Smith v Gould [2012] VSC 461

1 This is a case about fine art and its role in the personal domestic relationship between Geoffrey Smith and Robert Gould. Artistically it all began and ended with Donald Friend. Mr Gould was staging an exhibition of that artist's work at his gallery, Gould Galleries in South Yarra, when he met Mr Smith at an art event cocktail party in April 1990. Mr Smith recalled that when he told Mr Gould he was moving out, some 14 years later in June 2004, Donald Friend's sculpture Greek Soldiers bore silent witness to their anguish.

2 In the decade prior to meeting Mr Smith, Mr Gould worked successfully, with his mother Dita Gould, to establish and build a commercial art gallery. Gould Galleries has thrived to this day. Mr Smith, about 14 years Mr Gould's junior, was studying fine art at Melbourne University when he met Mr Gould and a career at the National Gallery of Victoria, specialising in modern Australian art, lay before him. Mr Smith's first love was the work of Sir Arthur Streeton and the story of his involvement in Gould Galleries, central to this proceeding, began with a Streeton painting, The Gentleness of Heaven is on the Sea. In 2006, Mr Gould's sale of Brett Whiteley's, Bather and Garden caused legal hostilities to erupt between the two men with an application to this court to restrain the sale of artworks allegedly constituting a joint private collection. By then, Gould Galleries had been dealing extensively in the secondary market with the art of modern Australian artists including Howard Arkley, Charles Blackman, Arthur Boyd, Andrew Browne, Criss Canning, Donald Friend, David Larwill, Norman Lindsay, Sidney Nolan, John Perceval, Ben Shearer, Freddie Timms, Albert Tucker, Brett Whiteley, and Fred Williams.

3 This court may, on application made under Part IX of the Property Law Act by one partner in a failed domestic relationship adjust the interests of the domestic partners in the property of one or both of them as appears to be just and equitable. The Family Court of Australia now exercises this jurisdiction.

4 In 1990, Mr Gould owned a terrace house in South Yarra and, once renovated, it became the domestic residence for the duration of the relationship. In 1999, Mr Gould acquired an apartment in Potts Point, used as a Sydney residence.

5 In 2004, when Mr Smith and Mr Gould separated, a most impressive hanging of artworks adorned what had been their South Yarra home. Mr Smith alleged that fifty-four of these artworks, sourced from Gould Galleries, and from one or both of Mr Gould and Mr Smith, had been the 'Gould-Smith Collection', a jointly owned private collection of significant modern Australian artists. Mr Gould owned half of Dukville Pty Ltd, which in turn owned all of the units in the E&R Gould Unit Trust. The trading trustee, Edrob Nominees Pty Ltd operated Gould Galleries from two locations in South Yarra and, later, in Sydney. In 1996, Mr Gould purchased his mother's interest in Dukville. Mr Smith identifies both the Gould Smith Collection and Mr Gould's shares in Dukville as major assets of the divisible pool of property interests for adjustment in this proceeding.

6 Mr Gary Singer was a close friend of each of Mr Smith and Mr Gould throughout the relationship. Now he is, and has been for some years possibly from a time prior to June 2004, Mr Smith's partner in an intimate relationship. During the 14 years of the Smith-Gould relationship, Mr Singer participated with them in residential property investment ventures. In 2004, Mr Smith and Mr Gould, or Mr Gould's entities, had interests, mostly with Mr Singer's entities, in nine investment properties. There were other investment projects that were completed before June 2004.

7 When Mr Smith and Mr Gould agreed to separate in 2004, Mr Gould purchased for Mr Smith an apartment in South Yarra that was under contract to Mr Singer or nominee and Mr Smith moved into it. Mr Gould furnished and equipped that apartment and provided artworks to adorn its walls. There were discussions between those involved about transfers of the interests in the investments consequent on the break up of the relationship. Mr Gould contended he reached an agreement with Mr Smith. Many investment properties have been sold since 2004.

8 There were other assets identified, being, in the main, cash in bank accounts, cars, household contents (other than artwork), superannuation accounts, gifts, and some liabilities.

9 The court needs to be satisfied of certain conditions for making orders that are set out in ss 280-282 of the Act. These matters are that:

(a) one or both of the domestic partners lived in Victoria on the day on which the application was made;

(b) both partners have lived together in Victoria for at least one third of the period of their relationship;

(c) substantial contributions of the kind referred to in s 285(1)(a) or (b) have been made in Victoria by the partner making the application;

(d) the domestic partners have lived together in a domestic relationship for a period of at least two years; and,

(e) if domestic partners have ended their domestic relationship, the application for an order was made within two years after the day on which the relationship ended.

Duties and obligations on the court and enabling powers

10 So far as is practicable, the court's duty is to make orders that will end the financial relationships between the domestic partners and avoid further proceedings between them.[1] To this end, the statute grants two relevant powers.

11 In respect of existing title or rights in property, the court may declare the title or rights, if any, that a domestic partner has in respect of the property.[2] Further, the court may make any one or more of the orders set out in s 291 of the Act, including, relevantly for this proceeding:

(b) order the sale of property and the distribution of the proceeds of sale in any proportions that the court thinks fit;

(c) order that any necessary deed or instrument is executed and that documents of title be produced or other things be done that are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;

(d) order payment of a lump sum, whether in one amount or by instalments;

(e) order that payment of any sum ordered to be paid be wholly or partly secured in any manner that the court directs.

12 The key operative provision is s 285 and I will set it out.

285. Order for adjustment

(1) A court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to -

(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and

(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the domestic partners to the welfare of the other domestic partner or to the welfare of the family constituted by the partners and one or more of the following -

(i) a child of the partners;

(ii) a child accepted by one or both of the partners into their household, whether or not the child is a child of either of the partners; and

(c) any written agreement entered into by the domestic partners.

Principles of adjustment - some general observations

14 In recent years, State appellate courts have examined the interpretation, and the principles governing the application, of the statutory provisions for the adjustment of property rights between former de facto couples. In 2011, the Court of Appeal in Apostolidis v Kalenik,[3] reviewed earlier authorities and affirmed the principles to be applied in the exercise of the statutory jurisdiction. In New South Wales, the Court of Appeal in Kardos v Sarbutt[4] considered the principles for adjusting property interests under the Property (Relationships) Act 1984 (NSW). The New South Wales Court of Appeal identified a three-step approach to the exercise of the jurisdiction, and a number of guiding principles in taking those steps, that have been accepted by other State appeal courts. In both Giller v Procopets[5] and Apostolidis v Kalenik,[6] the Victorian Court of Appeal approved of the Kardos three step approach when considering appeals under Part IX of the Property Law Act 1958 (Vic)), which is in similar terms to the NSW Act. In Queensland, the similar terms of Part 19 of the Property Law Act 1974 (Qld) were discussed in FO v HAF[7] and GAJ v RAJ.[8]

15 The three main steps in exercising the jurisdiction[9] are first, the identification and valuation of the property of the parties to the relationship, which determines the pool of property of the parties or either of them which may be adjusted (the 'divisible property'). The second step is evaluating and balancing the parties' respective contributions (of the identified types[10]), typically resulting in a percentage apportionment between the parties of the overall contributions made by each of them to the date of hearing. Third, determination of the orders required to sufficiently recognise and compensate the plaintiff's contributions. Commonly, but not in this case, this step results in a declaration that leaves the plaintiff with the identified percentage of the divisible property, and consequential orders.

16 In this proceeding I must, in making an order that adjusts the interests of the parties in the property of one or both of them, and in fashioning its terms, resolve the following issues:

(a) What is the date of separation when Mr Smith and Mr Gould ceased to live together as a couple on a genuine domestic basis?

(b) Did Mr Smith compromise his claim by making an enforceable agreement with Mr Gould that determined their several entitlements to divisible property?

(c) Should the court adopt an 'asset by asset' approach or a 'global' approach to determining the financial and non-financial contributions of each party?

(d) Should the court adopt, as the operative date, the date of separation or the date of trial to best facilitate the ultimate task of evaluating respective contributions.

(e) What was the nature and value of the assets, property, or financial resources - the divisible property - held by the parties at the operative date?

(f) During the relationship, what contributions were made by each of the parties to the acquisition, conservation or improvement of any of the divisible property (see note), an issue that raises some further issues being:

(i) what was the nature and value of the assets, property, or financial resources introduced by each party to the relationship when it commenced?

(ii) what was the nature and value of the divisible property that, following the date of separation, was retained by either party or provided by one party to the other?

(iii) what contributions were made by either party to divisible property retained by the other party after the date of separation?

(g) What were the respective contributions made by each party to the other's welfare?

(h) What orders are required to sufficiently recognise and compensate the plaintiff's contributions?

17 It is convenient, before examining the issues pertaining to adjustment to look at the first two issues raised - the separation date and whether Mr Smith compromised his claim by making an enforceable agreement with Mr Gould that determined their several entitlements to divisible property.

18 I find that the domestic relationship between Mr Smith and Mr Gould terminated on or about the Queen's Birthday weekend in 2004. For the most part, I can conveniently adopt 30 June 2004 as the appropriate date for separation.

19 Throughout the course of the proceeding until during the trial, Mr Gould maintained that the domestic relationship had ended in 1997 because Mr Smith was involved in an intimate relationship with Mr Singer from that time. The statute directs a factual inquiry into the status of the relationship. A 'domestic relationship' is defined in s 275 of the Act.

"domestic relationship" means the relationship between two people who, although not married to each other, are living or have lived together as a couple on a genuine domestic basis (irrespective of gender).

...

(2) For the purposes of the definition of "domestic relationship" in sub-section (1), in determining whether a domestic relationship exists or has existed, all the circumstances of the relationship are to be taken into account, including any one or more of the following matters as may be relevant in a particular case -

(a) the duration of the relationship;

(b) the nature and extent of common residence;

(c) whether or not a sexual relationship exists;

(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties;

(e) the ownership, use and acquisition of property;

(f) the degree of mutual commitment to a shared life;

(g) the care and support of children;

(h) the reputation and public aspects of the relationship.

20 The relevant determinative concept is residence, not fidelity, but all of the particular circumstances of co-habitation by the parties during the relevant period may bear upon the proper conclusion. Mushin J in Moby & Schulter,[11] considering like provisions in the Family Law Act 1975 (Cth),[12] pertinently observed:

It is not necessary for a de facto relationship to be an exclusive relationship. One or both parties may be legally married or in another de facto relationship while being in the de facto relationship which is the subject of the proceedings. Further, the parties to a de facto relationship may be heterosexual or of the same sex ...

... before the definition may be considered as constituting "a single composite expression of a comprehensive notion or concept", there are two specific elements of that definition which require individual consideration. The first of those is the concept of "a couple". For the purposes of the definition, "a couple" is constituted by two people, whether of the same or opposite sexes. The second specific element is the concept of "living together". In my view, if a couple do not live together at any time, they cannot be seen as being in a de facto relationship. However, the concept of "living together" does not import any concept of proportion of time. In particular, it does not require that a couple live together on a full-time basis. On the basis that one or both members of the couple may also be legally married or in another de facto relationship at the same time as they are in the subject relationship, it must follow that it is feasible that the subject relationship might involve the parties living together for no more than half of the time of that relationship. Further, there is nothing to suggest that it must be even as much as half of the time. Subject to the above, the question of whether the parties were in a de facto relationship must be considered on a case-by-case basis without circumscribing any particular factor.

21 I agree. Further, as I will explain, the infidelity that Mr Gould alleges, assuming it existed, did not have the effect of terminating his domestic relationship with Mr Smith until June 2004. Again, the family law cases, considering that issue when applications for dissolution decrees are opposed, provide guidance about the circumstances that identify the termination of a relationship. What is required is an intention by a party to the marriage to sever, or not resume, the marital relationship and that such party acts on that intention, or alternatively, acts as if the marital relationship has been severed.[13] This is a question of fact and degree depending on all of the circumstances of the particular case.

22 In this case, the confluence of intention and action did not occur until June 2004, but the relationship deteriorated over time. In December 2003, when on their way to Morocco on a holiday, Mr Smith told Mr Gould he wanted to leave him. Mr Gould persuaded Mr Smith to stay and try to make things work. Then, on their return to Australia, Mr Smith told Mr Gould that he was unhappy, depressed, and proposed that he needed 'space' to consider the future of their relationship. Mr Smith suggested acquiring an apartment at 3/31 Marne Street, South Yarra that was on the market. Although Mr Gould agreed to purchase 3/31 Marne Street, he did not then want Mr Smith to leave, but by April 2004 Mr Smith intended to move out. Mr Gould changed his attitude when he learned, from an admission made to him by Mr Smith in June 2004, that he was in a relationship with Mr Singer. In June, the purchase of 3/31 Marne Street settled, and Mr Smith moved out of Park Street. This was, in practical terms the termination of the relationship, although Mr Gould only conceded that in final submissions.[14]

23 Unsurprisingly, there was conflict in the evidence over the conversations about separation. These were emotionally charged times. Mr Smith denied making that admission about Mr Singer, asserting that he did not have a relationship with anyone between June 2004 and December 2004, when his relationship with Mr Singer commenced. He explained that the final decision to separate, when he told Mr Gould he was now moving to 3/31 Marne Street, occurred in the laundry, witnessed by Donald Friend's Greek Soldiers, and Mr Gould was still asking him not to leave. Mr Gould denied the laundry conversation, but most of its content was probably stated at some time. No doubt there were several intense conversations leading to separation. I think it likely that the other matters that Mr Smith attributes to this conversation were stated around this time. The move to Marne Street was in prospect for a while, during the settlement period on the purchase contract.

24 Mr Smith denied a conversation that Mr Gould recounted that took place in their bedroom in June 2004, but I accept Mr Gould's account of that conversation. Mr Smith admitted to Mr Gould that he had been having a long-term affair with Mr Singer. Mr Gould had expected as much and there was evidence of reasonable opportunity for suspicions to be aroused. When asked why this admission was finally emerging, Mr Smith said he had been seeing a counsellor. His psychologist counselled that it was best for his own mental state to come clean and tell Mr Gould the truth. Mr Gould described this admission as hardening his heart towards Mr Smith whom he now wanted to leave. Mr Gould helped Mr Smith into Marne Street to achieve this separation.

25 Mr Smith described how Mr Gould helped with the move and how together they selected and purchased furnishings. Invoice dates suggest that there was activity of this sort over the weekend of 12-13 June 2004.

26 I will have more to say about the credibility of each man later, but I will say a little now about my preference for Mr Gould's evidence on this issue. I found Mr Gould to be frank about his personal dealings with Mr Smith, just as he mostly was when in the witness box about his failings and lack of frankness in his commercial dealings outside of the witness box. Although that frankness in evidence about his commercial dealings did not paint a portrait of Mr Gould as a credible witness on many issues, careful assessment of the evidence of each of them, about uncorroborated conversations and dealings between them, must be undertaken to make certain findings of fact. About their personal relations, particularly in 2004, I generally prefer Mr Gould's evidence.

27 I reject Mr Smith's denial of his relationship with Mr Singer and his assertion that such relationship commenced in December 2004. Although it hardly matters, Mr Smith may have suspended his relationship with Mr Singer while trying to sort out his feelings for Mr Gould, but Mr Smith's explanation about that relationship, and this was not the only occasion, was incomplete.

28 During this time, Mr Smith discussed with Mr Gould what paintings could hang in Marne Street. Mr Smith referred to his 'contribution' and repeatedly, and apparently annoyingly, asked Mr Gould whether he thought Mr Smith had contributed. Mr Smith was asserting that he was entitled to 'a lot of things' although, as I will later discuss, the 'Gould-Smith Collection' was not one of them. Although Mr Smith denies the notion of 'contribution' was discussed, I accept Mr Gould's evidence of it.

29 Mr Smith's evidence, when his relationship with Mr Singer was involved, was not reliable. Although a close examination of Mr Smith's evidence provided many opportunities for not accepting his evidence about his relationship with Mr Singer, I will pause to mention two matters at this point. Because of his absence from the witness box, Mr Singer's evidence about his relationship with Mr Smith likely would not have helped Mr Smith and I more readily accept Mr Gould's evidence of the destructive effect of Mr Smith's admission of infidelity on their relationship.

30 Mr Smith was most unconvincing when cross-examined about evidence he gave in this court in Nolan v Nolan.[15] Mr Singer was Ms Jinx Nolan's solicitor and Mr Smith gave expert evidence for Ms Jinx Nolan concerning the provenance of three paintings that Ms Jinx Nolan alleged had formed part of the estate of her mother, Nolan's first wife Cynthia. Mr Smith was cross-examined about assisting Ms Jinx Nolan against her stepmother Lady Mary Nolan. There were two distinct issues from that cross-examination, which concerned Mr Smith's independence from Mr Singer and from Gould Galleries.

31 First, in the Nolan proceeding Mr Smith denied 'travelling together' with Mr Singer to New York in June 2001. Mr Smith was cross-examined in that trial about whether he, with Mr Singer and, to some extent, Mr Gould had, in effect, 'put a case together' for Jinx Nolan. Asked about a Gould Galleries exhibition of Nolan's work called Nolan - Landscapes and Legends, Mr Smith distanced himself from Gould Galleries, as being an independent art expert. That evidence was inconsistent with his evidence before me of his contribution to exhibitions by Gould Galleries, particularly that Nolan exhibition. Secondly, Mr Smith's evidence about his trip to New York was that he and Mr Singer had not travelled together. He was coincidentally in Boston when the opportunity presented for Mr Singer to introduce him to Jinx Nolan. In the Nolan proceeding, Mr Smith had at least two motives for providing an untruthful answer about 'travelling together' with Mr Singer, one of which may have been to protect his infidelity with Mr Singer from disclosure to Mr Gould.

32 Mr Smith's explanation to me about 'travelling together' with Mr Singer in June 2001 was demonstrated as not truthful when the cross-examiner presented Mr Smith with documentary evidence of his travel arrangements. Because I am not satisfied that Mr Smith's evidence about his relationship with Mr Singer can be relied on in any respect, I prefer as more probable, Mr Gould's account of the bedroom conversation in June 2004.

33 For these reasons, I am satisfied that, despite their difficulties, Mr Smith and Mr Gould remained in a domestic relationship, as that term is defined in s 275 of the Act, until about the Queen's Birthday weekend on 2004, when their domestic relationship terminated. That relationship may have been unsatisfactory for either or both of them prior to that time, as evidenced by their expressed intentions and conduct, however, they remained living together as a couple on a genuine domestic basis in that state of dissatisfaction until that time. It is convenient, and neither party suggested otherwise, to adopt 30 June 2004 as the appropriate proximate separation date.

34 I have mentioned the acquisition of 3/31 Marne Street. Mr Gould also furnished and fitted out this property for occupation. He provided Mr Smith with a car. Artwork was provided to Mr Smith. Transfers of interests in investment properties were discussed, that also involved Mr Singer and his entities, and some adjustment of interests later occurred. There was an agreement for Mr Gould to pay Mr Smith $100,000 in cash, and a debt of about $90,000 allegedly owed by Mr Smith to Mr Gould that was forgiven.

35 When Mr Gould agreed to buy 3/31 Marne Street for Mr Smith, he paid $200,000 to Simon Parsons & Co. That Mr Gould might approach the purchase of 3/31 Marne Street in this way was not surprising, given the history of dealings with investment properties when Mr Singer's legal firm handled the conveyancing. The money was used to repay to Mr Singer the deposit he paid and the balance was used, with a bank loan, to pay the residue and expenses, approximately $550,000. I accept Mr Gould's denial of being aware that 3/31 Marne Street had been originally purchased by Mr Singer or nominee. It was not asserted that anybody other than Mr Gould contributed financially to this property. Title to the property was transferred to Mr Smith with a mortgage and Mr Gould met mortgage repayments, totalling $39,600, for about 18 months until Mr Smith sold the property.

36 Naturally, in the period before settlement of the purchase, discussion centred on art works for 3/31 Marne Street. After separation, art was hung in 3/31 Marne Street. Some of the art was Mr Smith's; some of it was from Gould Galleries stock. Some art belonging to Mr Smith remained at Park Street. I will come back to the art.

37 Between 16 June and 10 July 2004, Messrs Smith, Gould, Singer, and Dunn (an accountant) discussed their jointly held property interests. I accept that an arrangement was negotiated, although nothing was signed. Mr Gould produced cotemporaneous notes of, or for, the discussions with Mr Smith to sort out their affairs at Mr Dunn's office at which Mr Singer was also present in July 2004. There was no other record produced of these discussions, and although Mr Smith called evidence from Mr Dunn of the discussions, Mr Singer was not called. Mr Smith claimed to have not been present or to have no recall of these discussions. I am satisfied Mr Smith participated in discussions. Mr Dunn suggested that his role was merely to provide accounting and tax advice, but through corporate entities, he is involved in Mr Singer's affairs, including holding, through his company Pacemake Pty Ltd, a third share in 4/35 Marne Street, South Yarra, one of the investment properties discussed. Mr Dunn did not produce a file or a note of the discussions. He displayed a poor recollection about these discussions, and about a later meeting he attended with a solicitor, Richard Szental. I found Mr Dunn an unconvincing witness who gave unsatisfactory evidence that provided no assistance to Mr Smith's contentions about the settlement arrangement.

38 It was immediately apparent to Mr Gould that the involvement of Mr Singer in their investments added complexity, requiring Mr Singer to be a party to these discussions in his own right. Mr Gould curiously expressed a desire to extricate Mr Smith from joint investments not just with himself, but also with Mr Singer, which, if it be true, may have contributed to the failure to arrive at a documented, and performed, settlement agreement. Others were also involved in these investments, including Mr Smith's mother and Questec Pty Ltd, associated with a Mr Piaggio.

39 Mr Gould and Mr Smith agreed in discussions in June and July 2004 that Mr Gould made no claim on any of Mr Smith's assets. Mr Gould had agreed a list of paintings in his possession that belonged to Mr Smith. Mr Gould agreed to confer other benefits on Mr Smith. He would give 3/31 Marne Street to Mr Smith together with furniture and household items (excluding art) that he valued at $40,000. He would pay out the mortgage on 3/31 Marne Street within five years, intending to do so on the basis that such payment would be recorded as a wage paid to Mr Smith from Gould Galleries.[16] Mr Smith would receive a car valued at $15,000, forgiveness of a $90,000 debt accrued on a running account, known as 'Geoffrey Trading', and Mr Gould would provide Mr Smith with $100,000 in cash.

