261 at 78,759; and Bell and Bell (1993) FLC 92-347 at 79,683) establishes as a clear guideline for the exercise of discretion under s 79 of the Act, that, absent some special consideration (such as a desire by one spouse to retain a particular piece of property, in specie), and particularly where the value of an asset is contentious, or even where it is not but the market for the property is volatile, or there is likely to be a significant time lapse between judgment and sale, and where the value of the asset is to be divided between the parties, the Court should order its sale and the apportionment of the proceeds between the parties rather than order one party to pay to the other a fixed sum representing a notional proportion of its assessed value.

    (Emphasis added)

1. Counsel advanced the proposition that the Trust was an asset being divided between the parties “but with an adjustive order back” and as there was no “special consideration” (that is neither party wished to retain the interest) then given the asset’s prominence in the pool her Honour should have ordered a sale of the property (appeal transcript 7 December 2015, page 32 lines 11-12, 21-24).

2. This argument relies for its force on the words in Noetel and Quealey (supra) “to be divided between the parties” to include circumstances where an asset is to stay with one of the parties but there is to be a financial adjustment in favour of the other party to reflect its value. We reject the argument that, in any case where, in the making of orders for property settlement as between parties where the effect of an order is that one party retains a property and the other receives a financial adjustment reflective of that, the court should order the property that would otherwise be retained, to be sold.

3. This ground is not made out.

Ground 3: the husband’s life insurance policy

1. As we have noted, her Honour included in the list of the assets of the parties and each of them, the husband’s life insurance policy held with American Express.

2. In considering the submission for the husband that the policy should not be included as an asset because it had no present value, her Honour said:

   52. …There was no evidence to support that proposition.  The husband saw fit to categorise this insurance policy as an asset with a value of $100,000, less than four weeks before that submission was made to the court.  On the basis of his own admission against interest, I will include the husband’s American Express insurance policy in the list of assets with a value of $100,000.

3. In a financial affidavit sworn by the husband on 8 January 2014 and filed on

   
   

   9 January 2014, the husband included this insurance policy and asserted its current value at $100,000. The hearing commenced on 13 January 2014.

4. On 11 February 2014 a joint balance sheet was submitted to the court by the parties.  In this, the wife ascribed the value of the husband’s insurance policy as $100,000 (in accordance with the husband’s earlier assertion) and the husband entered the value of the policy as “NIL”.

5. The husband gave no evidence about his assertion of the policy’s value of nil. However, in submissions, counsel then appearing for the husband said:

   …Issue is taken so far as the life insurance of the husband, and I will – in relation to that aspect, your Honour, that is a matter that the husband must disclose in his financial statement.  There is specific provision in relation to life insurance policies in a parties’ financial statement. That is its redeemable value, and it being a life insurance policy, it values my client’s life upon the happening of a particular event, i.e. his death. Your Honour would not include that item as an asset in the balance sheet for the purposes of these proceedings or otherwise.

   (Transcript 11 February 2014, page 19, lines 17-24)

6. It is observed and indeed it was conceded before us that it was always open to the husband either in his evidence in chief or at any time to seek to reopen the case to adduce evidence as to the value of the policy if it was to be asserted that the value was something other than that to which he had sworn.  He did not.  Further, although the joint balance sheet did not include as an asset of the husband, the asserted value of the policy, it was not raised with the trial judge before submissions that the husband resiled from his assertion as to its value or that the value ascribed to the item in the balance sheet should be accepted by her Honour instead of his sworn evidence in the financial affidavit.

7. Whether or not the husband’s sworn evidence that the value of that policy was $100,000 could properly be called an “admission against interest”, it was an assertion as to a value which was not challenged.  And, as we have said, no attempt was made by the husband to put evidence of any different position to her Honour.  In those circumstances her Honour was entitled to accept his evidence of value and to take it into account in determining the property dispute between the parties.

8. This challenge is not made out.

Grounds 7 to 12: the trial judge’s contribution assessment and the s 75(2) adjustment

Ground 7: the husband’s gambling

1. There was no dispute that, for a time during the marriage, the husband gambled.  It was submitted to her Honour that the evidence demonstrated that on a “large majority” of occasions the wife was present at the casinos or racetracks where the husband was gambling and had full knowledge of the husband’s gambling and the effect that it had (transcript 11 February 2014,

   
   

   page 22, lines 34-38).  

2. Her Honour rejected the submission made on behalf of the husband that she should not take the gambling into account because the wife was aware of it and connived in it.

3. Counsel for the husband also argued before her Honour that there was no evidence as to the amount of loss sustained, and that the wife’s evidence of the parties’ lifestyle was incongruous with her assertion that the husband was wasting his income on gambling (transcript 11 February 2014, page 34, lines 30-35).

4. Her Honour found that the husband had admitted that gambling was a “significant issue” to the proceedings.  She quoted the husband at [88] as saying:

   “It is correct that I would have lost overall on gambling on […] I don’t know how much.  I was probably involved in gambling and losing for most of the marriage.  I can’t give a figure.”

5. Further her Honour observed at [89] that in earlier proceedings before Ryan J, her Honour had referred to documents produced by betting agencies with which the husband held an account and she had found that one such agency recorded bets on horse racing of between $200 and $2000 on most days. After what her Honour described as “heavy betting on horses between 13 December 2009 and 10 April 2012” the husband imposed a “self-exclusion regime” which expired on 10 October 2012.

6. The trial judge further noted at [90] that the husband said that between May 2011 and April 2012 he estimated his losses to be in the order of $28,000 and offered to produce a schedule of funds won and lost by him.  Her Honour observed that such a schedule was never produced and that no explanation for this was given.

7. Further her Honour noted at [91] that the husband’s bank statements demonstrated that the husband’s “expenditure on gambling in the seven months between June and December 2010 amounted to $119,250”.

8. Her Honour said:

   92. In my view, the fact that it is impossible to quantify the husband’s gambling losses or gains means that this issue is best taken into account in the context of section 75(2) factors. It is true that the husband conceded that his gambling “probably” resulted in an overall loss during the course of the marriage. It is also true that the husband failed to produce the proposed schedule and, perhaps, there may be an inference available that its contents would not assist his case. Nonetheless, I consider the safest course is to have regard to the husband’s gambling within the context of section 75(2) of the Act.

   (Emphasis in original)

9. Her Honour found:

   109. …The effect of the husband’s own evidence was that his gambling reduced the funds available to the parties during the marriage.  I reject the suggestion on behalf of the husband that I should ignore his gambling because the wife was complicit in these activities.  I do not accept that she was aware or approved of the extent of the husband’s expenditure on gambling.  At most, it appeared that she attended casinos with the husband on a cruise and during other holidays. 

10. It is in this context that this ground of appeal should be considered.  The thrust of the ground is that her Honour erred in having regard to the husband’s gambling losses where there was no evidence of the quantum of those losses, contending that there was, but for the husband’s concession about losses of $28,000, only evidence of betting, not losing.

11. We reject the contention. First, her Honour had before her the husband’s concession to which she referred at [92] that the gambling probably resulted in an overall loss and secondly, her Honour also had before her Ryan J’s finding that the husband excluded himself from betting between April and October 2012 from which her Honour’s conclusion can be readily drawn. 

12. It was also argued that the wife did not bring evidence to rebut that of the husband.

13. None of the assertions made by the husband in relation to his gambling and on which this point turns was put to the wife during her cross examination.  It is little wonder then that she called no evidence to rebut what were, in truth, merely unsupported assertions by the husband.

