(a) whether the goodwill of the business carried on by Mr Bell, under the name Web Greyhound Racing and Breeding Kennels, was property of his to be considered in the first stage of the exercise;
(b) whether the goodwill can be valued and, if so, what value should be attributed to it;
(c) the extent of Ms Constable's contribution to the care of the greyhounds and otherwise to the greyhound breeding, training and racing business;
(d) how the parties' respective section 20(1)(a) and (b) contributions should be valued, and in particular how the value of the investments in real estate made by Mr Bell prior to the birth of Samantha should be assessed and allowed for; and
(e) what adjusting order is just and equitable.
8 Before dealing with the matters in dispute, it is necessary to flesh out the parties' circumstances.
Acquisition of Assets
9 When the relationship commenced in 1984, Ms Constable had no assets of significance. The parties lived in rental accommodation. They were both liable for the rent. For a period of about six months she obtained part-time paid employment as a packer at a warehouse in Liverpool, before she was laid off. During this period she contributed her wages to the parties' joint expenses. Otherwise, the expenses were met by Mr Bell, who, at that time, had a job as a storeman and packer.
10 Mr Bell owned a block of land at Bargo, which he had purchased in 1981 for about $5,000. He also had a car and savings of about $10,000.
11 The parties opened a joint account early in their relationship, into which they placed a few hundred dollars they had won in a lottery. From time to time, Mr Bell transferred sums into that account at random. It was used to pay some expenses and to pay for holidays.
12 In about 1986, the parties gave up the lease to save money on accommodation. For about six months, Ms Constable went back to live with her mother and Mr Bell also went home to live. They resumed living together in 1987 when they moved into a house Mr Bell purchased in his name at Gibson Avenue, Casula. Neither party suggested that their relationship, as de facto husband and wife, came to an end during the period their cohabitation was interrupted.
13 Mr Bell bought the house at Gibson Avenue, Casula, in 1987 for $66,000. The purchase price was partly funded by the proceeds of sale of the Bargo property, which had been sold in 1986 for $20,000. It was partly funded by a workers' compensation payout of about $20,000 received by him. The balance was obtained by borrowing from the St George Bank. The borrowing was made by Mr Bell alone. His income was used to meet the mortgage payments.
14 At about the time Mr Bell purchased the Gibson Avenue property, he also bought an investment property at Blayney. The price was $40,000. The majority of the price was paid with borrowings made by Mr Bell from the St George Bank. Subsequently, he bought a block of land at Callala Bay for $28,000. He paid a ten per cent deposit from his savings. The rest of the purchase price was borrowed from St George. Again, Mr Bell was the sole borrower, and he paid the loan instalments.
15 Samantha was born in December 1989. In November or December 1990, Mr Bell sold the Gibson Street property for about $120,000. The net proceeds of sale, after paying off the mortgage, were about $80,000. They were applied to the purchase of a house at Guise Avenue, Casula, for $220,000. This became the family home for the next seven years. It was purchased in Mr Bell's name. He borrowed $100,000 to assist with the purchase of Guise Avenue.
16 During the seven years the parties lived at Guise Avenue, they effected improvements to the property at a cost of $29,000. These improvements were funded by Mr Bell.
17 In 1992 Mr Bell sold the land at Callala Bay for about $50,000 and the investment property at Blayney for $81,000. The net proceeds of sale were applied towards the purchase of an investment property at Bathurst Street, Liverpool, for $195,000. The balance of the purchase price was provided by St George Bank and was borrowed by Mr Bell. According to the plaintiff, he initially bought the property with his mother and later acquired her share.
18 Up to about 1994 or 1995, Mr Bell was variously employed in the advertising industry. In 1994 or 1995, he started his own publishing business called Bellingham Publishing. He conducted this business until 2001. He also started training greyhounds, about which more later.
19 In 1996 or possibly 1997, (the evidence is inconsistent), Mr Bell sold the Bathurst Street, Liverpool, property for $275,000. The net proceeds of sale, after discharging the mortgage, were about $175,000.
20 In June 1997, Mr Bell sold the family home at Guise Avenue, Casula, for $225,000. The family moved to 145 Eighth Avenue, Austral. Mr Bell bought that property for $380,000. The purchase was partly funded by an advance of $230,000 from St George Bank. St George insisted on the loan being made to both Mr Bell and Ms Constable. She assumed liability for the repayment of the loan, but the repayments were made by Mr Bell. He was the only one of the two who earned an income, or owned property.
