Essex & Essex [2009] FamCAFC 236; (22 December 2009)

[ 2009] FamCAFC 236

FAMILY LAW - APPEAL - PROPERTY - Whether the trial Judge erred in "adding back" into parties' asset pool money withdrawn by the wife post-separation from the parties' bank account - Whether the trial Judge erred in finding the wife acted wantonly and recklessly in post-separation spending - Whether the trial Judge denied the wife natural justice in rejecting evidence of post-separation expenditure - Where the trial Judge made adverse findings about the wife's credit - Where the wife unilaterally removed funds - Where the wife failed to provide appropriate corroboration for expenditure - Where trial Judge carefully assessed the parties' assets and liabilities - Where issue of lack of corroborative evidence raised at trial - No appealable error.

FAMILY LAW - APPEAL - PROPERTY - Contributions - Whether the trial Judge erred in weight given to contributions by husband and husband's family - Whether the trial Judge erred in failing to provide adequate reasons for contribution assessment - Where the trial Judge carefully considered the parties' initial contributions - Where the contributions of the husband's family were significant - The contribution assessment by the trial Judge took into account the contribution by the husband's family and gave full weight to the contributions of the wife - No error in assessment of parties' contributions - The trial Judge's reasoning discernible - No appealable error.

FAMILY LAW - APPEAL - PROPERTY - SECTION 75(2) ADJUSTMENT - Whether the trial Judge erred in his assessment of the wife's earning capacity - Whether trial Judge's discretion vitiated by factual error in relation to the wife's employment in 2006 -Where trial Judge mistaken in finding wife had undertaken full-time work in 2006 - Where finding not of magnitude that discretion miscarried - Whether the trial Judge erred in rejecting the evidence of the wife's medical expert - Where findings in relation to the wife's earning capacity open to the trial Judge - No appealable error.

FAMILY LAW - APPEAL - PROPERTY - SECTION 75(2) ADJUSTMENT - FINANCIAL RESOURCE - Family trust - Whether the finding that husband did not have a financial resource in the trusts was against the weight of the evidence - Whether the trial Judge's discretion miscarried

(per Bryant CJ and Boland J, Faulks DCJ dissenting) Where the evidence before the trial Judge about the two trusts was limited - Where the husband an income beneficiary but not capital beneficiary of one trust - Where the attempt to remove the husband as a beneficiary was ineffective - Where the husband did not seek to remove himself as a beneficiary of trust - Where the settling of two trust was not necessary for the purposes for which it was asserted the trust were settled - Where the husband had effective operation of the trusts for 18 months - Where husband's evidence inconsistent with that of his brother - No onus on the wife to call trusts' accountant as a witness - Where the trial Judge did not give appropriate weight to the email and letter from the trusts' accountant and the evidence of husband's brother - The evidence admits an inference that the husband will receive distributions from the trust at the conclusion of proceedings - The trial Judge erred in his finding that the trust was not a financial resource of the husband.

(per Faulks DCJ) Where is was asserted that the husband's inclusion as a beneficiary was a mistake - Open on the evidence to find that the husband was not a beneficiary of the trust at the date of the hearing - Where no evidence that the husband would be appointed as trustee of the trust at the conclusion of proceedings - Where any distribution to the husband on behalf of the children would not constitute a financial resource of the husband - Where the husband could not compel the exercise of discretion by the trustee of the other trust - To the extent trusts may constitute financial resource not a resource of substance - No error in the trial Judge's determination that there was no relevant financial resource available to the husband.

FAMILY LAW - APPEAL (per Bryant CJ and Boland J, Faulks DCJ dissenting) - Appealable error established - Appeal allowed.

FAMILY LAW - APPEAL - RE-DETERMINATION - (per Bryant CJ and Boland J) Where asset pool increased from pool as found at hearing as a result of increased value of properties when sold - Where contributions of the parties' during cohabitation and post-separation (other than contributions of husband's family) equal - Where contributions made by the husband's family on his behalf substantial - Where contribution based entitlements of 60 per cent to the husband and 40 per cent to the wife appropriate - Where the husband has superior earning capacity - Where the husband has a financial resource as an income beneficiary of trust - Where disparity in the parties' contribution based entitlements - Where wife's health affects her capacity to work on a full-time basis - Where the wife responsible for the care of the parties' younger child - 17.5 per cent adjustment in the wife's favour appropriate.

FAMILY LAW - APPEAL - APPLICATION TO ADDUCE FURTHER EVIDENCE - Where the wife had not sought an adjournment of the hearing in order to place further medical evidence before the trial Judge - Where the evidence of the medical practitioner was contentious - Where the evidence would not demonstrate appealable error by the trial Judge - Application refused.

FAMILY LAW - COSTS - Where not in dispute that husband should pay wife's costs if appeal successful - Husband to pay wife's costs of and incidental to the appeal.

Family Law Act 1975 (Cth) - s 75(2), s 79

Evidence Act 1995 (Cth) - s 38

Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR. 621

Bennett v Bennett (1991) FLC 92-191 at 78,266

Chorn & Hopkins [2004] FamCA 633; (2004) FLC 93-204

Clauson & Clauson (1995) FLC 92-595

De Winter & De Winter (1979) 23 ALR 211; (1979) FLC 90-605

Fox & Percy [2003] HCA 22; (2003) 214 CLR 118

Gollings & Scott [2007] FamCA 397; (2007) FLC 93-319

House v The King [1936] HCA 40; (1936) 55 CLR 499

Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386

Kennon v Spry [2008] HCA 56; (2008) 251 ALR 257; (2008) 83 ALJR 145

Kowaliw & Kowaliw [1981] FamCA 70; (1981) FLC 91-092

Omacini & Omacini [2005] FamCA 195; (2005) FLC 93-218

Pierce & Pierce [1998] FamCA 74; (1999) FLC 92-844

Townsend & Townsend [1994] FamCA 144; (1995) FLC 92-569

[2007] FamCA 639

(1) That the appeal is allowed.

(2) That Order 3 of the trial Judge be varied by deleting where appearing therein "the sum of one hundred and eight thousand eight hundred and eighty six dollars ($108,886.00)" and inserting in lieu "In payment to the wife of such sum as is necessary to ensure the wife receives 57.5 per cent of the parties' net assets and liabilities as set out in paragraph 185 of reasons of the Full Court, save and except the value of the matrimonial home and the [J] Property which values shall be the actual sale price of the properties less sale costs, and the liabilities shall be adjusted to delete any liability discharged from the proceeds of sale of either party".

(3) That the husband pay the wife's costs of and incidental to the appeal as agreed and failing agreement as assessed.

IT IS NOTED that publication of this judgment under the pseudonym Essex & Essex is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

1. In May 2007 Benjamin J heard property and spousal maintenance proceedings between Ms Essex ("the wife") and Mr Essex ("the husband"). His Honour determined that the parties' property, which he found to have a net value of $981,429.00, should be divided between them as to 55 per cent or $539,572.00 to the wife and 45 per cent or $441,467.00 to the husband. His Honour dismissed the wife's application for spousal maintenance. This is the wife's appeal against his Honour's orders.
2. Before us the wife sought orders that the appeal be allowed, that the parties' assets (amended from the trial Judge's determination to reflect sale prices achieved for two properties) be divided between them as to 70 per cent to her and 30 per cent to the husband. In the event the appeal was allowed, she did not pursue her challenge to the dismissal of her spousal maintenance application.
3. At the hearing of the appeal the wife's counsel sought leave, which was unopposed, to rely on nine additional grounds of appeal, but abandoned ground 2 of the original grounds. He also sought to adduce three categories of additional evidence:
   • (a) evidence of the actual sale price of the former matrimonial home and an investment property (this evidence was not opposed and was provided to us after the hearing);
   • (b) expert medical evidence of Dr O, Rheumatologist concerning the wife's health; and
   • (c) an affidavit of Ms N (we refused to admit this affidavit at the hearing).
4. The husband opposed the admission of the expert medical evidence. We reserved our decision in respect of that evidence, and indicated we would determine the issue of that application with these reasons. We propose to discuss the further evidence application when dealing with the wife's grounds challenging the adjustment made by the trial Judge for relevant factors under s 75(2) of the Family Law Act 1975 (Cth) ("the Act").

1. It is unnecessary that we set out the appeal grounds and the additional grounds on which the wife relied. There was considerable overlap in some of the grounds which were argued together by the wife's counsel. The appeal grounds can conveniently be considered in four broad categories:
   • asserted error in "adding back" into the pool of assets to be divided between the parties a sum of $30,000.00 withdrawn by the wife from a bank account post separation, and in finding that the wife had acted "wantonly and recklessly" in her post separation expenditure;
   • a denial of natural justice by the trial Judge in rejecting the wife's evidence of post separation expenditure, without notice to her, when her evidence was not challenged by the husband;
   • an asserted failure by the trial Judge to give sufficient weight to the wife's contributions both financial and non financial (particularly her contribution as primary carer of the parties' two children both during the marriage and after separation) resulting in an asserted error in the exercise of discretion of the trial Judge; and
   • asserted error by the trial Judge in failing to take into account the disparity in the parties' income, property and financial resources, and in particular his Honour's failure to have regard to a concession by the husband's counsel that two trusts, of which the husband is a beneficiary, were a financial resource from which, on the balance of probabilities, it could be inferred that he would derive income in the future.
2. Although each category of challenge identified by us above was fully ventilated at the hearing of the appeal, the predominant focus of the appeal was directed to the question of the husband's entitlement, if any, from the two trusts. Accordingly, for reasons we will shortly expound, after we have recorded some relevant historical material, we propose to deal with the topics of the "add back", asserted denial of natural justice and then the contribution challenge, before turning to explore more fully the central issue agitated on the appeal - the husband's position in relation to the two trusts.

1. The wife and the husband were aged respectively 51 years and 50 years at the date of the hearing. They married and commenced cohabitation in June 1981.
2. There are two children of the marriage. The elder child "K" was aged 17 years at the date of the hearing and was in her final year at high school. The younger child "B" was aged 13 years at the time of his Honour's judgment.
3. The parties were in dispute as to their date of separation. The trial Judge found separation occurred in January 2000. There is no challenge to that finding.
4. Following separation the wife and children resided primarily in Hobart, initially in various rented properties until the wife purchased, in about January 2006, a home in a suburb of Hobart ("the L Property"). The husband remained living in the matrimonial home.
5. The matrimonial home was initially purchased by a property investment company owned by the husband's late father. The parties occupied the property on a rent-free basis from 1981 or 1982 until its transfer by the company to them in 1992 without consideration.
6. The parties were also the owners of an investment property in Tasmania ("the J Property").
7. In January 2006 the wife purchased the L Property for approximately $280,000.00. She borrowed approximately $226,000.00 from Y Company and $70,000.00 from her father to finance its acquisition. Prior to the purchase the wife had rented the property.
8. The parties had owned another investment property which was sold prior to the hearing resulting in each party having a capital gains tax liability (husband's liability $5,458.00 and wife's liability $5,200.00).
9. By Deed of Trust dated 18 May 2004 a discretionary trust known as the S Trust was settled. W Pty Ltd is the corporate trustee of the S Trust. The S Trust's assets were assets gifted by the husband's mother and formerly the property of the husband's parents.
10. By Deed of Trust dated 31 May 2004 a second discretionary trust known as the N Trust was settled. W Pty Ltd is also the corporate trustee of the N Trust. The N Trust's assets were also assets gifted by the husband's mother and formerly the property of the husband's parents. We will discuss the terms of the respective trust deeds and other evidence concerning the trusts later in these reasons.