14. Within this ground it was argued that her Honour failed to attach sufficient weight to the husband’s evidence on this issue, namely the wife’s knowledge of the husband’s gambling; that the husband did not gamble throughout the whole of the marriage; that the wife occasionally accompanied the husband to casinos and that for a time the parties owned racehorses.  Thus, this challenge devolves to an argument as to the weight or importance that her Honour gave to the husband’s evidence.  That task is one quintessentially for the trial judge and the bar to appellate intervention is set high indeed (see House v The King (1936) 55 CLR 499; Gronow v Gronow (1979) 144 CLR 513; CDJ v VAJ (1998) 197 CLR 172). We are not persuaded that her Honour’s consideration of this evidence demonstrates error.

15. This ground is not made out.

Grounds 8 and 12: the debt to the wife’s parents

1. As consideration of Ground 8 depends in part on a determination of the challenge in Ground 12, we will deal with Ground 12 first.

2. It was accepted that the wife’s parents advanced the parties a total of $358,718 which the parties used for their own purposes.  That amount represented two payments, of $221,572 and $137,146.  The sum of $137,146 was a joint debt of the parties and the sum of $221,572 was incurred by the wife after separation.

3. Her Honour found at [108] that the wife’s parents require the money be repaid and accepted the evidence of the wife’s father that he and his wife need the money to live on.  Her Honour found that the wife was obliged to repay those sums.

4. In formulating a balance sheet in relation to the parties’ liabilities, her Honour included that sum as a debt, apportioning $221,572 as being a debt owed by the wife solely to her parents and $137,146 being a joint debt to the wife’s parents. That the parties were jointly responsible for the debt of $137,146 was agreed and appears first in the joint balance sheet submitted by them to her Honour, which her Honour reproduced at [49].

5. After determining the issues in dispute about the assets and liabilities, her Honour at [77] set out the balance sheet as reflecting those determinations.  Again, the debt to the wife’s parents is apportioned in accordance with the parties’ agreed position.

6. Further, after determining the interest of the Commissioner and how that determined debt would be repaid, her Honour reformulated the balance sheet and again reflected the parties’ agreed position as to the loan to the wife’s parents at [122].

7. The ground as formulated both in the Amended Notice of Appeal and in the written summary of argument contends that her Honour erred in making the finding that the wife’s parents required the debt to be repaid.  That finding was made in acceptance of the evidence of Mr SG, the wife’s father, and was one entirely open to her.  No error has been shown.

Ground 8: error in the exercise of discretion in making an adjustment of 15 per cent for s 75(2) factors

1. Under the rubric of this ground the husband challenges a number of her Honour’s findings, all of which are separately challenged in other grounds of appeal, but in respect of which it was argued that her Honour erred in the exercise of her discretion in making a 15 per cent adjustment in the wife’s favour when, instead, she ought to have come to a finding that those relevant s 75(2) factors required an adjustment of not more than 10 per cent in the wife’s favour. When discussing s 75(2) factors the trial judge considered:

   ·The husband’s earning capacity as compared with the wife’s, taking into account the medical evidence brought by the wife and the wife’s intention to re-enter the workforce when she was able;

   ·The wife’s continuing responsibility to care for the children for the next several years particularly on weekends when the husband’s Saturdays were devoted to work commitments;

   ·The husband’s responsibility to contribute to the financial support of his infant son to another relationship;

   ·The effect of the extent of the husband’s expenditure on gambling during the marriage;

   ·The failure by the husband to account for the proceeds of the disposition of shares; and

   ·The lack of evidence as to the sale costs of the Suburb V, Suburb B and Suburb R properties.

2. In addition the trial judge considered the following further factor:

   108. I consider that the wife has a responsibility to repay to her parents the money which they have advanced to her since the separation.  [The wife’s father] gave convincing evidence that he and his wife have a need for these funds, which amount to a total of $358,718.  He said, inter alia:  “I want to get all my money back.  We need it to live on.  I will require to get this money back.  I need to live on this money.”

   (Emphasis in original)

3. At paragraph [112] her Honour weighed all of these s 75(2) factors and found that an adjustment in favour of the wife equivalent to 15 per cent of the net pool of assets and superannuation was warranted. The net assets were $2,584,122 and the 15 per cent adjustment amounted to $387,618 and created a difference in what the parties each received of $775,236.

4. Although the husband’s outline of submissions is not explicit, paragraph 8.2.2 complains that the trial judge placed “excessive weight on the Wife’s evidence that he [sic] had the responsibility to repay the debt to her parents”.  During oral argument counsel for the husband clarified the position and contended that her Honour had taken the parties’ debt to the wife’s parents into account twice.

5. In the course of her Honour’s reasons she redrafted the balance sheet from time to time.  At all times the debts to the wife’s parents were recorded as a liability.  When the trial judge distributed the assets and liabilities on the balance sheet to each of the parties, without making any formal order about the debt to the wife’s parents, the trial judge left 50 per cent of the joint debt ($68,573) with each of the spouses and the debt of $221,572 with the wife.

6. However the placement of [108] amongst the matters being considered under s 75(2) gave rise to the submission of ‘double counting’, that is to say that having determined that the debt to the wife’s parents would be taken into account as a liability of the parties, a portion of which they would each have to bear, the trial judge took it into account a second time when she said at [108] “I consider the wife has a responsibility to repay to her parents the money which they have advanced her since separation.” In concluding her consideration of the s 75(2) factors the trial judge said:

   112. All of these considerations indicate clearly to me that an adjustment in favour of the wife is warranted pursuant to section 75(2) of the Family Law Act. I find that the wife should receive an additional sum equivalent to 15% of the net pool of assets and superannuation.

7. Clearly included in the “considerations” was her Honour’s finding about the requirement to repay the debt to the wife’s parents.

8. Trial judges are not required to articulate or identify a percentage for each individual factor which ultimately leads to a holistic, but discretionary attribution of weight (see Tomasetti and Tomasetti (2000) FLC 93-023). However it is clear that the trial judge did take the post separation liability to the wife’s parents into account in the wife’s favour as a s 75(2) factor but also left the wife with that liability when arriving at a net figure for the distribution between the parties. We are satisfied that making an allowance twice for the debt to the wife’s parents in the wife’s favour is a material error. Counsel for the husband sought to bring the error to account in asserting in effect, that her Honour had, in assessing the section 75(2) factors, given weight to a matter which had already been taken into account. We conclude that the percentage reached by the trial judge impermissibly included the debt to the wife's parents and thus the exercise of her Honour’s discretion miscarried and thus leads to this ground being made out (see De Winter & De Winter (1979) FLC 90-605 at 78,092).

9. All of the remaining matters to which the written argument refers contend that her Honour erred in her apportionment of weight to various parts of the evidence and further that by reason of those errors her discretion miscarried.

10. An appeal court will be slow to overturn a decision on grounds which involve the assessment of the weight to be given to the evidence. 

11. In order to demonstrate relevant error in the exercise of judicial discretion, it is necessary for the appellant to show that:

    It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is in fact, plainly wrong, that an appellate body is entitled to interfere.

    (per Asquith LJ in Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345)

12. But for the finding of error in relation to the trial judge’s consideration of the debt to the wife’s parents, the challenge to the exercise of her Honour’s discretion to make an adjustment of 15 per cent to the wife pursuant to s 75(2) would not have succeeded.

Ground 9: the wife’s use of $138,000 of the parties’ joint funds

1. This ground asserted that the trial judge erred in taking into account, when assessing post separation contributions, monies received by the wife post separation and that her Honour had failed to provide adequate reasons for the conclusion that no adjustment should be made in the husband’s favour in respect of post separation contributions.

2. There was no dispute before her Honour that at the date of separation the parties had two sums, $63,000 and $75,000, totalling $138,000 in a joint account.  The sums represented rental income received from two properties owned by the parties and, during the marriage, the rental income had been applied to the reduction of the mortgages on those properties.