40 Concerning art, Mr Smith would surrender his half share of Nicky Hoberman's Bewitched 1998 to Mr Gould and in addition to the artworks that had been placed with Mr Smith at Marne Street, Mr Gould would provide additional paintings to Mr Smith; Nolan Wounded Bushranger, Arthur Boyd Hillside, Nolan Landscape, and Rupert Bunny Tintaldra.

41 I will explain the investment property dealings in due course. The agreement that Mr Gould alleged was that the property at 12/33 Albany Road would be sold with Mr Gould's share of the proceeds of sale going to Mr Smith. Mr Smith would receive the property at 3/35 Marne Street, South Yarra as his own, by Mr Gould and Mr Singer each transferring their one third interest to him. In return, Mr Gould would transfer his one third interest in 4/35 Marne Street, South Yarra to Mr Singer. Mr Singer would transfer his half share of 'Scotsforth', Elizabeth Bay, NSW to Mr Smith, and Mr Smith and Mr Gould would transfer their shares in 4/16 Millswyn Street to Mr Singer. Apart from these transfers, no further claims would be made between Mr Smith and Mr Gould respecting investment properties.

42 Later in 2004, Mr Richard Szental, a solicitor, was involved in these transactions, with correspondence suggesting that he was instructed to arrange the appropriate transfers. Mr Szental did not give evidence. Ultimately, for reasons that do not matter, these transfers were not effected. The agreement Mr Gould alleges was not documented and the other parties to it, at least in respect of the investment properties, are not parties to this proceeding.

Legal consequences of dealings post separation

43 Until final submissions, Mr Gould contended that he agreed to make these post separation adjustments in return for Mr Smith agreeing not to pursue any legal remedies available to him arising out of their relationship. Ultimately, Mr Gould did not press an argument that a settlement agreement forestalled the court's jurisdiction under Part IX of the Act. Mr Gould relied on the separation arrangement as evidence of the parties' respective views of Mr Smith's entitlement at the time.[17] That, Mr Gould contended, is a factor that is relevant to the exercise of the court's power under s 285 of the Act, at least as part of the context in which the contributions by the parties are to be assessed. Thus, I need not determine whether these post separation adjustments were made pursuant to a compromise agreement.

44 The entitlement of each of the parties to the divisible property is to be assessed by reference to the remaining issues identified above. Mr Gould contends that the separation arrangement is significant in other respects. First, it contradicts the existence of any private art collection, jointly owned by the parties. If Mr Smith had a joint interest in a private collection, he made no demand for his share of it prior to the institution of this proceeding. The evidence bears that out. Second, Mr Gould points to the practical consequences of the separation arrangement. In broad terms, Mr Smith has received over $2 million as part of the arrangement. He was to receive on Mr Gould's reckoning approximately $2.1 million more, which he has not yet received. Mr Gould contends that the total amount, some $4.1 million, was recognised then, and remains now, as adequate compensation on a just and equitable adjustment of their divisible property. Mr Smith contends that the assets he received upon his separation from Mr Gould should be treated as part of the pool of assets to be adjusted by the court, albeit that the present value of such assets sits on Mr Smith's side of the ledger. I will return to these contentions in due course.

45 Mr Gould provided $200,000 towards the purchase of 3/31 Marne Street for Mr Smith. Mr Gould paid the mortgage on 3/31 Marne Street until Mr Smith sold the property.

46 Mr Smith did not dispute the circumstances of the acquisition of 3/31 Marne Street in his name. Mr Smith's explanation of the arrangement under which he acquired 3/31 Marne Street was that he needed somewhere to live if they were going to live apart. Mr Gould offered to buy the property in Mr Smith's name and pay the mortgage 'until we came to a property settlement'. In late 2005, Mr Smith considered the property was his to sell and he sold it for $952,500. The net proceeds from the sale are agreed at $388,254. Mr Smith retains $188,254, and $200,000 now sits in a solicitor's trust account, by agreement with Mr Gould. That agreement followed a caveat lodged by Mr Gould's solicitors after he learned from Mr Smith of the sale. Interest has accrued on this sum and its present value is $285,572. Presumably Mr Smith retains the furniture and furnishings provided by Mr Gould. There was no evidence to the contrary.

47 The negotiated agreement about investment property interests was not completed. Apartment 12/33 Albany Road was sold on 27 November 2004, but Mr Gould retained his share of $49,713 from the proceeds of sale. Apartment 4/16 Millswyn Street was not transferred to Mr Singer and was sold in February 2007. The parties each received quarter shares of the proceeds of sale, $37,451. 'Scotsforth' in Elizabeth Bay, NSW was sold in April 2008. Mr Smith has received half of the proceeds of sale ($42,418), and Mr Singer's entity Goldcheck Pty Ltd retained its half share. Apartments 3/35 and 4/35 Marne Street have not been sold or transferred, and remain owned by various entitles as I will later describe.

48 On 16 June 2004, Mr Gould and Mr Smith continued their discussion about separating out art for Mr Smith. I prefer Mr Gould's account of the conversation on 16 June, accepting that the discussion took place at Gould Galleries and that a document was printed from the computer, signed by Mr Gould and handed to Mr Smith. There was substantial agreement at trial as to what artworks went to Mr Smith, but not much else.

49 I did not find Mr Smith's evidence about art transfer in June 2004 credible and, for the reasons that follow, I reject it. I find that Mr Smith received some 33 artworks into his possession at Marne Street mostly, but not entirely, at the time of separation. Mr Smith received art from four sources. Some pieces Mr Smith had purchased from his own resources and others were his as commissions from Gould Galleries or gifts from Mr Gould. Mr Gould described these artworks as belonging to Mr Smith. About 22 artworks came from Park Street or the Potts Point flat and, of these, 11 artworks were owned by Mr Smith. Mr Gould gave one of his own paintings to Mr Smith at this time. I will address later the issue of whether artwork at Park Street was part of a private art collection or was collectively hung, but separately owned by one of Mr Smith, Mr Gould, or Gould Galleries. Four or five artworks came directly from stock located at Gould Galleries, chosen by both men in the sense that Mr Smith nominated pictures that he wanted and Mr Gould agreed that he take them. In every case the artwork, directly or indirectly, formed part of the divisible pool.

50 The selection and rehanging of art at Marne Street occurred in June 2004 when Mr Smith took up residence there.

51 Mr Gould acknowledged to Mr Smith on 16 June 2004 a list of 17 works at Park Street, and one at 270 Toorak Road that belonged to Mr Smith. Most, but not all, of these works went with Mr Smith to 3/31 Marne Street. Mr Gould contended that these 17 artworks at Park Street were then valued at $586,200. On separation, Mr Gould kept eight of Mr Smith's paintings. He retained four Howard Arkleys; Own Your Own Flats,

Triple Fronted 1988, A Freeway Painting 1994 and House with Gate 1999, two works on paper by John Brack; Jockeys Returning 1956, Mounting 1956, and two other works, being Nicki Hoberman Bewitched 1988, and Maria Kozic I Woman (Brooke) 1994. Mr Gould agreed that Mr Smith take Nolan's Wounded Bushranger from Park Street.

52 I am satisfied that Mr Smith's denial that these were the paintings that Mr Smith wanted and Mr Gould gave them to him as part of the settlement arrangement was a false denial. Initially, Mr Smith maintained that on separation he took 'a couple' of artworks from Park Street. On reconsidering his response, he suggested 'maybe about 12, often works of low value', notwithstanding that he had just mentioned Nolan's Wounded Bushranger, Tucker's Antipodean Head and Rupert Bunny's The Little Green Tree, Tintaldra. The cross-examiner then inquired whether Mr Smith had taken Boyd's Hillside. Mr Smith said that the Boyd was lent to him, 'provided by Rob when we were furnishing Marne Street'. Confronted with an inconsistent answer to an interrogatory, Mr Smith suggested that Mr Gould had loaned him certain paintings. Mr Smith said the Boyd painting was loaned from Gould Galleries stock. When furnishing the apartment he had selected that painting. Likewise, Mr Smith received another Boyd, Potter's Wife, as a loan. I am satisfied that this concept of paintings on loan, having not previously been mentioned, was proffered as a refuge from the cross-examiner. Mr Smith contended that there was no separation arrangement as paintings were on loan to decorate 3/31 Marne Street until a separation agreement was negotiated, which never happened.

53 What then emerged was that Mr Smith had thereafter sold five paintings, not directly but by engaging Mr Singer or Goldcheck as his agent for sale. Four of the paintings 'on loan' were sold for $104,000 and the other, Williams' Swamp Grasses Kew Billabong, sold for $225,000. Although belonging to Mr Smith, the Williams is alleged to be part of the private collection. Mr Smith suggested, unconvincingly, that when Mr Gould gave an undertaking not to sell paintings, alleged to be part of the private collection, to settle the injunction application in 2006, Mr Smith also undertook not to sell artwork, but which did not extend to the works he sold. Mr Smith had not given any such undertaking. Even if he had done so, the Williams, the most substantial sale by value was, he alleged, part of the private collection. I will later return to the circumstances that prompted that injunction application. These sales, particularly of the loaned paintings, were not first discussed with Mr Gould. Mr Smith has explained that he considered the sold paintings including gallery stock were part of their joint asset pool and the sales were no different to sales of Gould Galleries' stock that had not been restrained. He was entitled to sell the loaned paintings and bring the proceeds to account as part of the pool of divisible assets. Mr Smith could not give detail about these sales. In particular, Mr Smith did not identify how the sale proceeds were disbursed and Mr Singer was not called. I am satisfied that Mr Smith sold these paintings to raise funds for his financial needs at the time believing them to be his to sell, free of any obligation to later account for sale proceeds.

54 The other benefits offered to Mr Smith were the forgiveness of a debt and payment of $100,000 in cash, which were received by Mr Smith. Mr Gould has not proved the debt he alleges, and the obligation to pay Mr Smith $100,000 was later worked out, at Mr Smith's suggestion, in art purchases by Mr Gould on Mr Smith's behalf. These transactions occurred after separation and it is now appropriate to return to the start of the relationship.

55 Mr Smith and Mr Gould met at a Sotheby's cocktail party and commenced their relationship on 5 April 1990. Mr Smith was then an undergraduate student at Melbourne University living in rented accommodation with his brother. Mr Gould was the owner, with his mother, of Gould Galleries, a commercial art gallery in Toorak Road, South Yarra. Mr Gould was living in rented premises in Grange Road, Toorak, but he had purchased a substantial property in need of renovation in Park Street, South Yarra. Soon after they met, Mr Gould spent $75,000 renovating Park Street and they then resided at Park Street until separation.

56 Mr Smith came to his relationship with Mr Gould, aged 21, effectively a full time student, living off his savings supplemented by casual employment. He had assets of about $20,000, being savings of about $11,000, a car, some furniture, glassware, and art, including a work by each of John Brack, John Tenniel, and Victor Mayzner. These were taken to Park Street by Mr Smith when the parties began living together there. Mr Smith later inherited some artworks from an uncle. These works have all been sold, to his benefit, and do not warrant further consideration.

57 Mr Gould came to his relationship with Mr Smith, aged 35, as an art gallery proprietor. When they met, Mr Gould's assets were:

(a) Park Street, South Yarra, in a dilapidated and uninhabitable state, purchased for $555,000 and renovated for $75,000 during 1990 by Mr Gould. The effective initial contribution into the relationship by Mr Gould of Park Street is $630,000;

(b) a one third interest in a property at Palm Court, Frankston; the parties are agreed that Mr Gould's interest in this property be disregarded;

(c) an indirect half interest in Gould Galleries; and

(d) artworks that he had purchased prior to 1990. These works were Tucker, Intruder and Parrots, Friend, Sleeping Sailor, Larwill, Falling Figure, Perceval, Boy with Cat Looking Over Shoulder, and Santhill's Fandango and Petrushka.

58 Mr Gould held half of the 12 issued shares in Dukville that, in turn, held all of the units in the E&R Gould Unit Trust, for whose benefit Edrob Nominees Pty Ltd operated the business of Gould Galleries. Mr Gould estimated that, as at 30 June 1990, the value of Gould Galleries stock, at cost, was $1-$1.5 million and by the time of the buy-out of his mother in 1995, the stock was, at cost, 'about a couple of million dollars'. Mr Gould also gave evidence that the value of stock was understated in the financial statements for the trust, prepared by Mr Dunn, and adopted by the directors of Edrob as true and correct. The understated figure was $95,426. I am not satisfied that I have sufficient information to value Mr Gould's half interest in Dukville when the relationship commenced, but I will assess an allowance for that value in Mr Gould's favour.

59 In 1996, Mr Gould acquired his mother's shares in Dukville. Mrs Gould received two payments, of $120,000 and $50,000, for her shares, plus some ancillary benefits including such Gould Galleries stock artwork as was hanging in her home. Mrs Gould retains the title to the gallery premises in Toorak Road, South Yarra. Mr Gould also became the sole director and shareholder of Edrob, the trading trustee. From 1996, Mr Gould brought the whole of the interest in Dukville to the divisible pool.

60 Mr Gould's buy-out of his mother's share of Dukville was not an arm's length transaction and provides no indication of the value of the gallery business at the time. The transaction was documented by a solicitor, a family friend, in two agreements signed on the same day. The arrangement appears, from that documentation, to have been one of convenience for the parties. I accept Mrs Gould's explanation that the principal consideration, $120,000, was set as the amount of money that Mr Gould was then able to draw out of the business. The supplementary agreement provided that all paintings at Mr Gould's house are his property and all paintings at Mrs Gould's house are her property. The precise effect of this term is unclear. Its practical effect was that any artworks at Mrs Gould's residence belonged to her whether or not such artworks had previously come from Gould Galleries stock and Mr Gould contended that the clause operated in the same way for him for stock at Park Street at that time.

61 This contention could not be tested. There is no evidence about the source of the purchase price paid to Mrs Gould, that is, whether it came from Mr Gould or from Edrob Nominees Pty Ltd, but from Mrs Gould's evidence it appears that the source of all benefits to either party to the buy-out was Gould Galleries. If that occurred Mr Gould drew $170,000 and an unquantified tax liability from Gould Galleries to pay to his mother and transferred some Gould Galleries stock at its 1996 value to both himself and his mother. No relevant financial records evidencing the transaction were produced in evidence.

62 Gould Galleries stock then hanging at Park Street that Mr Gould acquired this way included Arkley Actual Fractual, Blackman Girl with Flowers, Arthur Boyd Wedding Group, Boyd, Figure by a Round Pool (Narcissus),

Nolan Hartz Range, and Pugh Rape of Europa. Mr Smith alleges these five paintings are not Gould Galleries stock and form part of the private collection. If that is accepted, on any view these paintings were contributed by Mr Gould. Without evidence of appropriate entries in the loan accounts of the E&R Gould Unit Trust or other evidence, I am unable to find that the beneficial interest in these artworks passed to Mr Gould. Neither can I be satisfied that these transactions were properly accounted for by Mr Gould and Edrob Nominees Pty Ltd to the Australian Taxation Office. On 23 April 2012, the opening day of the trial, Mr Gould by letter informed the Australian Taxation Office that Dukville acquired the units of Mrs Gould and as part of the arrangement Mrs Gould and Mr Gould were permitted to retain unidentified paintings that belonged to the trust. These paintings will be regarded as part of the divisible pool, but not as gallery stock.

63 There were also limited occasions when Mr Smith and Mr Gould purchased artwork directly using their own funds. For example, Arkley's A Freeway Painting (Overpass) 1994, was purchased by Mr Smith with funds received following the settlement of a damages claim. Each of them contributed jointly to the purchase of Arkley's Triple Fronted 1988.

64 Naturally there were asset acquisitions during the 14 years of the relationship, but the areas of dispute about the pool of divisible assets that existed as at 30 June, 2004 were confined. There was agreement about many assets as to whether it was a divisible pool asset and as to value.

65 It was agreed at trial that, as at June 2004, the pool of divisible property included the following assets:[18]

(a) Park Street, South Yarra (Title: Mr Gould 100%);

(b) Oak Lane, Potts Point, Sydney (Title: Mr Gould (Dukville) 100%);

(c) 3/31 Marne Street, South Yarra (Title: Mr Smith 100%);

(d) Interests in investment properties -

(i) 3/29A Wallace Avenue, South Yarra (Interests: Mr Smith 100%);

(ii) 12/33 Albany Road, Toorak (Interests: Mr Smith one third; Dukville one third; Goldcheck Pty Ltd (Mr Singer) one third);

(iii) 14/63 Alexandra Avenue, South Yarra (Interests: Mr Smith two thirds; Goldcheck Pty Ltd one third);[19]

(iv) 2/128 Toorak Road West, South Yarra (Interests: Mr Smith and Me Me Me Pty Ltd (Mr Gould) two thirds; Goldcheck Pty Ltd one third. In 2003 Leona Smith bought out Me Me Me Pty Ltd and Goldcheck Pty Ltd and Mr Smith now holds a 36% interest);

(v) 4/16 Millswyn Street, South Yarra (Interests: Mr Smith one quarter; Me Me Me Pty Ltd one quarter; Goldcheck Pty Ltd one quarter; Questec Pty Ltd (Mr R Piaggio) one quarter);

(vi) 3/35 Marne Street, South Yarra (Interests: Mr Smith one third; Me Me Me Pty Ltd one third; Lakeberry Pty Ltd (Mr Singer) one third);

(vii) 'Scotsforth', Elizabeth Bay, NSW (Interests: Mr Smith one-half; Goldcheck Pty Ltd one half);

(viii) 4/35 Marne Street, South Yarra (Interests: Me Me Me Pty Ltd one third; Ablepair Pty Ltd (Mr Singer) one third; Pacemake Pty Ltd (Mr Dunn) one third);

(ix) 58-62 Smith Street, Fitzroy (Interests: Keelboat Pty Ltd (Mr Gould) 100%);

(e) artwork at Park Street on the separation date, other than artwork that was Gould Galleries stock, which is owned personally by the parties;

(f) Dukville, which was from 1996, and is, wholly owned by Mr Gould and which wholly owns all the units in the E&R Gould Unit Trust of which Edrob Nominees Pty Ltd, at trustee wholly owns the business of Gould Galleries including the leasehold interest in the gallery premises at Toorak Road, South Yarra; and

(g) Superannuation account balances - Mr Smith $47,709: Mr Gould $394,792.

(h) Various bank accounts -

(iii) Term deposit account 301 in Edrob Nominees Pty Ltd's name - $504,080.

66 The parties were in dispute about what Mr Smith described as the Gould-Smith Collection, a list of 53 artworks mostly situated at Park Street on the separation date. Mr Gould did not dispute that there was what might loosely be described as a 'collection' located at Park Street, but he denied Mr Smith's contention that such a named collection existed. He contended that the artworks identified by Mr Smith as forming the collection was mostly Gould Galleries stock that was owned by Edrob Nominees Pty Ltd and displayed at Park Street. Gould Galleries does not, separately from the shares in Dukville, form part of the pool. Otherwise the remaining artworks, which were owned by one, other, or both of them jointly are agreed to be pool assets. Mostly, there was agreement as to what artwork was located on the separation date at Park Street and as to its value if individually offered for sale at auction.

67 The parties were in dispute as to whether the following assets were part of the pool:

(a) cash in bank accounts in Hong Kong - (Mr Smith's value: $927,894.00);

(b) the furnishings and contents (excluding artwork) of Park Street and Potts Point (Mr Smith's value: $546,000, Mr Gould's value: $150,000);

(c) gift to Mr Gould's brother Gary - $719,000;

(d) half interest in a trust account with solicitors Marshalls & Dent in name of Mr Gould and Mrs Gould - $530,074; and

(e) various assets:

68 Whether two identified liabilities should be brought into account was also in dispute. The first was a debt of $280,000 owed by Edrob Nominees Pty Ltd to a bank. The existence and quantum of the debt were agreed. The second debt was a taxation liability for the financial year ended 2006, of which an amount of $1,196,850 was suggested to be the debt referable to the year ended June 2004 and prior years. This tax debt arose when Edrob Nominees Pty Ltd submitted amended tax returns that disclosed, in its view, the true value of its trading stock at relevant dates.

69 Mr Smith held title to three further assets that Mr Gould contended formed part of the pool. Mr Smith contended that these assets belonged to Mr Singer and that Mr Smith held Mr Singer's interest as a bare trustee and that Mr Smith neither contributed to the acquisition nor received proceeds from any sale of these properties or shares. These interests were:

(a) the proceeds of sale of 6/128 Toorak Road, South Yarra;

(b) the proceeds of sale of 6 Avoca Street, South Yarra; and

(c) shares in Lakeberry Pty Ltd, Pacemake Pty Ltd and Ablepair Pty Ltd;

70 Disputes about the content and, particularly, the value of pool property raise a number of issues of some complexity, and I will explain the approach that I take to resolving these aspects of the dispute before setting out my findings about the divisible pool.

Resolving asset pool disputes and determining contributions

71 Should the court adopt an 'asset by asset' approach or a 'global' approach to determining the financial and non-financial contributions of each party? Mr Gould made no submission on this issue. Mr Smith contended for a global approach. Either approach is open to me. In the context of s 79 of the Family Law Act, the High Court said that which of the two approaches is the more convenient will depend on the circumstances of the particular case, but, there is much to be said for the view that, in most cases, the global approach is the more convenient.[20] In Giller,[21] Neave JA held that the trial judge erred in concluding that a global approach was not open under Part IX of the Act, affirming the application of the discretion identified in Norbis to de facto property adjustment.[22] In Kardos, Brereton J suggested that mathematical calculations are of some use in guiding and testing conclusions, and that even though one approach is preferred, the other may serve as a check method about what is just and equitable.[23] The like observation is open about using one method as a check on the conclusion reached by the other method.

72 The circumstances of this particular relationship call for a departure from the global approach generally considered as more convenient. That is because the purpose of the approach chosen is to assess the parties' contributions to the divisible assets. The global evaluation of contributions in the circumstances of this relationship would become unnecessarily speculative and suffer for a want of transparency in the assessment being made.

As Lenehan shows, the principal indicator for an 'asset-by-asset' analysis is discrepant identifiable contributions of the parties to different assets: in that case, the proportionate contribution of the parties to the acquisition conservation and improvement of the matrimonial home on the one hand, and to the business assets on the other, were quite different. Such an approach will often be contra-indicated where, as here, there has been a pooling of income.