ASSERTED ERROR IN 'ADDING BACK' OF $30,000.00, AND FINDING THAT THE WIFE HAD ACTED 'WANTONLY AND RECKLESSLY' IN HER POST SEPARATION EXPENDITURE; DENIAL OF NATURAL JUSTICE IN REJECTING WIFE'S EVIDENCE OF HER EXPENDITURE

1. There was no dispute that, after separation, the wife who was living in Hobart, unilaterally altered a withdrawal slip signed by the husband for expenditure for the children's education thereby increasing the amount withdrawn by $30,000.00 in excess of the agreed withdrawal. It was also uncontroversial that, after living in various rented premises, the wife purchased the L Property which she had formerly rented. The purchase resulted in her weekly commitments in respect of the property increasing by approximately $149.00 per week. She carried out repairs to this property, and asserted she had other expenditure resulting in some outstanding liabilities, including liabilities to tradespersons, at the date of hearing.
2. The trial Judge determined, in the exercise of his discretion, he should "add back" the sum of $30,000.00 withdrawn by the wife from the bank account as a premature distribution of funds to her, and he disallowed some of the wife's claimed expenditure and liabilities.
3. The submissions made on behalf of the wife were essentially framed to assert that the wife's expenditure was reasonable in all the circumstances, and that as her expenditure claimed was essentially unchallenged, even if not supported by receipts, it should have been allowed by the trial Judge. In short, her counsel said her expenditure, including the unauthorised removal of the $30,000.00, and liabilities did not fall within the type of conduct recognised in Kowaliw & Kowaliw [1981] FamCA 70; (1981) FLC 91-092, which conduct, if established, warrants rejecting liabilities incurred as joint liabilities.
4. In dealing with these complaints it is important to bear in mind that the trial Judge, who had the benefit of observing the wife in the witness box, made adverse findings about her credit (reasons paragraph 21 and 22). We will return to these findings and the basis on which they were made shortly.

The trial Judge's discussion and findings about the wife's expenditure

1. The trial Judge discussed the wife's purchase of the L Property for $280,000.00 at paragraph 50 of his reasons. After reciting the purchase price of the property and how the wife asserted it was funded by borrowings totalling $296,000.00 which were applied in part for stamp duties, legal fees and transfers his Honour said:

...No satisfactory explanation was given by the wife as to the disposal [sic] balance of that sum. Some part was applied to legal costs but the evidence of the wife was that such amount was well less than $7,000.00. The wife said that part of the funds were applied for repairs to the house, yet only limited invoices and receipts were provided and amounts for a builder, a plumber and an electrician remain outstanding.

1. At paragraphs 53 and 54 his Honour further discussed the wife's purchase of the L Property and said:

The decision to buy [the L Property] was made in circumstances where the wife was struggling to make "ends meet" and I find the wife had no serious regard to her financial circumstances in terms of this acquisition and I find that the wife was either negligent, wanton or reckless in that decision. The wife was, in the circumstances, profligate in that purchase. She put herself in a position where she was living beyond her means and the fact that she was unable to meet expenses did not seem to detract or deflect her once she had made up her mind. Her evidence was that it was to provide a secure home for the children pending the outcome of these proceedings, yet the wife put her financial security at risk with that purchase.

This purchase led the wife to be unable to meet all bills when they fell due. This can be seen in the claims for the balance of her dental accounts, mechanical repairs, electrician, plumber, and builder.

1. In the following paragraphs (paragraphs 55 to 59) the trial Judge discussed in some depth a list of the wife's claimed expenditure, and receipts provided to him in a bundle of documents.
2. In referring to the wife's evidence that she had expended part of the $30,000.00 withdrawn from the bank account for her dental expenses, the trial Judge said:

...She says a part of the $30,000.00 was spend [sic] on dental treatment, the invoices show expenditure of $5,610.00 and the wife claims a further liability of $7,640.00. The wife ought not have the benefit of that liability set off against the asset pool. It is possible that it does not exist or if it does, it is not to the extent alleged by the wife. Further the need for this post separation expense has not been satisfactorily explained. If the debt is at that level it is up to the wife to satisfy the court both of its existence and need. (paragraph 59)

1. Later, at paragraphs 60 and 61, his Honour said:

I find that the wife was negligent, reckless or wanton in respect of incurring such debts claimed in this paragraph I do not propose to treat the debts to the electrician $950.00, plumber $3,470.00, builder $2,400.00, wife's MasterCard debt $6,400.00 and [BC Mechanical repairs] as liabilities against the assets. The debts were incurred in circumstances where the wife chose to live beyond her means or alternatively or additionally there is doubt about whether they exist at all or at the level alleged.

As to the MasterCard liability it has arisen post separation and at a significant rate. It has increased from $4,200.00 in March 2007 to $6,400.00 in May 2007. I infer this has occurred because of the wife's continued rate of spending which was beyond her means and as such was wanton or reckless.

1. His Honour then discussed the fact the wife had retained a Saab motor vehicle (when she had another vehicle) and disallowed claimed expenses for the Saab car, when the wife did not produce documentary evidence to support the claimed debt. His Honour also discussed the wife's debt to the Department of Education. This related to money the wife had received from the Department, and although she knew it was an overpayment, had expended the sum. The trial Judge again found the wife's behaviour "wanton and reckless". His Honour accepted the wife's debt was a genuine debt, but refused to include it as a liability in calculating the parties' net assets. His Honour made similar findings about a Centrelink overpayment.
2. Early in his reasons, under the heading "Credit of the parties", the trial Judge summarised his findings about each of the parties, and referred briefly to the evidence the wife had altered a withdrawal slip to enable her to receive $30,000.00 more than the original sum on the withdrawal slip signed by the husband. His Honour returned to this topic at paragraphs 72 to 75 of his reasons. At paragraph 75 his Honour said:

The documentary evidence in respect of the use of these funds is limited and the wife has had reasonable opportunities to provide it to the court and the husband.

1. At paragraph 78 and 79 his Honour set out his conclusions on the topic of the $30,000.00 and said:

I do not accept the accuracy of the wife's explanation as to how she disposed of the $30,000.00. Even if I had accepted her evidence as to the expenditure, there is the underlying failure of the wife to live within her means. That circumstance should not be visited upon the husband. What the wife did was to distribute to herself an asset in which the husband had a legitimate interest.

Taking all of those factors and facts into account, the $30,000.00 will be added back into the pool as an asset of the wife, as being a premature distribution to her.

1. The grounds which go to the trial Judge's findings about the quantification of the parties' net assets involve two issues - "add backs" and identification of either joint or sole liability for debts.
2. Questions of how a trial Judge should deal with so called "add backs", and/or premature distribution of assets, regularly arise in cases under s 79 and are often the subject of grounds of appeal. Often the amounts are minor when compared to the overall property in issue and the time taken and costs involved to agitate the claims both at first instance and on appeal, lack proportionality. Trial Judges are correct to deal with such claims robustly in the broad exercise of their discretion under s 79.
3. The principles about when an expense should be "added back" have been comprehensively discussed in Full Court decisions particularly Chorn & Hopkins [2004] FamCA 633; (2004) FLC 93-204, Omacini & Omacini [2005] FamCA 195; (2005) FLC 93-218 and Gollings & Scott [2007] FamCA 397; (2007) FLC 93-319.
4. The principle that where one party has unilaterally assumed control of, and has improperly disposed of, or diminished the value of, an asset to the detriment of the other party, that the disposal should be regarded as a premature distribution to the party at fault is not in doubt (see Townsend & Townsend [1994] FamCA 144; What is often controversial is when the principle is applicable.

Did the wife's conduct require that the whole of the $30,000.00 should be added back and some of her liabilities asserted at trial be disregarded?

1. This topic cannot be considered in isolation from the trial Judge's evaluation of the evidence of the wife. His Honour's findings about the wife were, as we have already noted, carefully documented in paragraphs 21 and 22 of his reasons. Those findings are, in our view, pivotal to this challenge. The paragraphs included the following:

...[t]he wife was not an impressive witness. Her demeanour was poor and she took many opportunities to minimise the husband's contributions to the family and to expand her own. From time to time she prevaricated. She had a tendency to exaggerate. An example of this was in terms of her initial evidence that the furniture and furnishings that she brought into the marriage had a value of some $17,000.00 and in evidence in chief she said it had a value of over $20,000.00. The wife gives the husband very little credit for his contributions to the family. Furthermore, the wife engaged in fraud in order to procure funds from the joint account of the parties and in addition she took the benefit of monies mistakenly deposited into her account by the Department of Education in circumstances when she knew the deposit to be a mistake. These incidents cast further doubt on the wife's credibility as a witness of truth, and as such her evidence is, from time to time, unreliable.

On balance I generally prefer the evidence of the husband to that of the wife, except where the wife's evidence is supported by some objective facts. [footnote omitted]

1. His Honour made findings adverse to the wife about her conduct in altering the withdrawal slip and her unilateral use of funds the parties had agreed were for the education of the children. Those findings were open on the evidence. His Honour also found the wife's evidence was exaggerated and unreliable. She produced little documentary evidence to support the expenditure of the $30,000.00 in circumstances where it would have been readily apparent her conduct would be subject of careful scrutiny at the trial.
2. It may be that the wife did spend the money as she asserted, particularly in circumstances where her income was not large and she had to provide accommodation for herself and the children whilst the husband remained in the matrimonial home. Some support for her assertion of need for dental work is found in the history she recounted to Dr T in his report dated 9 May 2007 (Exhibit "H2).
3. The circumstances in which the wife was living were, in all the circumstances, relatively modest. Her expenditure claimed does not suggest extravagant expenditure. The language used by the trial Judge to describe her conduct as "living beyond her means" and thus "negligent", "reckless" or "wanton" is, in our view, unfortunate.
4. There is no doubt the wife's conduct in altering the withdrawal slip deserved his Honour's criticism. But how she spent the funds obtained did not, in our view, amount to conduct which would warrant the descriptions used by his Honour.
5. It is arguable that the wife's expenditure of the funds could have been considered in all the circumstances reasonable. The husband's earnings exceeded those of the wife, he occupied the matrimonial home, and pursuant to an undertaking given to a local court she was excluded from it. The wife and children had lived in a number of rented properties in Hobart and the property she purchased was formerly occupied by her as rented premises. The wife had worked until mid 2006 when she asserted her health prevented her continued employment. The purchase of the L Property occurred after the institution of proceedings for property settlement so that the wife could reasonably have anticipated an adjustment of property sufficient for her to discharge the mortgage obtained to purchase the L Property in a relatively short period.
6. Other judges, in the exercise of their discretion, may have found it appropriate to "add back" part only of the $30,000.00, or none of it, and/or to allow the liabilities claimed by the wife in full. But here the question is whether his Honour's decision was "plainly wrong" or outside the reasonable ambit of his discretion. We are not satisfied his Honour's decision falls into that category when looked at in the context of his judgment overall, including his strong adverse credit findings about the wife, the wife's unilateral removal of the funds, and the failure of the wife to provide appropriate corroboration for her expenditure.

1. In the original grounds of appeal it is asserted that the trial Judge had erred in failing to give proper weight to the wife's homemaker and parent contributions. The additional grounds of appeal sought to challenge the trial Judge's assessment of the 60 per cent contribution assessment in the husband's favour without providing adequate reasons for so doing. It was also asserted the trial Judge's finding that the husband's contribution as the "overwhelming provider of income" during the marriage was against the evidence and the weight of the evidence. It was further asserted that the trial Judge was in error in failing to have regard to the wife's evidence of her involvement in the renovations to the matrimonial home.
2. In his written submissions, counsel for the wife submitted, having regard to the principles enunciated in Pierce & Pierce [1998] FamCA 74; (1999) FLC 92-844, that the "weight of [the husband's initial contribution of the matrimonial home] should be significantly reduced" (amended submissions, p 7).