3. It was further uncontested that after separation, the wife removed those funds from the joint account without the consent of the husband.

4. The wife said that she used that money for “mortgage repayments and [the] children’s and my living expenses.” (Transcript 14 January 2014, page 94 lines 45-46).  The wife further conceded that during this time she was also receiving $13,000 per month from the husband.

5. The wife then said in relation to the suggestion that that payment to her of $13,000 per month by the husband was to ensure that all of her expenses were met:

   …but he didn’t pay most of the amounts on time, so the money that I had, the 75, was basically covering mortgages as he was paying irregularly, plus at the time I had tax instalments that were being met to the ATO, and that also formed part of the money I had to pay.

   (Transcript 14 January 2014, page 95 lines 26-29)

6. The wife said that while there was no accounting for the expenditure of those sums in her affidavit, a reconciliation of the expenditure had been sent to the husband’s solicitors by her solicitor.  There was no suggestion to her that this was not the case.  Further it was not suggested to her that she did not spend those funds as she had said, in payment of joint debts and in the living expenses for the children and herself.

1. As to this, her Honour found:

   94. In her oral evidence the wife gave an imprecise account of her use of these funds, which amounted to a total of $138,000. She said that she applied this money to pay “mortgages, tax”.  She agreed that the husband was providing $13,000 per month at this time but claimed that “the mortgages were all in arrears”. 

   (Emphasis in original)

2. In submissions to the trial judge, counsel for the husband said:

   And I think, if my memory serves me correct, there was not less than $75,000 withdrawn by the wife, at about that time, without the knowledge and consent of the husband. This was done at a time where agreement had been reached between the parties that the husband would provide the wife a little over $13,300, which was used to meet the various mortgages and outgoings on the properties, provision for child support and provision for a variety of other expenses, in accordance with a table provided to him by the wife as to what she needed to meet her expenses. In addition to that, that table provided provision for school fees, and your Honour is aware that the wife also charges approximately $17,000 onto the Amex card, for the provision of school fees, at around the same time.

   (Transcript 11 February 2014, page 24, lines 35-44)

3. No submission was made to her Honour as to how the $75,000 should be dealt with in her consideration of the contribution issues. Rather, counsel for the husband drew her Honour’s attention to the withdrawal and the context in which it occurred, but did not contend that the wife’s account of her expenditure of the money was not accurate. The second withdrawal of $65,000 was not mentioned by counsel for the husband in submissions to the trial judge.

4. Her Honour noted the submission of the husband’s then counsel that the parties’ contributions up to the date of separation had been equal but rejected the further submission that the husband should have an adjustment in terms of contributions for his post separation contributions.

5. Immediately following discussion of the $138,000 at [94] her Honour referred to the husband’s post separation sale of shares and noted that the husband had not properly accounted for the proceeds of sale of those shares. Her Honour however dealt with that consideration as a s 75(2) factor at [110].

6. In regards to contributions, her Honour concluded:

   100. I am not persuaded that payments made by the husband for the benefit of the wife and the children after separation warrant a contribution finding in his favour.  During this period, the wife carried out most of the parenting of the children.  The husband cared for them, at best, on an average of one day per week.  Logically, he could have had little input into the day-to-day duties and responsibilities incidental to their parenting on Sundays only.  I am satisfied, and I find, that the contributions of the parties were equal as at the date of trial.

7. Her Honour was entitled to weigh the wife’s post separation contributions in the role of parent against any imprecision in the wife’s accounting for funds that she had available to her post separation and to reach a conclusion that no adjustment should be made in the husband’s favour because of those considerations.

8. We do not accept that her Honour erred in her consideration of the wife’s use of the funds.  We further do not accept that her Honour failed to give sufficient reasons to support her findings.

Ground 10: the wife’s income earning capacity

1. It was contended that her Honour erred in failing to take into consideration the wife’s earning capacity between the date of separation and the date of the trial.

2. Her Honour observed that the wife’s case was that she had limited capacity to earn income because of anxiety and distress.  The wife’s treating doctor said, and her Honour clearly accepted, that the major source of the wife’s distress was related to the marital problems.

3. Her Honour found at [103] that the wife will come to terms with the marital breakdown and, as a person who had in the past been engaged in employment was “likely to take on gainful employment in the relatively near future”.

4. In making that finding, her Honour referred to the wife’s evidence of having an interview for a position in the near future and her Honour found that the wife was actively contemplating a return to the paid workforce at [105].

5. Her Honour’s findings at [85] are relevant to this issue.  She said:

   85. It was common ground that the husband was the principal income earner and the wife the primary homemaker and parent during the marriage.  The wife’s uncontradicted evidence was that she continued her employment with Westpac Bank until October 1998, when she took on an administrative role in the husband’s [property business].  After the sale of [ERE Pty Ltd] in 2000, both parties worked in the [retail business], the husband until 2004 and the wife until its collapse in 2006. 

6. Clearly then, the parties’ roles during the marriage reflected her Honour’s findings, namely that the wife was primary homemaker and parent.

7. Her Honour took into account however that the wife would have the primary care of the children for the next several years and that while the husband might spend more time with the children in the future than he has in the past, it was likely that he will continue to devote his Saturdays to work commitments.

8. In her evidence the wife agreed that between May 2011 and June 2012 she worked in an unpaid role as a finance manager to help a friend, and also agreed that she has the expertise and qualifications to undertake such a role (transcript 14 January, page 63 lines 8-9).  

9. Before her Honour, counsel for the husband tendered the wife’s Linkedin profile in which she outlined her employment history and work qualifications which had not been included in the wife’s affidavits. The wife also gave evidence that she worked in a role as a commission only salesperson from May 2013 until November 2013 (wife’s trial affidavit 9 January 2014 at [3] - [4] and Annexure A).

10. Also before the court was a log book showing the wife’s attempts to gain employment. The wife indicated that she was able to support the log with emails sent in association with her job seeking if required (wife’s trial affidavit 5 October 2012, at [12]).  

11. In submissions to the trial judge counsel then appearing for the husband argued that her Honour could not be satisfied that in the three and a half years since separation the wife had made every effort available to her to gain employment (transcript 11 February 2014, page 31 lines 17-21), particularly in light the fact that she engaged in unpaid and commission only work during that time.

12. Again, this ground challenges the weight attributed by the trial judge to the evidence before her.  Her Honour’s findings at [103] as to the wife’s capacity for future employment since separation were well open to her on the evidence and nothing in the submissions persuades us that she was “plainly wrong” (see House v The King (supra); Gronow v Gronow (supra); CDJ v VAJ (supra)).

13. This ground is not made out.

Ground 11: the husband’s capacity to establish himself financially following the implementation of her Honour’s orders

1. In essence this ground argues that her Honour erred in finding that the effect of the orders for division of property between the parties would, when given effect, allow the husband to re-establish himself financially within a short time.  It was argued that the trial judge failed to consider that, in order to satisfy the payment to the wife of $342,000, the husband would need to dispose of his assets, for example by selling the interest in LBP. It was further argued that there was no evidence to support her Honour’s finding that the husband was able to satisfy the order for a cash payment to the wife.

2. Her Honour’s comment about the financial re-establishment of the husband is a reference to his earning capacity.  At [101] in comparing the parties’ future earning capacities, her Honour said:

   It is abundantly clear that the husband’s capacity to generate income is vastly superior to that of the wife.  His evidence was that he earned $600,735 in 2010 and $636,956 in 2011.  In his oral evidence, he estimated that his 2013 taxable income amounted to approximately $400,000 and agreed with a suggestion that he “has earned hundreds of thousands for many years”.  In my view, the husband is highly likely to re-establish himself financially within a short time-frame, following a distribution between the parties of their assets and superannuation.

