Grace v Grace

Total assets 5,968,987 4,757,154 Less, total liabilities -1,045,473 -675,475 Net asset value 4,923,514 4,081,679 1/112 share 43,960 36,444 Colin = 12/112 shares 527,520 437,323

(1) 2/754 New South Head Rd was acquired after 30 June 1993. (2) Boston Ave, East Malvern was acquired after 30 June 1994. 4Prior to his death, Colin held 10 of the 112 shares in Nevilda Investments, and was beneficially entitled to another two (held in trust for him by Hilda and Carolyn). This process results in Nevilda Investments having net assets of $4,081,679 as at 30 June 1993, so that one ordinary share would be worth $36,444, and Colin's twelve ordinary shares $437,323. 5Nevilda Holdings. As explained in the substantive judgment (at [261]), the value of the ordinary (equity) shares is derived from the same process as applied by the defendants as at May 1995, but substituting the value of the underlying Nevilda Investments shares as deduced in the previous paragraph, and using the 1993 instead of the 1995 accounts. Defendants' Judgment: submission: 1993 valuations 1995 valuations and accounts and accounts 100 Nevilda Investments ORD 4,395,995 3,644,400 Current assets 1,393 1,389 Total assets 4,397,388 3,645,789

Total assets 4,397,388 3,645,789 Less, liabilities -63,121 -60,525 Net asset value 4,334,267 3,585,264 1/600 ORD 7,224 5,975 Colin = 300/600 ORD 2,167,133 1,792,632

6This results in a value for Colin's 300 ordinary shares of $1,792,632 - an immaterial discrepancy from the $1,792,012 mentioned in the substantive judgment. 7Grace Securities. As explained in the substantive judgment (at [262]), the defendants ascribed to each share a value of $2,286,150, by substituting 1995 valuations, this time into the 1993 financial statements - presumably because the 1995 financial statements were not contained in DX314. In any event, on my preference for the September 1992 date, the 1993 financial statements are more proximate and appropriate. However, 1993 and not 1995 valuations should be used for that purpose. In the case of this company's properties, however, only 1995 valuations were obtained. From the overall trend in the valuation evidence over this period, I have assumed a general increase in values of about 20% over the relevant two-year period. Working backwards, this involves a discount of about 15% from the 1995 values. It is also necessary to substitute the revaluations of the 300 shares in Nevilda Holdings (as per para 6 above) and the 200 shares in Sharander (as per para 9 below). Defendants' Judgment: submission: 1993 valuations 1995 valuations and accounts and 1993 accounts 17 Sir Thomas Mitchell 965,000 820,250 124 Roscoe 1,460,000 1,241,000 Other non-current assets 21,618 21,618 300 Nevilda Holdings ORD 2,167,133 1,792,632 200 Sharander A 183,326 163,540 Other current assets 108,980 108,980 Total assets 4,906,057 4,148,020

Total assets 4,906,057 4,148,020 Less, liabilities -333,757 -333,757 Net asset value 4,572,300 3,814,263 1/2 ORD 2,286,150 1,907,131 Colin = 1/2 ORD 2,286,150 1,907,131 Julienne =1/2 ORD 2,286,150 1,907,131

8This results in a value for each of Colin's and Julienne's shareholding of $1,907,131, and exposes an error in the substantive judgment, where I concluded that value per share was $1,724,978. I have not been able to identify the source of that error in the previous calculation. 9Sharander. As explained in the substantive judgment (at [263]), using a similar process, the defendants attribute to 200 shares held by Colin in Sharander a value of $183,326 as at April 1995, and a corresponding value to the equivalent number of shares held by Julienne. Sharander's property at Curlewis St was valued only as at 1995, and accordingly I have applied a 15% discount and substituted that discounted valuation in the 1993 instead of the 1995 accounts; this results in each parcel of 200 shares being worth $163,540, a minor discrepancy from the $163,604 mentioned in the substantive judgment. Defendants' Judgment: submission: 1993 valuations 1995 valuations and accounts and accounts 86 Curlewis 1,160,000 986,000 Other property etc (1) 78,421 96,209 Other non-current assets 8,128 7,977 Current assets 168,560 220,622 Total assets 1,415,109 1,310,808

Total assets 1,415,109 1,310,808 Less, liabilities -131,827 -166,025 Net asset value 1,283,282 1,144,783 1/1400 917 818 Colin = 200/1400 183,326 163,540 Julienne = 200/1400 183,326 163,540