1. The trial Judge dealt with the matrimonial home and the parties' contributions to it as a discrete topic under the heading "F property". There was no dispute that the matrimonial home was transferred to the parties from the husband's father's company in 1992 at no cost to them and it remained their matrimonial home until separation. They had occupied the property on a rent-free basis from about the time they commenced cohabitation.
2. In paragraph 36 of his reasons, the trial Judge referred to the wife's affidavit evidence at paragraph 73. In that paragraph the wife set out tasks she had undertaken to maintain and improve the matrimonial home. The trial Judge noted that, in her oral evidence, the wife had conceded the husband was also involved in the restoration and maintenance of the matrimonial home.
3. At paragraph 138 of his reasons, the trial Judge commenced his discussion of contributions. He found that the wife had furniture and furnishings at the date of the marriage, and that her net property assets at that time had a value of $10,500.00 or less. This finding was not challenged by the wife.
4. Under the heading "Monies advanced by the husband's family to the husband and wife" the trial Judge chronicled the contributions the parties received from the husband's family, including the matrimonial home, a gift of $25,000.00 in 1982, the provision to the wife of a Mazda 323 motor vehicle early in the marriage, such car having a value of $8,500.00, and provision of a further motor vehicle in 1988.
5. His Honour went on to make findings that the husband's mother had given the husband a cash sum of $40,000.00 in October 1995 and in December 1996 a further sum of $6,000.00, which sums were applied for the benefit of the family.
6. His Honour also explained, at paragraph 145, that the husband's family had provided educational funding to the children of at least $11,000.00 subsequent to 1995 and an unspecified sums had been paid by the husband's late father prior to that date.
7. His Honour also found that the wife had, in 1992, contributed her redundancy pay of $26,000.00 which was used for the bathroom extension at the matrimonial home and purposes for the family.
8. His Honour then turned to consider the parties' contributions to their two investment properties noting that one property in Tasmania ("the M Property") had been sold by agreement between the parties and used to fund some education expenses of the children.

[The matrimonial home] is a substantial asset in the context of the finances of these parties and the wife's contribution to providing that accommodation for the husband (albeit contrary to her wishes) is a fact and factor which has been taken into account and given weight in determining the relative contributions of the parties.

1. His Honour then discussed the husband's self-managed superannuation fund, noting the base of the fund had been created whilst the parties lived together and had substantially increased since separation.
2. In paragraphs 161 to 165 the trial Judge discussed the wife's claims about her parenting contribution and made findings that:
   • the husband was absent from the matrimonial home on an average of one day and one night per week leaving the bulk of the parenting and homemaking to the wife;
   • the husband worked throughout the entire period of the parties' marriage and was the overwhelming provider of income;
   • the wife worked as a teacher from 1981 to 1982 when she took a redundancy; and
   • from 1984 the wife trained as a therapist and she undertook private practice in that occupation.
3. His Honour concluded, at paragraph 164:

Both of the parties contributed in their own ways from the date of the marriage until separation in 2000 and on balance I find that such contributions, with the exception of gifts to the parties from their respective families, were equal.

1. His Honour, at paragraph 165, accepted that post separation the wife had had the overwhelming care of the children.
2. At paragraph 166 his Honour set out his conclusions on contribution as follows:

I have made an overall assessment of all of the facts relating to contribution and having regard to same and the findings I have made in respect of facts in issue I determine that the contribution entitlement to the husband should be 60% and the wife 40%.

1. The challenge to his Honour's contribution assessment was agitated on three bases, namely:
   • the giving of inappropriate weight to the husband's contributions from his family and, in particular, to the matrimonial home;
   • inappropriate weight to the husband's greater financial contribution by way of income; and
   • failure to give adequate reasons for the overall contribution assessment;
2. A careful reading of the judgment overall shows that the trial Judge carefully took into account the parties' initial contributions, their respective roles and contributions throughout the marriage and post-separation. Nothing to which we were directed indicates that the trial Judge overlooked any relevant fact or circumstance. Rather, he meticulously chronicled the parties' respective contributions and gave such weight as he thought appropriate to the evidence.
3. We discern no appealable error in the trial Judge's assessment that, at the conclusion of this lengthy marriage which produced two children, the parties' contributions, other than those which came from the husband's family, should be regarded as equal.
4. In Pierce the Full Court discussed initial contributions and at paragraph 28 said:

In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home...

1. There was no dispute that at trial the value of the matrimonial home represented approximately 43 per cent of the net assets. The home provided by the husband's parents, firstly on a rent-free basis, and then by way of ownership, enabled the parties to acquire investment properties and was a very significant contribution by and on behalf of the husband. The other financial contributions of the husband's parents were not disputed. They too were significant.
2. The trial Judge's contribution assessment resulted in a differential of 20 per cent or $196,286.00 in the parties' entitlements. That assessment properly took into account the very significant contributions by the husband's parents while at the same time giving full weight to the contributions made by the wife, both during the course of the marriage and post-separation.
3. The reasons challenge may be disposed of shortly. The necessity to give adequate reasons is not in doubt (see Bennett v Bennett (1991) FLC 92-191 at 78,266 and Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386).
4. In this case, his Honour's path of reasoning is clearly discernable and no appealable error is demonstrated.

DISPARITY IN INCOME EARNING CAPACITY, PROPERTY AND FINANCIAL RESOURCES

1. The wife's challenge enunciated under this topic was essentially twofold. First, she asserted that the further evidence she sought to adduce would, if admitted, demonstrate that the trial Judge was in error in rejecting the evidence of her expert at trial, Dr E, and preferring the evidence of the single expert, Dr T. The wife's counsel submitted that the trial Judge had given insufficient weight to her two medical conditions (ulcerative colitis and osteoporosis), and the limitations those conditions place on her ability to earn income. Second, and the gravamen of her appeal, was her assertion the trial Judge was in error in rejecting the argument advanced on her behalf that the husband had a significant financial resource in the S Trust and the N Trust. Her counsel asserted, properly analysed, the evidence supported a finding that husband had a significant resource in these two trusts. It was asserted the settling of the trusts had, as a primary purpose, an intention to preclude the Court being able to deal with these trusts.

The submissions in respect of the medical and other evidence before the trial Judge about the wife's earning capacity

1. Counsel for the wife submitted that the trial Judge made a factual error in respect of his findings about the wife's employment in 2006, and that this factual error vitiated his discretion. A challenge to the evidence recorded by the trial Judge in paragraph 76 of his reasons was abandoned at the hearing of the appeal, but counsel maintained that paragraph 77 of his Honour's reasons was contrary to the evidence. In that paragraph the trial Judge said:

In the 2006/2007 financial year the evidence is that the wife worked most of the final two school terms full time, she has done little paid work in 2007. I find that her income, government benefits and child support in the 2006/2007 financial year will be about $50,000.00. For reasons set out later, I find that the wife has a good working capacity. The school fees and some expenses for the children were paid, at least in part, out of the CBA account.

1. Later in his reasons when dealing with what his Honour described as "[t]he other factors" he said, at paragraph 178, when discussing the expert medical evidence:

It is significant to note that subsequent to that report the wife worked virtually full time through Tasmanian school terms two and three in the year 2006. [footnote omitted]

1. The wife's evidence was that she had worked as a relief teacher on a 50 per cent workload, and that in relying on a statement in the single expert, Dr T's report, his Honour had misconstrued the evidence. The relevant extract from Dr T's report is as follows:

[Ms Essex] indicated that in 2006 she worked as a relief teacher at [a school in Tasmania] on a 50% workload teaching TCE subjects, with time spent on preparation of the education material. She indicated that she had been overly conscientious and committed to the girls with the result that she worked virtually full time throughout terms 2 and 3. [Ms Essex] stated that she worried about the "kids doing well".

1. The wife's oral evidence disclosed her income in the financial year ended 30 June 2006 was $23,113.00 and that she received a pension and allowances of $6,241.00, together with child support for the children (Transcript, 18 May 2007, p 49). Later, in re-examination, the wife confirmed she had not worked on a full time basis in 2006.

The trial Judge's discussion of the medical evidence

1. The trial Judge, as a preamble to his discussion about the expert medical evidence, noted the wife's health related issues and summarised the wife's evidence about her ulcerative colitis recording she had suffered from that condition for about 22 years "albeit mostly asymptomatic".
2. His Honour went on to note that the wife disagreed, in part, with the report of the single expert, Dr T. The trial Judge explained, at paragraph 173, that Dr T had concluded the wife would be able to "return to active employment in either part or full time capacity". His Honour also recorded that Dr T had acknowledged the seriousness of the wife's illnesses but noted she had managed with the conditions for many years.
3. The trial Judge went on to explain that as the wife had not accepted the opinion of Dr T, by leave, she had been allowed to obtain her own expert evidence from Dr E who prepared reports dated 2 March 2006 and 16 May 2007.
4. His Honour explained how both doctors had given evidence at the same time and accordingly had been able "to explain their relative opinions and the difference between their opinions from the witness box" (paragraph 176). His Honour noted that neither expert was a qualified gastroenterologist.
5. Ultimately, after examining in some detail the expert evidence, the trial Judge determined he preferred the evidence of Dr T and concluded his findings on this topic at paragraph 187 where he said:

I am concerned about the history provided by the wife to the experts. I find that [Dr T's] analysis of the wife and her condition is better based than that of [Dr E]. Accordingly, and having regard to all of the evidence I prefer the findings of [Dr T] and find that the wife is able to work part time or full time as a teacher.

1. At the appeal the wife's focus was directed principally to an assertion her osteoporosis, and its effect on her ability to work, had not been properly taken into account by the trial Judge.
2. Dr E, in his report dated 2 March 2006, referred to the wife giving a history of diagnosis of osteoporosis.
3. Under the heading "information from other practitioners", Dr E noted he had discussed the wife's medical history with her general practitioner who confirmed that bone density testing showed evidence of osteoporosis affecting her hip and osteoporosis of her spine. Dr E considered the interrelationship of the wife's osteoporosis and ulcerative colitis in his first report when he said:

The avoidance of episodes of ulcerative colitis is made all the more important by her development of osteoporosis. If she did have a significant flare in her ulcerative colitis, there may be a greater need for her to resume steroid medication, which may further exacerbate her other conditions. It is therefore of even greater importance that she avoids stressors that could trigger further attacks of ulcerative colitis to avoid the need for further medication. In addition to the risk of requiring further steroids if her ulcerative colitis is not controlled, there is also the risk of bowel cancer associated with that condition that needs to be managed.

1. Dr E specifically addressed the question of the wife's osteoporosis in his report dated 16 May 2007. He noted at the commencement of his report that it was prepared after he had prepared a summary of major issues of disagreement between himself and Dr T in his reports of 9 May 2007 and 28 September 2005. At paragraph 4 he discussed the wife's osteoporosis as follows:

[Dr T] indicates that osteoporosis is common in middle age women and that he believes that [Ms Essex's] osteoporosis is related to her age, even though he acknowledges that steroids can exacerbate the condition. My understanding however is that her use of steroids is an important factor in the development of her osteoporosis which is quite severe. She developed back pain last year which may relate to progression of her osteoporosis which may have further impact on her fitness to work. It is certainly my understanding that in some individuals the use of steroids alone can cause significant osteoporosis.