   (Emphasis in original)

3. Neither her Honour’s finding, nor the evidence on which it was based, was challenged in the appeal.

4. After considering the parties’ contributions and the s 75(2) factors, her Honour considered the interests of the Commissioner and determined how the various taxation debts would be borne and how those debts would be repaid at [118]. She determined at [120] that, consistent with the husband’s submissions, she would make orders that he retain the Suburb R property in which there was then an equity of approximately $191,000.

5. Her Honour then set out the effect of her determination on the property of the parties and each of them at [123]-[127].  As to the husband, her Honour found:

   124. The husband will thus retain or receive the following assets:

1.	[O Street, Suburb R]	$1,150,000
2.	Porsche Motor Vehicle	$57,000
3.	Volvo Motor Vehicle	$10,150
4.	Bank Accounts	$58,650
5.	28.5% Interest in [LBP Partnership]	$1,258,000
6.	Share Portfolio	$71,147
7.	Loan to [Mr W]	$8,950
8.	Furniture and Contents	$5,000
9.	Paid Legal Fees	$23,059
10.	Life Insurance Police [sic]	$100,000
Total:	$2,741,956

125.The husband will assume or retain the following liabilities:

1.	Mortgage on [Suburb R property]	$958,748
2.	Lease on Porsche Motor Vehicle	$87,941
3.	Taxation Debt	$185,094
4.	Taxation Debt of [D Pty Ltd]	$63,391
5.	Taxation Debt of [U Pty Ltd]	$85,535
6.	50% of Debt to Wife’s Parents	$68,573
7.	50% of Debt to [M College]	$24,500
8.	HSBC Loan	$4,000
9.	American Express Credit Card	$16,009
10.	Westpac MasterCard	$1,983
Total:	$1,495,774

The husband will thus hold net assets to the value of $1,246,182.  That amount exceeds his entitlement of 35% by $341,739.

1. Her Honour then concluded:

   128. On this basis the wife requires an additional $341,740 from the husband to constitute her entitlement of 65% of the net pool.  As noted above, I will accede to the husband’s application that he retain the [Suburb R property] but he will be required to pay a sum of $342,000 to the wife.  The approximate net equity in the [Suburb R property] is approximately $191,000, which means that he [sic] husband must find some $152,000 in addition to that sum if there is a sale in default of payment by him to the wife.  The husband conducted his case on the basis that he holds realisable assets to an approximate value of $149,000 (Volvo vehicle; bank accounts; share portfolio; loan to [Mr W]) independently of the [Suburb R property] and the interest of the Trust in [LBP].  I will allow the husband a period of six weeks to pay that sum to the wife.  If he fails to do so, he will sell the [Suburb R property] and make that payment from the net proceeds.

2. It is relevant too to this ground of appeal that her Honour declined to make an order at the behest of the husband that the Trust’s interest in LBP be sold.  She found:

   119. …Such a sale would be nothing less than a sacrifice of an historically lucrative career…

3. The thrust of this ground was that the orders which required the husband to make a cash payment to the wife of $342,000 left him with no option but to sell the interest in LBP to realise sufficient cash to pay the wife.  In essence, the argument was that her Honour’s orders left the husband with

   
   

   $1.8 million in debt and his capacity to earn income through the partnership.

4. This submission relies for its acceptance on the debts for which the husband is to be responsible being repaid, or being repayable, immediately.

5. That clearly cannot be accepted and it was conceded in argument on appeal that the mortgage on the Suburb R property of $958,748 was not immediately repayable nor was the lease of the husband’s Porsche car which was being met through his income. 

6. Her Honour’s impugned finding about the husband’s capacity to re-establish himself within a short period of time needs then to be considered in light of the evidence before her.  She was clearly aware of the effect of her orders because she set out the assets and liabilities to be retained by the husband and the debt falling on the husband is clearly identified.

7. Further, there was no challenge to her Honour’s findings at [101] that:

   ·    the husband’s capacity to generate income is vastly superior to that of the wife;

   ·    the husband earned $600,735 in 2010 and $636,956 in 2011;

   ·    the husband estimated his 2013 taxable income to be approximately $400,000; and

   ·    the husband agreed that he had “earned hundreds of thousand for many years”.

8. Not only do these findings support her Honour’s conclusion about the husband’s capacity to re-establish himself in light of her orders and the debt taken on by him but they provide clear reasons for that finding.

9. This challenge is not made out.

Grounds 13 to 17: her Honour’s treatment of the parties’ and related entities’ tax liabilities

1. Her Honour noted at [1] that the Commissioner had intervened in the proceedings between the parties seeking orders that the court take into account taxation liabilities said to be owed by the parties and their related companies.  The outstanding amounts were said to be referrable to unpaid tax, late payment penalties and general interest charges. Produced in tabular form at [2] the tax said to be owed by the husband, the wife, U Pty Ltd and D Pty Ltd was as follows:

   Applicant Wife

Tax	30.06.2010	30.06.2011	30.06.2012	Total
Income tax (IT)	$39,572	$45,062.90	$34,374.60	$119,009.50
Late Penalty (LP)	$1,110.00
General Interest Charge (GIC)	$21,381.11
Payments/Credits	$9,500.00
Total for IT, LP, GIC	$132,000.61
Running balance account deficit debt	$26,332.10
Total Tax	$158,332.71

Respondent Husband

Tax	30.06.2010	30.06.2011	30.06.2012	Total
Income tax (IT)	$194,689.75	$239,287.05	$17,924.25	$451,901.05
Late Penalty (LP)	$1,220.00
General Interest Charge (GIC)	$89,098.54
Payments/Credits	$131,511.81
Total for IT, LP, GIC	$410,707.78
Running balance account deficit debt	$208,363.47
Total Tax	$619,071.25

Second Respondent [D Pty Ltd]

Tax	30.06.2009	30.06.2010	30.06.2011	30.06.2012	Total
Income tax (IT)	$80,851	$7,412.70	$7,347.00	$6,847.80	$102,458.50
Late Penalty (LP)	$1,220.00
General Interest Charge (GIC)	$20,932.62
Payments/Credits	$65,200.00
Total for IT, LP, GIC	$159,411.12 [error in original]
Running balance account deficit debt	$3,979.99
Total Tax	$63,391.11

Third Respondent [U Pty Ltd]

Tax	30.06.2008	2009/2010	30.06.2011	30.06.2012	Total
Income tax (IT)	$57,114.30	MA [sic]	$8,463.30	$10,957.80	$76,535.40
Late Penalty (LP)	$1,220.00
General Interest Charge (GIC)	$32,568.67
Payments/Credits	$24,788.65
Total for IT, LP, GIC	$85,535.42
Running balance account deficit debt	NA
Total Tax	$85,535.42

1. Her Honour observed that:

   2. …I understood that neither the husband nor the wife took issue with the accuracy of these amounts nor contended that there is any reason why these debts should not be paid to the Taxation Commissioner.

2. The trial judge found that the payment of the parties’ and related companies’ taxation liabilities to the Commissioner should be secured as part of her orders at [116]. Further, her Honour determined that she would give separate consideration to pre and post separation taxation debts at [115].

3. Thus, the trial judge concluded:

   116. …In the particular circumstances of this case, I consider that the 2010 and 2011 personal tax debts to the Commissioner should be paid from the proceeds of sale of the [Suburb V] property. The parties enjoyed together the fruits of the husband’s employment during those two financial years […] I consider that the husband should bear liability for the 2012 tax debts of the two corporate entities, which is consistent with the position adopted on his behalf in the joint balance sheet dated 11 February 2014.