74 The pool of divisible assets is quite varied both in terms of the nature of the asset and the nature of the contributions of the parties to different assets. The non-financial contributions, direct and indirect, distinctly relate to particular assets rather than to the whole pool. In particular, the special non-financial contribution that Mr Smith contends that he has made is his application of his scholarship and expertise in modern Australian art for Mr Gould's benefit. Mr Smith contends this contribution has enhanced the value of Gould Galleries, represented by the value of Mr Gould's shares in Dukville. That form of contribution bears little analogy with a welfare contribution. A significant welfare contribution, commonly present in most cases, will usually be more conveniently assessed on a global approach. Further, Mr Smith's contribution to investment properties was different in character to his contribution to Gould Galleries. The contribution he alleges that he made to Park Street is distinct from his contribution to investment properties and to the gallery business.

75 Further, there was no pooling of assets, or of banking, or of financial commitments by Mr Smith and Mr Gould. There was not a practical union of property in this relationship. In fact, some assets said to form part of the divisible property are held in different entities from the parties and, in relation to the investment properties, jointly with different third parties. Each of Mr Smith and Mr Gould pursued his own commercial and employment interests unrestrained by obligations to provide for the welfare of the other and without supererogatory merit.

76 In the first instance, I will evaluate contributions in sub-pools, but globally within the sub-pool rather that on an asset-by-asset basis because the alleged nature of non-financial contribution to sub-pool assets suggests this approach. I recognise that interaction between the sub-pools may be present. Mr Smith contends that his contribution to the decisions about precisely what stock of art Gould Galleries purchased facilitated the application of greater financial resources by Mr Gould in other activities than might otherwise have been the case. I will also later check that the approach I have adopted meets the fundamental criteria of Part IX of the Act, that the adjustments of the respective interests of the parties in the divisible property of the relationship seems just and equitable.

77 I propose to consider the asset categories as follows:

(a) Properties that were used as residential, with no rent collected - Park Street, South Yarra, Potts Point, Sydney and 3/31 Marne Street, South Yarra;

(b) Investment properties - equity in, and profits earned on realised, property investments;

(c) Artworks, considering both the private collection alleged and Mr Gould's shares in Dukville Pty Ltd; and,

(d) Remaining personal assets and liabilities.

Operative date - date of separation or date of trial

78 Should the court adopt, as the operative date, the date of separation or the date of trial to best facilitate the ultimate task of evaluating respective contributions? The parties proceeded on a complex basis for agreement of assets and values. The operative date is the date of separation for the purposes of the identification of the divisible property but they adopted the date of trial as the date to value retained property, subject to liabilities that existed as at the date of separation. Where property was sold between these dates, the sale price of the property is adopted as the valuation. On this basis, the parties agreed the value of many, but not all, of the assets comprising the pool.

79 Ordinarily, the identification and valuation of the divisible property is undertaken as at the date of trial, to appropriately account for ongoing contributions since separation by one party that have benefited the other. However, adopting the date of separation can better facilitate the ultimate task of evaluating respective contributions in some circumstances. The separation date may be favoured where, as here, there has been substantial delay by the parties in pursuing the matter to trial.[25]

80 In my view, the ordinary rule ought not be applied in the circumstances of this relationship, as there have not been ongoing contributions since separation by one party that have benefited the other. Commonly such contributions are made in the context of a family. Here, the contributions that have been made since separation fall into two categories. First, some limited dealings between the parties have involved a service for a separate commission or consideration. Second, the property that was involved in the separation arrangement forms part of the pool. The dealings between the parties under the separation arrangement are properly to be considered as post relationship adjustments to the divisible pool. Property used in the adjustment by the separation arrangement came partly from Mr Gould and partly from Gould Galleries and other entities.

81 A further reason not to apply the ordinary rule is the appreciating nature of the primary asset type, collectable fine art. There appears to have been significant appreciation in the value of this art during the period of substantial delay by the parties in pursuing the matter to trial. Separation was in June 2004. Competent litigators could have completed the proceeding by June 2007. During that period, values in the secondary art market were trending strongly upwards. That trend ended after 2007 because of the global financial crisis. One of the art valuers, Mr Abdallah, suggested that many artists set personal best prices in 2007 that have not been improved upon. While some artists' prices have moved higher in a gentle trend, others remain in decline. A few artists, Brett Whiteley being an example, have remained strongly in demand, unaffected by the global financial crisis. Valuation at the separation date could eliminate such factors.

82 Had the court the opportunity to manage trial preparation on key issues, the issue of the time of, and the methodology for, valuation of art and company shares may have been appropriately identified. That would have facilitated an efficient trial. I will say more about valuation methodology in due course. Notwithstanding my view that, in the circumstances of this relationship, the separation date is the appropriate time, the separation date was not adopted. The evidence presented will only permit issues of value and contribution to be resolved fairly if I continue on the basis agreed by the parties, despite my view that it is not the proper and most appropriate approach to either the issue of timing or that of value. Mr Gould also presented some evidence of values for art that was a hybrid of 2004 values for unsold items and actual sale prices for art sold after 2004 and prior to 2012. On the other hand values for property investments were based on realised values where sales had occurred after 2004 and assessments of current values where the asset was still held.

83 I have concluded that the approach agreed and adopted by the parties constrains me on pool valuation issues, and the related contribution issues, to the basis most consistently adopted by the parties, which is, absent agreement, realised values where sales have occurred since 2004 and assessments of present market value where the asset is still held.

84 In calculating the value of the pool I have excluded, to the credit of the original contributor, the initial contribution to the acquisition of assets in the name of that contributor or his entity. The value of equity in real estate in the pool represents equity in respect of which the contribution of the other to its acquisition, conservation, or improvement can be assessed. In the next section of my reasons, I have identified the direct financial contributions that have been made and I will deal separately with the indirect, and non-financial, contributions to the acquisition, conservation, or improvement of pool assets.

85 With all investment properties, I was invited to infer, and do, that rents were collected and properties managed by estate agents (or friendly/related tenants), that mortgage debts and expenses were managed from property income, and the financial transactions for the property were accounted for annually to proprietors in accordance with the respective property interests. Such administration was, it appears, Mr Singer's province, and does not constitute a contribution by either of the parties to the other.

86 Real estate values in relation to the residential properties are agreed.

87 The agreed current market value of Park Street is $3,600,000. Its market value in June 2004 was not the subject of agreement or evidence. The property is subject to a mortgage and the loan is, and always was, serviced by, or on behalf of, Mr Gould. The agreed current outstanding balance of the loan is $216,765. I have determined that the value of Park Street when introduced into the relationship was $630,000. The net increase in the equity in Park Street therefore represents a pool asset in Mr Gould's hands valued at $2,753,235.

88 The agreed current market value of Potts Point is $575,000. It is owned by Dukville, purchased in October 1999. Dukville paid $403,000 for Potts Point, which was borrowed on mortgage security. The loan is, and always was, serviced by Dukville. Its market value in June 2004 was not the subject of agreement or evidence. The property was used during the relationship as the parties' Sydney residence and was not rented. There was no evidence of the arrangement between Mr Gould and Dukville for his occupation of its premises. The current outstanding balance of the loan is $301,800, which is a liability of Dukville. In the absence of specific evidence from Mr Smith that he paid or contributed to the expenses of ownership or occupation of this property, I infer on the probabilities that all expenses were paid by Dukville.

89 Its net current value, agreed at $273,200, represents a pool asset, in Mr Gould's hands. The parties have agreed that I proceed on this agreed value and I will do so despite reservations about whether it is the appropriate valuation of Mr Gould's contribution to the relationship. The value of the property, the related debt, and any entitlement in Dukville to a return from that asset will be excluded from the valuation of Dukville and included in the residential real estate sub-pool.

90 In relation to this property, the parties have agreed that I proceed on the return from the sale of the property in October 2005. The net proceeds of sale, agreed at $388,204, do not, in my view properly represents a divisible pool asset having regard to the circumstances in which it was acquired. It is to be properly treated as a post separation adjustment. In that context, Mr Smith retains $188,204 and $200,000 was paid into a solicitor's trust account. The present value of that sum is identified as $285,572, and interest is continuing to accrue. I propose to treat the value of the asset as $473,776 with any further accrued interest to follow the allocation of the trust sum. I have already discussed the circumstances of the acquisition and servicing of the expenses of ownership and occupation of this property.

91 The net value of this sub-pool of assets is $3,026,435, which is in Mr Gould's hands.

92 Real estate values, mortgage payout figures and many other financial transactions in relation to the investment properties are substantially agreed. There were a number of issues that were not agreed that I will deal with on a property-by-property basis, approaching the evidence in the following way.

93 I was not impressed by Mr Smith's recall of financial transactions. Evidence of this sort stood in sharp contrast with his recall of the detail of the images, names, provenance, history, and value of artwork. Much of this detail was numerical. His memory about the detail of financial transactions involving the investment properties was quite poor and references were usually to approximate amounts, rarely backed up with any document. This was, in most cases, because he was not directly involved in the financial transaction that was the subject of inquiry. On those occasions when he was involved in the transactions, he was able to identify the particulars of the transaction from documents, once produced to him.

94 Mr Gould had a much better grasp of financial transactions, recollection coming with personal involvement. Further, running his own business clearly exposed Mr Gould to a much greater extent than Mr Smith, to recording financial transactions. Although I have reservations about Mr Gould's record keeping and his discharge of financial reporting obligations, there was evidence that routine data entry was mostly completed by his staff at the gallery. I have generally preferred Mr Gould's evidence of the financial transactions in dispute concerning these investment properties where conflict cannot be resolved by reference to reliable records or the inherent probabilities of the transaction in question when making the findings that I am about to record.

95 Mr Gould used three corporate entities for the purchase of property investments: Me Me Me Pty Ltd, Dukville Pty Ltd, and Keelboat Pty Ltd. Mr Smith's interest were, in the main, registered in Mr Smith's own name. Mr Singer's interests were held through his companies Goldcheck Pty Ltd, Lakeberry Pty Ltd, or Ablepair Pty Ltd, and his business partner, Simon Parsons and his accountant Phillip Dunn may have had interests in these companies. A Mr Robert Piaggio through his company Questec Pty Ltd and Phillip Dunn through his company Pacemake Pty Ltd, took an interest in some investments.

96 A document called 'Geoffrey Trading' emerged that set out brief descriptions of amounts owed between 'GS' and 'RG' and suggested a debt from Mr Smith to Mr Gould of about $90,000. The document, which contained the following notations, became relevant in relation to a number of disputed contributions and it is convenient to now set out my findings about it.

Geoffrey Trading

GS owes RG

Castle Towers purchase & renovation $ 24,070

Mandeville 08/11/02 $ 18,500

28/02/03 $ 27,000

04/04/03 $ 2,500

2/128 Toorak Rd W $ 24,314

Amanda Marburg $ 2,500

Fiona McMonagle $ 1,665

Gwyn Hansen Fraser $ 16,000

Gwyn Hansen Rex $ 13,400

$129,949

RG owes GS

? $ 20,810

Bronze Kelly $ 1,000

Lisl sold Kelly $ 2,000

Lisl purchase Nolan Burke

& Girl $ 15,000

$ 38,818

$ 91,131.

97 The document is undated, was not produced in electronic form, and there was conflicting evidence given about its origin and author. Mr Smith contended that this was Mr Gould's attempt to 'recreate retrospectively some kind of trading account for dealings by Mr Smith in works of art.' Mr Gould contended that Mr Smith created and maintained this document on Mr Gould's laptop computer at Park Street, mainly to record commission entitlements. I am satisfied that Mr Gould made some, at least, entries under the heading 'GS owes RG'. Mr Gould claimed that he only saw this document for the first time towards the end of their relationship.

98 Mr Smith claimed that the first time he saw the document was during the course of the case. Mr Smith admitted Mr Gould referred to a document like this in the six months after they separated, suggesting it recorded transactions in the period when the relationship was deteriorating. Mr Smith admitted that he recalled Mr Gould mentioning to him that he owed Mr Gould amounts like those recorded. Mr Smith contented, disingenuously, that the 'GS' on the document could refer to Gary Singer while denying that it had anything to do with him or that he knew what the amounts referred to.

99 I do not accept the account given of this document by either man. It is probable that each of them has contributed to this document in some way. Mr Smith denied knowing anything about the amounts listed under 'GS owes RG' which were most likely added by Mr Gould when during the time when the separation arrangement was being considered, which would explain the amounts adjacent to the four named artists. It is probable that the entries under the heading 'RG owes GS' were the original commission records that Mr Gould referred to. One entry read '? - $20,810'. Mr Smith stated that he did not know what this amount referred to and, consistently, Mr Gould claimed Mr Smith had said that the $20,810 related to 'other things that had happened but he hadn't recorded it properly and I sort of had to accept it - not had to, but I just accepted it and thought I just want to clean everything up and be gone'.

100 This property was purchased in March, 1997 for $174,000 in Mr Smith's name. The rent was collected, and borrowings serviced, by Mr Smith from his own financial resources. Apparently, Mr Gould's brother was the tenant for some time as was Mr Singer. By the time of its sale in February 2006, for $510,000, the mortgage loan had been substantially repaid. The agreed value of Wallace Avenue is $452,403, and those funds were retained by Mr Smith.

101 Mr Gould claimed he paid $10,000 towards its acquisition. Mr Smith disagreed. The deposit of $17,400, he said, came from his personal bank account, and I am satisfied that it did. The payments that Mr Gould identified as making up his contribution were due to Mr Smith for the sale of an inherited Heysen. I accept that Mr Smith paid some $6,000-$8,000 in renovation costs on initial acquisition of the property from his own resources. Mr Smith, although when interrogated denied any contribution by Mr Gould to a later renovation of the property that cost $40,000-$50,000, accepted that Mr Gould contributed $25,000 towards that later renovation. However, this $25,000 payment was made as a commission payment by Edrob Nominees Pty Ltd to Mr Smith and declared as such in respective tax returns. The funds Mr Smith applied to the renovation were his own after-tax income. Mr Gould did not contribute to Wallace Avenue.

102 This property was purchased in July 1999 for $401,500, by Mr Smith, Dukville, and Goldcheck Pty Ltd in equal shares. Mr Smith located this property with Mr Singer during the course of their regular Saturday property searches. Mr Smith was unable to recall whether he contributed financially to the acquisition of this property but claimed to have repaid out of his personal account the mortgage loan in equal shares with Mr Gould and Mr Singer. Mr Gould did not give evidence about the deposit for this property and no other evidence contradicted Mr Smith's claim. The parties agreed that, when sold in November 2004, one third of the net proceeds received were distributed to Mr Singer's Goldcheck Pty Ltd, and the value of this asset in the sub-pool is $99,426, held equally by Dukville, for Mr Gould, and Mr Smith. Mr Gould did not give Dukville's share of the net proceeds of this sale to Mr Smith, notwithstanding the separation arrangement that he would do so.

103 This property was purchased in February 2000 for $150,000, by Mr Smith, his mother Wendy, and Goldcheck Pty Ltd in equal shares. Mr Gould was not involved with this property. Mr Smith said 'this one, it wasn't very expensive and I contributed from my account the share to that property', adding that he considered that he held his share for Mr Gould as well. I do not accept this statement as the intention appears to have been to provide for Wendy Smith. Later, in November 2003, Mr Smith and Goldcheck Pty Ltd acquired the interest of his mother. The parties agreed that when sold in October 2004, after half of the net proceeds received were distributed to Goldcheck Pty Ltd. The value of this asset in the sub-pool is $37,217, held by Mr Smith.

104 This property was purchased in August 2000 for $490,00, by Mr Smith, Mr Gould (using Me Me Me Pty Ltd), and Goldcheck Pty Ltd in equal shares. In February 2004, Me Me Me Pty Ltd sold its one third interest to Mr Smith's sister Leona, who had separated from her partner and needed accommodation. Me Me Me Pty Ltd received $96,787.03 but there were issues in the reconciliation of the pay-out. Mr Gould alleged that he was short-changed by $24,313 in settlement of this buy-out. Mr Singer handled the transaction and when Mr Smith was cross-examined about it he could not offer any explanation. Part of a contemporaneous fax that appeared to be a settlement sheet for the transaction confirmed that Mr Gould ought to have received $121,100.56. Mr Singer's evidence would not, apparently, have helped Mr Smith. Further, in the 'Geoffrey Trading' document Mr Gould records that sum as owing by Mr Smith to him.

105 The property is currently owned by Mr Smith as to 36% and Leona Smith, as to 64%. The parties agreed that the current value of the property is $1,200,000 and that Mr Smith's net share, and the value of this asset in the sub-pool, is $327,000. That holding incorporates a contribution in the form of the underpayment of Mr Gould's share when bought out of $24,313.

106 This property was purchased in August, 2000 for $290,000 by Mr Smith, Mr Gould (using Me Me Me Pty Ltd), Goldcheck Pty Ltd and Questec Pty Ltd (Mr R Piaggio's company) in equal shares. Mr Smith initially suggested that 'the entities paid the deposit' and he could not recall the purchase price, date of purchase or the size of the mortgage. A deposit of $32,000 was paid and Mr Gould provided Mr Smith's share of $8,000. The parties agreed that when sold in February 2007, after half of the net proceeds received were distributed to Goldcheck Pty Ltd and Questec Pty Ltd, the value of this asset in the sub-pool is $74,902, held equally by Me Me Me Pty Ltd, for Mr Gould, and Mr Smith. There may have been a renovation of this property at some stage, and Mr Smith may have had some involvement in arranging it along with Mr Singer, but the evidence does not permit a finding that Mr Smith, Mr Gould, or Me Me Me Pty Ltd contributed financially to any renovation expenses or precisely what Mr Smith's administrative involvement was.

107 35 Marne Street, known as 'Mandeville' is a property where title to the apartments is held in the form of shares in the corporate registered proprietor Mandeville Pty Ltd. This apartment was purchased in November 2002 for $555,000 by Mr Smith, Mr Gould (using Me Me Me Pty Ltd), and Lakeberry Pty Ltd in equal shares. Mr Smith is registered with ASIC as the beneficial owner of 12 ordinary shares in Lakeberry Pty Ltd but contends that, from March 2001, he has held these shares on trust for Mr Singer. He claimed to have never held any meetings of shareholders nor received any benefit from the shares. Mr Dunn suggested that Mr Simon Parsons was the other shareholder and that the state of the ASIC register is incorrect and is his error. Although Mr Dunn's willingness to admit error that assists Mr Singer was evident on more than one occasion and Mr Singer did not give evidence, I am persuaded that the Lakeberry Pty Ltd interest is not part of the divisible pool of assets because there was no evidence of any financial contribution by Mr Smith on behalf of Lakeberry Pty Ltd, or for that matter by Mr Gould. Ultimately, I do not think that, in respect of this property, Mr Gould contended otherwise. Mr Gould thought Lakeberry was Mr Singer's company and was unaware that Mr Smith was a shareholder.

108 There was, apparently an irregularity in the conveyancing, handled by Mr Singer, which resulted in Me Me Me Pty Ltd and, possibly, Mr Smith not being registered with Mandeville Pty Ltd for their interests in the apartment. This state of affairs was discovered when Mr Szental was instructed to implement the 2004 separation arrangements. Some time later, in circumstances that are not presently relevant, the share register of Mandeville was rectified. This property is still held by these parties and its agreed value of the current net equity in the property is $910,000, and accordingly the value of the shares of Me Me Me Pty Ltd and Mr Smith in this property, the asset in the sub-pool is $606,667, held equally.

109 It appears that some renovations were undertaken when possession was obtained. Mr Smith estimated the cost of the renovations at about $40,000. Mr Gould contended that he paid Mr Smith's share of the deposit, $18,500 and their share of the renovations. In the 'Geoffrey Trading' document, Mr Gould records the deposit as a debt to him. Mr Gould also produced a single sheet print out from a computer based accounting system, Quicken, apparently of a loan account out of the 'Gould Galleries' bank account for Me Me Me Pty Ltd in respect of 3/35 Marne Street, in support of his claim that he paid $66,000 towards the renovations of this property. The 'Geoffrey Trading' document suggests a lesser sum of $29,500, but is irreconcilable with the extract from Quicken. Mr Smith did not dispute that Mr Gould contributed at least $45,000 to the acquisition of this property. I find that in respect of 3/35 Marne Street, Mr Gould contributed Mr Smith's share of the deposit and $66,000 to the costs of the renovations.

110 This property was purchased in November 2002 for $219,500 by Mr Smith and Goldcheck Pty Ltd in equal shares. Mr Smith claimed that he and Mr Gould 'went halves' in the deposit for this property but I reject that claim, as there was no other evidence contradicting Mr Gould's denial of any participation and I infer that Mr Singer's evidence could not assist Mr Smith. The parties agreed that, when sold in April 2008, after half of the net proceeds received were distributed to Goldcheck Pty Ltd, the value of this asset in the sub-pool is $42,418, held by Mr Smith. Mr Gould contended that his general financial support of Mr Smith was a spring-board for Mr Smith's opportunity to invest in property such as Elizabeth Bay. I will return to Mr Gould's 'spring-boarding' contention, which he also claims applies to other properties, in due course.

111 Apartments being offered for sale in Mandeville are first offered to existing shareholders. When a second apartment on the same floor as no. 3 came onto the market, Mr Smith was enthusiastic about its acquisition but he had no funds. Mr Smith told me he insisted on its acquisition, but I am satisfied that it came to the notice of all of them in this way. Mr Gould and Mr Singer decided to, and did, purchase the apartment for $525,000. The purchasers were Me Me Me Pty Ltd, Ablepair Pty Ltd and Pacemake Pty Ltd. Ablepair and Pacemake were companies controlled by Mr Singer. The accountant, Mr Dunn, held equity in Pacemake and was a director of Ablepair. Mr Singer's shares in Ablepair were held by Mr Smith. Mr Smith stated that Mr Gould supported his interest in acquiring this apartment and agreed that Me Me Me Pty Ltd would 'hold our share'. Thus, Mr Smith considered he had acquired a third interest in this apartment as Mr Gould's partner. Beyond this assertion, Mr Smith had no knowledge of the financing of Me Me Me Pty Ltd's contribution to the acquisition of this property. Mr Gould rejected this contention. Mr Smith, he said, had no funds for property investment after the acquisition of apartment 3. He bought apartment 4, using Me Me Me Pty Ltd, for himself.

112 I reject the suggestion that Me Me Me Pty Ltd held its interest in the property for Mr Gould and Mr Smith equally, but the interest does form part of the divisible pool of assets. The property has not been sold. Its agreed current net equity is $830,000 and the value of the interest that forms part of the sub-pool is $267,666. The like issue about the share register of Mandeville arose with this property as well but is not presently relevant.