1. The wife sought to adduce by way of further evidence an affidavit of Dr O sworn 23 November 2007. The wife also sought to rely on her affidavit filed 18 April 2008. In her affidavit, the wife deposed she had not seen Dr O when the decision of the trial Judge was delivered. She further deposed, in paragraph 3, "[t]he appointment had been made prior to the Court case but due to the specialist [sic] unavailability it had not been possible to see him".
2. Dr O deposed to seeing the wife on two occasions, namely 9 July 2007 and 15 August 2007 (that is, the wife's first appointment was a week after his Honour's reasons for judgment were delivered).
3. Dr O is a rheumatologist carrying on practice in Tasmania. He deposed to the wife suffering severe spinal osteoporosis and set out in his report appropriate treatment for the wife. He did not set out any specific prognosis for the wife other than recording in paragraph 6 of his report "[w]hen [Ms Essex] suffers factures in my opinion her capacity to work as a relief teacher is compromised". He noted the medication prescribed for the wife was likely to improve her back pain and that she had commenced the medication Forteo on 15 November 2007 after sustaining three factures at T3, T4 and T5.
4. In seeking to have Dr O's report admitted as further evidence, her counsel conceded that the wife had not sought an adjournment of the hearing before the trial Judge to place further medical evidence before the Court.
5. The wife's counsel sought to adduce the evidence on two bases, namely, that it demonstrated error in the assessment the trial Judge made of relevant s 75(2) factors and his refusal to make a spousal maintenance order.
6. The husband's counsel opposed the admission of Dr O's report noting that if the report was admitted that he would want to cross-examine Dr O and provide alternate material. He submitted that we should not admit the evidence having regard to the principles enunciated in CDJ v VAJ (1998) 197 CLR 172. In summary, he submitted that Dr O's evidence was contentious and further, if it had been available at trial it would not have affected the result. He submitted that the diagnosis of osteoporosis had been dealt with by both Dr T and Dr E. Significantly, he submitted the report was defective, on its face, containing internal inconsistencies about fractures reported to have been suffered by the wife.

1. We accept that the trial Judge appears to have mistaken the evidence in his finding that the wife had undertaken full-time work during two terms in 2006. It is difficult to be satisfied, however, that error has been carried through in his Honour's calculation that the wife would have an income in 2006/07 of $50,000.00 comprised of earnings, government benefits and child support. That calculation was based on the wife earning at least $23,000.00 in the financial year, and the husband continuing to pay child support at the rate of approximately $20,000.00 per year. It was not in dispute that the wife ceased work after terms 2 and 3 in 2006 when she worked a 50 per cent load, but she did not put evidence before the Court of her earnings from her 50 per cent workload. Thus we are not satisfied that the trial Judge's findings "she worked most of the final two school terms full time" was of such magnitude that his Honour's discretion miscarried (see De Winter & De Winter (1979) 23 ALR 211; (1979) FLC 90-605 and Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR. 621). What was of relevance was his Honour's finding that the wife had a "good earning capacity" - that finding was based on his Honour's rejection of the evidence of Dr E, the wife's independent expert, and his acceptance of, and preference for, the evidence of Dr T, the single expert.
2. Although his Honour's focus in his reasons for judgment was on the wife's ulcerative colitis he did not overlook the osteoporosis suffered by the wife. At paragraph 180 of his reasons, the trial Judge addressed the issue of alternatives to steroids for the wife's treatment and explained the doctors had been in agreement there were other options available to the wife. His Honour concluded:

...I find that there are other options available to the wife for the treatment of her ulcerative colitis and that the evidence of Dr [T] in this regard is to be preferred. (paragraph 180)

1. His Honour's pivotal findings about the wife's health were contained in paragraphs 187 and 188 of his reasons. Although we have already set out paragraph 187 it is useful we repeat it, as well as reproducing paragraph 188:

I am concerned about the history provided by the wife to the experts. I find that Dr [T's] analysis of the wife and her condition is better based than that of Dr [E]. Accordingly, and having regard to all of the evidence I prefer the findings of Dr [T] and find that the wife is able to work part time or full time as a teacher.

Notwithstanding that finding, I accept that the wife's health is problematic and that she does not have the income earning capacity of the husband. I do not accept her submission that her income earning capacity is severely restricted but I do find that it is moderately restricted.

1. These findings were ones open to the trial Judge, and while we accept his Honour was in error in his finding the wife had worked full-time in terms two and three in 2006, we are not satisfied that error itself vitiated his discretion and appealable error has not been established. His Honour relied, and was entitled to rely on, Dr T's evidence about the wife's earning capacity.

1. The evidence before the trial Judge about the two trusts was limited. The husband's brother, swore an affidavit to which he annexed the two trust deeds. He gave oral evidence and was cross-examined.
2. The husband's brother deposed to receiving from his mother a transfer of her shares in W Pty Ltd, the corporate trustee of the trusts, in June 2004, and that prior to that date he became the sole director of the company. An accountant, Mr RO, also became a director of W Pty Ltd on 21 February 2005. The husband's brother deposed that he agreed with his mother that two trusts should be established, and some of her assets contributed to the trusts. W Pty Ltd was to be the corporate trustee of each trust. The S Trust was settled by Deed of Trust dated 18 May 2004 and the N Trust settled by Deed of Trust dated 31 May 2004. The trust deeds are not identical. The deeds were prepared by different solicitors.
3. The husband's brother deposed to the two trusts being established for the following purposes:
   • to provide income to enable the husband's mother's expenses to be met, and after five years, to enable her to be eligible to receive an aged pension;
   • to ensure the husband's mother did not, with advancing years, dissipate her assets "through unwise or ill considered investments"; and
   • to protect the husband's mother's assets from any claim by the wife for property settlement had she died and left provision for the husband in her will.
4. He further deposed that the husband had not received any distribution from either trust. He said "[i]n keeping with my parents' wishes there will never be a distribution to [the husband] if it has the effect of providing directly or indirectly for [the wife]".
5. The husband's brother also deposed to approaching the husband to manage the day to day affairs of W Pty Ltd and the trusts while he, the husband's brother, was overseas. The husband was subsequently authorised to operate W Pty Ltd's bank account. The husband's brother does not depose in his affidavit to when the husband's role in the day to day operation of W Pty Ltd ceased. The husband's brother annexed to his affidavit a letter signed by the husband on letterhead of "W Pty Ltd" and bearing the date 5 July 2006 in which the husband authorised inspections of three properties in Tasmania which properties were acknowledged to be assets of the trusts.

MR TREZISE: The question was: did you, in your discussions with [Mr RO], mention to him that your brother [the husband] was having matrimonial problems?---Yes, I did.

Which explains, does it not, the comment which [Mr RO] makes under the heading Trust Restructure?---What comment is that?

He says, if you can read it, "It is proposed that two trusts be formed." One for [the husband] and one for yourself. Initially you'll be the appointor and primary beneficiary of both trusts, however on the resolution of [the husband's] matrimonial problems, you would retire from [the husband's] trust, handing control over to him?---As I said to you before, that is not correct. [Mr RO] overrun what was talked about and he said, "And we'll do this, this, this and this." I set up the trusts. I set up the trusts to protect my mother's assets for a number of reasons and that was it. And the way the trusts are set up would indicate that I can't give him back his trust real easy, if you want to call it "his trust". At the moment he doesn't have a trust.

Could the witness be shown W9C. If you could just cast your eye over that, ...?---Yes.

That is, is it not, a letter from [Mr RO] to yourself?---Yes.

It's, if you like, advancing the matter of the establishment of the two trusts?---Yes.

He goes on to say - this is the fourth paragraph - "I would recommend that [W Pty Ltd] is the trustees of the respective blood line trusts"?---Yes.

Is that the first time you had seen or heard the expression "blood line trusts"?---No.

What did that term mean to you?---"Blood line trust" meant that - it meant that you had to either - well, you had to be born of that person or both within that family.

In this case [the Essexes]?---That's correct. (Transcript, 23 May 2007, pp 271-272) (our emphasis)

1. Later the husband's brother was cross-examined about his ability, as appointor or principal of the trusts, to change the trustee of the trusts and appoint the husband as trustee which he conceded he could do. He also agreed that if the husband was an income beneficiary of the S Trust he could distribute income to him, but he asserted the husband was not a beneficiary "at the moment". Later the husband's brother expanded his evidence about the husband being named as a beneficiary of the S Trust as follows:

You're the one that says it's the trustee?---I'm the trustee, but if you'll let me expand on - - -

Yes, sure - - -?--- why I say it's not the correct document. When I went in to see [Mr RO] to set up the trusts he said, "We can set up two trusts," and he said to me - I said. "I don't want my brother's name to appear on the trust. It's my mother's wishes that the money is protected and as such, given [the husband's] situation, I don't want his name in the trust. My mother has asked me to manage her affairs and her money and it's inappropriate for me to take part of that money and run. I want her to see that the money is still there," and we went about setting up the trusts. He had the trust documents drawn up, he sat me down and he said, "Here's the documents," and I said, "What is [the husband's] name doing on this trust?" He said, "Don't worry about it. You have the sole discretion" - or "the discretion", as you said - "of making the benefits payable to beneficiaries," and I said, "Well, I'm not comfortable with this," and that discussion took place probably obviously at the signing of the document. (Transcript, 23 May 2007, p 274)

1. A document was tendered before the trial Judge which purported to remove the husband as a beneficiary of the S Trust. When referred to this document and asked to agree he could distribute income to the husband the following exchange occurred:

Again, dealing with [the S Trust], was it your understanding that the trust allowed you to, in your discretion, distribute income to [the husband]?---If he was a beneficiary of the trust, yes.

And you agree he's named as one?---He's not at the moment. (our emphasis) (Transcript, 23 May 2007, p 274)

1. The husband's brother also gave evidence that he had borrowed funds to a total of $135,000.00 from the N Trust, but said he had not made any withdrawals from the S Trust's accounts (Transcript, 23 May 2004, p 279).
2. The following concession was made by the husband's brother towards the end of his cross-examination:

MR TREZISE: In broad terms ... in a perfect world where there are no Family Court proceedings, no marital problems, would it be your desire to share the wealth of these trusts with [the husband]?---Is that a relevant question? That isn't the case.

Well, no-one has objected so I would seek an answer to it?---Well, of course it would be.

Thank you?---I just qualify, by "a perfect world", that he wasn't being attacked by someone else. (Transcript, 23 May 2007, p 280)

1. Documents tendered during the hearing included documents from the file of Mr RO's firm including an email from Mr RO to the husband's brother dated 25 November 2003 (Exhibit W9B), a copy of Minute of Meeting of the Directors of W Pty Ltd dated 28 February 2005 which purported to record the removing of the husband as a beneficiary of the S Trust (Exhibit W9D) and further Minutes of a Meeting dated 30 June 2005 (Exhibit W9E) recording the resolution that income of the trusts be paid to W Pty Ltd. The transcript discloses that the financial statements for the two trusts for year ended 30 June 2005 (Exhibit W9E) were admitted into evidence (Transcript, 23 May 2007, p 279).
2. We consider it appropriate to set out parts of the exhibits, or to summarise their effect, in order to properly consider the wife's challenge to his Honour's rejection of the probability of any benefit flowing to the husband from either trust:
   • (a) Exhibit W9B - email from Mr RO to the husband's brother dated 25 November 2003 (which referred to a meeting and discussions the previous day) included the following:

It is proposed that two trusts be formed one for [the husband] and one for yourself. Initially you will be the appointer and primary beneficiary of both trusts however on the resolution of [the husband's] matrimonial problems you would retire from [the husband's] trust handing control over to him.

You would need to update you [sic] will and [the husband's] possibly hold a power of attorney in relation to his proposed trust.

(b) Exhibit W9C - file copy letter from Mr RO to the husband's brother dated 27 April 2004 included the following:

Further to my oral advice I advise [C] is happy to assist with the restructure of your mother's affairs.

As discussed, this would involve changing Directors and the shareholders of [W Pty Ltd] and gifting [the husband's mother's] existing loan account to your brother and your trust. There is Tasmanian stamp duty on the gifting of the loan account and we would estimate the stamp duty to be around $1,415.00.

I would recommend that [W Pty Ltd] is the trustees of the respective "Bloodline Trusts" and on establishment you amend your Will to allow for appointor changes. I would also recommend you have an Enduring Power of Attorney and Medical Power of Attorney drawn up at the same time. This must be done through a solicitors [sic] office and I would estimate the combined cost of the three (3) documents to be around $500.00.

In the case of your brother he would also need to address these issues and give consideration to guardianship for his children, Executors and perhaps a Testamentary Trust.