   117. I will make orders in relation only to the 2008, 2009, 2010 and 2011 taxation debts. The Commissioner is at liberty to take such actions as he chooses in relation to the 2012 liabilities…

4. Her Honour then indicated that she would order that, in total, $518,612 be paid to the Commissioner before the net assets and superannuation of the parties were distributed to the parties.  Her Honour set out the calculation by which she arrived at that figure, being the wife’s 2010 and 2011 primary tax debts of $39,572 and $45,063 and the husband’s primary tax debts for the same years of $194,690 and $239,287.

5. The grounds of appeal contend:

   ·The trial judge erred in excluding $407,718.49 of tax debts from the sums to be paid to the Commissioner from the proceeds of the sale of the Suburb V property (Ground 13);

   ·The trial judge erred in not finding that the wife directly or indirectly benefitted from the husband’s post separation income and thus should share in the 2012 taxation liability (Ground 14);

   ·That the trial judge erred in failing to order the payment of the 2008 to 2011 taxation liabilities of U Pty Ltd and D Pty Ltd (Ground 15);

   ·That the trial judge erred in concluding based on reliance on the parties’ joint balance sheet that the husband admitted liability for the 2012 taxation debts of the companies (Ground 16); and

   ·The trial judge failed to take into account when apportioning the 2010 and 2011 taxation liabilities between the parties, the amounts referrable to general interest and penalties (Ground 17).

Ground 14: the husband’s 2012 personal taxation debts

1. Ground 14 contends that her Honour ought to have found that the wife continued to enjoy the benefits of the husband’s post separation income and thus should have been required to share jointly in the 2012 tax debts.

2. Her Honour said:

   115. In my view, justice between the parties dictates that separate consideration is given to the pre- and post-separation taxation debts. In her oral evidence the wife conceded that she “liaised with our accountants and lawyers” and that she “had [her] finger on the pulse in relation to our money” prior to the separation. By contrast, the husband thereafter caused the incorporation of the company [SY Pty Limited] and channelled his income into that entity without any input at all from the wife.

   (Emphasis in original)

3. Before moving to the thrust of this ground, her Honour’s reasons clearly indicate why she chose to treat the pre and post separation tax debts differently.

4. In support of this ground it was argued that her Honour failed to take into account the husband’s evidence that his post separation income had been applied to benefit the wife, children and in maintaining the parties’ properties (husband’s written summary of argument at [14.2]).

5. Further it was argued that her Honour failed to give proper weight to the wife’s agreement that after separation the husband paid her periodic sums of $13,303 per month, reduced later to $10,000 per month, and that the husband’s income received from LBP was applied to the purchase of the Suburb R property, the value of which was included in the balance sheet of the parties’ assets.

1. For the wife it was submitted that before the husband incorporated SY Pty Ltd his income was paid into the Trust from which both the husband and wife jointly benefitted.

2. Clearly her Honour’s distinction between the wife’s capacity to control or exercise control over the parties’ finances before separation and the husband’s election to refocus the channel for his income to a separate corporation justified both her treatment of the tax debts and her conclusion that post separation tax debts should rest with the husband.

3. That the husband attended to his obligations to provide financial support to his children and the wife does not, in our view, support this ground.

4. There is no substance in this challenge and it is not made out.

Ground 16: the balance sheet

1. This ground contends that her Honour incorrectly regarded the husband’s assignment of his tax debts to him as an admission that he was responsible for that debt.

2. The parties prepared and submitted for her Honour’s consideration, a joint balance sheet on which the tax debts were allocated either as a debt to the wife or to the husband.

3. At [116] her Honour said, in considering the tax debts, “I consider that the husband should bear liability for the 2012 tax debts of the two corporate entities, which is consistent with the position adopted on his behalf in the joint balance sheet dated 11 February 2014.”

4. In submissions counsel for the husband argued that ascribing the debt to the husband in the balance sheet did no more than reflect that, at the time, the liability sat with him.  He contended that it was not an admission by the husband that he should bear that liability.

5. While that is perhaps correct, her Honour’s finding was not solely based on the attribution to the husband of that tax debt in the balance sheet. Her Honour’s finding at [116] has to be seen in the context of her wider reasons, and in particular her immediately preceding discussion of the s 75(2) factors including her finding that the husband’s capacity to earn income is “vastly superior” to that of the wife at [101]. Her Honour’s finding was to leave the tax burden where it then lay. We reject the suggestion that her Honour’s finding merely reflected the contention in the balance sheet.

6. This ground is not made out.

Grounds 13 and 17: general interest charges and penalties

1. It was argued for the husband that her Honour, while determining that the parties should equally share in the taxation debts for 2010 and 2011, only took into account the primary tax and failed to take into account the amounts owed by the parties in relation to general interest charges and late penalties.

2. Thus it was contended that, for example, the wife’s total tax lability (together with interest and penalties) as shown in the table at [2] is $158,332.71.  Her Honour’s orders required that $39,572 and $45,063 be paid from the proceeds of sale of the Suburb V property and, leaving the $34,375 debt referrable to the 2012 year about which her Honour said at [116] she would make no orders, there remained an amount of $39,323 which it was argued must be referrable to the general interest and penalties accruing from earlier years but about which her Honour made no orders.

3. Equally, it was asserted that in failing to take similar account of the general interest and penalties in relation to the husband, the husband is left with tax of $185,094 to pay but of which only $17,924 relates to the 2012 financial year. 

4. Further, it was argued that her Honour gave no reasons for not requiring payment by the parties of the general interest and penalties referrable to the 2010 and 2011 financial year tax debts.

5. Ground 13 asserts that the trial judge erred in excluding the sum of $407,718.49 from the sum paid to the second respondent on the sale of the Suburb V property and failed to give adequate or sufficient reasons for doing so. As the grounds overlap we will encompass Ground 13 in this discussion.

6. On the appeal, counsel for the wife conceded that the general interest and penalties must be relevant to the tax liabilities for the years 2010 and 2011 and that while some could be relevant to the year 2012, there was no apportionment between the years of those penalties and interest.  Counsel for the wife further conceded that had her Honour intended to exclude those amounts from the amount ordered to be paid from the sale proceeds of the Suburb V property, she should have articulated a reason for that, which she did not.  Counsel’s concession, in our view properly made, was that the penalties and interest imposts must relate to pre separation liabilities that the parties did not pay and that her Honour erred in not including them.

7. We agree that her Honour erred in not including these other taxation liabilities in the sums deducted from the proceeds of the sale of the Suburb V property but as we will explain, it is an error without adverse effect upon the husband and accordingly these grounds must fail.

Ground 15: company taxes

1. For the husband it was argued that her Honour, as part of her discussion of the payment of the various tax debts, at [116] and [117] found that it was appropriate that the husband and wife share in the liabilities for the tax debts for the years 2010 and 2011 but each would be responsible for his or her own debt for 2012.  Further, her Honour concluded that the husband would be responsible for the 2012 tax debts of U Pty Ltd and D Pty Ltd.  Thus she concluded at [117] that she would make orders in relation to the 2008, 2009, 2010 and 2011 tax debts.

2. It was thus argued that, consistent with those findings, her Honour’s order that the husband alone should bear all the liabilities for the two companies was an error.  Support for this contention was gleaned from her Honour’s specification of the years 2008 and 2009, years for which only the companies had tax debts.

3. Counsel for the husband pointed to Order 8 made by her Honour in which she directed the husband to meet all the tax debts of the two corporate entities, contending that her Honour’s orders do not give effect to her intention as reflected in [116] and [117] of her reasons. 