113 The property at 58-62 Smith Street comprised four terrace shops on separate titles with land behind. It was identified by Mr Smith and Mr Singer as a redevelopment opportunity, the proposal being to subdivide the four titles, retain the shops, but sell off the land behind once consolidated into a fifth title. Mr Gould was introduced to the property and the proposal, and agreed. There was a dispute about who introduced Mr Gould to this opportunity. Mr Gould stated that Mr Singer contacted him, and I am satisfied that this is probably correct as Mr Singer was an investor in the project and appears, from Mr Smith's evidence, to be its principal organiser. I reject Mr Smith's evidence that Mr Gould agreed to 'get a quarter of the investment for us', after he introduced Mr Gould to it. It appears that Mr Singer would not have supported Mr Smith's version of these events.

114 A consortium of four entities that included Mr Gould's company Keelboat Pty Ltd purchased the property in November 2003. Keelboat paid $652,000. In due course, the sub-division proceeded and the investors each took separate title to a terrace shop. When the land at the back was sold in 2006, Mr Smith had commenced this proceeding and a caveat that he lodged over this property was removed on Keelboat's agreement to apply its share of the proceeds in reduction of the mortgage remaining over its terrace shop at 59 Smith Street. That is what occurred.

115 It is agreed that the net current value of Keelboat's equity in this property is $443,200.[26]

116 Two further observations about investment properties can be made. Evidence was given about other properties bought, and sold, during the course of the relationship. Those dealings may have limited relevance when considering the extent to which the distribution of the equity from property investment requires adjustment from the holdings set out in preceding paragraphs for considerations of non-financial, or indirect, or welfare contributions.

117 The second matter is that Mr Gould contended that there were further properties that should be included in the pool of divisible assets acquired before June 2004 in Mr Smith's name that Mr Smith contended were held on trust by him for, or by companies in which he held the shares on trust for, Mr Singer. I will now state my findings on that issue.

118 Evidence from Mr Smith and Mr Christopher Grady (Mr Singer's previous partner), and such documents as were produced, suggests that Mr Singer was the appointor or creator of trusts that affected interests in property that were possibly relevant. It appears that Mr Singer preferred that title to some of his interests be held for him, possibly for security from creditors, but Mr Singer was not called to explain these transactions. I have mentioned the shareholding in Ablepair Pty Ltd, but this aspect of the dispute centred on a property at 6 Avoca Street, South Yarra, purchased by Mr Singer and/or nominee in October 2003 for $1,705,000, with settlement due in 180 days. There was no suggestion that Mr Gould contributed directly to its acquisition. Rather, the issue was whether the property, of which Mr Smith became proprietor shortly before separation, was part of the pool. Mr Smith stated that he was a bare trustee for Mr Singer at the latter's request with no equity in the property.

119 Some copy trust deeds were produced. In relation to 6 Avoca Street, Mr Gould contended that the trust deed was self-evidently backdated. On its face, the trust was declared on 21 April 2004, at a time when the relationship was in terminal decline, and, apparently, when settlement of the purchase occurred. By the deed, Mr Smith declares that he is a bare trustee. However, the loan documents for that property specifically disclaim to the bank any trust. The borrowers on the loan financing the purchase were Mr Smith and Mr Singer. The trust deed bore a date 12 April 2006 in a footer on the document, apparently part of the file name, that might support an inference that it was created in April 2006. It is possible that a trust, which was later documented, became effective when Mr Singer exercised the nominee clause in favour of Mr Smith prior to settlement, but I am not in a position to make any finding about that. However, in respect of that property, Mr Singer represented to his bank, as his creditor, in April 2005 that 6 Avoca Street was held in half-shares for him and Mr Smith. As Mr Singer was stating his financial position to persuade the bank to accept a lesser sum in satisfaction of a claimed debt,[27] had a trust been declared as documented, it was in his interests to reveal it to the bank at that time.

120 When sold by a contract made in July 2005 and settled in March 2006 for $2,240,000, the net proceeds of the sale of 6 Avoca Street, $1,013,349, were paid into an account in the name of Mr Singer. There was no evidence that Mr Smith had any interest in that account. Mr Smith was not effectively challenged by the cross-examiner when stating that Mr Singer organised the purchase and paid for the property, and that he held title to it for Mr Singer because he was asked to do so. Neither did Mr Gould establish any basis for an inference that funds were contributed, either directly from Mr Smith or indirectly in the circumstances of their relationship, to assist in the acquisition of the property. I am unable to infer that Mr Smith's interest in 6 Avoca Street is a pool asset, notwithstanding that Mr Singer did not give evidence, and it will not be included in the adjustment.

121 There is one respect in which the 6 Avoca Street transaction may be relevant and that is in evaluating what adjustment, if any, is just and equitable in the residential real estate sub-pool, having regard to Mr Smith's current financial position, which will be dealt with in due course.

Distribution of investment properties sub-pool

122 In summary, the standing of the investment properties sub-pool before adjustment for contributions is as set out in the following table. In the column for financial contributions to acquisition or capital improvement, I have noted any relevant disparity that I have found, not the total of the contributions by each party. Where N/A is entered, the evidence does not reveal what financial contributions were made, or that such contributions if known were not equal. I have proceeded on the basis that whatever contributions may have been made in such circumstances for those properties can be disregarded.

123 Edrob Nominees Pty Ltd is wholly under the control and direction of Mr Gould and operates a single bank account for its benefit and that of Mr Gould, Dukville and other related entities. While the value of the E&R Gould Unit Trust, determines the value of Dukville, the units in the trust are not a part of the divisible pool. The court's function is to adjust the interests of the domestic parties in the property or financial resources of one or both of them. 'Financial resources' is a term defined broadly in the Act. Assets and liabilities of other entities controlled by, or indirectly benefitting, Mr Gould are relevant to Mr Gould's financial resources. In this case, the relevant asset in the pool is Mr Gould's shares in Dukville. The value of the shares represents the whole of the relevant financial resources available to Mr Gould from this structure.

124 Setting the proper value of Dukville necessarily takes into account its assets and liabilities. To include in the pool an individual asset or liability of Edrob Nominees Pty Ltd, separately and additionally, is to double count. Care has been required to indentify what, if any, assets and liabilities in the name of Edrob Nominees Pty Ltd should, because of the approach taken by the parties to valuation issues, form part of the divisible pool of assets for adjustment in this application.

125 The major area of valuation dispute in this proceeding concerned the value of Dukville. The proper approach to valuing a private company is to take expert evidence.[28] Although the plaintiff led evidence from Mr Gary Fettes who appears to have appropriate qualifications for this task, he did not express a valuation opinion about Dukville. In theory, all valuation methodology for a business is based on its cash flow. Discounted cash flow is the most commonly accepted valuation methodology. Other common valuation methodologies include capitalisation of future maintainable profits, capitalisation of future maintainable dividends, value of net tangible assets on a going concern basis, or notional realisation of assets (hypothetical liquidation). In some circumstances a combination of valuation methods may be adopted.

126 The proper way to value the shares in this entity must be on an 'as is' basis and as it is being operated by Edrob Nominees Pty Ltd. That is so because the hypothetical purchaser of shares in Dukville, which is a going concern, is looking, not to a winding up, but to the profits which will ensue from the company continuing to trade. There is no evidence before me that the earning capacity of Gould Galleries will provide no measure of the true value of the shares, or would obscure the task of evaluating indirect and non-financial contributions to the improvement in that value over the course of the domestic relationship. Rather, Mr Fettes told me he would have adopted that approach if appropriately instructed.

127 In Mallett v Mallett[29] Gibbs CJ explained[30] that in determining the value of shares in a private company, it is necessary to take into account both the earning power of the company and the value of its capital assets.[31] That is so because in many cases the real value of the shares will depend more on the former than on the latter. An obvious example of the latter is a company that is merely a convenient means of holding the assets, which shareholders may be able to liquidate at will. In that example, the real value of the shares may be what the holder would receive if the company were voluntarily wound up. Gibbs CJ noted the purpose for which a valuation is made may affect the court's approach[32] commenting that there is much to be said for the view that the court will be more ready to value shares on a liquidation basis in a family law case than in a revenue or even in a compensation case. That said, the court must determine as a question of fact that valuation on a liquidation basis would be appropriate, and if so what result such a valuation would produce.

128 I am satisfied that valuation on a liquidation basis is inappropriate in this case. I do not find that Dukville is merely a convenient means of holding the art stock that existed on a particular date. There is no reason why Mr Gould, who has, I assume, the power to cause Edrob Nominees Pty Ltd to sell Gould Galleries and wind up the E&R Gould Unit Trust should do so. Mr Smith is not in a position to require it and nothing in Part IX of the Property Law Act requires that the asset be valued on this basis for the purposes of an application under the Part. To the contrary, the structure of the business is one commonly employed particularly where, as here, the business was operated by more than one proprietor when first set up. Moreover, it was a trading entity when Mr Smith was first introduced to it. It would be inappropriate, and unjust, to treat the corporate structure of Dukville as having no significance beyond the costs of its liquidation. Yet, as will become clear, the focus of the valuation evidence has been to explore what the proceeds of realisation of the stock of Gould Galleries would likely be, rather than to explore whether the stock is capable of ready realisation, and whether it would be prudent to realise the stock, and conversely the cash flow that can be maintained with that stock and business structure.

129 Further, and importantly, the stock of Gould Galleries has been acquired from, or with, the income of the business. In addition to establishing the gallery and later 'introducing' it to the domestic relationship, Mr Gould ran the business. His contribution to the value of the business is not simply measured in the value of its assets. It was, overwhelmingly, the most significant asset introduced. Mr Smith contends that he helped, contributing expertise and ideas as I will later explain, but he does not suggest that he ran or operated the gallery. His contribution to its conservation or improvement was made, he contends, in other ways. When evaluating contributions, the manner in which the gallery's assets were initially acquired and then built up is a critical consideration. This is a further reason for preferring an earnings based valuation methodology.

130 In Mallett v Mallett,[33] Mason J remarked:

There is always the risk that in examining methods of valuation attention is diverted from the object of the exercise, namely the ascertainment of the real value of the shares, to the means by which the object is to be achieved. As a general proposition the valuation by means of capitalization of profits is appropriate to those cases in which the likely purchasers will be looking to the profits which the company will earn as a going concern. Where, however, the valuation of the shares as calculated by reference to their assets backing substantially exceeds their valuation as calculated on a capitalization of profits, the former is to be preferred, subject to a discount for the expenses of winding up and distribution, unless there is some good reason for preferring the latter, as, for example, where the shareholding to be valued is a minority of shareholding and those in control of the company intend to carry on its business because that course has advantages for them. Even in such a case it will be proper to take some account of the assets backing of the shares in order to reflect the possibility that those in control of the company might be minded in the future to sell their shares or to realize the value of the assets of the company.

The joint lifestyle of the parties was financed by the profits of Gould Galleries, but it was never treated by Mr Gould and Mr Smith as a repository for the assets they collected during their relationship. In my view, that is a further reason for preferring that Dukville should have been valued on an earnings basis.

131 Like any other business, Gould Galleries is a collection of assets. Those assets are principally its stock, debtors, fixed assets, goodwill, employees, and loan accounts, all of which are involved in the income producing activity of buying and selling its products, artwork. The assets of a business are usually funded; whether by creditors, debt, or equity. With Gould Galleries, the question of how its major asset, its trading stock, is funded becomes central, as Mr Smith contends that a consequence of his contribution to Gould Galleries was that stock purchasing was specifically directed, due to his expertise, within the Australian art market. To evaluate the impact of Mr Smith's contributions to the value of Gould Galleries in the equity of Dukville, I must look at how the value of Gould Galleries was conserved or improved or the financial resources available to Mr Gould enhanced by Mr Smith's contribution. That task requires a proper, principled assessment of the value of Dukville at relevant dates, particularly of its gallery business, yet another reason for preferring an earnings based valuation methodology.

132 Because Mr Smith alleges that his contribution is of a nature that has increased the value of the gallery business and the equity of Mr Gould in Dukville, I have ignored its separate property interests and property related expenses in financial statements in looking for the true value of the Gould Galleries business. Dukville's property assets have been dealt with in other sub-pool categories.

133 It cannot be accepted at face value that Mr Gould's equity in Dukville has significantly increased in value simply because, as Mr Smith would have it, Gould Galleries has evolved into a gallery dealing in collectible modern Australian art on secondary sales, as opposed to representing artists offering new work, or sales of what was described, somewhat disparagingly, as decorative art. It was largely within that rubric, defining the nature of the stock dealt with and the manner in which it was marketed, that Mr Smith's contributions lay, inviting the inference that selling top quality collectible art of itself will produce a more valuable business than one that sells new or decorative art, begging the question whether those contributions or Mr Gould's contributions as a businessman/salesman were what drove any significant increase in value and how the factors that drove such improvement are best identified. Mr Smith's contentions in this respect were merely asserted, not proved. Plainly a well run gallery representing new artists may be a more profitable, and more valuable, gallery than one selling secondary art and vice versa. There is no room for assumptions.

134 As it is a matter for expertise, valuation is not an issue on which the court should conduct its own inquiry, or seek to inform itself. I was not provided with assistance from expert company valuers, particularly with experience or a background of appropriate research in art marketing. I do not doubt that an appropriate expert could have been appointed by the court had the parties sought to conduct this dispute sensibly. Common sense suggests that in a simple selling or distribution business the critical drivers of its profitability will be the selection of the stock to be sold and the marketing of that stock, in the context of the business structure employed. The focus ought to be on the trend in the gross profit margin of the business, for it is in the components of a gross profit that the influence of the contributions alleged by Mr Smith on these critical drivers may best be seen. Further, a capitalisation of maintainable future profits would take account of how stock acquisition is funded, the rate of turnover of stock and the impact of liabilities following on inaccurate disclosure of stock levels and values.[34] However, that did not occur and I must do the best I can with the evidence that the parties have chosen to present. In the end, the purpose of the valuation exercise is to ascertain the real value of the shares, the asset of Mr Gould that is amenable to adjustment under s 285 of the Act.

135 Commencing with the caveat that I do not accept that financial statements prepared by Mr Dunn for Mr Gould's entities reflect a true and fair view of their financial position at relevant balance dates, I will nonetheless set out what they reveal. The caveat about the reliability of these accounts was principally directed to the accuracy of stock figures, which are central to gross profit. It is likely that the general expenses of the business may be inflated to some extent by inclusion of personal expenses or, at least, expenses that are not strictly deductible business expenses. Mr Smith, having been significantly supported by Mr Gould, may well have benefitted from any inflated level of general expenses (items such as cars, travel, utilities, dining out, etc) and discrepancies in this regard are unlikely to affect significantly the conclusions to be drawn from the gross trading figures.

136 Nevertheless, the context of the business structure employed by the gallery business is sufficiently revealed by these accounts.

137 As I have noted, Mr Fettes was the only accounting expert called, but Mr Smith did not ask Mr Fettes to express an opinion about the value of Dukville. The inquiry he undertook was significantly more limited and concerned the accuracy and reliability of discovered financial records and the figures set out above. Unfortunately, disputes over the reliability of discovery were not confined to targeting what was needed to instruct business valuers. Unsurprisingly, Mr Fettes was unable to conclude either that Mr Gould's personal income and expenses had been fully and accurately disclosed or that the income and expenses of Gould Galleries had been fully and accurately disclosed.

138 In particular, Mr Fettes could not determine whether the correct level of stock held by Gould Galleries had been revealed in the financial years ended 2002 to 2004. A matter of weeks prior to the commencement of the trial Mr Fettes was asked to provide his opinion as to the increase in value of the business between 1991 and 2004 and between 1996 and 2004.[35] Mr Fettes was required to assume, for valuing the business, that the 'net business assets are essentially the value of the stock'. Mr Fettes justified proceeding based on this assumption because his instructions did not enable a suitable figure for maintainable earnings to be established. For that reason alone, Mr Fettes opined that an asset based approach is appropriate, thereby restating, by bald assertion, the assumption he was instructed to make. Thus, Mr Fettes, in breach of the Expert Code of Conduct, turned away from addressing the real issues that his expertise, as opposed to his instructions, should have directed. Mr Fettes ought to have sought proper instructions to establish a suitable figure for maintainable earnings, heavily qualified his opinion, or justified by transparent reasoning why establishing the value of the stock on a nominated date would, as a matter of accepted accounting principle, properly demonstrate the fair value of the business. The assumption Mr Fettes was asked to make has not otherwise been established.

139 Assuming the assets and liabilities of Gould Galleries to be accurately stated in its accounts, which has not been established, Mr Fettes concluded that the value of the business increased in the first period by $516,199 and in the second period by $479,451. Mr Fettes explained that in calculating a business value he had excluded all non-business assets and liabilities from the valuation thus drawing a distinction between a business valuation of Gould Galleries and an equity valuation of Edrob Nominees Pty Ltd (or Dukville). Mr Fettes commented that the value of stock represents between 66% and 80% of the value of the assets of the business. Stock is held on the balance sheet at cost and the value of any particular artwork is not necessarily reflected in its book value due to the rate and nature of stock turnover in an art gallery. Mr Fettes drew attention to the significant discrepancies apparent to him upon his examination of the financial records concerning stock.

140 Later, during the course of the trial, amended financial statements for the year ended 2006 were provided to him for his comment. Mr Fettes found these financial statements largely incomprehensible and was highly critical of unrealistic figures appearing in those accounts, particularly for closing stock. In the end, Mr Fettes was unable to express any meaningful opinion addressed to the issue that the court must determine. Plainly, in the 5½ years since the issue of the writ, the parties could not establish a proper valuation to base discussions to resolve their differences or, for that matter, to conduct an efficient trial.

141 From other evidence, the explanation emerged that Mr Gould was advised by accountants that a significant understatement of stock in tax returns prior to the 2007 return required correction. Those accountants elected, instead of reopening the returns for each of the financial years from 2002 to 2006, to reflect all necessary adjustments in the accounts for the financial year 2006. The consequence was the incomprehensible comparisons identified by Mr Fettes in items such as closing stock. The regulatory system for amended returns is one of self-assessment and, unless the Australian Taxation Office is not satisfied with this approach, amended financial statements for years prior to 2006 will never be produced.

142 The amended 2006 return resulted in a substantial tax liability of $1,476,850 for Edrob Nominees Pty Ltd, which it paid. Mr Lew, the accountant who prepared these returns, gave evidence that by an arithmetical calculation the tax liability attributable to the understatement of stock as at 30 June 2004 was quantifiable at $1,196,850. Mr Gould contended that that sum needed to be brought to account as a liability that reduced the value of the divisible pool. On an earnings based valuation methodology, that would likely occur. However, Mr Lew's analysis is unhelpful in assessing the value of Gould Galleries, apart from identifying a liability that properly existed in 2004. The amended return for 2006 was not accompanied by revised financial statements that permitted calculation of realistic maintainable earnings for valuation of the gallery business.

143 In the context of unreliable financial statements, the failure of Mr Smith's advisers to direct Mr Fettes to the proper questions to be considered in the proceeding and the failure of Mr Fettes to pay anything more than lip service to the Expert Code of Conduct meant, effectively, that no expert opinion could be advanced as to the proper value of the Gould Galleries business at the relevant dates. Mr Smith submitted that he was forced into this position by Mr Gould's default in making proper discovery. Whether or not that is so, and I will say a little more about discovery issues in another context, this submission is too simplistic and focuses attention of the failure of the parties to use available interlocutory processes to resolve this dispute efficiently.

144 It is unfortunate that the proceeding was not subject to close judicial case management from its inception, which in itself reveals how limited is the modern view taken by litigation solicitors of their obligations to the court. As the legal advisers to the parties have permitted this fundamental question to be explored in the proceeding other than by reference to appropriate valuation principle, time consuming and expensive interlocutory disputes particularly about discovery have been run. Secondly, weeks of hearing time were occupied with determining the stock lists and the value of the stock at relevant dates. As I will explain, the court has been left with an unsatisfactory, and unprincipled, morass of evidence from which to make a finding about the value of Gould Galleries at relevant dates and the nature of Mr Smith's contribution, if any, to the increased value of that business since 1990.

145 Unsurprisingly, Mr Smith and Mr Gould focussed on individual artworks. Their legal representatives have run the trial on the basis that the value of Dukville is assessed by reference to the current market value of the June 2004 closing stock. Further, stock is limited to the paintings that Gould Galleries owns, not paintings consigned to it for sale, notwithstanding that consignment of artwork to Gould Galleries was a significant profitable business activity. Gould Galleries otherwise, it is agreed, has no goodwill. The parties invited me to translate the value of the stock into the value of the units in the E&R Gould Unit Trust which in turn identifies the value of the shares in Dukville, leaving aside Dukville's property interests. In essence the parties have, without expressly acknowledging the fact, adopted a valuation method that appears to lie between a hypothetical liquidation valuation and a valuation of net tangible assets on a going concern basis, but which, in fact, is neither.

146 On these assumptions, the parties focussed the dispute on two issues:

(a) what comprised the stock of Gould Galleries at 30 June 2004; and

(b) what is the present market value of that stock?

Despite my reservations about proceeding on this basis, I am effectively constrained to do so by the focus of the evidence presented at trial. As it is not grounded in proper valuation principle, this approach has led to further areas of dispute between the parties. In particular, what definition of value for an individual artwork is to be adopted, its cost no longer being appropriate, and ought there be any adjustment to, or discount from, the assessed value of stock to achieve a commercial value commensurate with the real value of the Dukville shares to Mr Gould? What liabilities or other assets of Gould Galleries should be included in assessment of its value?

The stock of Gould Galleries as at 30 June, 2004

147 During the course of the trial, there was substantial agreement about the stock of art held by Gould Galleries at the separation date, but the area of disagreement took up much trial time. Mr Smith developed schedules of the stock, in two parts, that were referred to throughout the trial as schedules 3A and 3B. Schedule 3A, described as Mr Gould's version of the 30 June 2004 stock list was compiled from discovery, answers to interrogatories, other interlocutory affidavits, and like sources. At the start of the trial it comprised 209 artworks valued by Mr Smith at $8,328,126 (excluding the value of artwork on the schedule that hung at Park Street). Schedule 3B was a stock list compiled by Mr Smith to show stock, additional to schedule 3A, that was purchased by Gould Galleries prior to June 2004. Mr Smith was not personally satisfied that appropriate documentary evidence existed to show that the artwork had been sold prior to that date. Mr Smith contended that the stock of Gould Galleries was the sum of the two schedules, although he recognised the prospect that Mr Gould might persuade the court of sales of some of this stock, or that it was stock on consignment.

148 The content of schedule 3A developed further during the trial, finishing up as a list of 225[36] artworks, assigned a current market value of $8,970,951, by agreement. I have assessed the reconstructed stock list as at June 2004, identifying further deletions from the stock list as appropriate.