21 In 1992, Mr Bell purchased a greyhound bitch called Web of Silence. In 1993 or early 1994, he brought Web of Silence to the Guise Avenue property. He raced her for about eighteen months, during which period she won $3,000 to $4,000. He then organised for her to be bred. Over the ensuing years she had about seven litters. Mr Bell kept two dogs, Go Wild Teddy and Mean Bean, for racing and three brood bitches. Later he sold Go Wild Teddy and, in due course, repurchased a half-interest in that dog. Ms Constable assisted in the care of the dogs. The extent of her work increased as the number of dogs to be cared for increased and as the scale of racing activities increased. Racing necessitated Mr Bell's travelling to country and interstate race meetings, and meant that he was absent from home for varying periods. Moreover, until 2001, he worked in his publishing business. Although he worked with the dogs, or for the dogs, in the mornings before work and at night, Ms Constable looked after them during the day when he was working. The dogs needed attention every four hours. Mr Bell acknowledged that at this time, that is to say, before 2000, Ms Constable helped in the care of the dogs in the mornings and spent up to three hours each day feeding them and cleaning their kennels. She said that she helped eight hours a day, seven days a week. On some days I accept that this was true, but I do not accept that she worked those hours on all days from the mid 1990s. Nonetheless, her contribution to the care of the dogs was undoubtedly a very substantial one and was acknowledged as such by Mr Bell, as I understood his evidence.
22 The only reason identified in the evidence for the parties moving from Guise Avenue, Casula, to Eighth Avenue, Austral, was to move to a larger property for housing and exercising of the dogs. The Austral property is on land of 1.2 hectares, about ten kilometres west of Liverpool.
23 Ms Constable had grown up around greyhounds, but she was not happy about Mr Bell's hobby, which became a business. She told him more than once that she was not interested in their having dogs or breeding them. When Mr Bell purchased Web of Silence, he did so without informing her. He kept that dog for twelve months at a friend's house. When assessing the contribution made by Ms Constable in caring for Mr Bell's dogs, it is relevant that she took up a burden which she had made known to Mr Bell she was unwilling to assume.
24 The mortgage over Austral was discharged from the proceeds of sale of the Guise Avenue, Casula, and Liverpool properties. There was about $80,000 left over.
25 By July 2000, Mr Bell acknowledged that his enterprise in breeding, training and racing greyhounds had become a business enterprise. Prior to that time he kept six dogs at Austral. In June or July 2000, he registered the business name Web Greyhounds Racing and Breeding Kennels. He registered for GST purposes from 1 July 2000. He started to run the business full-time. He acquired more dogs and built more kennels, to bring the number of dogs up to twenty-three, plus their pups.
26 In the financial year ended 30 June 2001, Mr Bell must have derived substantial income from his activities as a trainer of greyhounds. Go Wild Teddy, which he trained, won the Melbourne Cup for greyhounds. Mean Bean was transferred to Ms Constable's name and won the Derby, earning prize money of $61,000. Half of this was earned by Mr Bell as trainer and half by Ms Constable.
27 In February 2001, Mr Bell purchased an investment property at 133 Wanawong Street, Belimba Park, for $320,000. $110,000 of the purchase price came from the parties' joint account. The account was in credit as a result of various moneys having been deposited into it by Mr Bell, including the $80,000 left over from the sale of the Guise Avenue and Liverpool properties, and after the discharge of the mortgage over the property at Eighth Avenue, Austral. The winnings were also paid into that account. Mr Bell borrowed $160,000 from St George to assist with the purchase. He has met the mortgage repayments on the property.
28 In 2003 Mr Bell paid $85,000 in two instalments to acquire a half share in Go Wild Teddy.
Funding of Expenses
29 From 1990 until 22 October 2004, Mr Bell paid Ms Constable $600 per week to fund her living expenses and the household's every day expenses, such as food and groceries. He also paid the expenses for the house, such as water, electricity, telephone and rates. Prior to 1990, he paid her $300 per week. The allowance was increased when Samantha was born, but remained unchanged for fourteen years. At no time did Ms Constable earn an income. Nor did she receive social security payments. She remained dependent on Mr Bell until he stopped the allowance, following their separation.
30 From year 1, Samantha has attended a local private school. Mr Bell funded Samantha's school fees, which increased from about $4,000 per year in 1996 to $7,440 per year currently.
31 Although the parties separated on 8 July 2004, Ms Constable has continued to reside at Eighth Avenue, Austral. At separation, she had $10,000 in an account in her name, but that money had been spent at the time of the hearing. It was spent on general living expenses. An unidentified amount was used to pay legal costs. Both parties claim to have paid for Samantha's food and other expenses since separation. Since September 2005, Ms Constable has been employed three days a week, earning $380 per week after tax.