4. Counsel for the wife conceded that her Honour’s order does not reflect her stated intention and that she failed to apportion the company tax debts between the parties as she had concluded. 

5. Thus, counsel for the wife agreed that her Honour ought to have extracted the amount referable to the 2012 tax for each company to be the husband’s responsibility, but the balance should have been paid equally by the husband and the wife.  He accepted that, consistent with her Honour’s stated intention, the parties should be fixed with the sum of $56,543 in respect of D Pty Ltd and $74,577 in relation to U Pty Ltd being the tax debts for 2008, 2009, 2010 and 2011 for those companies, as well as the associated general interest charges and late penalties.  The corollary of that submission, and again correctly conceded by counsel for the wife, is that the husband was incorrectly fixed with a liability of $131,120 for the taxes for the two companies (appeal transcript 7 December 2015, page 112 lines 43-47).  Finally, counsel for the wife agreed that the relevant company debts should have been paid out of the proceeds of sale of the Suburb V property. Again we accept that Her Honour erred but as we will explain, without adverse effect upon the husband.

6. The errors asserted in grounds 13, 15 and 17 demonstrate a failure to give effect to the findings at [116] and [117]. But notwithstanding these apparent errors, consideration needs to be given to the overall outcome as ordered by her Honour.

7. Overall, while her Honour “recast” the [77] balance sheet at [122], the net assets of the parties remained identical.  Thus, when her Honour at [113] says that the wife should receive 65 per cent of what is at [77], that also means the wife should receive 65 per cent of the [122] balance sheet.

8. The balance sheet at [122] attributes a responsibility for the remaining taxation liability of $407,718 as to $334,020 to the husband and as to $73,698 to the wife and that is how those debts are distributed at [125] and [127].

9. It is axiomatic that once the net assets and the percentage that each party will receive of those net assets has been determined, mathematically it is of no moment what assets and liabilities appear against each of the husband and the wife in the distribution table, as long as they receive the percentage of the net assets in accordance with the trial judge’s determination as to percentage.

10. Had the primary judge given effect to the findings at [116] and [117], the amount to be paid from sale of the Suburb V property to the Commissioner would have been greater because it would have incorporated the tax payable by the companies and would have included the penalties and interest for the pre 2012 periods.  In that event, the wife would have received less from the sale proceeds of the Suburb V property and therefore the husband would have had to pay her an adjusting figure greater than the $342,000 as provided in Order 4 of her Honour’s orders.

11. But, commensurate with a greater payment to the Commissioner from the sale proceeds of the Suburb V property, the husband’s liability to pay tax would have reduced by the same amount.  The effect would simply be that the husband would pay less to the Commissioner but more to the wife, however the underlying percentages in [122] are not affected.  Accordingly, although we find that the primary judge failed to give effect to her findings in [116] and [117], it is an error without any adverse effect on the husband when the overall effect of the judgment is considered.  Hence grounds 13, 15 and 17 must fail.

Grounds 19, 20, 21, 25 and 26: the structure of the orders and her Honour’s reasons for determination

1. These grounds challenge the exercise of her Honour’s discretion in making the orders and in failing to give reasons for her determination (Grounds 19,

   
   

   20 and 21) and challenge the structure of her Honour’s orders intended to give effect to her findings as to the parties’ respective entitlements (Grounds 25 and 26).

Grounds 19, 20 and 21: justice and equity of the orders and failure to give reasons

1. These grounds argue that in making the orders, her Honour failed to take into account, or properly into account, the husband’s capacity to fund the required payment in addition to his debts to the Commissioner, and that the division of assets was unjust and inequitable in light of her Honour’s rejection of the husband’s application that the interest in LBP be sold.   Further it was argued that her Honour gave no reasons for coming to the determination that the appropriate adjustment as between the parties is 65 per cent in favour of the wife.

2. The determination of the contributions, the adjustment for s 75(2) factors and, ultimately whether orders are just and equitable are quintessentially matters for the exercise of the trial judge’s discretion. As we have said at [108], the bar to appellate intervention in relation to discretionary determinations is set high indeed and the court will only intervene where it is demonstrated that the determination is plainly wrong. That has not been established and these grounds are not made out.

3. Similarly her Honour’s judgment demonstrates the reasoning process by which she reached her determination and the facts and matters on which she relied.  We reject the argument that her reasoning process was flawed or inadequate. This ground is not made out.

Grounds 25 and 26: the structure of the orders

1. As to the structure of her Honour’s orders, it was argued that her Honour erred in structuring the orders to provide the wife with the whole of the balance of the proceeds of sale of the Suburb V and Suburb B properties and in providing that the wife should receive the whole of the balance of the proceeds of the Suburb R property if the husband defaulted in paying to her the cash adjustment determined by her Honour, rather than sufficient of those proceeds to meet the husband’s obligation under the order.

2. The parties agreed that the Suburb V property would be sold as would the Suburb B property.  The wife sought an order also for the sale of the Suburb R property and from the proceeds of that sale there be an adjustment so as to give her 75 per cent of the value of the property pool.  The husband, while wishing to retain the Suburb R property, also sought that adjustment be made from the proceeds of sale of the properties.

3. The parties agreed on the value of the Suburb V property and the Suburb B property.

4. Her Honour ordered in summary:

   ·the Suburb V property be sold and after the discharge of the mortgage to ANZ Bank, payment of the tax liabilities as identified by her Honour and other expenses, the balance to be paid to the wife;

   ·the Suburb B property be sold and after discharge of the mortgage and special levy, the balance to be paid to the wife;

   ·the husband pay to the wife $342,000; and

   ·if the husband defaults in compliance with the order to pay that sum to the wife, then the Suburb R property be sold and the proceeds be distributed in discharge of the mortgage and that the balance be paid to the wife.

5. On the evidence before her Honour and accepted by her, the Suburb R property had a value of $1,150,000 and was encumbered by a mortgage of $958,748, leaving an equity of approximately $191,000.

Ground 25: orders for the sale of the Suburb V and Suburb B properties

1. Dealing first with the orders that require the sale of the Suburb V property and the Suburb B property, it was argued that the distribution of the proceeds of sale should have been expressed in percentage terms rather than as a lump sum, to avoid potential injustice.  The injustice referred to being that which would arise if the sale price of either of the properties was either higher than or lower than that anticipated by the parties.  It was argued that at trial, while both parties sought sales of the property (save that the husband wished to retain Suburb R) each sought that her Honour thereafter make an order adjusting the distribution of the proceeds. However, in the wife’s case, this only pertained to one of the three properties (the Suburb R property) where she sought 75 per cent of the total worth of the net assets. For both the Suburb V and Suburb B properties the wife sought that she receive the balance of the proceeds of sale.  Her Honour ordered the sales of the Suburb V and Suburb B properties but, rather than making an adjustment from the net proceeds realised from the sales to effect the percentage division at which she had arrived, her Honour ordered the husband to pay a fixed sum of money to the wife in satisfaction of the division of the assets.  In so doing, it was argued that the husband was deprived of the benefit of any sale in excess of the asserted value of the properties.

2. The husband’s contention that he was not afforded procedural fairness because the trial judge did not at the hearing canvass with him the orders made, is without foundation because the orders made by the trial judge were in accordance with the form of the orders sought by the wife with the addition that the trial judge required the husband and wife to pay the second respondent the sum of $581,612 from the proceeds of the sale of Suburb V property. 

3. The husband contends that the facts in this case attract the application of the principle articulated in and the line of authority summarised in Sinclair & Sinclair [2000] FamCA 262 at [108]-[110] and approved in Noetel and Quealey (supra) and to which we have earlier referred at [84].