(c) Exhibit W9D - Minutes of Meeting of Directors of W Pty Ltd dated 28 February 2005. The Minutes is in the following terms:

One of the Primary Beneficiaries of [the S Trust], being [the husband], was excluded by the Trustees from any class of beneficiaries and no sums, whether of income or capital, shall be allocated or set aside or paid to or otherwise applied to or for the benefit of such Beneficiary in accordance with Clause 20.1 of [the S Trust] Deed.

The resignation was hereby accepted by the Trustees effective immediately.

There being no further business the meeting was closed.

1. It is necessary to understand the powers and restrictions and the differences between the S Trust and the N trusts to set out in some detail relevant provisions of each trust deed.

1. The S Trust deed was settled on 18 May 2004. The corporate trustee of the trust named in the schedule to the trust deed is W Pty Ltd. The principal of the trust is the husband's brother. The primary beneficiaries are W Pty Ltd, the husband's brother and the husband. The capital beneficiaries are the two children of the marriage, K and B. The default beneficiaries are W Pty Ltd, the husband's brother and the husband.
2. Clause 3.8 provides in the case of a beneficiary entitled to income that the income may be paid to one or more of the parent, guardian or spouse of that beneficiary or to that beneficiary for the maintenance, benefit, support and advancement in life of that beneficiary.
3. Clause 4.1 deals with the termination and vesting of the trust fund and enables the trustee to pay the capital of the trust to one or more of the capital beneficiaries at its absolute discretion, and in the event that a capital beneficiary has not attained the age of 18 years, to that capital beneficiary's parent or guardian.
4. Clause 5.1 provides power to the trustee, in its absolute discretion, at any time prior to the vesting date to apply the whole or part of the capital for the benefit of one or more of the capital beneficiaries, and the income for the benefit of all or any of the income beneficiaries "in such proportions or manner as the Trustee shall think fit".
5. Clause 5.3 enables the trustee at any time in its absolute discretion to transfer the whole or part of any income to the trustees of any other settlement to which any of the income beneficiaries are or is beneficially entitled whether absolutely, contingently, presumptively or prospectively, or to any other company or corporation in which any one or more of the income beneficiaries are or is beneficially entitled whether absolutely, contingently, presumptively or prospectively to any shares.
6. Clause 5.4 provides a similar provision to clause 5.3 in relation to the capital of the trust.
7. Clause 6.1 of the trust deed empowers the trustee from time to time before the vesting of the trust to lend any sum out of the trust fund to any primary or capital beneficiary on the terms set out in clause 6.3 of the trust deed.
8. Clause 6.3 provides appropriate commercial provisions for the granting of a loan.
9. Clause 7.1 of the trust deed enables the trustee, either in writing, or orally before a Justice of the Peace (as prescribed in clause 30), to appoint further income beneficiaries as either primary or secondary beneficiaries subject to provisos, including a restriction to the appointment of the settlor or any person as a capital beneficiary.

Any Beneficiary by oral declaration recorded in the Minutes or records of the Trustee or by written notice to the Trustee at any time may exclude himself from any class of Beneficiaries and no further sums whether of Income or of Capital shall be allocated or Set Aside or paid to or otherwise applied to or for the benefit of such Beneficiary provided however that any such notice shall not affect the beneficial entitlement to any amount Set Aside for such Beneficiary prior to the date of such notice. (my emphasis)

1. As we have earlier recorded, the N Trust is also a discretionary trust, but the trust deed is not identical to the S Trust deed. The date of the Deed of Settlement of the N Trust is 31 May 2004. The husband's brother is the initial appointor and the trustee is W Pty Ltd. The primary beneficiaries are the husband's brother and his wife.
2. Clause 13 defines the beneficiaries of the N Trust, and by virtue of clause 13(d), the husband, as the brother of a primary beneficiary, is defined as a general beneficiary.
3. Clause 3 deals with the income of the trust and provides that the trustee may pay the income to any one or more of the beneficiaries as the trustee determines on or before 30 June each year. However, if the trustee does not exercise its discretion, the income is to be distributed, if there are more than two primary beneficiaries and if there are less than three primary beneficiaries, to those beneficiaries in equal shares as tenants in common. Sub-clause (d) enables the trustee in its discretion to accumulate income which shall be "retained as part of the Trust Fund".
4. Clause 4 deals with the capital of the trust fund and enables the trustee, on the vesting date, or such earlier time as the trustee may determine, to pay the trust capital to any one or more of the beneficiaries as the trustee determines and subject to certain conditions the trustee may, prior to the vesting date, pay part of the trust capital to one or more of the beneficiaries as the trustee determines. Sub-paragraph (b) of the clause provides, if the trustee does not make a determination before the vesting date, the trustee shall distribute the capital of the trust to the primary beneficiaries.
5. Clause 11 deals with the power to amend the trust deed. The clause enables the trustee, at any time prior to the vesting date, and with the prior written consent of the appointor, to amend, add or delete any provisions of the deed, including the schedule and annexure provided the amendment shall not have the affect of causing the trust fund or income to vest after the vesting date. However, sub-paragraph (d) is in the following terms:

No amendment of, addition to or deletion from this Deed shall be effective if it purports to reduce a present entitlement of Beneficiary [sic] to Income or capital.

1. Clause 12 of the trust deed enables the trustee to arrange for resettlement of the trust.
2. Clause 14 sets out the procedure for nominating an additional beneficiary but is subject to the restriction in sub-clause (c) which is in the following terms:

No Person may be nominated to be a Beneficiary under sub-clause (b) without the prior written consent of the Appointor, unless that Person is:

(i) a direct lineal descendant or a parent of a Primary Beneficiary;

(ii) a company in which an individual described in sub-paragraph (i) has either a shareholding interest or a directorship; or

(iii) a trust of which any individual described in sub-paragraph (i) is a beneficiary or potential beneficiary.

1. Clause 15 enables a beneficiary to declare that he or she no longer wishes to be a beneficiary. Such declaration must be made by deed expressed to be irrevocable by the beneficiary. Sub-paragraph (b) provides:

The Trustee may, with the prior written consent of the Appointor, by deed expressed to be irrevocable, declare that a Beneficiary or a class of Beneficiaries is no longer to be included in the definition of a Primary Beneficiary or a General Beneficiary, as the case may be.

1. However, a person may be reappointed under clause 14 at any time and their removal does not affect any rights accruing to that person before their removal.

The trial Judge's discussion and conclusions about the trusts

1. In paragraphs 86 to 137 of his reasons for judgment, the trial Judge discussed the two trusts and reached a conclusion that the husband did not have a financial resource by reason of being a beneficiary of them.
2. His Honour commenced his discussion by referring to the conflict between the parties about the characterisation of the two trusts.
3. His Honour explained, at paragraph 87, that the wife claimed the husband had entitlements to assets and/or income from either one or both trusts, the amount of which was not clear.
4. His Honour went on to explain that the wife's counsel had submitted that the assets of the two trusts should be treated in full or part as property in the hands of the husband. His Honour also recorded counsel for the wife's alternate submission that the assets and income of the trusts, or either of them, were financial resources available to the husband.
5. His Honour then turned to his examination of the S Trust. He recorded that W Pty Ltd is the corporate trustee of that trust, that the husband's brother was the director and sole shareholder of W Pty Ltd, as well as the principal of the S Trust with power to appoint and remove trustees.
6. His Honour went on to record that W Pty Ltd, the husband's brother and the husband were primary beneficiaries of the S Trust, and then referred to evidence of the husband's brother that it was not his intention that the husband should be included as a primary beneficiary of the S Trust. His Honour said, at paragraph 92:

...[The husband's brother] said that he had arranged for the husband to be removed as primary beneficiary, and produced a document prepared by his accountant. I am not sure that such document had the desired effect.

1. His Honour went on, at paragraph 94, to refer to the capital beneficiaries of the trust - the parties of the children, and recorded similar information to that set out by us above in relation to the powers of the trustee in respect of the capital beneficiaries.
2. His Honour set out clauses 5.1 and 5.2 of the trust deed dealing with the capital of the S Trust prior to its vesting date. His Honour, correctly in our view, summarised the effect of these provisions of the trust deed in paragraph 98 of his reasons where he said:

In essence the trust deed provides that capital is payable to the capital beneficiaries and, in the absolute discretion of the trustee, the parents of the capital beneficiaries whilst the capital beneficiaries are under the age of eighteen years. [K] attains the age of eighteen years later in 2007. [B] attains the age of eighteen years in June 2013.

1. His Honour then recorded his determination about the S Trust in paragraph 99 of his reasons as follows:

I find that it is possible but unlikely that the income will be available for distribution to the husband and the wife, but that the trust is primarily set up to provide the capital for the benefit of the parties' children.

1. His Honour then referred to the fact that the wife did not seek to join the husband's brother, W Pty Ltd or the children as parties to the proceedings.
2. At paragraph 101 his Honour turned his attention to the N Trust and discussed the provisions of that trust deed. He made the finding, again correctly in our view, the husband's brother has the effective control of the N Trust. His Honour also noted that the husband, the wife and the children fitted within the definition of general beneficiaries under the terms of the deed but noted the pool of general beneficiaries was "quite large". His Honour went on to explain "[t]here is no evidence that the husband, wife or children have had any benefit from [the N Trust], except as set out in these reasons".
3. His Honour then set out his conclusions about the N Trust in the following terms:

...I find that it is unlikely that either party to these proceedings will receive any capital from [the N Trust] and that neither of the parties has any legal or equitable right to the trust's capital or income... (by reference to clauses 7 and 13(d) of [the N Trust] Deed) [footnote omitted] (paragraph 101)

...I find that in the particular circumstances of this case the inclusion of the husband as a general beneficiary in this discretionary trust does not give the husband any interest in the property contained within the trust nor does the trust constitute a financial resource of the husband. (paragraph 101)

1. His Honour expanded his conclusions at paragraph 102 where he said:

[The N Trust] had all of its assets provided by [the husband's mother] and/or the estate of [the husband's late father] or entities controlled by them. There has been no intermingling of funds with those of the parties and I find that the husband has not at any time exercised control over the trust, except in the capacity of an 'errand boy' for [the husband's brother] when he was overseas. Prior to June 2005 [the husband's brother] went to live overseas with his family and asked the husband to undertake some day-to-day duties with regard to both the trusts. The overall management of the trusts remained with [the husband's brother]. He returned to Australia in late 2006 and has resumed day-to-day management of the trusts and [W Pty Ltd]. There is no evidence that the husband received any benefits from the trust and there is no evidence that he used any assets in the trust except the airfare referred to later in these reasons.

1. His Honour then referred to the assets of the two trusts and appropriately qualified his findings as to those assets on the basis that no valuation of either trust was available to him, but on the evidence provided, he inferred that each trust had assets in excess of $700,000.00.
2. His Honour's findings at paragraphs 107 to 109 are important and we record them in full:
   1. [The husband's mother] has few assets, almost all of the assets previously owned or controlled by her and her late husband were placed into the two trusts.
   2. [The husband's brother] gave evidence, which I accept, that the primary purpose of creating the trusts was to enable [the husband's mother] to receive social security benefits in the circumstances of her failing health and her need for assisted care. This was done after consultation by [the husband's brother] with Centrelink.
   3. There was a document produced by the trust accountant which said that the primary intent was to enable [the husband's mother] to obtain a pension and the other intent was to ensure the wife did not receive any benefit from her estate. This later intent was not accepted by [the husband's brother], who gave evidence that the accountant did not have such instruction, I accept his evidence in that respect. However, even if it was the case, [the husband's mother] is entitled to disperse her estate as she thinks fit. If [the husband's mother] wishes to ensure that the wife receives none of her estate [the husband's mother] is entitled to do so. [footnote omitted]
3. At paragraph 115 his Honour referred to a "file note" of Mr RO and set out an extract of the file note. The "file note" which was an email to the husband's brother became Exhibit W9B and is set out by us earlier in these reasons.
4. His Honour then set out his conclusions about the two trusts as follows:
   1. [The husband's brother] denied that this reflected the instruction given to the accountant and said that such comment was neither his proposal nor that of the mother. [Mr RO's] file, with exhibit W9A was available for inspection by the parties and [Mr RO] was not called to give evidence. I accept [the husband's brother's] evidence in that regard. I find that the two trusts, [the N Trust and the S Trust] were created by [the husband's mother] to divest her of assets so that she could receive Centrelink benefits. This appears to have been done with the knowledge of Centrelink and appears to have been done lawfully.