149 I am satisfied from Mr Gould's explanations given in the context of schedule 3B that artworks should be excluded from Mr Smith's reconstructed stock list schedule 3A. Friend's Boy Playing Guitar and Whiteley, Study for Wood Sculpture [37]were sold prior to 30 June 2004 and Smart, Study for Arrow Carriers[38] was acquired after that date. A number of works were on consignment; Nolan, Girl on Horse, 1940, Central Australia and Stringybark Creek, Dickerson Children Reading (1965), three works by Joy Hester, and Perceval Moses in the Basket[39]. On occasion, Mr Gould purchased artwork with other dealers and only his share should be brought to the account. Gould Galleries had a half share in Preston, Phlox and Christmas Bells, and Streeton, The Creek.[40]

150 From schedule 3B, after allowing for duplication, Mr Gould conceded that a further five artworks should properly be added to the June 2004 stock list. Schedule 3A also includes artwork that was retained by Mr Smith following separation and three works purchased for Mr Smith using an agreed cash component of $100,000 as part of the separation agreement.[41] Like art hanging at Park Street, such stock, being 21 artworks assigned a current market value of $652,825, will not be included as stock to avoid double counting.[42] Of that retained artwork, 13 artworks fell within the originally identified list and 11 artworks were added based on evidence that these works, having been provided to Mr Smith to hang in 3/31 Marne Street, must have been part of the stock at the time.[43] Three works, Rupert Bunny's The Little Green Tree, Tintaldra 1926, and Sidney Nolan's Plant, 1949 and Wounded Bushranger, 1955 both hung at Park Street and were in Mr Smith's possession following separation.

151 Before turning to consider schedule 3B, I am satisfied that, for the purposes of valuing the gallery business, the stock of Gould Galleries as at June 2004 comprised 198 artworks identified from schedule 3A,[44] excluding 22 artworks identified in the schedule that hung at Park Street[45] and the works that were in Mr Smith's possession following separation.

152 Schedule 3B developed, essentially, from interlocutory procedural steps. Mr Smith invited the court to draw two inferences about the true closing stock list for 2004. First, to infer that, in the absence of satisfactory evidence that the items listed in schedule 3B were sold before June 2004 or were on consignment, schedule 3B is the best evidence of the stock of Gould Galleries at June 2004. Second, that the value of the stock is the value attributed by Mr Smith's art valuation expert for those items that were valued.

153 Mr Smith submitted that the 2004 closing stock could not be resolved by analysing Mr Gould's discovery, but required the time and expense of reconstructing a stock list in the form of schedule 3B because of Mr Gould's conduct. I am satisfied that Mr Gould had admitted, or the evidence otherwise shows, that:

(a) Mr Gould no longer retains stock number entry books which pre-date those tendered as an exhibit;

(b) Mr Gould no longer retains sale invoice books relating to pre-2000 sales;

(c) Mr Gould no longer retains consignment books relating to pre-2000 consignments of art to Gould Galleries;

(d) Mr Gould's business books and records were a 'total mess' prior to 2006;

(e) Mr Gould admitted to instances of art works purchased under false names because it was 'considered a smart idea at the time to get ... money back into the country';

(f) Mr Gould purported to divest an indeterminate amount of stock from Gould Galleries by means of clause 5 of the Supplementary Agreement with his mother in February 1996;

(g) Mr Gould undervalued his stock for years;

(h) Mr Gould traded stock, including a work by Howard Arkley worth $325,000, with clients such as 'John Wilkinson' or 'John Asbett' off Gould Galleries' books and as part of the 'cash economy';

(i) Mr Gould has, since the commencement of this proceeding in January 2006, re-introduced paintings that had 'slipped through the system' as stock following advice from his lawyers;

(j) Mr Gould disposed of a computer which last contained what he said were Word© sales invoices for the more valuable art works sold e.g. Brett Whiteley's Bather and Garden;

(k) Mr Gould swore an affidavit in which he explained that he had 'inadvertently' omitted sales of stock valued at about $940,000. Mr Gould stated falsely that stock, Whiteley Bather and Garden, had been sold for $1 million, knowing that his statement was false and that the true sale price had been $1.5 million. Mr Gould admitted that his reason for doing was 'opportunistic', to take advantage of a possible misunderstanding by Mr Smith;

(l)

Mr Gould and Edrob Nominees Pty Ltd have never discovered or produced, whether on a confidential basis or otherwise, an electronic copy of the Tracker or Filemaker business records to which he apparently made reference after hours during the trial when formulating his response to schedule 3B; and

Mr Gould and Edrob Nominees Pty Ltd revealed to the Australian Taxation Office on the day that the trial was scheduled to commence that there may be irregularities in their disclosures in prior year tax returns.

Mr Gould has a response to the defaults laid at his feet about discovery, his record keeping in relation to the issue of the true stock list of Gould Galleries and as to what has been produced, although I need not set out that response or resolve that debate at this point.

154 Mr Smith contended that Mr Gould was, by force of these matters, a wrongdoer for the purposes of the rule in Armory v Delamirie (Chimney Sweeper's Case).[46] In that case, Delamirie had taken and kept a jewel from a chimney sweep's boy who had found it, and was sued in trover. The jury was directed that 'unless the defendant did produce the jewel, and show it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages'. Although the principle in Armory v Delamirie does not entitle the court to disregard actual evidence, Mr Smith contended that it allows the court to quantify an assessment robustly where the evidence tendered to the contrary is wantonly deficient or unreliable. Mr Gould disputed that he was a 'wrongdoer' in the relevant sense and that the rule had any relevant application.

155 The operation of the rule in a contemporary context is explained by Gyles JA in McCartney v Orica Investments Pty Ltd.[47] That proceeding concerned an assessment of damages for breach of a share sale agreement and the context concerned whether, and what, discount should be allowed in relation to an inducement to change distribution contracts that affected the assessment of damages for breach of a covenant against competitive business activities. It was, like Armory v Delamirie and the more recent authorities examined,[48] a proceeding in which the plaintiff bore an onus to establish his damages and could identify conduct on the part of the defendant that rendered that task more onerous than was required, whether by force of the conduct constituting the wrongdoing, or where wrongful conduct is accompanied by a failure to keep or disclose proper records.

156 In Murphy v Overton Investments Pty Ltd,[49] the High Court cited the same line of authority for the proposition that the trial judge on remitter 'may think it proper to draw inferences in favour of [the plaintiffs] if it is concluded that the respondent's wrong itself made quantification difficult'. In Murphy, the quantification was of loss or damage through undertaking financial obligations, by no means involving the defendant's control of relevant evidence.

157 What emerges from these cases is that where there is uncertainty in quantifying damages, an approach of resolving that uncertainty against the wrongdoer is generally not taken. Damages are to be assessed by reference to proper principles. However, if a range for damages is appropriate, the wrongdoer can hardly complain if the loss is found to be at the upper end of that range. The question of who bears the onus of proof and precisely what is being proved are important considerations. The underlying policy objective of the common law rule remains as it was expressed by Learned Hand J in L Albert & Son v Armstrong Rubber Co,[50] speaking of proof of what would have been earned had a contract been performed, that 'it is a common expedient, and a just one, in such situations to put the peril of the answer upon that party who by his wrong has made the issue relevant to the rights of the other'.

158 Mr Gould contended that the principle does not travel beyond identifiable limits; questions of the quantification of damages, or circumstances where a plaintiff must prove a past hypothetical, and where there has been a tortious interference with the plaintiff's goods or destruction of the separate identity of those goods. Accordingly, the principle does not apply to cast on Mr Gould an onus to show that personal property possessed by Edrob Nominees Pty Ltd at a past time was not in its possession on a nominated date, or that property possessed by Edrob Nominees Pty Ltd at a given time was not owned by it at that time. These are questions concerned with the identification and ownership of the property, not valuation, or quantification of a loss.

159 Mr Gould also contended that the principle applies only where the difficulty in valuation or quantification of damages arises from the wrongful conduct of the defendant that is the basis of the plaintiff's action and it is not sufficient to rely on conduct of a defendant, which is not the basis of the cause of action, but complicates the plaintiff's proof.

160 When it is borne in mind that the issue, on which I am invited to draw assistance from an Armory v Delamirie approach by a robust assessment against a 'wrongdoer', is the question of the value of the shares in Dukville, I am not persuaded that this principle has any relevant application for the following reasons. First, as I have stated, the proper method for resolution of the issue of the value of a business is to receive expert opinion. Inadequate record keeping by business entities is a fact for accountants and business valuers. There are processes adopted, and principles applied, as matters of proper accounting or valuation practice and principle where the available information is inadequate. I do not expect that robust assessment against a 'wrongdoer' is recognised as appropriate valuation practice and there was no evidence before me that it was.

161 Second, the court is not assessing damages against a wrongdoer. Part IX of the Property Law Act is an assessment of a different kind. This is not to say that an onus does not lie on a party to prove the value of an asset for which it contends an adjustment of interests. Mr Smith is entitled to contend for a greater value for Gould Galleries than Mr Gould admits but not on the basis that Mr Gould is a wrongdoer. To point to failures to keep proper records or make proper disclosure of the records kept, including proper discovery, assuming that such failures are proved, is not the sense in which the concept of 'wrongdoer' is used in the application of the principle.

162 Third, the trial of a proceeding is not the proper forum either to revisit interlocutory disputes about discovery, or to obviate doing so by seeking an Armory v Delamirie approach. The Supreme Court (General Civil Procedure) Rules 2005 provide processes and remedies for non-compliance with such processes that are appropriate to enable the parties, in interlocutory stages, to identify the issue of the value of the gallery business as critical in the proceeding and resolve issues about discovery and proof that arise. Such processes are not avoided simply by classifying one party as a 'wrongdoer'. The court is unnecessarily, and inappropriately, drawn back into a matter that competent litigators must resolve before a trial commences. This matter was listed for trial because the parties certified that it was ready for trial. It was incumbent on Mr Smith's advisors to resolve the issue of how, and by reference to what, the value of the business for which he contends is to be proved, at a much earlier stage in the 5½ years between issue of the writ and trial than actually transpired.

163 In relation to schedule 3B, Mr Smith insisted, inflexibly, that where there was evidence that an artwork had been purchased prior to June, 2004 or was in the possession of the gallery prior to that date, unless Mr Gould proved it was sold or received on consignment, it formed part of the closing stock of the gallery in June 2004 to be valued to determine the value of the business. The content of the schedule proposed by Mr Smith, and Mr Gould's response to it, evolved as the trial proceeded, which naturally constricted the parties in responding to the material of the other. The court extended considerable opportunity to the parties to fairly deal with schedule 3B. Mr Smith maintained that a document substantially in the form of the schedule was provided to Mr Gould several weeks prior to trial but that, of itself, did not fairly afford Mr Gould the opportunity to respond fully to the schedule in the form that was ultimately tendered. The parties delayed the progress of the hearing taking time to discuss matters of agreement and disagreement concerning these schedules. It was never clear whether the parties, or the court, benefitted from these delays.

164 It emerged that, in part, the allegation that particular artwork ought to be considered as stock in June 2004, was based on Mr Smith's review of his extensive collection of auction catalogues to compare his contemporaneous handwritten notes in such catalogues, with purchases by Gould Galleries evident from discovered stock records. Mr Smith took an appreciable time in his evidence-in-chief to prove that part of the schedule. As it was only when the format and content of the schedule was finalised and handed to Mr Gould that he could research and respond to it, that process became the final step in taking evidence in the proceeding. Mr Gould's response[51] challenged both the assumption that underpinned Mr Smith's schedule and the values assigned to the stock.

165 Schedule 3B on its face, identified over 1,800 works of art, with a value in excess of $23 million as the total of the stock list at June 2004. On its face this was inherently improbable, properly to be described as an 'ambit claim'. That consequence is hardly surprising given the assumptions made by Mr Smith when compiling it. Further, there was evidence that the available space for art storage was limited to approximately 230 artworks in both Sydney (30) and Melbourne (200), that Mr Smith could not contradict. There was not evidence that stockrooms were overflowing. If Mr Smith's evidence of the extent of his familiarity with the gallery is accepted, then he well understood that schedule 3B could not be a reasonable assessment of undeclared stock. Another yardstick that is, perhaps, less subjective, is the insurance cover that was held by Gould Galleries for stock, which is discussed elsewhere. Mr Smith's evidence was that he checked the schedule, not that he compiled it, except for a sub-schedule of about 440 works that he compiled from his archive of auction catalogues. By reference to its form and content, it is likely that schedule 3B was compiled by Mr Smith's advisers. It bears many hallmarks of a lawyer's discovery analysis. So much was stated by counsel when suggesting that it was a convenient aide for digesting a large volume of source material. There was unnecessary duplication and repetition, perhaps a consequence of hurried preparation or perhaps a consequence of word processor convenience.

166 Mr Gould worked through the list, comparing it not just with his computer and paper records, but also with the Australian Art Sales Digest website, and with his recollections. He explained entries in the schedule where a value had been ascribed to an artwork. Some explanations were conceded by Mr Smith. Others were challenged, on a sample basis, by the cross-examiner. Mr Gould's explanations included:

• Stock numbers could be duplicated when artworks, given a stock number by staff when initially acquired, received another when returned from the framer or restorer.
• The artist gave the same name to similar paintings, which made the life of the stockist difficult.
• The Tracker or Filemaker software programs showed either that the painting was on consignment or had been sold. The cross-examiner's attack on the examples chosen did not impugn the transaction, it challenged Mr Gould's discovery.
• Some artworks (mainly prints) had been donated to charity.
• Some artworks were purchased at auctions for clients and not entered in the stock system.
• Some artwork was donated to the NGV.

I accept Mr Gould's explanations given in response to schedule 3B.

167 More telling than the explanations offered is that there were items that Mr Smith knew should not have been included. In particular, the more significant artworks fell under this explanation. Mr Gould stated, and I accept, that he fed Mr Smith's particular interest in compiling his archive by providing him with information about sales, including consignment sales, particularly with the artworks of significant artists like Boyd, Nolan, and Perceval. In other examples, Mr Smith was involved in the sale transaction or he knew the consignor, vendor, or purchaser personally. John Kelly's Heads and Tails 1997-1998 was sold to Mrs Lisl Singer, with Mr Smith receiving a commission. Nolan's Kelly and Horse 1962, was on consignment for Ms Jinx Nolan. Nolan's Fitzroy River 1950, was purchased by Gary Singer, and Girl and Township 1962, was purchased by Lisl Singer. Nolan's Kelly Stalked by a Trooper was purchased by a collector known to Mr Smith.

168 For these reasons, I do not regard schedule 3B as establishing, on a prima facie basis, a stock list that established the true stock at June 2004 unless Mr Gould produced evidence to the contrary. I am not satisfied that Mr Smith carefully checked and adopted this schedule in the form in which it was tendered. Further, in accepting Mr Gould's explanations, as I have, any evidentiary onus cast upon Mr Gould to explain the entries in schedule 3B is discharged.

Finding as to the stock of Gould Galleries at 30 June 2004

169 As I have noted, Mr Gould conceded that five further artworks should be added to the June 2004 stock list. Leaving to one side Park Street artwork and artwork provided to Mr Smith on separation, I reject Mr Smith's contention that the closing stock at June 2004 included more than 212 artworks from schedule 3A that I have identified. I turn now to the question of the present value of the stock held by Gould Galleries in June 2004.

Present value of the June, 2004 stock of Gould Galleries

170 For Mr Smith, Jonathon Dwyer, an art consultant and valuer, valued both stock lists of Gould Galleries and the alleged private collection. Mr Dwyer had extensive practical experience in the art industry but only 7 years' experience in art valuation. He has no formal tertiary qualifications in art or valuation. He is an approved valuer for the Australian Government's cultural gifts program, although I do not know what rigour applies in assessment for that approval.

171 For Mr Gould, Timothy Abdullah undertook substantially the same exercise. Mr Abdullah has tertiary qualifications in fine arts and has been since 1985 registered as an art valuer in several relevant categories with the Commonwealth Government for the Taxation Incentives for the Arts Scheme. I take this to be the same scheme as the cultural gifts program that Mr Dwyer referred to. Mr Abdullah, who performs over 1,000 art valuations each year, has been involved in marketing art since 1984. Mr Abdullah, too, has no educational qualifications in valuation, but extensive practical experience in the art industry.

172 Neither witness presented their opinions in respect of each artwork with such transparent reasoning as might facilitate a proper understanding by the court of their evidence. Nevertheless, there was, ultimately considerable agreement between them and subject to the observations I am about to make, I will accept the agreed values. I need only note the theoretical basis of their approach to valuation and the areas of dispute between them, before setting out my findings regarding the value of the business and of the art alleged to be the private collection.

173 The valuations were of individual artworks and were estimates, apparently derived from comparable sales, of the price that might be paid for each artwork offered for auction individually. Each valuer asserted that he used the comparable sales theory of valuation. The theoretical basis for the expressed opinions of value was otherwise not discernable. Neither valuer explained in conceptual terms the value being identified, identified the actual comparable sales he had used to arrive at any individual valuation or explained the process of reasoning by which any particular value was determined. Although opinions may have been, for the most part, inadmissible, neither party objected to the evidence tendered against him and there was, in large measure, agreement between the two valuers about the market value of the artworks.

174 In adopting the comparable sales theory of valuation, each valuer agreed that there were many matters of assessment considered in the selection and evaluation of comparable sales. The inexact nature of the task is often reflected by quoting a range, and that is commonly done when preparing auction catalogues. The explanations by each valuer of the concept of a range of value were, I think, indicative of marketing theory, not valuation theory. Mr Abdullah suggested that a range for a catalogue is established by expected hammer price to expected hammer price plus buyer's premium, but other factors will influence the extent of the range quoted. Mr Dwyer suggested the lower end of the range will be a 'tease to the potential buyer' and the upper end of the range is more likely to reflect what the vendor, and the auction house, would like to see realised by the artwork. I was not able to identify a range, in the sense of the accepted margin for error flowing from the subjective assessment of imponderables, which might be applied to the exact value opinions expressed. While real estate valuations are commonly regarded as carrying a margin for error of 10%, I suspect that art valuations have a significantly greater margin for error.

175 Each valuer assumed sale at pubic auction. The practice at art auctions in Australia is that the 'hammer price', at which the artwork is knocked down to the successful bidder, is neither the price paid by the purchaser nor the consideration received by the vendor. It identifies the buyer who offers to pay the highest price to the vendor on that day. Irrespective of any other consideration, the seller will not receive more than the hammer price. There are four basic types of expenditure that affect the transaction:

• commissions, which can be either vendor's commissions or buyer's premiums, or both. Commissions may vary with value, buyer's premium is commonly 20% or 25%, while vendor's commissions are much lower - one to two percent or even waived for exceptional artworks or multiple offerings;
• GST, which may affect parties to the transaction differently depending on other factors;
• resale royalties levied against a vendor following an applicable sale, which are a recent development and excluded from consideration by each valuer; and
• expenses in preparation for or completion of the sale, such as cleaning, reframing, or transport costs. The last category is readily dismissed from consideration as transaction costs peculiar to one party or the other and paid by one party to a third party, which are irrelevant.

176 The concept of market value that ought to be under consideration when valuing artworks is that of the value to be struck between a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm's length. In each case the party to the transaction although willing, is not obliged to complete the transaction. Further, the inquiry is into what the purchaser will pay and the vendor will accept.

177 In Kenny & Good Pty Ltd v MGICA (1992) Ltd[52] McHugh J said, speaking of land valuation:

Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth:

'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property'.

The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.

178 In family law, this concept had been applied[53] as the test by which the real value of an asset forming part of the divisible pool is to be determined by the court when agreement is absent.[54] However, Family Court authorities recognise that the method of valuation adopted is in the court's discretion and may depend on the nature of the asset or interest being valued. The position is the same in this court on Part IX applications. Having agreed to market value of the art stock as the basis for the valuation of the interest of Mr Gould to be adjusted in this proceeding, articulating properly the concept of market value for the agreed purpose will, as I will now explain, resolve the further issues in dispute between the valuers - whether transactions costs, particularly buyers premium and GST are relevant.

179 Mr Dwyer stated that he did not include GST in his valuations, because 'its not common practice' to do so. Mr Dwyer did include auction house buyer's premium but did not include seller's commission, because the buyer's premium is, he said, part of the market value, openly recorded in the art price databases. In Mr Dwyer's view, vendor's commission which is negotiable, is unlikely to be applicable in the present circumstances. Mr Dwyer suggested that his expressed valuation opinions represent what one would have to pay for a comparable work in the secondary market at auction or what one would reasonably expect the painting to realise at auction. His evidence exposed a failure to conceptualise properly the valuation principle that he applied. The market value of an artwork was, for Mr Dwyer, the hammer price plus the buyer's premium, yet Mr Dwyer conceded that his current market value was what a purchaser must expect to pay and that a vendor is always likely to receive less than the hammer price.

180 Mr Abdullah did include GST because it was in his view common practice to do so. Mr Abdullah explained that artworks attract GST and 'because we are often selling, or quoting prices to buyers. We are accustomed to having all our valuations for any purpose to include a GST component'. Mr Abdullah's expressed valuation opinions represent the prices as they would be estimated in an auction catalogue, with a further 25% added for buyer's premium, what one would have to pay for the painting at auction. Mr Abdullah's evidence also exposed a failure to conceptualise correctly the valuation principle that he applied. Each of the valuers has expressed a concept of what art salesmen want buyers to pay. Mr Abdullah agreed in the concurrent evidence session that a vendor will receive at least 20% less (on the assumptions being made) than the assessed value.

181 The debate at trial about GST and the valuation opinions arose because of the assumption that the market value of the stock is the value of the business. Mr Gould contends generally that, as a commercial dealer, he must pay GST on his turnover when an individual, not registered for GST, who might bid at auction would not do so. Mr Gould contended for a 10% reduction in the values nominated by his expert for that reason and his counsel suggested to Mr Dwyer that he had included GST in his assessments, seeking a like reduction in the values nominated by Mr Dwyer. This calculation is misconceived. On much of Gould Galleries' stock GST would have been paid on acquisition, generating an input credit against the obligation to account for GST on sales. It is now not possible to determine the impact on the value of individual artworks of GST on sales by Gould Galleries after June 2004.