4. In this case, the values of the Suburb V and Suburb B properties were agreed. There was no evidence of a volatile market, the orders for sale are required to be implemented as soon as is practicable (see rule 1.15 of the Family Law Rules 2004 (Cth) (“the Rules”)) and there was no evidence that there was likely to be a significant lapse in time between judgment and the sales of the properties.

5. Nor was this a case where one spouse is being paid a specific dollar amount from the proceeds of the sales of these two properties. The value of these assets was not to be divided between the parties. Thus, the contention of the husband that the orders for the sale of Suburb V and Suburb B should have involved an order which divided the balance proceeds of the sale of the properties by as a percentage adjustment is misconceived. In any event, in fact, the trial judge did do that. She gave 100 per cent of the balance of the sale proceeds of each of the properties to the wife as part of a s 79 order which amongst other things, distributed the whole of an unencumbered interest in the husband’s business and another piece of real estate, in specie, to the husband.

6. It was conceded by counsel for the wife that the husband could have asked the trial judge to make an order for a percentage adjustment for any amount achieved on the sales of the properties which was either higher or lower than the agreed value. The husband did not ask the trial judge to do that. Nothing in the authorities referred to in Sinclair required the trial judge to make such an order when no such protection was provided to the wife against any movement in the value of the two major assets retained by the husband.

7. Ground 25 is not made out.

Ground 26: order for the sale of the Suburb R property

1. Finally it was contended that the order which required the sale of the Suburb R property if the husband defaulted on payment to the wife was unjust because it did not provide for the wife to receive the sum ordered from the sale but instead that she receive the whole of the balance of the sale proceeds.  While it was accepted that the agreed equity of the property was less than that necessary to satisfy her Honour’s order that the wife receive cash, its structure is such that it could rise to potential injustice when the property is sold.

2. The orders, the subject of the ground  are in the following terms:

   (4) That the husband pay to the wife, within 2 (two) calendar months of   the date of these orders a sum of $342,000.

   (5) That, in the event of default by the husband in compliance with order 4 hereof, he will do all things and execute all documents required to effect the sale for the best price reasonably obtainable of the property situate [sic] at and known as [O Street, Suburb R] in the State of New South Wales and to distribute the proceeds of sale as follows:

   5.1in payment of agent’s commission and expenses

   5.2in payment of legal costs and expenses incidental to the sale

   5.3in payment of all monies required to discharge the mortgage      secured on the title to the property

   5.4in payment of the balance to the wife.

3. It is clear that the trial judge’s order provided for the wife to receive 100 per cent of the proceeds of the sale of the Suburb R property.

4. The amount of $342,000 was calculated by the trial judge as the amount the husband is to pay to the wife to achieve an overall 65/35 division of the net assets.  The trial judge’s reasons for making orders 4 and 5 are explained at [128]:

   On this basis the wife requires an additional $341,740 from the husband to constitute her entitlement of 65% of the net pool.  As noted above, I will accede to the husband’s application that he retain the [Suburb R] property but he will be required to pay a sum of $342,000 to the wife.  The approximate net equity in the [Suburb R] property is approximately $191,000, which means that he husband must find some $152,000 in addition to that sum if there is a sale in default of payment by him to the wife.  The husband conducted his case on the basis that he holds realisable assets to an approximate value of $149,000 (Volvo vehicle; bank accounts; share portfolio; loan to [Mr W]) independently of the [Suburb R] property and the interest of the Trust in [LBP].  I will allow the husband a period of six weeks to pay that sum to the wife.  If he fails to do so, he will sell the [Suburb R] property and make that payment from the net proceeds.

1. The intention of the trial judge was that, if the husband defaulted in the payment to the wife under Order 4, the wife could in part be satisfied, as to an amount of about $191,000 (out of the required $342,000), from the sale of the Suburb R property.  The trial judge intended Order 5 to assist in the implementation of Order 4.

2. However, her Honour’s orders do not reflect her stated intention and we accept that the structure of her Honour’s orders and the potential unfairness produced by them and to this extent the challenge is made out.

3. Were this the only successful challenge to her Honour’s orders, we would have, as counsel for the husband accepted, addressed this matter pursuant to r 17.02 of the Rules (“the Slip Rule”).

4. However, as the appeal will otherwise be allowed, there is no need to further consider the application of the Slip Rule.

Grounds 22, 23 and 24: spousal maintenance

1. The challenges are to her Honour’s finding that the wife was temporarily unable to support herself (Ground 22), that her Honour erred in ordering the husband to pay spousal maintenance to the wife of $800 per week until she receives the entitlements pursuant to the orders (Ground 23), and that the trial judge erred in finding that the husband had the capacity to pay the sum of $800 per week to the wife (Ground 24).

Grounds 22 and 23: the wife’s capacity to support herself adequately

1. So much of the ground that challenges her Honour’s finding about the wife’s capacity to support herself has, in the main, been dealt with in considering Ground 10 albeit under a different heading, and has been rejected. 

2. Her Honour found that the wife assumed most of the care of the parties’ children with little assistance from the husband; that she has a capacity to engage in gainful employment and was currently seeking to re-enter the workforce and concluded that she is “temporarily unable to support herself adequately” at [129].

3. Her Honour accepted that the wife had skills which would enable her to re‑enter the workforce and she had a desire to do so and, in testament to her efforts referred to, was pending interview for a position which if she was successful would pay her a salary of $70,000 to $80,000 per year.

4. The summary of argument contends that her Honour ought not to have come to that conclusion given the wife’s evidence about the pending interview.  Her Honour took that evidence into account as demonstrating the wife’s willingness to re-enter the workforce. In our view the suggestion that her Honour ought to have come to a positive finding that the wife was then able to support herself based on a pending interview must be rejected.  Her Honour’s finding was entirely open to her on the evidence.

5. Further, under this complaint, it was argued in the summary of argument that her Honour erred in relying on the wife’s evidence of her financial needs.  It was contended that the wife sought a weekly payment of $1500 as reflective of her financial needs but she gave no particulars of how that figure was derived.

6. Her Honour did not make an order for spousal maintenance in the amount sought by the wife.  Her Honour ordered that the husband pay to the wife $800 per week. 

7. In coming to that figure, her Honour observed that at the time of the hearing the wife’s only source of income was rental income from the Suburb B property which was to be sold in accordance with her Honour’s orders. Further, her Honour took into account the weekly expenses of the wife of $792 as reflected in her Financial Statement at [131].

8. In oral argument on the appeal, counsel for the husband refocussed the thrust of the argument and contended that the error in her Honour’s orders was that there would be a period, before the sale of the Suburb B property, in which the wife would be receiving both the rental income from the property and the ordered spousal maintenance.  Further, it was argued that until the property was sold, the income received by the wife from the rental was more than her claimed weekly needs. Finally it was contended that although her Honour ordered the payment of spousal maintenance to continue until the wife had received her entitlements under the orders, the order admitted of unfairness because if she received even part of her entitlement under the orders, being the proceeds from the sale of the Suburb V property which was estimated to be in the order of $1 million, she could not be said to then be in need of spousal maintenance even though she had not received all of her entitlements under the orders.

9. We do not accept her Honour erred in finding at the time of hearing that the wife was then unable to adequately support herself.  Her Honour clearly contemplated that shortly after the making of the orders, the property from which the wife derived her income would be sold and she would be without a source of income. Thus her Honour was entitled to make that threshold finding.

10. The error, and we accept that her Honour was in error, lies in the structure of the orders made because they do not contemplate nor admit of the wife’s receipt of part of her entitlement under the orders which would, it could not be denied, leave her well able to adequately support herself. 