1. Considering all of the evidence with regard to the trusts and the company I am not satisfied that it is a financial resource available to the husband. I find that the husband, and for that matter the wife, are discretionary beneficiaries under the deeds of trust but and [sic] neither have control of such trusts. Whilst it is possible for the husband to receive monies under either [the S Trust or the N Trust] this is at the absolute discretion of [the husband's brother] or his alter ego, [W Pty Ltd].
2. In particular, given the purpose of [the S Trust] and, on the evidence before me of [the husband's brother's] unfailing compliance with this purpose, I find that there have been no payments to the husband (except perhaps the airfare referred to above) from the trust and I find that it is unlikely that any payment will be made to him. Further, I find that if the husband were to be paid any money from this trust it would be to enable husband to disburse such payment for the children or either of them bearing in mind their place as capital beneficiaries. If some capital of [the S Trust] were disbursed to the husband for his own purposes it may well be that such distribution would constitute a breach of the terms of the trust deed bearing in mind the entitlements of the capital beneficiaries under that trust, namely [K] and [B].
3. With regard to [the N Trust] I find that this trust has been set up for the eventual benefit of [the husband's brother] and his family. Given the management of the trust to date, the discretionary nature of the trust and the large number of general beneficiaries I find and [sic] that it is possible but unlikely that the husband, the wife or their children will receive benefits from that trust, there is no evidence that this technical possibility can be relied upon. Any monies the husband may conceivably receive from [the N Trust] would be akin to a general gift made by [the husband's brother] in the absence of any trust, rather than by recourse to a financial resource in the hands of the husband.
4. The facts in this matter are distinguishable from the majority of family law proceedings involving discretionary family trusts. Typically when discretionary trusts are involved in family law proceedings one of the parties is the appointor and, frequently, that party is also a director or major shareholder in the Trustee company. In such scenarios, the requisite degree of control may be established relatively easily. This is a significant distinguishing factor from the present case, where there is little evidence that the husband has or will have control of either of the trusts. Such evidence as exists, viz the note from [Mr RO], exhibit W4 [sic], is not persuasive.

Given the large number of beneficiaries, the history of the management of the two trusts thus far and the accepted purpose for their creation I find that neither the husband nor wife have reasonable grounds to expect that a discretion will be exercised in his or her favour.

1. Finally his Honour turned to whether or not he should take into account an interest in the trusts as an expectancy under s 75(2)(o). He concluded that it could not be predicted the husband would receive any capital and his Honour went on, at paragraph 137, to conclude:

On the evidence [the husband's mother] did not want the wife to have any benefit from her estate and it is not up to this court to "re-write the arrangements" so that the wife does get such a benefit.

1. Before us, in his written and oral submissions, counsel for the wife contended that his Honour was in error in not regarding both the S and N Trusts were a financial resource of the husband. He did not seek to maintain the position advanced at trial that the assets of the trusts were property of the husband.
2. In his written submissions counsel for the wife referred to the fact that the husband had access to all of the information concerning the financial affairs of the trusts for a period of 18 months, that the trial Judge should have found the purpose for the creation of the trusts was as recorded by Mr RO in Exhibit W9B. He submitted on the balance of probabilities that:
   • the husband's brother sought advice from Mr RO in relation to the financial problems which might arise as a result of his brother's matrimonial problems;
   • that two trusts were set up in accordance with the recommendations made by Mr RO;
   • that the trusts were "bloodline trusts";
   • the husband's brother understood he could effectively appoint the husband as trustee;
   • the husband's brother had conceded if there were no family law proceedings, no marital problems, it would be his desire to share the wealth of the trusts with the husband;
   • that the N Trust is the husband's brother's property and he has obtained borrowings from that trust.
3. He further submitted that the trusts had significant assets. Before us counsel for the wife submitted the husband, at the termination of the matrimonial proceedings, would be appointed trustee of the S Trust, could derive income from that trust, and until the younger child attains the age of 18 years deal with the capital at his will. He further submitted that if the true purpose of the creation of the trusts was to remove assets from the husband's mother's possession in order that the wife not receive any benefit that one trust would have been efficacious for that purpose (Transcript, 6 May 2008, p 43).
4. The wife's counsel referred to the oral evidence of the husband's brother which we have set out above. We discern the true question to be whether on the balance of probabilities his Honour should have found it was likely that at some time in the near future the husband would receive benefits from the trusts or either of them.

... there is only one conclusion, that this trust was created for two purposes : one, to divest [the husband's mother] of sufficient fund [sic] to enable her to get a pension; and secondly, to park money under the control of [the husband's brother] pending the resolution of [the husband's] matrimonial dispute, his property dispute. It's a blatant attempt, in my respectful submission, to oust the jurisdiction of this court. (Transcript, 6 May 2008, p 58)

1. In his written submissions, counsel for the husband submitted:

...that there is no demonstrated error of law or of fact on the part of the Learned Trial Judge set out in this Ground of Appeal nor was the Learned Trial Judge "plainly wrong" in reaching the conclusions that he did and in rejecting the contentions put for and on behalf of the Wife as to [the S Trust] and [the N Trust]. (submissions, paragraph H, p 4)

1. The husband's counsel further submitted that the conclusions of the trial Judge were ones "reasonably open to him to find". He further noted that Mr RO's file note had been available for inspection in April 2007 and submitted "[i]n those circumstances, there can be no adverse inference drawn by the Respondent's failure to call [Mr RO]. Presumably, the Learned Counsel for the Appellant decided [Mr RO] ought not be called as a witness for the Appellant's case".

1. It is convenient for us to commence our discussion by reference to the S Trust. As we have already recorded, the trust deed discloses the husband is named as an income beneficiary of this trust. He is not, as observed by the trial Judge, a capital beneficiary, and the terms of the deed preclude him being appointed as such.
2. We agree with his Honour that, having regard to the terms of the trust deed, the attempt to remove the husband as a beneficiary of the trust as recorded in Exhibit W9D was probably ineffective. The deed (clause 13) required that any removal of the husband as beneficiary be by deed or an oral declaration by the husband before a Justice of the Peace, with a recording of the declaration by the trustee (clauses 20 and 30). If the document entitled "Minutes of Meeting of Directors of [the S Trust]" dated 28 February 2005 purported to comply with clause 11(h)(iii) of the deed as a resolution of the directors, in our view, it was ineffective. Consequently, we consider at the date of the hearing the husband remained one of three named primary beneficiaries of the trust, and as such entitled to be considered by the trustee to receive income from the trust fund's assets. Alternatively, if he had been validly removed as a beneficiary, the husband's brother could, at the conclusion of the proceedings, reappoint him as a primary beneficiary entitled to income.
3. We do not accept the contention of the wife's counsel that (on the assumption the husband was appointed trustee of the trust at the conclusion of the property proceedings) he could have unfettered use of the capital of the trust by making a distribution to himself, as a parent, until the youngest child attains the age of 18 years. We discern no error by the trial Judge in determining, in accordance with general principles of trust law, a proper construction of clause 4.1 when read with clause 2.1(d) of the deed implies that if such capital advance was utilised by a guardian or parent for his or her own purposes, it would be a breach of trust. However, he could use funds obtained to provide for the child's needs, including educational needs, reducing any call on his income.
4. The crucial question thus becomes - was the trial Judge in error in determining, on the balance of probabilities on the evidence before him, that the husband would not:
   • in a reasonable period of time, be appointed the trustee of the S Trust in lieu of W Pty Ltd;

...The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. ...

1. While having regard to the limits on appellate interference with a discretionary judgment it is nonetheless the task of an appellate court to undertake a real review of the evidence. This duty was explained by Gleeson CJ, Gummow and Kirby JJ in Fox & Percy [2003] HCA 22; (2003) 214 CLR 118 at 126-7 as follows:

Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of "weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect". In Warren v Coombes, the majority of this Court reiterated the rule that:

"[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it."

As this Court there said, that approach was "not only sound in law, but beneficial in ... operation". [footnotes omitted]

Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint. From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons. However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.

That this is so is demonstrated in several recent decisions of this Court. In some, quite rare, cases, although the facts fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable" or "contrary to compelling inferences" in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must "not shrink from giving effect to" its own conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process. [footnotes omitted]

1. We consider there is merit in the submissions of the wife's counsel insofar as the S Trust is concerned, and that the evidence admits a compelling inference that the husband will receive distributions from the S Trust at the conclusion of the proceedings:
   • First, if the purpose of the settling of the trusts was to entitle the husband's mother to receive an aged pension in due course, and to prevent her making imprudent investment decisions, that could have been achieved by the settling of one trust, the settling of the N Trust was unnecessary.
   • Second, the difference in the provisions of the two trust deeds is relevant. The beneficiaries named in the N Trust deed evince a clear intention in the drafting of that trust to benefit the husband's brother and his wife. As they do not have children, the wide class of general beneficiaries (who are not named) is readily appreciable. The S Trust deed evinces a clear intention that the capital of that trust be distributed on vesting, or at such earlier time as the trustee may determine, to the two children of the marriage, the grandchildren of the husband's mother. It also discloses a clear intent that the husband, as one of the three named income beneficiaries, is entitled to be considered to receive distributions of income until the vesting of the trust.
   • Third, the husband had the effective day to day operation of the trusts for a period of approximately 18 months and was well aware of the assets of the trusts. The husband's brother only retrieved relevant trust documents from the husband some months prior to the hearing.
   • Fourth, Mr RO's contemporaneous file note of the purpose of the settling of the trust is compelling. Although the husband's brother said in his cross-examination that Mr RO's email was incorrect, it is not inconsistent with the husband's brother's own affidavit (see paragraph 100 of these reasons) and his oral evidence set out in paragraph 108 of these reasons. The husband's brother's answers did not demonstrate that the husband would never receive income, or even that he was unlikely to receive income from the trusts. Rather, his answers in cross-examination strongly implied that the restrictions on the husband's receipt of income were dictated by the proceedings, and particularly if his actions as controller of W Pty Ltd might be seen to directly or indirectly or benefit the wife.

Under the heading Trust Restructure, [Mr RO] then says this, "It is proposed that two trusts be formed, one for [the husband] and one for yourself. Initially you will be the appointer and primary beneficiary of both trusts; however, on the resolution of [the husband's] matrimonial problems you would retire from [the husband's] trust, handing control over to him." Was that ever discussed with you that two trusts would be created, one of which, after your matrimonial problems were at an end, would be handed over to you?---That's a twofold question. The first part, the establishment of two trusts was discussed with me. I'm not aware of that email. ...