182 Properly assessed by reference to cash flows, GST, and all other transaction costs would be appropriately incorporated in the value of Gould Galleries. In that context the effect of GST, like the effect of income or capital gains taxes, on maintainable income streams is relevant. It is irrelevant to assessment of market value of individual artwork. A valuer ought to be identifying the incidence of GST when properly assessing comparable sales. If GST is not treated uniformly in the achieved prices being compared, the process is flawed. Mr Dwyer produced examples to show that auction houses do not necessarily regard the hammer price as GST inclusive for that vendor's obligation to account for GST. Plainly the terms of an auction can specify what the hammer price represents and in that way affect the incidence of GST between the buyer and the seller. The practice, apparently, is to use a 'dagger' symbol in the catalogue.

183 The incidence of GST upon a taxpayer obliged to account for it because of the sale of an artwork is not relevant to the concept of 'market value'. Like any other tax or levy imposed on one party or the other, it should be disregarded. So too are commissions to be disregarded, whether paid by vendor or purchaser. Like any other transaction expense they are irrelevant to the inquiry. That is so because the relevant inquiry focuses on the value that would, hypothetically, be agreed for the artwork between the buyer and seller, each knowledgeable and willing, but not anxious. Incidents of the transaction that are dealings between one of those parties and a third party are ignored. It does not matter that incidental third party transactions might apply consistently to such transactions, if that be the case. The concept of market value does not involve assessing the incidence of the levies, taxes, charges, or expenses that are incidental to the transaction. Such expenses are incurred either before, or after, the time contemplated by the proper concept of market value and are outside the concept as properly understood. The hammer price represents what the buyer offers and the seller accepts, before each accounts to others for the expenses and imposts incidental to the transaction. The true value of the work must be the same whether the valuer is speaking to a seller or a buyer. Thus, a valuer would inform a seller that his opinion of the true value of an artwork is $500,000 but the seller will not likely receive more than, say 96%, of the value after allowing for expenses of sale and a valuer would inform a buyer that it will likely cost 120%-125% of the value to acquire the work.

184 For these reasons, the proper market value of the artworks in question is the 'naked' hammer price.

185 I am satisfied that, disregarding common practice, the available data bases permit calculation of the 'naked' hammer price, that is, without buyer's premium added or any consideration of GST issues. There was no impediment to using hammer price. To assess the proper market value, the allowance made for these irrelevant considerations must be removed. Each of the valuers has assumed buyer's premium for the purposes of their valuation. Mr Dwyer allowed 20%. Mr Abdullah's report states that he allowed 25% for buyer's premium but at other times in his evidence he refers to buyer's premium at 20%. Comparison sales from databases shows the actual buyer's premium paid. Because the issue of buyer's premium was not identified as a point of disagreement between the valuers, I will adopt a discount rate of 20% to expose from the valuation opinion expressed the valuer's opinion about expected hammer price. It is not possible to undertake the same exercise in relation to GST because the comparable sales, and the appropriate details about such transactions was not revealed in evidence.

186 Turning to value the reconstituted stock list of Gould Galleries at 30 June, 2004, the agreed, or sale, value for items in schedule 3A is, less the Park Street art, $8,328,126. The adjustment of the value of the reconstituted list consequent on my findings is a net decrease of $903,858, a sub-total of ,$7,424,268. This is the sum of individual values arrived at in three ways. Since 2004, many artworks have been sold by Gould Galleries. In those cases the invoiced sale price has been used. Unsold artworks have been valued in the manner discussed above. Where there is disagreement between the valuers, the parties have mostly agreed a compromise value. For the reasons I have already given, a discount that removes the buyer's premium of 20% should be made so that these values correlate with a true hammer price. However, such a discount only applies where the opinions of valuers, rather than an achieved sale price since June 2004, is the basis for the value attributed to the work. Mr Gould submitted, and I accept, that the value of paintings on schedule 3A that have been sold was approximately half of the total value attributed to the schedule.[55] To eliminate the inappropriate inclusion of buyer's premium in valuations when used, I will apply a further discount of 8.3% to this sub-total, assessing that component of the stock list as valued at $6,808,054.

187 Mr Smith contended that, if the court made an order for the payment to him of a liquidated sum, he will be forced to pay buyer's premium to acquire art works in lieu of those in the pool, as would any buyer in the art market. The 'hammer price' alone will substantially undervalue the art, providing Mr Gould with an unfair windfall. This submission is misconceived. Firstly, the purpose of this valuation is to assess the value of Dukville for adjustment under Part IX of the Act. Secondly, the assessment of an adjustment in property interests under Part IX of the Act is not made by reference to Mr Smith's future intentions for art acquisition. Thirdly, for the reasons given above, it makes no commercial sense to value the shares of Dukville by reference to the equivalent of the full retail value of the stock of the business assessed by reference to the cost to an individual purchaser of a single artwork at auction.

188 Mr Gould, on the other hand, contended a further discount of not less than 20% to the stated valuation for a bulk sale of the stock or a significant part of it. This submission is inconsistent with the basis for valuation put forward by Mr Gould who cannot now approbate and reprobate on that choice. I have already referred to the conceptual difficulties of the valuation 'methodology' adopted by the parties. The choice of market value rather than cost price is the consequence of that agreement. That further discount is, in any event, not appropriate. First, it is speculative. Mr Abdallah is not a business valuer. The suggested discount is not based on any evident knowledge, skill or experience, nor is it supported by a transparent process or reasoning. Second, a sale of the whole stock at one time is hypothetical. The theoretical realisation of the stock is in the course of conducting a viable, solvent business and not otherwise. No liquidation sale is proposed. Since the total represents values agreed between the parties, I will make no further adjustment to this sum.

189 To this sub-total, $6,808,054, I add the value of the five artworks from schedule 3B conceded by Mr Gould. Mr Gould states that three of these artworks are presently available for purchase at Gould Galleries for prices that exceed the value assessed by Mr Abdallah but are less than the values assessed by Mr Dwyer. Mr Gould's offer prices represent the average of the valuations and I will adopt that figure as the value of these artworks, a total of $60,000. I assess the market value, on the valuer's assumptions, of the remaining two Nolan crayon works on paper at $10,000 each.

190 The total value of the identified components of the reconstructed June 2004 stock list is accordingly $6,888,054.

191 Mr Gould did not offer any evidence of the value of his half interest in Dukville when the relationship commenced, an interest to which Mr Smith plainly did not contribute. The buy-out of his mother's interest in 1995 is not relevant to this question. Apart from the timing of it, it was not an arms length transaction. Mr Gould described how the gallery experienced favourable trading conditions in the late 1980's but its viability was seriously compromised with the onset of the economic downturn in 1990. While then not profitable, trading conditions did improve through the 1990's. The accounts prepared by Mr Dunn disclose a deficiency in beneficiaries' funds of $5,548, but these accounts are not reliable. Again, the issue is understated stock values. In June 1991, closing stock was recorded as $95,246. In evidence Mr Gould suggested the closing stock value may have been closer $1.5-2 million. I am not satisfied that this figure is closer to an estimate than a guess, and Mr Gould had the opportunity since 2004 to prepare a proper valuation of what he brought to the relationship.

192 Gould Galleries was a valuable business in 1990, despite difficult trading conditions. Overall, my impression is that over time annual art purchases broadly approximated annual sales. Declared sales for 1991 were $472,000. Its declared gross trading profit was $262,000. On consideration of this evidence, I assess the value of the Gould Galleries business, when the relationship commenced at $500,000, and will allow that sum as a credit against its 2004 value to isolate the increase in equity to which Mr Smith can claim to have contributed. It does not matter that Mr Gould's interest in Dukville was a half interest in the light of the subsequent buy-out of his mother.

193 In the following table, I set out my findings as to the artwork at the centre of the private collection dispute, which has also been referred to as the artwork hanging at Park Street, although those two categories are not an exact match. The artworks identified are those, from what hung at Park Street, that Mr Smith contends formed an agreed private collection, irrespective of who originally contributed the particular artwork to hang at Park Street. For all but five of these works, values were agreed by the parties based on hammer price plus 20%. I will state my findings about the value of these works in due course.

Schedule of 'Private Collection' Artworks from Park Street

Conversation Piece 1941 aka Helen Blaxland and Tonia

Interior with Screens and Avocado, Lavender Bay, 1976

194 I have already noted that several issues arise about ownership of these artworks. To the extent that artworks are the personal property of either man or are jointly owned personally by both men, they cannot form part of the stock of Gould Galleries. Once such artworks are identified and separated out, the residual issue is whether the remaining artworks were stock of Gould Galleries or formed part of a private collection that was the joint property of the parties.

195 Starting with Mr Smith's interests, Mr Gould concedes that the following paintings were personally owned by Mr Smith. None of the artworks originally possessed by Mr Smith in 1990, or later inherited, have been retained by him. The overlap with the alleged private collection is evident from the number in the left column. Mr Smith does not contend that he contributed financially, or is entitled by gift, commission or otherwise apart from by a Part IX adjustment, to any other artworks.

196 The evidence touching the Arkleys was confused. Mr Smith recalled that he personally purchased OYO Flats. By his 2001 will, he bequeathed the painting to the NGV. Mr Smith could not recall purchasing Arkley's Triple Fronted but claimed to have contributed $12,500 to a half share, with Mr Gould, of A Freeway Painting (Overpass), using the proceeds of a damages settlement. Mr Gould gave a different account, which I accept. He said Mr Smith contributed $9,000 to buy Triple Fronted. Mr Smith bequeathed Triple Fronted to Mr Singer by his 2001 will. A Freeway Painting (Overpass) was purchased by Gould Galleries and it was later given to Mr Smith either as a commission or a gift.

197 Mr Smith denies owning or possessing several of the Marburg works. I am satisfied that he purchased Garden and Far Gone. I am unable to say in whose possession the former painting now is. It appears that Gould Galleries purchased the remaining Marburgs. Mr Gould described them as Mr Smith's, by gift or commission payment, and I accept that this is so as Mr Smith took them when he moved to 3/31 Marne Street. I also find that McMonagle's Keith, Gwyn Hansen-Piggott's Harbour 1998, Tucker, Antipodean Head[56] and Williams, Swamp Grasses, Kew Billabong[57] were originally purchased by Gould Galleries and were either a gift, or a commission paid, to Mr Smith before the separation date. They were also taken by Mr Smith when he moved to 3/31 Marne Street. Mr Smith did not claim ownership of all of these artworks, asserting that eight identified works were part of the private collection. Mr Gould produced an unsigned list of 18 artworks dated 19 June 2004 of artworks at Park Street that belonged to Mr Smith. This list appeared to involve the concession of a half interest in some artworks. Mr Smith took possession of many of these works on separation. The three Arkleys, the two Bracks, the Hoberman, and the Kozic remain at Park Street.

198 As I have already noted, Mr Gould owned the following artworks when the relationship commenced. These artworks hung at Park Street.

Tucker's, Intruder and Parrots, although hanging at Park Street, was offered for sale by Gould Galleries on four occasions between 1997 and 2004.

199 Mr Gould contends that he personally acquired the following artworks during the course of the relationship.

200 I have noted above, at [62], that I cannot conclude that Mr Gould personally acquired title to six of these paintings when he bought out his mother, namely 2, 7, 9, 11, 33, and 44. After the time of that buy-out, there was evidence that some of these paintings were Gould Galleries stock. Arkley's, Actual Fractual was purchased by Gould Galleries from Tolarno Galleries, who represented the artist in 1995. I find that Mr Smith, who has a particular affection for Arkley's works located the painting and drew Mr Gould's attention to it. It hung at Park Street. It was not offered for sale by Gould Galleries after 1996.

201 Gould Galleries purchased, and sold, many works by Charles Blackman during the relationship period. Gould Galleries purchased Girl with Flowers from a client. It is likely that Mr Smith suggested to Mr Gould that it be acquired, but the acquisition was arranged by Mr Gould and funded by Gould Galleries. I am satisfied that the painting was acquired as gallery stock. It did not sell at the 1995 Hong Kong exhibition and thereafter hung at Park Street. It was not offered for sale by Gould Galleries after 1996, but neither was it named in Mr Gould's 2003 will.[58]

Two Boyd 'Bride series' paintings, Dreaming Bridegroom and Wedding Group, were purchased by Gould Galleries in the USA before 1996. Mr Smith contended that they were bought by the two men together. I do not accept Mr Smith's evidence. I accept that Mr Gould had been compiling lists, from the literature, of the ownership and whereabouts of paintings that might be acquired from about the time he commenced to operate Gould Galleries. Mr Gould located the collector in Philadelphia, USA. That this collector might have these paintings was evident from Franz Philipp's 'Arthur Boyd'.[59] Mr Gould had a copy of the book in his gallery library. I have no doubt Mr Smith also had access to the book and was keenly interested in the acquisition. Mr Gould located a phone number and made contact with the owner. He then visited the owner in the US and negotiated the purchase of the two works by Gould Galleries for a 'good price'. Mr Smith was not present with him. Not long after the acquisition, the other painting was sold by Gould Galleries netting a profit of $275,000 and thereafter Wedding Group hung at Park Street. The acquisition of a third Boyd, Figure by a Round Pool (Narcissus), was not the subject of specific evidence, but I am satisfied that Mr Gould claims it under the buy-out of his mother. These two Boyds were not offered for sale by Gould Galleries after 1996.

203 Nolan's, Hartz Range was initially purchased by Gould Galleries. I reject Mr Smith's assertion that he had to convince Mr Gould to buy it and that it was only for the private collection and never offered for public sale, because it featured on an invitation for the 1991 Hong Kong exhibition and on the price list for that exhibition. Mr Smith gave no evidence of any specific agreement or arrangement discussed between them by which Hartz Range hung at Park Street as part of an exclusive[60] private collection. There was no evidence that it was ever offered for sale by Gould Galleries after 1996. It was not included in the Gould Galleries' Nolan, 'Landscapes and Legends' exhibition in 2001.

204 Pugh's Rape of Europa was purchased by Gould Galleries from a Christie's auction in London in 1991, which offering became evident to both men from the auction catalogue. Mr Smith told me of its significance in modern Australian art but I am not satisfied that he persuaded Mr Gould, by reference to such material, to buy the painting. Mr Smith suggested that the recent sale of a Streeton at the 1991 Hong Kong exhibition had 'given us the financial confidence to buy the Pugh' (Gould Galleries paid £8,800) and that 'we were rewarding ourselves with the purchase of a major painting for our collection'. I do not accept that the purchase occurred as Mr Smith described it. It is likely that both men discussed the painting and that Mr Smith was enthusiastic that it might be a good buy, but I am satisfied that Mr Gould made the purchase as stock for the gallery. Rape of Europa was offered for sale by Gould Galleries in the exhibition 'The Antipodeans' held in November and December 2003.

205 I find that Rape of Europa was gallery stock on June 2004, and I accept, for present purposes, Mr Gould's claim to own five paintings by acquisition from the gallery in the buy-out of his mother as I am neither concerned, nor able on the evidence, to determine title to it as between Mr Gould and Edrob Nominees Pty Ltd.

206 The remaining five paintings were acquired in differing circumstances. Blackman's, The Friends, was purchased at a Sotheby's auction by the use, initially, of the false name Hymie Schwartz. The painting was paid for with funds transferred in from a bank account in Hong Kong. The ownership of the Honk Hong funds is an issue that I discuss elsewhere. Mr Gould claimed the painting as his own. Unable to produce satisfactory evidence of identity for Schwartz, the invoice was re-issued in Mr Gould's name. That invoice includes three other paintings that were Gould Galleries stock, precluding any inference from the face of the Sotheby's invoice. The painting, which hangs at Park Street, has never been publically offered for sale. Mr Gould contends it is not part of Gould Galleries stock. Mr Gould considered that it was his when he made his 2003 will. Mr Gould discussed the merits of its purchase with Mr Smith before the auction and I am satisfied that Mr Smith was aware of and agreed to the circumstances in which this painting was acquired. For my purposes, this painting will be regarded as Mr Gould's personal property.

207 Dobell's, Conversation Piece, was likewise purchased under a false name, and paid for with funds drawn from Mr Gould's Hong Kong Citibank account. Mr Smith was very keen on this painting. I am satisfied that Mr Smith was aware of and agreed to the circumstances in which this painting was acquired. The painting, which hangs at Park Street, has never been publically offered for sale. Mr Gould contends it is not part of Gould Galleries stock and he included it in his 2003 will.

208 How Lucien Freud's etching, Large Head, was acquired was not explained in evidence, apart from Mr Smith's reference to an interest of Professor & Mrs Singer in Freud's work. It may have been that two etchings were purchased and one of them sold to the Singers. Mr Smith said the etching was acquired for their private collection but with a sale to the Singers and the etching, Large Head, offered for sale in April 2005 at the 'Collectable & Exceptional' exhibition in May, 2009, I do not accept that this was so. Although Mr Gould included it in his 2003 will, the probabilities are that it was acquired as Gould Galleries stock. Whether, and how, it became Mr Gould's property could not be verified from the records of Edrob Nominees Pty Ltd.

209 The acquisition of Donald Friend's, Warriors (Greek Soldiers), was also not explained in evidence, although Gould Galleries did stage at least one exhibition of Mr Friend's work, in 1990. The sculptures decorated the laundry. It was not suggested that they were ever offered for sale through the gallery and they are included in Mr Gould's 2003 will. It is probable that this artwork did personally belong to Mr Gould.

210 Nolan's, Kelly and Armour, 1962, was purchased at auction in 2000 for approximately $350,000. At the same time, Gould Galleries or Goldcheck acquired, jointly with another art dealer, Nolan's Wounded Bushranger. Kelly and Armour was not included in the Gould Galleries 'Landscapes and Legends' exhibition in 2001. Mr Smith claimed that this work was purchased by Gould Galleries as gallery stock. Mr Gould disagreed. He explained that, although he did the bidding at auction, one John Asbett, who owed him a debt from a long time ago, paid for the painting for him. The explanation of this dealing was that the result of prior transactions that had nothing to do with Gould Galleries, Mr Asbett owed Mr Gould $325,000. Mr Gould suggested that an Arkley of that value that came from trades with other dealers had been 'provided' to Mr Asbett. Mr Gould produced no relevant document. Mr Gould could not name the painting or when the transaction occurred and initially confused the identity of the other party, although he volunteered a correction. I am not satisfied that a probable explanation of these transactions was given. However, the painting has hung at Park Street since acquisition, has not been publically offered for sale, and Mr Gould included it in his 2003 will.

211 Each of these paintings does not appear to have been offered for sale by, or through, Gould Galleries and, as Mr Gould contends that they are his private property, while Mr Smith contends they are part of the private collection. I am neither concerned, nor able on the evidence, to determine title to them as between Mr Gould and Edrob Nominees Pty Ltd. I will treat these paintings as Mr Gould's personal property acquired during the relationship, rather than include them in the gallery stock for pool adjustment purposes.

212 The market value of Rape of Europa was not agreed. Subject to what I am about to say concerning the concept of the private collection, I find that the disputed works were owned as follows:

• Mr Smith owned nine works, being the works numbered 1, 4, 5, 22, 23, 24, 43, 47, and 54 in the table in paragraph [193].
  • Mr Gould owned 16 works, being the works numbered 2, 7-9, 11, 16, 17, 19, 20, 27, 33, 34, 41, 45, 46, and 48 in the table.
  • The remaining 29 works were Gould Galleries stock.

213 I do not think that the insurance arrangements at the separation date are determinative of either ownership or value of the Park Street artwork. In 1998 Mr Gould increased the insurance cover for Park Street from $1.5 million to $5.5 million, presumably after the major renovation of Park Street was completed. In 2003, the insurance cover for Edrob Nominees Pty Ltd at Park Street was increased to $8.3 million. Edrob Nominees Pty Ltd maintained a Fine Art Dealers insurance policy that covered Gould Galleries artwork at four locations, the Melbourne and Sydney galleries, Park Street and Potts Point. The insured is Edrob Nominees Pty Ltd trading as Gould Galleries, covered for its interest in stock which is its property. Neither Mr Gould nor Mr Smith were identified as insured persons with any interest covered by the policy for personally owned artworks. Edrob Nominees Pty Ltd paid the premium. The policy conditions required properly maintained stock records as a condition precedent to settling claims and losses in relation to unsold stock were settled at cost price. The policy also provided that, where the insurer had agreed values for specific stock items, settlement would be at agreed values.

214 A list of paintings at Park Street appeared to accompany the policy schedule, although I am satisfied that it is not part of the policy schedule. No interest of Mr Smith or Mr Gould is noted in any artwork on that list. The list is an almost identical[61] list of artworks to the alleged private collection and individually ascribes values totalling $8,300,000 to them. Mr Gould compiled this list and kept it on his computer at Gould Galleries. He probably nominated to his broker the values for insurance purposes using this list. Neither the policy schedule nor the correspondence with Freeman McMurrick Pty Ltd, the insurance broker, suggests that the list of artworks is an agreed value list binding the insurer under the policy. I reject Mr Smith's suggestion that with Mr Gould he would go around Park Street, working through the list of artworks item by item, discussing the current value of the private collection.

215 Neither the valuers, nor the parties were able to agree on the value of the following paintings from the collection at Park Street - Arkley, OYO Flats, Nolan, Kelly and Armour (1962), Ned Kelly Outlaw, (1955), and Wounded Bushranger (1955), and Pugh, Rape of Europa. What was in issue between them was current market value.

216 I make the following findings as to current market value. The value of Arkley's OYO Flats was not analysed in the concurrent evidence session.

The exhibits are confusing as a substituted version of Exhibit P19 no longer shows the value of this painting as agreed at $180,000. Such an agreement would represent taking the median value between the expert's assessments. On balance, this is the only conclusion supported on the state of the evidence. That value represents the comparative hammer price plus a 20% buyer's premium. The proper market value of the work is $150,000.

Nolan's Kelly and Armour (1962) was valued by Mr Dwyer at $1,500,000 and by Mr Abdullah at $1,200,000. Mr Abdullah had reconsidered the opinion he had earlier expressed and raised it. Neither valuer identified his comparable sales. As objective analysis of the bases for the differing opinions was not evident on the evidence and the medial value sits on a 10% range, I find that the comparative hammer price plus a 20% buyer's premium is $1,375,000. The proper market value of the work is $1,145,000.

218 Nolan's Ned Kelly Outlaw, (1955) was valued by Mr Dwyer at $1,200,000 and by Mr Abdullah at $1,000,000. For the same reasons, I find that the comparative hammer price plus a 20% buyer's premium is $1,100,000. The proper market value of the work is $920,000.

219 Nolan's Wounded Bushranger (1955) revealed significant discord between valuers. Mr Dwyer considered that it was valued at $1,100,000, being comparable with Outlaw, in terms of its scale, style, and quality. Mr Abdallah, valuing the painting at $680,000 reasoned subjectively.