11. We find Ground 23 is made out.

Ground 24: the husband’s capacity to pay the ordered amount

1. Ground 24 challenges her Honour’s finding that the husband had the capacity to pay to the wife the ordered amount.

2. Her Honour said:

   132. In his Financial Statement of 8 January 2014 the husband deposed to an average gross weekly income of $8,605. He swore that his average weekly expenses amount to $9,421 but provided no breakdown whatsoever of this figure. In these circumstances, I am prepared to infer that the husband has the capacity to pay spouse maintenance in the sum of $800 per week from his income.  In any event, the husband’s case was that he has approximately $58,000 in savings. If necessary, he could apply those funds to meet the proposed order for spouse maintenance.

3. It was argued that her Honour’s criticism that the husband provided no detail of his expenses was unfair and counsel for the husband drew attention to the Financial Statement which was before her Honour which, in a note to the document, sets out such a breakdown relating to his expenses between December 2012 and November 2013.

4. We do not accept the challenge to her Honour’s approach.  While the document provided some information about the husband’s income and expenses, it was not current but related to an earlier period.  Her Honour was concerned with the husband’s current capacity to pay and part of that determination required her Honour to assess his present income and expenses.  In the absence of relevant evidence of the husband’s income and expenses, her Honour was entitled to draw the inference she did.

5. However, there is force in counsel’s submission that while her Honour was correct to find that the husband did have savings, she had already taken those savings into account in calculating the husband’s capacity to pay the cash sum to the wife, and thus those savings were not available to the husband to make the payments of spousal maintenance to the wife.

6. We accept that in this regard, her Honour erred in finding that the husband had this sum available to him from which to fund the maintenance order when she had determined that the sum would be paid to the wife. 

7. This ground is made out.

Ground 27: winding up of the corporate entities and related taxes and costs

1. This ground contends that her Honour erred in failing to consider and determine the orders sought by the husband for the winding up of D Pty Ltd and U Pty Ltd and for the parties to equally pay any taxes or costs arising from the winding up.

2. The husband sought this order in his minute of orders filed on 11 February 2014.  Her Honour did not make the order and there is no discussion of it in her reasons.

3. However, her Honour did make orders in relation to the companies which reflected orders proposed by the wife. These provided that the wife resign from any offices held by her and transfer her interest in them to the husband, and that the husband indemnify the wife against all liabilities arising from her shareholding or directorship in the companies (Orders 6 and 7).

4. Counsel conceded that there were only oblique references to this order before her Honour (appeal transcript 7 December 2015, page 128 lines 35-37). Indeed the references to which counsel directed us merely mentioned the order sought and submitted that “neither of the parties seeks an order to retain either of those two entities, and it’s appropriate that such an order [winding up the companies] be made” (transcript 11 February 2014, page 33 lines 6-8).

5. On appeal counsel submitted that this issue went beyond a matter where an order sought was not considered by the trial judge, and argued this was due to the fact that there was “a financial cost to the husband identified in his financial statement of about $164,000” (appeal transcript 7 December 2015, page 78 lines 43-47).

6. In the husband’s financial affidavit filed 9 January 2014 the husband said that he had been advised by the parties’ accountant that there is a further taxation liability that “would crystallise in the amount of approximately $164,396, should the companies [U] Pty Ltd and [D Pty Ltd] be wound up” (at Part O [6(b)]).  This was the only evidence before the court of any further liability if the companies were wound up.

7. In circumstances where there was no argument before her Honour as to why such an order should be made we are of the view that it cannot be argued on appeal.  It is a matter which, had it been agitated before her Honour, it could have been the subject of evidence.  That it was not falls squarely within the ambit of Metwally v University of Wollongong (1985) 60 ALR 68.

Grounds 4 and 28: errors in the judgment

1. Ground 28 contends that her Honour’s reasons are beset with error such that the judgment cannot stand.

2. Success of this ground depends on the success of the individual grounds of appeal which we have already considered and, in respect of most, rejected the contended error.

3. Ground 4 challenges her Honour’s finding that the husband’s initial contributions were not greater than those of the wife.

4. We observe that at the hearing, the husband asserted that the parties’ contributions to the date of separation should be considered equal and her Honour so found (see [37] of these reasons).  Despite having submitted that a finding of equal contribution was open at the trial, on appeal counsel nonetheless contended that her Honour’s finding about the husband’s initial contribution was an error of fact which, when taken with the other asserted errors, rendered her Honour’s orders unable to be sustained.

5. Her Honour, while accepting the husband’s evidence that he introduced two properties to the marriage said:

   80.      There was no evidence as to the value of assets held by the husband as at the date of the marriage, nor the extent of his equity in the two parcels of real estate. When the husband sold the [H] Street, [Suburb K] property in 2000 he received net proceeds of approximately $200,000…

6. Her Honour continued to discuss the evidence of initial contributions and concluded at [84] that she was not persuaded that the husband’s initial contributions exceeded those of the wife.

7. Counsel for the husband contended that her Honour was in error in finding that there was no evidence of value of those properties because the husband had ascribed a value to these properties in his Financial Questionnaire.  However, counsel also conceded that the husband attempted to give a value of the properties in his trial affidavit and the evidence was rejected by her Honour after objection.  No attempt was made thereafter by the husband to bring sworn evidence of the value of the properties introduced by him into the relationship.  We note in passing that the Financial Questionnaire was not a sworn document.

8. Secondly, counsel for the husband argued that her Honour erred in coming to the finding about initial contributions because the evidence establishes that the parties married in December 1996 and by 1997 her Honour found at [81] that he received the net proceeds of sale of the V Street, Suburb K property of $108,000 which he applied to start up a business.  Thus it was argued that her Honour’s finding must be erroneous.

9. This contention does not take into account her Honour’s other findings about the wife’s contributions made at around the same time and to which she referred in paragraphs [78] to [84].  To demonstrate appellate error in fact finding it is necessary to show that the impugned finding was not open on the evidence.  In our view the finding was open to her Honour and this asserted error is not made out.

10. In any event, even if her Honour erred as a matter of fact in her finding that there was no evidence as to the extent of his equity in the two pieces of real estate introduced into the relationship by him, the husband’s concessions about equality of contributions at date of separation renders this error immaterial to her Honour’s ultimate conclusion (see De Winter (supra)).

11. As to the contention that by reason of the errors attending her Honour’s judgment, it cannot stand, we have in the main rejected the challenges to her Honour’s findings but given the successful challenges to her Honour’s orders, the appeal will be allowed. 

Disposition of the Appeal

1. Having found error in relation to her Honour’s treatment of the debt to the wife’s parents and in her consideration of the orders for the maintenance for the wife, the appeal will be allowed.  Counsel both conceded that in that event the only course to be adopted is to remit the matter to be reheard by a judge other than the trial judge.

Application to adduce further evidence

1. As we indicated, the husband sought to adduce further evidence on the appeal.  The application was opposed. Given that the appeal will be allowed and remitted for rehearing, it is unnecessary to further consider the application and it will be dismissed.

Costs

1. As is usual we took submissions on costs to save the parties the time, trouble and expense of making submissions once judgment was delivered.  Counsel for the appellant submitted that if the appeal succeeded on a question of law, he would seek an order for a costs certificate for both the appeal and any rehearing.

2. The question of costs on appeal is governed by s 117(2) of the Act. Although the appeal has succeeded by reason of an error of law, the making of an order for costs certificates requires a finding that the matter is one in which it is not appropriate to make a costs order inter partes.

3. This is not a matter in which there should be a departure from the usual rule that each party pay his or her own costs. However, equally we are of the view that it is not appropriate to order a costs certificate.

I certify that the preceding two hundred and seventy-four (274) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Ainslie-Wallace & Watts JJ) delivered on 14 September 2016.  

Associate:        

Date:              16 September 2016