(1)Derived by deducting 86 Curlewis at Directors' valuation $432,425 (as per 1991 and 1995 Financial Statements) from total property plant and equipment $528,634. 10N&H Grace Holdings. As explained in the substantive judgment (at [264]), the defendants attributed to Colin's shareholding in N&H Grace Holdings a value of $263,646, by substituting the revaluation of the Sharander shares into the 1998 balance sheet obtained from the 1999 financial statements - presumably because none other after 1990 were in evidence. Applying the above revaluation of Sharander to the same balance sheet results in a value for Colin's 1002 shares of $244,056, which differs immaterially from the $244,119 mentioned in the substantive judgment. Defendants' Using 1993 submission 1995 valuations and valuations and 1998 accounts 1998 accounts 200 Sharander A 183,326 163,540 Shares in public companies 4,633 4,633 Current assets 96,120 96,120 Total assets 284,079 264,293

Total assets 284,079 264,293 Less, liabilities -17,801 -17,801 Net asset value 266,278 264,492 1/1012 ORD 263 244 Colin = 1002 ORD 263,646 244,056

11The error in the substantive judgment in the calculation of the value of the shares in Grace Securities affects both the husband's and the wife's share, as each held one of two shares. On this account (and on account of the other minor discrepancies noted above) the table of assets in the substantive judgment must be amended, as follows: Husband's Assets Title Value Note ANZ Deposit H 531,632 1 Other cash H 4,966 2 Super H 61,058 3 3 Burrabirra (1/2 interest as joint tenant) Jt 750,000 4 272 Birrell H 640,000 5 Shares in public companies H 132,222 8 Shares in Nevilda Investments H 437,323 10 Ordinary shares in Nevilda Holdings H 1,792,632 11 CUMPs in Nevilda Holdings H 1,943 11 Share in Grace Securities H 1,907,131 12 Shares in Sharander H 163,540 13 Shares in N&H Grace H 244,056 14 Shares in Debid H 99 15 Other H 34,500 16 Total Assets 6,701,102

Less, liabilities Title Value Note Burrabirra mortgage (1/2 outstanding balance) Jt 82,500 4 Birrell mortgage H 127,800 5 Other H 122,484 17 Total Liabilities 332,784

Husband's net position Total Assets 6,701,102 Less, total liabilities -332,784 Net position 6,368,318

Wife's Assets Title Value Note Cash W 0 2 Super W 50,000 3 3 Burrabirra (1/2 interest as joint tenant) Jt 750,000 4 2 Alma W 385,000 6 6/2 New Beach W 300,000 7 Shares in public companies W 334 9 Share in Grace Securities W 1,907,131 12 Shares in Sharander W 163,540 13 Shares in Debid W 100 15 Other W 48,981 16 Total Assets 3,605,086

Less, liabilities Title Value Note Burrabirra mortgage (1/2 outstanding balance) J 82,500 4 Alma mortgage W 250,000 6 New Beach mortgage W 120,000 7 Other W 23,539 17 Total Liabilities 476,039

Wife's net position Total Assets 3,605,086 Less, total liabilities -476,039 Net position 3,129,047

Summary Husband's net position 6,368,318 Wife's net position 3,129,047 Net divisible property 9,497,365