The image is, in his view, 'less appealing, somewhat pale and rather haunted', an assessment which in his view warranted consigning it to the other end of the price spectrum. Mr Abdallah placed the painting in the context of other Kelly paintings that Nolan did in 1955. Mr Dwyer conceded that the painting has a 'subtle palette'. In the witness box, Mr Abdallah relied on a sale in May 2011 of Glenrowan Fragments for $400,000 to support his opinion. In joint conference other Nolan Kelly series sales were discussed and debated by them, including Ned Kelly 1956, which sold in 2010 for $624,000, a much smaller work described as an iconic composition. Another 'comparable Kelly' sold in 1999 for $838,500. The valuers could not agree about the comparability of these sales, and they did not agree about the inherent value of this painting. There was no evidence concerning these comparable sales, and no images. Doing the best I can with conflicting subjective assessments, I find, for my purposes that the proper market value of this painting is $700,000.

220 Although the valuers could not agree on a market value for Pugh's, Rape of Europa, they did not greatly differ. Mr Abdullah frankly conceded the need to put aside a personal prejudice against Pugh's work, suggesting his commercial rating has fallen in recent years. However, he did not dispute Mr Dwyer's assessment of the inherent quality of this particular painting, nor his comparable sale, The Feral Cat. Accepting Mr Dwyer's assessment, I find the proper market value of this painting is $48,000.

221 The agreed value of the artworks as identified in the table in paragraph [193] will be, for the reasons given, discounted by disallowing the buyer's margin at 20%. I find that the proper market value of the works owned by Mr Smith is:

222 I find that the proper market value of the works owned by Mr Gould is:

Six of these artworks were owned by Mr Gould before the relationship commenced and Mr Smith cannot contend that he contributed to their acquisition, maintenance, or improvement. Although Mr Smith contends that these artworks are part of the private collection he alleges, the relevant value of the art sub-pool must exclude the works that precede its commencement date. Those works are valued at $575,000, leaving a net value of $3,482,550.

223 The proper current market value of the Gould Galleries stock is:

Interior with Screens and Avocado, Lavender Bay, 1976

224 For reasons that I will explain in due course, there was not an expropriation of the Gould Galleries stock at Park Street to a private collection and the value of that stock is added to the value that I have assessed for the reconstructed June 2004 stock list. Thus the current value of the Gould Galleries June 2004 stock is $12,414,704, As I have done with other assets, the pre-relationship contribution will be allowed to Mr Gould, leaving a net value of $11,914,704. The next issue I must to consider is whether any further allowance should be made for other assets or liabilities of Edrob Nominees Pty Ltd but before doing so I will make one further observation.

225 Following my questions about the principles, if any, on which the agreed valuation methodology proceeded, the parties suggested other, 'ball park' estimation, methods to assess the value of Dukville. I have mentioned the schedule propounded by Mr Gould that was based on a hybrid of 2004 values for unsold items, actual sale prices for art sold after 2004 and prior to 2012, and 2012 values where no other figure was available. Mr Smith suggested that the court could 'safely' rely on the values declared for insurance in December 2003, which he suggested were at cost. I do not accept that such values were at cost, the evidence about that process established that broad estimates were made of the cost of stock in the stock room and an estimated replacement cost appears to have been applied to Park Street stock. Mr Smith contended such values should be multiplied by a multiplier of 2-2.5, a figure extracted from Mr Gould in cross-examination, to arrive at the market value of the stock of Gould Galleries on the operative date. This is an instance of Mr Smith resiling from the agreed valuation basis to meet criticism of, or difficulties with, the valuation methodology. This approach was not supported either by Mr Gould's agreement, expert opinion, principle, or authority.

226 Other assets belong to Edrob Nominees Pty Ltd cannot be separately considered beyond the value, as assessed, of the shares of Dukville. In theory, to do so would be double counting. Particular liabilities must also be ignored. This is a necessary consequence of the assumed valuation methodology for the Dukville shares.

227 In this category, Mr Smith looked to Edrob Nominees Pty Ltd's trading account, seeking to fix upon the balance of that account as at 31 May 2004, rather than 30 June 2004. This was said to be because of subsequent 'anomalous' transactions in that account. I accept Mr Gould's explanation of end-of-financial year transactions. In any event, I would not allow the reconciled balance on 30 June 2004 of a trading account as an addition to assets on the adopted valuation methodology for Dukville. Next, Mr Smith focussed on a term deposit of $504,080.90, which was transferred into the trading account and should be treated in like fashion. In addition, Mr Smith sought to add the plant and equipment on the business, adopting $375,000 as its value from an insurance schedule. On the evidence about the business, I would not accept this value, but, more fundamentally, I will not include this asset on the adopted valuation methodology.

228 I have also disregarded two liabilities of Edrob Nominees Pty Ltd for the same reason. At 30 June 2004, Edrob was liable on a bank loan of $280,000. In addition, Mr Gould contended that a significant proportion of the tax liability paid by Dukville in 2007 that was referable to the understatement of stock as at 30 June 2004 was a liability as at 30 June 2004.

229 There are some disputed assets where the evidence of ownership as between Edrob Nominees Pty Ltd and the parties requires closer analysis, being:

(a) cash in bank accounts in Hong Kong - (Mr Smith's value: $927,894.00);

Also involving Mr Gould's brother is a trust account with Marshalls and Dent, solicitors, in the name of Robert and Edith Gould, which Mr Smith contended was a divisible pool asset. If these assets belong to Mr Gould personally rather than Edrob Nominees Pty Ltd or his brother, they will properly form part of the divisible pool.

230 In November 1991, during the first Hong Kong exhibition, Mr Gould opened two bank accounts at HSBC in Hong Kong. Mr Gould suggested it was 'nigh on impossible' to open an account in Hong Kong in the name of a foreign business, such as Gould Galleries or Edrob Nominees at that time. One account was for trading in Hong Kong. The second account was to be used to salt money away for travel purposes. Later, probably in 1994, Mr Gould closed one of these HSBC accounts and opened two passbook accounts at Standard Chartered Bank, one in his name and one in Mr Smith's name. Around this time, Mr Gould also opened an account with Citibank in Hong Kong. Mr Smith went to the Standard Chartered Bank with Mr Gould to open his account, as he was required to show his passport. These accounts allowed overseas access to money for both Mr Smith and Mr Gould.

231 Mr Gould identified the net proceeds from the Hong Kong exhibitions as the only source for deposits into these accounts. Mr Gould estimated that Mr Smith's account had an estimated maximum balance of between AU$60,000 to $80,000 in it at any time, and his personal account 'had many hundreds of thousands of dollars and then it got a bit more'. When cross-examined, Mr Gould estimated that the total of funds deposited in these accounts probably exceeded AU$1.5 million. A Hong Kong Citibank account monthly statement dated 25 February 2004 reveals an account balance of HK$6,402,315.74. The Hong Kong exhibitions ceased in 1997, stretching this explanation of deposit sources beyond probable credulity. It seems likely that more than $1.5 million has passed through these accounts and that there are other possible sources for deposits, such as, for example, sales of art to overseas buyers.[62] Statements for these accounts were addressed to Mr Gould and the passbooks were kept upstairs at Park Street. Mr Smith took with him a file of documents that contained statements from the offshore accounts when he left Park Street in June 2004. When making discovery, Mr Gould claimed not to have any documents relating to his Citibank account as it was his practice to discard them. During the course of the trial, Mr Gould served two folders of Citibank bank account statements, in Mandarin, apparently recently obtained from the bank. Neither party required the tender of these account statements.

232 On the probabilities, these Hong Kong finds were held on behalf of Edrob Nominees Pty Ltd. No document from Edrob Nominees Pty Ltd, such as a loan account ledger or a dividend distribution statement or the like, was produced to the court. Mr Gould's solicitor's letter on 23 April 2012 informed the Australian Taxation Office of the existence of these offshore bank accounts. Mr Gould's solicitors suggested to the Australian Taxation Office that income from the Hong Kong exhibitions was used to fund art purchases for Mr Gould and Mr Smith. The solicitors suggest that the extent of the proceeds of sales at the Hong Kong exhibitions returned to Edrob Nominees Pty Ltd as income cannot be determined.

233 Mr Smith sought to distance himself from these accounts. Although Mr Smith claimed he conducted the banking at HSBC for Mr Gould for the first Hong Kong exhibition, he maintained he was not involved with accounts in his name. Mr Smith claimed that Mr Gould controlled the withdrawals from Mr Smith's account with signed blank withdrawal slips, which were not for his benefit but for Mr Gould's use. Mr Gould suggested that Mr Smith wished to have a foreign account and that he acted on advice from his accountant, Phillip Dunn, that accounts in different names at more than one bank would be an advantage 'if there was ever someone looking into it'.

234 Mr Gould admitted to using his offshore bank accounts to purchase artworks under false names and thus repatriated such funds to Australia. Mr Smith denied that he used his offshore account or Mr Gould's offshore accounts. I accept Mr Smith's denial in its literal sense, but I am satisfied that when Mr Smith signed blank withdrawal forms he knew of these accounts and knew and approved of their use for art purchases. Lloyd Rees, A Mountain Stream was purchased with funds from Mr Smith's Standard Chartered account in Hong Kong. I have referred above to other purchases that Mr Smith contends from part of the private collection that were bought with offshore funds in the name of Schwartz. Other purchases, which Mr Smith included in his schedule 3B, had been funded and transacted in this way.[63] Although Mr Gould conceded that all false name purchases were funded with Hong Kong money, I cannot determine the total value of such purchases.

235 On 30 June 2004, there was AU $927,894 in a Hong Kong bank account in Mr Gould's name.[64] No evidence established that Mr Gould had a better claim than Edrob Nominees Pty Ltd to this account. There is no evidence of any authority for Mr Gould, or for that matter Mr Smith, to draw on these finds for any private purpose. As I have described above, funds from Hong Kong that were 'repatriated' into Australia, by funding purchases of art at auctions in Australia or were otherwise used for other undisclosed purposes that may have included overseas travel or art purchases overseas, probably came from Edrob Nominees Pty Ltd. There was no other explanation. I am satisfied that Mr Smith understood, and probably approved of, Mr Gould's use of these accounts in this way. The subsequent use of the funds that were in the account in 2004 was not revealed.

236 There is a prospect that Edrob Nominees Pty Ltd may face a liability for unpaid tax, penalties and interest arising from the Hong Kong accounts although neither party submitted that I should consider such a liability or suggested how, on the evidence, that liability might be assessed. Even if that task could be undertaken, the liability would not belong to Mr Gould or Mr Smith but to Edrob Nominees Pty Ltd and would affect the value of Dukville, properly assessed, but I cannot see how that estimated liability could be taken into account when determining the value of Dukville on the agreed valuation methodology.

237 For these reasons, I do not consider that the Hong Kong bank account or any related liability arising from its use should be included in the divisible pool or affect the current market value of the reconstructed stock list of Gould Galleries, when valuing Mr Gould's Dukville shares.

238 Mr Gould paid $719,000 to his brother, Gary on 15 June 2004. Mr Gould had a trust account with Simon Parsons & Co, where Mr Singer practised as a solicitor. A transaction statement for Mr Gould's trust account for the relevant period reveals deposits of $437,300.00 on 1 June 2004 and $290,000.00 on 3 June 2004. The source of the deposits was not identified. On 4 June 2004, $719,000 was debited from the same account. The entry was reversed on 4 June 2004 and debited again on 15 June 2004. The debit was explained as the payment of a debt to Gary Gould. Mr Smith contended this money should be included in the divisible pool of assets as the Gary Gould debt claim was an attempt to hide funds from Mr Smith.

239 When cross-examined, Mr Gould explained that he had given $719,000 to his brother as a gift. Challenged about the gift, he responded: 'Why wouldn't I? ... He had supported me through many, many times, he had gone through his hard times, we are brothers, we take care of each other'. Mr Gould denied that the money was to be, or had been, repaid by his brother.

240 When Mr Gould's solicitors wrote to the Australian Taxation Office on 23 April 2012, Mr Gould revealed that Edrob Nominees Pty Ltd paid commissions to Goldcheck Pty Ltd in excess of $1 million for which it claimed tax deductions. The funds received by Goldcheck Pty Ltd were applied for purposes including a payment of approximately $700,000 to Gary Gould. The admission regarding the payment to Gary Gould is within a paragraph that explains commissions paid to Goldcheck Pty Ltd. An implication is that the $700,000 was money derived from selling paintings through Goldcheck Pty Ltd. The letter to the Australian Taxation Office did not describe the money as a gift. Mr Singer was not called to explain transactions involving Goldcheck or the Simon Parsons & Co trust account.

241 Other solicitors, Marshalls and Dent held funds in trust for Mr Gould and his mother Edith. Mr Gould claimed that those funds were held on behalf of his brother Gary Gould. On 30 June 2003, the account had a balance of $1,060,148.50 and Mr Smith claimed half of that sum as a divisible pool asset. Mr Gould stated that he was not beneficially interested in these funds, which belonged to his brother. Asked to explain, he referred to Gary's business, a telecommunications business, that was put in to receivership some years earlier when his brother went through a divorce. Apparently the business was sold and the trust funds represented his share of the sale proceeds. He stated that these funds were returned to Gary Gould and it appears that repayment occurred before 30 June 2004.[65]

242 Although I am not satisfied with the explanations proffered by Mr Gould for his dealings with his brother, I am also not satisfied that it is probable that either the payment of $719,000 on June 2004, or the half share of the Marshalls and Dent trust account is a divisible pool asset.

243 The relevant value of Mr Gould's equity in Dukville, for the purposes of valuing the art sub-pool, is $11,914,704.

244 At separation, Mr Gould held a total of $75,576.87 in two ANZ bank accounts and $504,080 in a term deposit. His superannuation balance was $394,792. These balances were agreed.

245 The value of the contents, other than artworks, at each of Park Street and Potts Point were disputed. Mr Smith's estimate, $546,000, is the aggregate of sums declared for contents insurance, being $246,000 for Park Street and $300,000 for Potts Point. I reject this estimate. The insurance policies relied on are, in the case of Park Street for a period after separation[66] and in the case of Potts Point the policy referenced insures artwork for Gould Galleries, not personal contents. Mr Gould plucked out an estimate of $150,000, which is also rejected. There was no inventory of the contents of each property and no evidence Mr Smith contributed to the acquisition or improvement of the contents of the properties during the relationship. I assess the total insurable value of the contents of both properties as at the separation date at $300,000. From the insurable contents, there would be personal effects, such as clothing, presumably taken by the owner, which need not be further considered. No attention was directed to the contents of 3/31 Marne Street, apart from expenditure by Mr Gould to furnish and fit out that property. I will treat the furnishing and fitting out of all residential premises as contributed by Mr Gould and as part of the premises in which such contents were found at or shortly after the separation date. They will lie where they fell.

246 Mr Smith's superannuation balance at June 2004 was $47,709.58.

247 The net value of the real estate in this sub-pool of assets is $3,026,435. Although I have conveniently dealt with the personal contents of these properties, valued at $300,000 as part of this sub-pool, personal contents and possessions can fairly be excluded from further consideration.

248 The total value of this sub-pool is $2,359,899, of which $1,110,363 is in Mr Gould's hands and $1,249,535 is in Mr Smith's hands.

249 The total value of this sub-pool is $16,923,004.

250 The assessed value of Dukville based on the reconstructed June 2004 stock, less the value of the business on initial contribution, is $11,914,704. Mr Gould holds all of the shares in Dukville.

251 The assessed value of Mr Smith's artwork is $950,750, which is in Mr Smith's hands, apart from some seven paintings, including the Arkleys, which are in Mr Gould's possession.

252 The assessed value of Mr Gould's artwork, less the artworks that he owned prior to the commencement of the relationship, is $4,057,550, which is in Mr Gould's hands.

The remaining personal assets and liabilities sub-pool

253 This sub-pool is assessed at $518,078. Mr Gould's superannuation balance was $394,792 and Mr Smith's superannuation balance was $47,709.58. There are no relevant liabilities. The balance of this pool was held by Mr Gould.

The divisible pool of assets collectively summarised

254 It is convenient to summarise the total divisible pool in a table, that indicates in whose possession the value of the pool lies, excepting assets transferred under the separation agreement in 2004 and 3/31 Marne Street.

Contributions of the parties to the relationship

255 I have noted above the financial contributions to assets within the sub-pools where appropriate and I now turn to the non-financial and indirect contributions that were alleged. I have already allowed, in assessing the pool as the increase in equity over the course of the relationship, for the initial contributions of each party made in April 1990.

256 When evaluating and balancing the respective contributions of the parties, contributions made before cohabitation commences and contributions made after separation and before trial are relevant contributions.[67] In particular any division and distribution of assets or property or return of assets or property initially contributed to the relationship that are made from one partner to the other after the failure of the relationship are brought into account. Assets or property initially contributed to the relationship may be eroded in the sense that the present value of the asset cannot be returned in full to the contributing party because of the relative significance of initial and ongoing contributions in all of the circumstances.[68] The value of that contribution is said to be eroded by the adjustment of interests. Mr Smith placed some reliance on erosion and I will return to it.

257 Mr Smith contended that if 'special factors' or the application of 'special skills' to the accumulation of the assets is established, the court may then proceed to consider that contribution 'above the normal range' entitled the party to recognition of an 'extra' or 'special' contribution. Mr Smith contends that his contributions as an eminent art expert in twentieth century Australian art led to a 'special contribution' that his relationship with Mr Gould brought to his contribution to Gould Galleries.

258 As the authorities to which I have just referred make clear, the concept of a 'special contribution' is no more than an aspect of the broad discretion to achieve the just and equitable adjustment that s 285 of the Act requires. It is not a principle of law, it directs the factual inquiry. The practical adjustment for 'special skills' effectively adjusts interests in favour of the party with the special skills to a greater degree than might be done on an objective, or usual, assessment of their contribution whether based in financial or welfare considerations. What is required is a qualitative assessment of the actual contribution said to be a special contribution, and that assessment is made having regard to all of the relevant circumstances, including both the outcome for the other party and the nature of the skills brought to the accumulation of financial resources. Such an approach is required by the Act and is made clear by reference to family law cases.

259 The concept of a 'special contribution' was explained by the Full Family Court in 1992 in Ferraro:[69]

However, there are cases where the performance of those roles has what may be described as "special" features about it either adding to or detracting from what may be described as the norm. For example, in relation to the homemaker role the evidence may demonstrate the carrying out of responsibilities well beyond the norm as, for example, where the homemaker has the responsibility for the home and children entirely or almost entirely without assistance from the other party for long periods or cases such as the care of a handicapped or special needs child. On the other hand, in the breadwinner role the facts may demonstrate an outstanding application of time and energy to producing income and the application of what some of the cases have referred to as "special skills". Within either role there may be cases where the evidence demonstrates a neglect of those responsibilities or a wasting of income or assets.

260 Two particular cases illuminate the proper approach. In JEL & DDF,[70] a highly skilled geologist whose effort and application in locating and acquiring mining tenements netted the family business substantial wealth of more than $30 million, was apportioned 72.5% of the assets representing due allowance for his special skills. The Full Family Court identified an approach to the assessment of a 'special skills' contribution when considering this allocation. The court said:

(a) There is no presumption of equality of contribution or 'partnership'.

(b) There is a requirement to undertake an evaluation of the respective contributions of the husband and the wife.

(c) Although in many cases the direct financial contribution of one party will equal the indirect contribution of the other as homemaker and parent, that is not necessarily so in every case.

(d) In qualitatively evaluating the roles performed by marriage partners, there may arise special factors attaching to the performance of the particular role of one of them.

(e) The Court will recognise any such special factors as taking the contribution outside the 'normal range'.[71]

(f) Whether a 'special' or 'extra' contribution is made by a party to a marriage is not necessarily dependant upon the size of the asset pool or the 'financial product'. When considering special contribution, care must be taken to recognise and distinguish a 'windfall' gain.

(g) Decisions in previous cases where special factors were found to exist may provide some guidance to judges at first instance, but are not prescriptive, except to the extent that general principles are expounded.

(h) Special contribution is ultimately a matter in the trial judge's discretion on the particular facts of the case.

(i) In the exercise of that discretion, the trial judge must be satisfied that the actual orders being made, not just the underlying percentage division, are just and equitable.

261 The special contribution doctrine was questioned In the Marriage of Figgins[72] when Nicholson CJ and Buckley J suggested that in an appropriate case the doctrine of special contribution explained in JEL & DDF should be reconsidered as marriage is a partnership and the party with lesser economic contributions should not be disadvantaged.[73] That consideration is not applicable in this case and, for my part, I consider the approach of JEL & DDF provides proper guidance when assessing special contribution under the Act.

262 Whiteley and Whiteley[74] is much closer to the present circumstances, being the property settlement between Brett and Wendy Whiteley. The dispute was mostly about artworks. Plainly enough, Mr Whiteley brought 'special skill', in the form of his internationally recognised artistic ability, to the marriage. He contended that over 90 of his paintings were 'irrevocables', by which he meant pieces of art of special significance to him as points of reference or aids for him in his future artistic endeavours. The court recognised that Mrs Whiteley substantially contributed to his artwork, not just as a homemaker and mother to his daughter, but as his muse, inspiration, art critic, friend, and confidant. The court accepted that Mrs Whiteley had a special understanding of his work from multiple perspectives, including technical and marketing aspects. Brett Whiteley had publically acknowledged Wendy Whiteley's special influence on and understanding of his work and its significance for his artistic achievement. The court accepted that her special contribution 'enlarged his thought or feeling and encouraged his artistic scope' providing him with both ideas and direction. That said, the court observed that his art was, in the ultimate, his work. In those circumstances of special skill and contribution, a split of 70/30 favouring Mr Whiteley was ordered, by a particular process that enabled Mr Whiteley to first choose and retain 40 of his 'irrevocables'.

263 Mr Smith submitted that, in the absence of a reliable valuation of Dukville as at April 1990, the duration of the relationship and the extent of offsetting and special contributions, have eroded the assets introduced to the relationship by Mr Gould. The principle contended for is that the value of initial contributions by one party are depreciated or 'eroded' to accommodate latter contributions by the other party. Citing Kardos v Sarbutt,[75] Mr Smith contended that, with the passage of time in the course of a relationship, substantial initial contributions may in an appropriate case be eroded by offsetting and ongoing contributions which result in a totality of contributions, including non-financial contributions, not all of which can be satisfied in full out of the available pool. Initial contributions are described as 'eroded', in the sense that they cannot, for the contributor, be satisfied in full.