1. It is also of significance that when the husband's brother chose to borrow approximately $135,000.00 from trust assets he did so from the assets of the N Trust. This action implies the assets of S Trust were to remain intact for the income and capital beneficiaries of that trust.
2. Although the husband's counsel submitted that Mr RO could have been called by the wife, (presumably as an unfavourable witness see s 38 of the Evidence Act 1995 (Cth)) the necessity for her to do so was not apparent from inspection of the subpoenaed material. That material, which was clear on its face, supported her case. In fact to the contrary had it been argued before us it might be said the onus was on the husband to call evidence effectively repudiating the gravamen of the document, and allowing the Court to draw an adverse interest against his failure to do so (see Jones v Dunkel (1959) 101 CLR 298). As this was not a submission advanced by counsel for the wife, it is sufficient for us to simply note there was certainly no onus on the wife to do so.
3. Insofar as the N Trust is concerned, we discern the trial Judge's findings were open to him on the evidence.
4. As we have already noted his Honour's analysis of the provisions of the trust deeds was careful and thorough. However, his Honour did not, in our view, give appropriate weight to the email and letter from Mr RO to the husband's brother and its reference to each of the brothers' trusts, as well as the qualified evidence of the husband's brother which we have highlighted earlier in these reasons. The husband was a named income beneficiary of the S Trust. The husband at no time sought to remove himself as a beneficiary, and the husband's brother's attempt to do so had no relevant purpose (other than to attempt to put the trust's assets beyond the reach of the Court). The date of the minutes of the meeting of W Pty Ltd purporting to remove the husband (28 February 2005) was not contemporaneous with the signing of the S Trust deed (18 May 2004) as asserted by the husband's brother.

1. As we noted at the commencement of these reasons, the wife's counsel sought, in the event that appealable error was established, that the Full Court should re-determine the matter using the assets and liabilities found by the trial Judge adjusted to take into account actual sale values of the properties.
2. While we were provided with the actual sales figures for the matrimonial home and the J Property and figures for net proceeds of sale, we were not advised whether any of the liabilities shown in the liabilities recorded by the trial Judge were discharged on completion of the sale of the relevant properties.
3. We propose to consider the list of assets and liabilities as set out by the trial Judge, but substituting into that table the actual sale price achieved for the properties. We accept that the list of assets and liabilities does not include the selling costs associated with the properties and that the adjusting sum to be received by the wife will require a mathematical calculation by the parties' solicitors.
4. The adjusted list of assets and liabilities of the parties using the gross sale price of the two properties is:

Antiques & paintings in possession of wife, agreed value

Balance of funds in joint CBA cash management account, agreed value

Partial distribution of property being withdrawal of funds by wife from joint CBA account on 20 September 2006

Husband's interest in E Enterprises Pty Ltd, agreed value

Husband's interest in E Superannuation fund, agreed value

Further deduction by wife from joint CBA Management account

Loan to wife from Y Company on the L Property, agreed amount

Husband's Capital Gains Tax liability on sale of the M Property, agreed amount

Wife's Capital Gains Tax liability on sale of the M Property, agreed amount

Wife's liability to her father for loan on the L Property

Wife's loan to father in respect of purchase of Camry motor vehicle

Interest claimed by wife as liability to her father for the debts of $80,000.00

Wife's G liability for furniture included in the above assets

1. We note that the asset pool has increased by approximately $240,000.00 from the asset pool found by the trial Judge, the consequence of which we will discuss further.

1. Having regard to the contributions of the parties recorded by the trial Judge, including giving appropriate weight to the wife's contribution to the repairs and maintenance of the matrimonial home and her larger contribution as homemaker and parent, we would assess the parties' contributions during their cohabitation and post separation, save and except for the contributions made by or on behalf of the husband by his family, as equal. The basis for this finding is the respective roles played by the parties throughout their marriage and cohabitation. We accept that the husband was the principal breadwinner albeit that the wife also engaged in employment and contributed her earnings for the benefit of the family. We accept that the wife provided the predominant care of the children, particularly post separation and that her role in this regard was a significant one.
2. In this case the contributions made on the husband's behalf by his parents were substantial, particularly the gift of the unencumbered matrimonial home. Having regard to those additional contributions on the husband's behalf, we are satisfied that a contribution based assessment of 60 per cent in favour of the husband is an appropriate one, that is, a 20 per cent differential or $244,286.00.

Section 75(2) factors

1. The predominant factors requiring consideration under s 75(2) are:
   • the disparity in the parties' contribution based entitlements (husband $732,857.00 and wife $488,572.00);
   • the husband's superior earning capacity;
   • the wife's health and its effect on her earning capacity;
   • the wife's ongoing care of the younger child of the marriage;
   • the wife's ongoing role in providing accommodation and other support for the parties' elder child;
   • the husband's financial resource as an income beneficiary in the S Trust;
   • the husband's ongoing liability to pay child support; and
   • the delay until the husband can access his superannuation entitlements.
2. We have addressed at length the evidence in relation to the wife's health and her earning capacity. We are satisfied that the wife's ulcerative colitis and osteoporosis are likely to affect her capacity to work on a full-time basis, although she does have the capacity to engage in part-time teaching.
3. The evidence before the trial Judge disclosed that the S Trust had an income of approximately $40,000.00 per year in the financial year ended 2005. We are satisfied that at the conclusion of the proceedings the husband is, on the balance of probabilities, likely to receive distributions of income from the S Trust. Such distributions, together with the husband's earning capacity gives him the capacity to have a far superior income to that of the wife.
4. The disparity in the parties' capital entitlements as a result of the contribution assessment, the husband's vastly superior income earning capacity and the wife's responsibility for the ongoing care of the younger child require an adjustment in her favour. We are satisfied an adjustment of 17.5 per cent or approximately $213,750.00 is an appropriate adjustment so that the wife's overall entitlement is 57.5 per cent or approximately $702,322.00. We are conscious that the increase is only 2.5 per cent more than the trial Judge but he was working on a different asset pool.
5. In arriving at this assessment, we have taken into account the monetary terms of the adjustment, rather than relying on a percentage adjustment (see We have also taken into account the increase in the parties' net assets as a result of the actual sale price achieved for the properties. While in percentage terms the adjustment we propose in the wife's favour is not substantially different to that made by the trial Judge, the practical effect of the increase in value of the property pool results in an adjustment in the wife's favour for factors of $213,750.00 compared to the adjustment ordered by the trial Judge of $147,218.00.

1. As noted at the commencement of these reasons, in the event that appealable error was found, the wife abandoned her claim to spousal maintenance so it is unnecessary that we say anything further on that topic.

1. At the conclusion of the appeal we sought submissions from the parties on costs. There was no dispute before us in the event that the wife's appeal succeeded that the husband should pay the wife's costs. We would accordingly propose such an order.

1. I have had the advantage of reading the judgment of their Honours Chief Justice Bryant and Justice Boland. I agree generally with their Reasons for Judgment and have nothing to add to their analysis, discussion and conclusions, except that, with great respect to their Honours, I dissent from their conclusion about the issue whether the trusts are financial resources in the husband's hands. This means that I agree with the learned trial judge's conclusion (although not with all of his reasoning) that the husband's asserted interest in the trusts does not constitute a financial resource. I would not therefore allow the appeal against the orders about the division of property. I have some difficulty with the trial judge's conclusions about spouse maintenance and I would allow the appeal on that issue. However in the light of the judgment of their honours the Chief Justice and Justice Boland allowing the appeal in relation to property my concerns about spouse maintenance do not arise, as if the appeal about property succeeded, counsel for the wife abandoned the appeal about spouse maintenance. I set out my reasons for disagreeing with my colleagues hereafter. I should perhaps add, that on the assumption that the Chief Justice and Justice Boland are correct in their determination that the husband had an interest in the trusts or either of them, I agree with the methodology and the calculation of the reassessment.
2. It does not appear that it was ever asserted that, the husband in these proceedings, had any property by reference to either the S Trust or the N Trust. As appears from the additional grounds of appeal, however, it is asserted that the husband's interests as a beneficiary in the N and/or S Trusts constituted a financial resource.
3. The husband has no interest in property as a result of the S Trust. In that trust deed he is nominated as a primary beneficiary along with W Pty Ltd and the husband's brother. It was asserted that his inclusion as a primary beneficiary or as a beneficiary at all was a mistake. It is possible that under the S Trust he might also satisfy the definition of being a secondary beneficiary as the definition appears in the trust deed. He is a brother of a person nominated as a primary beneficiary. It does not appear that the wife would satisfy the definition of being a secondary beneficiary except to the extent that the wording of the schedule in the trust deed reads (Schedule to the S Trust Deed):

Any person who shall at any time be or have been (emphasis added):-

1. On the assumption that it has not been claimed that the deed should be rectified, it seems that the husband was, at least at the time of the execution of the deed, and at least until his purported removal on or about 28 February 2005, a primary beneficiary. In such circumstances it might reasonably be argued that the wife had been a spouse of a primary beneficiary, although if the removal of the husband as a beneficiary was validly conducted she was not after that time a person who was a spouse of a primary beneficiary.
2. On balance, I prefer the latter construction, however, little turns on this matter as it is clear that under no circumstances was the present wife in these proceedings the spouse of a capital beneficiary. At most, she may have or may still be entitled to a distribution of income. To that extent, it may represent a potential source of funds for her at some point. However, in the light of all of the evidence particularly and the findings of his Honour Benjamin J, the prospects of her ever getting any money out of the trust would have to be regarded as low. To categorise her potential benefit as a spes succession would be, in the words of Dusty Springfield, "wishing and hoping, thinking and praying."
3. The capital beneficiaries were the children K and B, and it is they who have a potential entitlement to the capital of the trust at some point.
4. The default beneficiaries nominated in the deed are W Pty Ltd, the husband's brother and the husband. The significance of default beneficiaries is that if the trustee had not by 30 June in each year exercised a discretion to pay, apply or set aside or accumulate the whole or any part of such of [the] income from the trust in [that year] (Clause 3.3(d) S Trust Deed):

... then the Trustee shall hold it on trust absolutely for the Default Beneficiaries.

1. This provision is in one form or another commonly incorporated into discretionary trust deeds to prevent a penalty rate of tax being applied owing to a failure on the part of a trustee to exercise the discretion among the various beneficiaries for distribution of income.
2. The nomination in the trust deed of the husband as a default beneficiary hence means that there was the potential for him to have been the recipient in any year in which the trustee failed to make a determination about distribution among the beneficiaries of one third of the income of the trust in that year.
3. There is no suggestion that that has ever occurred. In particular, there is no suggestion that it occurred prior to the purported removal of the husband as a beneficiary on or about February 2005. In his oral evidence, the husband's brother, (Appeal Book, p 616) with reference to the document that was tended and became Exhibit #W9D, said:

MR TREZISE: So that purports to remove [the husband] as a beneficiary of the trust? --- Yes.

The date, I think, was August 05? --- February 05. We went away in March.

So the purpose of that was what? --- The purpose of that, as I just said, it was twofold. The first, I never asked his name to be included in the trust and second, as my brother was going to represent me and there could be an inference that he was a beneficiary of the trust and benefiting from his actions. Those two issues combined, his name was removed in discussions with [Mr RO]. I said to [Mr RO] - he went away and said, "I'll get legal advice on it," and come back and said, "You're the beneficiary of the trust," in basic terms, "You can do it."

1. Subsequently, his Honour the learned trial judge (Appeal Book, p 617) said as follows:

HIS HONOUR: Whether the trustee has power to do that, on reading clause 21, is a moot point, I would have thought.

MR WELCH: One would think that as [the husband] could be removed ---

HIS HONOUR: I don't know that the section gives you power to remove. Perhaps if you get legal advice from accountants you get the legal advice that you pay for, don't you?

1. As was commented during the course of the proceedings, and by his Honour Benjamin J, it was the submission on behalf of the wife that a failure to call Mr RO, the accountant, ought to have been regarded by his Honour as falling within the scope of the rule in Jones v Dunkel ((1959) 101 CLR 298) and that the trial judge should have inferred that Mr RO would not have given evidence favourable to, or perhaps supportive of, the position adopted by the husband.
2. I do not accept that the Rule in Jones v Dunkel has application in this matter about this point. To some extent exhibit #W9D speaks for itself in that it purports to record the removal of the husband as a beneficiary from the S Trust. Whether it accurately records what happened is another matter altogether to which I will return. Moreover, the evidence of the trustee and principal the husband's brother was to the effect that it was a mistake that he was ever incorporated into the classes of beneficiaries in the first place. The wife, of course, was unable to give any contradictory evidence and although the husband's brother was questioned about these matters he was not seriously challenged as to the alternative proposition namely that the process whereby the husband was removed as a beneficiary was in effect a sham or a deceit. His Honour the learned trial judge correctly identified that the minute of the trustee company appeared not accurately to record what had happened. The minute is short and I quote it in full.