32 Mr Bell has agreed with Ms Constable that he will continue to pay Samantha's school fees and tutoring, and that he will pay $100 per week for her support. Surprisingly, Ms Constable accepts that this is a fair and equitable contribution to be made by him in relation to Samantha. Because of Mr Bell's declared level of income, the Australian Government Child Support Agency has decided that he is not liable to make any contribution by way of child support.
33 In any event, Ms Constable's need for child support is not of primary relevance in determining what adjusting order under s 20 is just and equitable. However, it forms part of the context in which a determination is to be made of what adjustment is just and equitable, having regard to the matters in paragraphs (a) and (b) of subsection 20(1). The needs and means of the parties have a general relevance, as subsidiary factors, to the question of what is just and equitable, having regard to the contributions of the parties. (Evans v Marmont (1997) 42 NSWLR 70 at 75 and 79-80; Chanter v Catts [2005] NSWCA 411 at para 206).
Parties' Assets at the Hearing
34 It is common ground that the parties owned the following assets at the time of the hearing: Ms Constable owns a 1998 Holden Commodore valued at $10,000, and shares valued at $5,100. She also owns another Holden Commodore, having an agreed value of $10,650, which is driven by Mr Bell. She has no savings and no other property. She is the trustee of an investment for Samantha, but it was ultimately common ground that this was not property of hers to be taken into account. Her assets at the date of hearing are worth $25,750.
35 Mr Bell owns the house at 145 Eighth Avenue, Austral, which has an agreed value of $1,150,000. He also owns the investment property at 133 Wanawong Street, Belimba Park, which has an agreed value of $500,000. It is subject to a mortgage to secure an outstanding balance of $67,991. It is common ground that this property will be sold, that the costs of sale will be $11,050 and that Mr Bell will have a liability for capital gains tax of $16,518. After discharging the mortgage and Mr Bell's capital gains tax liability, and after allowing for the costs of sale, the agreed value of this property is $404,441.
36 Mr Bell owns shares worth $4,915. His half interest in the dog Go Wild Teddy is valued at $30,000. His beneficial interest in other greyhounds is valued at $15,200. He transferred the ownership of those dogs to his mother in an attempt to strip himself of assets, but acknowledges that his mother holds the dogs for him. He has a savings account with about $3,000, and a credit card debt of about $6,000.
37 Leaving aside the question whether the goodwill of Mr Bell's business is a valuable asset, his assets should be taken to have a value of $1,601,550. The parties' combined assets total $1,627,300.
38 The imbalance of the parties' assets is not itself a reason for making an adjusting order. Ms Constable says, however, that her contribution as a homemaker and as a parent, and her contribution to Mr Bell's business, is such that she should receive half of the value of the parties' combined assets, and these should include a substantial sum representing the value of the goodwill of Mr Bell's business. Mr Bell says that Ms Constable should receive thirty per cent of the combined value of the parties' assets, and that these should not include any amount for goodwill.
Goodwill of the Defendant's Business
39 I will deal first with the question of the goodwill of the defendant's business. It was submitted for Mr Bell that what the plaintiff called the goodwill of his business was, in truth, no more than his capacity to earn income in the future by deploying his personal skills to the assets which have already been included in the valuation. Whilst the plaintiff's contributions to the business, which have enhanced his capacity, would fall to be taken into account as a contribution to his welfare under s 20(1)(b), there was, so it was submitted, no separate item of property to be valued as part of the first stage of the three-stage process identified in the authorities. Such goodwill as existed was entirely personal and could not be realised on sale.
40 Provided that it is recognised that Ms Constable's contribution to the care of Mr Bell's dogs has value, not only for helping Mr Bell earn income in the past but in allowing him to establish himself in the industry as a breeder and trainer, such that he is likely to continue to generate earnings, and provided proper allowance is made for that benefit derived from her contribution, I do not think it matters whether goodwill is separately identified as property to be valued under s 20(1)(a). However, in my view, such goodwill should be identified and valued, if possible, as part of the defendant's property, to the acquisition of which the plaintiff contributed.
41 It is now firmly established that goodwill is property in Federal Commissioner of Taxation v Murry (1998) 193 CLR 605. Gaudron, McHugh, Gummow and Hayne JJ said, at para 23:
" From the viewpoint of the proprietors of a business and subsequent purchasers, goodwill is an asset of the business because it is the valuable right or privilege to use the other assets of the business as a business to produce income. It is the right or privilege to make use of all that constitutes "the attractive force which brings in custom." Goodwill is correctly identified as property, therefore, because it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it. It is a right or privilege that is inseparable from the conduct of the business." (See also para 30 and footnote 44) .