12Accordingly, the net divisible property as at September 1992 was in the order of $9,497,365 (not $9,132,630), of which Julienne was entitled to $3,129,047 (not $2,946,958), or 33% (a greater share than the 32% I had originally thought). This is because the correction in respect of Grace Securities increases each of Colin's and Julienne's property by $182,153. Consequently, the alteration that would have been made had Colin not died is slightly less than I had originally contemplated, and there is similarly even less reason still to make an adjustive property order in the light of the consequences of and circumstances following his death. 13As a result of the foregoing, some amendments are required to some of the summary paragraphs in the substantive judgment, as follows. 14Paragraph 288 of the substantive judgment requires revision, to the following effect: 288 As at the notional adjustment date the actual distribution of assets was 67:33 in favour of Colin, and as I have concluded that an appropriate apportionment was 60:40, it can be concluded, for the purposes of s 79(8)(b)(i), that had Colin not died the court would have made an order adjusting the interests of the parties in favour of Julienne, so as to produce a distribution that was 60:40 in favour of Colin. 15Paragraphs 293 and following of the substantive judgment require revision, to the following effect: 293 The second impact of Colin's death is that, by survivorship, Julienne succeeded to Colin's share in Burrabirra Avenue, unencumbered. The practical effect of this was an adjustment in her favour of $750,000, increasing her net position to $3,879,047, or 41% of the pool of property. Only a further $157,333 would have been required to produce the notional 57.5:42.5 distribution, based on the original pool. 294 Thirdly, however, under Colin's will, Deborah also obtained significant benefits. Through the shares in Grace Securities, Deborah received property to the value of $1,907,131, and through the shares in Sharander, a further $163,540. In all, this amounted to almost 22% of the divisible pool of property. This is of importance because, having regard to (1) the alignment of Deborah with Julienne and David with Colin following separation, (2) the arrangement between Colin and Julienne following their separation that he would provide for David while she would provide for Deborah, (3) the fact that Julienne made a will on February 1988 leaving the bulk of her estate to Deborah, and explaining in the body of her will that she did so because Colin was proposing by his will to leave his estate to David, and (4) the alignment of the parties in these proceedings, so that it may be considered improbable that David would inherit significantly if at all from Julienne, it is necessary to consider whether - at least to the relatively small extent of $157,333, which corresponds to about 7.5% of Deborah's inheritance from Colin - it should be borne by Julienne's share of the matrimonial pool. 295 In my judgment it should, first because the provision made by Colin for Deborah significantly reduced Julienne's obligation to provide for her; secondly because her remaining 41% share was ample to provide for Julienne's needs; and thirdly because treating the distribution to Deborah in that way would result in Julienne receiving 41% of the matrimonial pool, David 37% (being Colin's residuary estate) and Deborah 22%, but with the likelihood that in due course Deborah and not David would inherit from Julienne. 296 Accordingly, once the s 75(2) adjustment in favour of Colin is disregarded by reason of his death, the appropriate apportionment returns to 57.5:42.5. As a result of the will, the distribution in favour of Julienne increased from 33% to 41%, by reason of her succession to Colin's interest in Burrabirra Ave. Although this implies that there ought to have been an adjustment in favour of Julienne to increase her interest to 42.5%, Deborah received 22% of the pool pursuant to Colin's will, and given the sufficiency of 41% amply to provide for Julienne's needs, and the alignments of the parties and the arrangements they agreed in respect of provision for the two children, it is just and equitable that the distribution to Deborah be treated, at least to the extent of 1.5% of the pool, as being for the benefit of Julienne. 16Paragraphs 315 and 316 of the substantive judgment require revision, to the following effect: 315 The net divisible property of Colin and Julienne as at September 1992 was in the order of $9,497,365, of which Julienne was then entitled to $3,129,047, or 33%. Overall, the contributions of Colin up to that notional date of adjustment exceeded those of Julienne, in my assessment by 57.5% to 42.5%. On balance, the s 75(2) factors weighed in favour of Colin, albeit that given the size of the pool of assets, their relative impact would have been slight, justifying a further adjustment in his favour of 2.5%, resulting in an overall apportionment 60:40 in favour of Colin as at the notional adjustment date. As, at the notional adjustment date, the actual distribution of assets was 67:33 in favour of Colin, and an appropriate apportionment was 60:40, had Colin not died the court would have made an order adjusting the interests of the parties in favour of Julienne, so as to produce a distribution 60:40 in favour of Colin. 316 Once the s 75(2) adjustment in favour of Colin is disregarded by reason of his death, the appropriate apportionment returns to 57.5:42.5. As a result of the will, the distribution in favour of Julienne increased from 33% to 41%, by reason of her succession to Colin's interest in Burrabirra Ave. Although this implies that there ought to be an adjustment in favour of Julienne to increase her interest to 42.5%, Deborah received 22% of the pool pursuant to Colin's will, and given the sufficiency of 41% amply to provide for Julienne's needs, and the alignments of the parties and the arrangements they agreed in respect of provision for their two children, it is just and equitable that the distribution to Deborah be treated, at least to the extent of 1.5% of the pool, as being for the benefit of Julienne. It is therefore not still appropriate to make an adjustive property order. Accordingly, I would not make an order under s 79 in substitution for the order set aside. 17Orders may now be made to give effect to the substantive judgment.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 October 2012