One of the Primary Beneficiaries of [the S Trust], being [the husband], was excluded by the Trustees from any class of beneficiaries and no sums, whether of income or capital, shall be allocated or set aside or paid to or otherwise applied to or for the benefit of such Beneficiary in accordance with Clause 20.1 of [the S Trust] Deed.

The resignation was hereby accepted by the Trustees effective immediately.

There being no further business the meeting was closed.

1. The reference to clause 20.1 of the trust deed was misconceived. That clause reads as follows:

Any Beneficiary by oral declaration recorded in the Minutes or records of the Trustee or by written notice to the Trustee at any time may exclude himself from any class of Beneficiaries and no further sums whether of Income or of Capital shall be allocated or Set Aside or paid to or otherwise applied to or for the benefit of such Beneficiary provided however that any such notice shall not affect the beneficial entitlement to any amount Set Aside for such Beneficiary prior to the date of such notice.

1. It seems clear that this clause was intended to deal with a situation where a beneficiary sought to exclude himself or herself from the operations of the deed. It is common ground and not suggested by anyone that any written notice was given at any time by the husband to the trustee or to any other relevant person that he wished or would exclude himself from any class of beneficiaries. The only other condition upon which this particular clause could operate was if he had made an oral declaration which was then recorded in the minutes or records of the trustee that he was excluding himself from any class of beneficiaries.
2. As quoted above, the minute records that the husband was "excluded by the trustees from any class of beneficiaries..." and consistent with the evidence of the husband's brother in his cross-examination (as referred to above) this is almost certainly what occurred. It was not the case that the husband sought to exclude himself which would have invoked the provisions of clause 20.1 but rather that he was to be excluded by the trustee.
3. Almost certainly if the husband's brother's evidence is to be accepted (and there is no contradiction put to him or indeed called in contradictory evidence if it was a mistake for the inclusion of the husband as a beneficiary in the trust deed) then the correct course for the trustee to have undertaken was to have executed a deed of rectification or more drastically and inappropriately if the issue ever became a matter of doubt to have sought an order for rectification from the Supreme Court of Tasmania in its equitable jurisdiction.
4. However, under the terms of clause 13.1 of the trust deed, the trustee was given power to vary or delete any of the trusts the subject of the deed. The clause reads as follows:

Subject to clause 13.2, the Trustee may by deed or in the manner prescribed in clause 30 revoke, add to, release, delete or vary all or any of the trusts or powers or any trusts or powers declared by any revocation, addition, release, deletion or variation made to this Deed from time to time and may by the same or any other deed declare any new or other trusts or powers concerning the Trust Fund or any part or parts of it provided that no such revocation, addition, release, deletion or variation shall be valid if it would have the effect of infringing the law against perpetuities.

1. Clause 13.2, which is referred to above, simply means that the principal cannot be removed or have his powers or discretions reduced or revoked without the consent of the principal.
2. Hence, it seems to me that the trustee, in this case W Pty Ltd operating through its sole director the husband's brother, may have by deed achieved the removal of the husband as a beneficiary. It is clear that this did not occur. In terms of clause 13.1 therefore the way in which the same result may have been achieved was by reference to clause 30. Clause 30, however, does not necessarily provide a total solution to the problem. Clause 30 appears under a general heading of "Oral Declarations" and clause 30.1 reads as follows:

Notwithstanding any provisions to the contrary in this Deed, any power or discretion vested in the Trustee, Settlor, Principal or any other Person under this Deed may at the discretion of the person exercising that power be exercised by that Person or, where the power or discretion is vested in a company, by any director of that company, making an oral declaration in the presence of a Justice of the Peace or Solicitor of the manner in which the Person is exercising the power or discretion and, where the oral declaration by a resolution of the directors of the company, that he has been authorised to make the declaration by a resolution of the directions of the company. A statutory declaration sworn by the Justice of the Peace or Solicitor in whose presence the power or discretion is exercised declaring that the Person purporting to have such power or discretion has exercised that power or discretion by oral declaration in his presence and setting out the terms of that oral declaration shall be conclusive evidence of the valid and effectual exercise of that power or discretion (emphasis added to the word 'may' above).

1. Given the positioning of this clause in the trust deed and its removal by a number of other clauses from clause 13.1 referred to above it may be that the purpose of the drafters was to provide some form of evidentiary provision to overcome an informal or unrecorded exercise of a discretion. If it had been intended that the combined effect of clause 13.1 and clause 30.1 was to prescribe only two ways by which the trusts might be varied then it would have been logical for the word 'will' to have been substituted for the word 'may' (as emphasised above). The use of the permissive 'may' would suggest that this was a further way in which the discretion or power might be exercised without its necessarily being the only alternative to the deed referred to in clause 13.1. What clause 30.1 undoubtedly provided was a mechanism for proving that which had been done orally. It seems to me, however, that it does not preclude the proposition that if satisfactorily otherwise proved, the exercise of a power or discretion might nevertheless be effective to alter the trust deed.
2. Although a deed of rectification may have been sensible or a deed in any event whether entitled "of rectification" or otherwise would have been wise, and whether or not the procedure for conclusively proving that an oral variation of the trusts had occurred in this matter, there is no evidence to dispute the proposition contended for by the husband's brother that there had been a variation in the trusts designed and effective, to remove the husband as a beneficiary. To some extent the minute of 28 February 2005 (Exhibit #W9D) is corroborative of this process because it refers to the fact that the husband was 'excluded by the trustees'.
3. If my interpretation of the deed is correct then as and from 28 February 2005 and certainly at the date of the proceedings before his Honour the learned trial judge the husband was not a beneficiary of the S Trust except perhaps indirectly as the brother of a primary beneficiary and hence as a secondary beneficiary. However, if he has, as the minute suggests, been removed as a beneficiary then he would have been removed implicitly from that category of beneficiary as well. This means that, in my opinion, there is no basis upon which it could be said that the husband could have had an interest in the S Trust such as to constitute a financial resource after 28 February 2005.

1. However, nothing is ever quite as simple as that. In this matter, it is common ground and was conceded by the husband's brother that he could in his capacity as director of the trustee company have resigned as trustee and appointed the husband or some other person presumably as his nominee as the trustee of the S Trust. There seems little doubt that such a power exists - see for example clause 14.3 (trustee may resign) and clause 14.2 provides that the principal may remove a person from being a trustee and appoint any person other than a secondary beneficiary to be a trustee either alone or together with any continuing trustee jointly or severally. If my interpretation set out above is correct and that the husband has been removed as a secondary beneficiary (as brother of a primary beneficiary) then he could be appointed as a trustee pursuant to clause 14.2 by the principal being the husband's brother. If, however, my interpretation of the removal provisions is incorrect and the husband remains as secondary beneficiary as undoubtedly was the case in the original form of the deed, then he could not be appointed as a trustee.
2. Assuming for a moment that he is not a secondary beneficiary and hence capable of being appointed as a trustee, would such an appointment thereby permit a finding that there was a financial resource for the husband in the S Trust? Applying the reasoning referred to above about clause 13.1 it seems that the trustee might vary the trust to again include the husband as a beneficiary.
3. Clause 7.1 which enables the appointment of additional beneficiaries precludes the appointment of any further capital beneficiaries and would permit only the appointment of a primary beneficiary or a secondary beneficiary. Whether or not the husband remained as the secondary beneficiary as I have suggested above may be moot but if it were it would preclude him from being appointed as a primary beneficiary.
4. In this elaborate scenario, therefore, if the trustee resigned and if the principal were to appoint the husband as trustee and if the trustee were then to appoint himself or his nominee as a primary or secondary beneficiary it would be open in such circumstances for the husband to exercise his discretion as trustee in favour of himself (or perhaps his nominee) to distribute income from the trust to him. In such circumstances, it would be the case that this could then represent a financial resource in his hands. It was suggested in the course of cross-examination of both brothers that this was in fact the intention and that once the dust on the matrimonial settlement had settled the trust would be handed over as a 'blood-line' trust to the husband who would then have the benefit for it.

1. The N Trust, it is common ground, was set up for the benefit of the husband's brother and his wife and those who might derive some benefit through either or both of them. It appears, although I am not sure there is any direct evidence of the point, that they have no children. Under the terms of this trust deed which was clearly drafted by a different person from the S Trust the primary beneficiaries are the finders the husband's brother and his wife. The processes referred to in the S Trust are primary and secondary beneficiaries are not pursued in this deed but in clause 34 of the deed (definitions) beneficiary is defined as:

(a) This clause explains who are the Beneficiaries of the Trust.

(b) In this Deed the word "Beneficiary" means either a Primary Beneficiary or a General Beneficiary and the phrase "a class of Beneficiaries" and any similar phrase shall have a corresponding meaning.

(c) In this Deed the phrase "Primary Beneficiaries" means the persons described as the Primary Beneficiaries in the Schedule and any additional Primary Beneficiaries nominated under clause 14 of this Deed.

(d) In this Deed the phrase "General Beneficiaries" means the Primary Beneficiaries; the parents, brothers, sisters, spouses, widows, widowers, grandparents and any descendant of the Primary Beneficiaries and the spouses, widows, widowers, or any descendant of such brothers, sisters, spouses, grandparents and descendants; any educational body which a Beneficiary attends or has attended; any company in which a Beneficiary has a shareholding interest or a directorship; any other trust under which a Beneficiary is a beneficiary;

1. The remaining clauses of 13 are not relevant for these purposes. It therefore appears that the beneficiaries under the N Trust would include the husband as a brother of a primary beneficiary. It would appear that the wife is no longer a spouse of the husband and accordingly, would not fall within the definition set out above.
2. In such circumstances can it properly be said that there is a financial resource available to the husband under the N Trust? There is no suggestion that he has been removed as a beneficiary of the N Trust, but equally it is not suggested that his brother is likely to provide any benefit to him. It was not suggested to his brother that he would and not suggested to his brother that he had, except in the very limited circumstances dealt with in part in cross-examination whereby an airfare was provided to enable the husband to attend his father's funeral. Moreover, the terms of the cross-examination of the husband's brother reveal quite clearly that it is improbable that he would exercise a discretion (as would obviously be required) to make such a provision for his brother.
3. There is no way that the husband can compel the exercise of such discretion and while he may retain a residual power to seek an order from an appropriate court if he wanted to do so for a proper administration of the trust it would seem that such a remedy would in its terms be somewhat empty. It is not necessary under the terms of the deed and in fact not reasonably within contemplation that any beneficiary might claim a share of the estate except in circumstances of default which are not relevant. This means that it would be enough even if the trustee were to be obliged to give consideration to a distribution in favour of the husband that such consideration be given and rejected. There would be no recourse by the husband against such a determination.
4. Again, this may, in the circumstances, constitute perhaps, in its most attenuated form, a financial resource but to the extent that it does constitute a financial resource, its weight is of no substance.

1. Accordingly his Honour's determination that there was no relevant financial resource to the husband under either of the trusts is in my opinion appropriate and valid and accordingly this particular additional ground of appeal should be dismissed.
2. As I mentioned above, I also express doubts about the way in which his Honour approached the question of spousal maintenance. However, given the way in which their Honours the Chief Justice and Justice Boland have approached their judgment, this is a moot consideration and it is unnecessary for me to determine this issue.

I certify that the preceding two hundred and thirty-eight (238) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.