264 As Pierce v Pierce,[76] cited by Brereton J in Kardos, demonstrates, 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 contribution by a party with all other relevant contributions of both parties. In considering the weight to be attached to the initial contribution, regard must be had to the use made by the parties of that contribution. In many family law and de facto relationship cases the initial contribution is a substantial contribution to the purchase of the matrimonial home, which is the significant asset in the divisible pool and was so during the relationship. When weighed against the subsequent substantial homemaker and parent contribution made by the other party, that initial contribution may be said to be eroded because it cannot be returned to the contributing party, while fairly satisfying out of the available property all relevant contributions. The principle does not, Mr Smith contended, cast an onus on him, as the party who has not made the initial contribution, to prove that the initial contribution should be eroded as such an approach would be contrary to s 285(1).[77] Brereton J said:

Significant factors affecting the application of the 'erosion principle' are the length of the relationship and, in particular, the extent to which there have been other or off-setting contributions which also have to be satisfied from the available pool. It is to accommodate those contributions that the initial contributions are 'eroded".

265 In Bilous v Mudaliar[78] Ipp JA considered the content and application of the erosion principle to de facto property adjustment as explained in Kardos,[79] commenting that there are dangers in elevating process of reasoning to the status of a principle and concluding that it preferable that the erosion principle (as a rule) should play no part in a determination under [s 285(1)]. I agree that an 'erosion principle' is not a rule applicable to pre-cohabitation or initial assets in long relationships and cannot be identified from the statute as a relevant distinct consideration. It can be said, as a matter of language, that the exclusive interest of a defendant in an asset is eroded when any adjustment is made in favour of a domestic partner based on Part IX of the Act. It does not matter whether the asset was introduced by that party into the relationship or acquired during it, an erosion effect may be evident where contributions during the relationship did not result in the accumulation of significant assets and there are significant non-financial contributions during the term of the domestic relationship that must be considered.

266 Mr Smith's contention is misconceived. No significant welfare contribution eroded the contribution initially made by Mr Gould. On the other hand, Mr Smith has benefitted substantially from Mr Gould's contributions. Mr Smith contends that his non-financial contributions to the financial resources of Mr Gould have significantly enhanced or increased those resources such that an adjustment in his favour can be readily accommodated. The value of the assets in the pool will be assessed after allowing to Mr Gould the value of his initial contribution. This approach will not deny to Mr Smith an opportunity for full recognition of his properly acknowledged contributions to the increase in the divisible pool during the relationship. Overwhelmingly, the improvement in the value of and equity in pool assets has come from the use of Mr Gould's initial contributions rather than Mr Smith's ongoing contributions.

267 It is well established that where there is a division of roles in the relationship between the homemaker and parent on one hand and the breadwinner on the other, contributions of a partner as a homemaker and parent are not to be regarded as inferior in any way to the financial contributions made by the other partner.[80] The proper focus of this consideration is the particular circumstances of the parties. In Mallet v Mallet,[81] the High Court noted that:

... it cannot be said of every case where the parties reside together that equal value must be attributed to the contribution of each. That will be appropriate only to the extent that the respective contributions of the parties are each made to an equivalent degree. What the Act requires is that in considering an order that is just and equitable the court shall 'take into account' any contribution made by a party in the capacity of homemaker or parent. It is a wide discretion which requires the court to assess the value of that contribution in terms of what is just and equitable in all the circumstances of a particular case. There can be no fixed rule of general application.

Other members of the court referred to relationships that ordinarily involve 'a practical union of both lives and property' or where the acquisition of assets, such as a matrimonial home, can be seen as representing 'the fruits of a totality of efforts of wage earning, homemaking and mutual support'.[82] There may be an equality of contribution if 'the efforts of the wife in her role were the equal of the husband in his'.[83]

268 The same general considerations may apply to a single gender relationship, if it is a relationship between partners living together on a bona fide domestic basis. Such relationships may involve a practical union of lives and property, but this will not always be so. It is a question of fact in each case. In most cases where such concepts have been explored in the context of de facto relationships, the relationship in question involved the children of one or more of the parties, or a family unit that included children. The two considerations specified in s 285 of the Act are similarly directed to financial and non-financial contributions to property or financial resources (asset contributions) and to contributions made in the capacity of homemaker or parent (welfare contributions). Although it may be convenient to summarise the latter consideration in these terms in most cases as commonly occurs, not all relationships have a homemaker or parent role.

269 The terms of the Act direct attention to 'the contributions ... made by either of the domestic partners to the welfare of the other domestic partner'. In cases such as the present, the terms of the Act require consideration, in the relevant context, of the same general considerations as have been identified in mixed gender relationships but as there is no relevant homemaker or parent role I will explain how I approach assessing welfare contribution.

270 The welfare contribution, being broadly defined, is to be given a beneficial construction.[84] In determining the contributions made by one party to the welfare of the other party, and whether the welfare contribution of each party is of equal value, I have regard to whether the respective contributions made by each party to the other's welfare is, broadly, to an equivalent degree. That form of contribution may be of different degree for one party compared with the other, but assessed as equitable in the particular circumstances. Providing affection, comfort, and intimacy within the relationship can be said to be a contribution to the welfare of the recipient partner, but such matters do not ordinarily warrant separate consideration. Where the relationship ordinarily involved 'a practical union of both lives and property' or the acquisition of assets, such as a shared home, can be seen as representing 'the fruits of a totality of efforts of wage earning, homemaking and mutual support', contributions that are different in character or degree between partners may be equitable. There may be an equality of contribution if the efforts of each partner in his respective role was the equal of the other in his role.

271 The nature of the relevant contributions that may be considered is limited - contributions must be to the partner's 'welfare', his wellbeing, or condition of existence. Such concepts are not mutually exclusive with concepts of contentedness, happiness, or prosperity. A party persevering in a union where that party pays all the expenses of their relationship but wants for affection, comfort and intimacy within the relationship from the other party, because that other party obtains such comforts elsewhere, may be making an unequal contribution to the welfare of that other party.

272 It is, however, important to observe that the Act speaks of contributions, not a want of contribution, or of fault. The latter considerations are irrelevant. Careful attention to the terms of s 285(1)(b) reveals that contribution to welfare is not required to be seen as an indirect contribution to the acquisition, conservation, or improvement of the property of one or both of the parties.[85]

Contributions to the residential real estate sub-pool

273 Mr Smith submitted that his contributions to the residential sub-pool were non-financial contributions. First, Mr Smith claimed he was intimately involved in the conception and execution of renovations at 23 Park Street in 1996-1997, including attending the major meetings with the architect and making, with Mr Gould, the major decisions. Second, Mr Smith claimed that he decided jointly with Mr Gould on the purchase of Oak Lane, Potts Point. I have already described the circumstances of the purchase of 3/31 Marne Street.

274 Mr Gould accepted that Mr Smith was involved in the renovation of Park Street. Mr Smith attended meetings with builders and architects in the company of Mr Gould. Mr Smith had an input into aesthetic choices made about finishes. I do not accept that Mr Smith made any material contribution that was anything like the benefit Mr Smith enjoyed from living at Park Street. Participating in the selection of finishes and decoration, but not contributing financially in any way to the renovation, is immaterial. The renovation was wholly paid for by Mr Gould, including by borrowing on mortgage security. Mr Gould serviced the mortgage. The creative design work and contract administration was done by architects. Moreover, the project was not free of dispute and Mr Gould managed, and resolved, those matters.

275 The balance of the contributions to Park Street overwhelmingly favours Mr Gould. He purchased it and paid for its initial renovation. He paid for its major renovation in 1997. He made mortgage repayments on the borrowing taken for that renovation. Mr Smith had the benefit of living there and the vast majority of the expenses of occupation associated with the property were paid by Mr Gould. Mr Smith lived in the property for 14 years rent free, with the advantage of an effectively greater personal income at his disposal.

276 I find that Mr Gould located the Oak Lane Potts Point property, decided to purchase it and then arranged for Dukville to acquire it. Mr Smith did not contribute to the costs of acquisition, or continuing ownership and occupation. He enjoyed the benefit of staying there when in Sydney, although this property was principally used by Mr Gould when in Sydney on gallery business. Mr Smith did not make any relevant contribution to Potts Point.

277 I have come to the same conclusion about 3/31 Marne Street. It will be recalled that this property was located by Mr Singer, who initially purchased it in early 2004. Although Mr Smith took title, under a nomination clause, Mr Gould paid for the property and serviced the mortgage and Mr Smith took possession of it under the separation arrangement discussed above. I regard this property as a post separation contribution by Mr Gould to Mr Smith and will return to it in that context.

278 I find that Mr Smith made no material direct or indirect financial or non-financial contribution the acquisition, conservation, or improvement of any of the residential properties. Subject to further consideration in due course, the issue of whether the financial resources available to Mr Gould or his entities were improved by contributions made by Mr Smith to the art sub-pool, I find that Mr Smith has not established any entitlement to an adjustment of the interests:

(a) of Mr Gould in Park Street;

(b) of Dukville in Potts Point; or

(c) to the funds sitting in the solicitors' trust account that represent the balance of the proceeds of sale of 3/31 Marne Street.

Further, the sum of $188,204 retained by Mr Smith when he sold 3/31 Marne Street is properly characterised as a post separation contribution to him by Mr Gould.

279 I do not propose to make any adjustment in relation to the contents of the residential properties as I infer that, other than artwork that is separately considered, each took his own possessions and Mr Gould who mostly, if not entirely, furnished and set up the residential properties at Park Street and Potts Point did the same for Mr Smith at 2/31 Marne Street.

280 Mr Smith submitted that his contributions to the investment properties sub-pool were both financial and non-financial contributions. First, from the mid-1990's Mr Smith, usually with Mr Singer, found and inspected properties for potential acquisition and recommended suitable investment properties for purchase. There were properties additional to those I have already discussed as other properties were bought and sold during the period of the relationship, such as 21/21 Marne Street, South Yarra, 84 Leopold Street, South Yarra, and Taplin Street, North Fitzroy. Second, Mr Smith contributed financially to some, but not all of the investment properties, such as Wallace Avenue, 14/63 Alexandra Avenue, and Elizabeth Bay. On the other hand, Mr Smith made no financial contribution to 3/35 Marne Street, 4/35 Marne Street, and 59 Smith Street.

281 Mr Gould generally agreed several aspects regarding the organisation and management of many of the investment properties:

(a) properties were located by Mr Smith and/or Mr Singer;

(b) finance and conveyancing for properties was arranged by Mr Singer or staff at Simon Parsons & Co;

(c) property were managed (rents collected, property inspections) by RT Edgar, Real Estate Agents, directed by Mr Singer, and in some cases the rent was paid directly to the owners from an arrangement with a relative or friend as tenant; and

(d) Mr Dunn prepared financial reports for each investment property partnership at the end of each financial year.

282 Mr Gould contended that any indirect contribution by Mr Smith to investment property interests in his name, or that of one of his entities, was matched by his financial contribution, by paying household, entertainment and travel expenses, which increased the level of Mr Smith's discretionary income and 'spring-boarded' Mr Smith in to property investment. I am satisfied that Mr Smith received considerable benefit from living rent free, with Mr Gould, or his entities, paying household, entertainment and travel expenses. The evidence did not allow any quantification of the extent of that benefit but I accept that, broadly, Mr Gould's indirect contribution to Mr Smith's financial resources fairly and equitably exceeds or matches Mr Smith's indirect contribution in finding and inspecting properties with Mr Singer on a Saturday morning. In this sense, I am satisfied that the parties' non-financial contributions to the investment property sub-pool were broadly equal.

283 Plainly, Mr Smith did not have the financial resources of either Mr Gould or Mr Singer. He described his claimed financial contributions in these terms: 'If I personally didn't have funds in my personal account to contribute towards a property, funds would come from an account that Rob looked after or controlled, so we did it together'. Financial contributions to deposits, renovations, and the share taken by the parties to this proceeding varied as I have set out above. It was not the case, and I reject Mr Smith's contentions to the contrary, that there was any pooling or joint holdings of investment properties. No separate jointly owned entity was set up for the purposes of these investments. Mr Gould used three corporate entities for the purchase of his investment shares: Me Me Me Pty Ltd, Dukville Pty Ltd, and Keelboat Pty Ltd. Mr Smith's interest were, in the main, registered in Mr Smith's own name. Title to property was never taken jointly and Mr Gould and Mr Smith did not share bank accounts. Where properties were negatively geared, the expenses were claimed on individual tax returns.

284 Referring back to the summary at [122], Mr Gould did not directly contribute financially in any way towards 3/29A Wallace Avenue, 14/63 Alexandra Avenue and 'Scotsforth' Elizabeth Bay. Mr Smith holds each asset or received the net proceeds of its sale. Mr Smith did not directly contribute financially in any way towards 59 Smith Street, or 4/35 Marne Street and Mr Gould or his entities hold each asset or received the net proceeds of its sale.

285 I am satisfied that the equal division of the proceeds of sale of 12/33 Albany Road, Toorak in November 2004 reflected the contemporaneous view that each man had contributed to the acquisition of this property.

286 The remaining three properties warrant further consideration. The interest of Mr Gould in the property at 2/128 Toorak Road West, South Yarra was bought out towards the end of 2003. I found earlier that Mr Gould had been underpaid in the settlement of the property by $24,313. In the case of the remaining properties, I am satisfied that Mr Gould made a greater financial contribution that Mr Smith to the acquisition and renovation of the property. Mr Gould paid Mr Smith's share of the deposit for Millswyn Street but on the sale in 2007, Mr Smith received a quarter share of the net proceeds. I am not satisfied that Mr Smith made any financial contribution to the acquisition or renovation of 3/35 Marne Street. At trial the remaining unsold investment properties were 2/128 Toorak Road West, 3/35 Marne Street and 4/35 Marne Street.

287 Between 2004 and 2008 Mr Smith received $166,719 from sales of investment properties. Mr Gould received $87,164. Mr Smith has also retained his equity in Wallace Avenue and 2/128 Toorak Road, with an agreed valuation of $779,403. The combined value of proceeds and retained equity for Mr Smith post separation is agreed at $946,122. Mr Gould retained his equity in 59 Smith Street (Keelboat) valued by agreement at $433,200, and 4/35 Marne Street valued by agreement at $276,666, a total of $709,866. The combined value of proceeds and retained equity for Mr Gould post separation is agreed at $797,030. It is unnecessary to adjust the interests of the parties by declaration of the title rights of the parties in these properties.

288 Both Mr Gould (through Me Me Me Pty Ltd) and Mr Smith remain co-owners of a two-thirds interest in 3/35 Marne Street and the agreed value of each share is $303,333. The owner of the remaining one third interest is Lakeberry Pty Ltd (Mr Singer). Me Me Me Pty Ltd has a one third interest in 4/35 Marne Street and the agreed value of that interest is $276,666. The owner of the remaining two one third interests are Ablepair Pty Ltd and Pacemake Pty Ltd.

289 Adding the value of interests still jointly held increases the total value of proceeds and retained equity for Mr Smith post separation to $1,249,535. For Mr Gould, the total value is $1,110,363. In percentage terms, Mr Smith now holds 53% of this sub-pool.

290 Ignoring tax benefits through negative gearing about which there was no evidence, and assuming that the costs of ownership and occupation of these properties were otherwise broadly funded from rents, I find that Mr Gould's direct financial contributions to investment properties exceeded Mr Smith's direct financial contributions by $116,813 and that that disparity is mostly referable to 2/128 Toorak Road West and 3/35 Marne Street. Although Mr Gould contributed the deposit for Millswyn Street, the contribution to the pool on the sale of that property was modest.

291 In determining, on a broad allocation, the adjustment that should justly and equitably be made of the assets in this sub-pool, the following matters are relevant:

(a) Having regard to the court's duty under s 284 of the Act, an adjustment in the title interests to 3/35 and 4/35 Marne Street is desirable. However, none of Lakeberry Pty Ltd, Ablepair Pty Ltd, and Pacemake Pty Ltd (Mr Singer's companies) is a party to the proceeding.

(b) The greater financial contribution to the sub-pool value was made by Mr Gould, however for reasons later explained I have allowed a contribution in Mr Smith's favour in the art sub-pool and there arises an issue of whether Mr Gould's discretionary financial resources were improved by contributions made by Mr Smith to the art pool which indirectly improved the financial resources available to Mr Gould. Taking that indirect contribution into account, I consider the financial contributions to investments to be broadly equivalent.

(c) I am satisfied that the balance of non-financial contributions is also broadly equivalent, with Mr Gould's support providing the opportunity for Mr Smith to spend a greater proportion of his income on property investment while the high standard of living that he enjoyed was subsidised by Mr Gould but Mr Gould having the benefit of investment opportunities being found for him.

(d) The allocation of the proceeds of sales of investment properties has, to date, favoured Mr Smith.

(e) It is not possible, on the evidence to assess, in percentage terms, the extent of the disparity in direct financial contributions represented by the identified sum of $116,813. Plainly, the value of the sub-pool has increased through capital growth in the market and the yield from rental of the properties. The principal reason why the parties have enjoyed exposure to such factors has been Mr Gould's financial backing rather than Mr Smith's weekend activities with Mr Singer.

292 My initial adjustment, which is subject to consideration of remaining issues and crosschecking, is that the just and equitable distribution of this sub-pool is that Mr Gould and Mr Smith should share the value of the sub-pool equally. I defer, for the moment, my consideration of how that is to be achieved.

293 Mr Smith contended that he contributed to the value of the art sub-pool in the following ways. Generally:

(a) As an eminent expert in twentieth century Australian art from no later than 1995, Mr Smith contributed 'special skills' to the accumulation of pool assets;

(b) Mr Smith consulted and agreed with Mr Gould on the buy-out of Mrs Gould;

(c) Mr Smith consulted and agreed with Mr Gould regarding the location, opening of and concept for the Sydney gallery;

(d) After the buy-out of Mrs Gould, Mr Smith consulted and agreed with Mr Gould a vision for the direction of Gould Galleries;

(e) Mr Smith lent to Gould Galleries the benefit of his personal archive.

(a) Mr Smith located artwork for acquisition by Gould Galleries as stock;

(b) Mr Smith planned and selected with Mr Gould the art for each Gould Galleries exhibition, including Hong Kong exhibitions, and including the stock-piling of works for exhibitions, as well as deciding price lists;

(c) Mr Smith recommended, advised (often involving research and physical inspection) and attended on the acquisition of (whether by private treaty or auction) about 95% of acquired art works which in turn increased the quality of stock and, upon sale, proved significant for the growth and success of the business of Gould Galleries, including:

(i) Arthur Streeton's Sydney Harbour/Cremorne Point/The Beauty of Heaven is on the Sea;

(d) Mr Smith persuaded Mr Gould to acquire and deal in the works of Howard Arkley; and

(e) Mr Smith visited art galleries and dealers most Saturdays and advised Mr Gould of works that might be of interest to Gould Galleries or to clients of Gould Galleries.

295 Concerning the operation of the gallery, Mr Smith:

(a) assisted with packing and unpacking for several Hong Kong exhibitions;

(b) assisted Mr Gould with after-hours gallery administration work, including drafting correspondence, laying out exhibitions and consulting with Mr Gould on conservation, framing and client interests;

(c) assisted Mr Gould to find and select new staff, including recommending staff who were subsequently employed by Gould Galleries;

(d) consulted with Mr Gould in expanding and improving the quality, look, content and prestige of Gould Gallery catalogues, including writing the provenance, exhibition history and literature references for the majority of paintings in those catalogues in the period 1995 to 2003 with a view to creating both a record and a marketing tool;

(e) consulted with Mr Gould regarding every major sale of Gould Gallery stock;

(f) advised clients of Gould Galleries on the acquisition of art works and the development of their collections;

(h) assisted Gould Galleries by offering expert opinion that would be an advantage to art dealers and purchasers.

(a) On the advice and encouragement of Sue Grieve, Mr Smith with Mr Gould investigated and decided on the venture to exhibit annually in Hong Kong;

(b) Mr Smith acted as a host at Gould Galleries exhibitions;

(c) Mr Smith referred potential clients to Gould Galleries for the sale of works;

(d) Mr Smith lent his personal authority and prestige as a recognised art expert, and that of the NGV by reason of his position as curator of Australian art, to Gould Galleries to the benefit of the business;

(e) Mr Smith offered expert opinion to potential purchasers that was considered by them as worthwhile and valuable;

(f) Mr Smith procured or materially assisted with the sale of art works, including:

(i) Arthur Streeton's Sydney Harbour/Cremorne Point/The Gentleness of heaven is on the sea;

(v) Andrew Browne's Flemington Lights (or Mooney Valley Lights);

297 Mr Smith claimed to have made the following contributions to the acquisition, conservation, improvement, and expansion of joint, private art collection at Park Street by:

(a) recommending, advising (including research and physical inspection), and attending on the acquisition of art works by Gould Galleries, including:

(iii) Robert Dickerson Boy in Street; and The Late Shopper;

(v) Charles Blackman Christabel in a Chair; The Friends; Girl on a Bike; and Girl with Flowers;

(vi) Brett Whiteley Interior with Screen and Avocado;

(viii) Sidney Nolan Hartz Range; Portrait of an Outlaw; Kelly and Armour; and Wounded Bushranger;

(ix) Howard Arkley Actual Fractual; A Freeway Painting (Overpass); and Floriated Interior (or Room).

(b) locating and purchasing with his funds Arkley's OYO Flats.

298 Mr Smith's evidence and that of other witnesses called by him about his contributions has conflicted with evidence from Mr Gould and his witnesses. Mr Smith urged me to accept his evidence and conclude that Mr Gould was an unreliable witness whose uncorroborated testimony should not be accepted. There was merit in Mr Smith's contention that, in identifiable respects and particularly in relation to four matters, Mr Gould's conduct was unsatisfactory. Those matters were disclosure of true stock levels in tax returns, the use of false names at art auctions as part of a scheme to repatriate funds to Australia, his answers to interrogatories about a Whiteley painting, and the circumstances of a consignment of a Drysdale painting from Mrs Alice Rouse to Gould Galleries for its sale. There were other matters stressed by Mr Smith's counsel in his closing address but I can sufficiently explain my reasoning about Mr Gould's credit with these examples.

299 Mr Gould's timely attention to his disclosure obligations to the Australian Taxation Office seemed to fall short of what is expected of a good citizen. Although it might appear that Mr Gould discovered the virtues of frank disclosure as this proceeding commenced, he has made significant, if late, disclosure.

(a) In 2007, the stock understatement for the years 2002 to 2006 was corrected by the inclusion of previously undisclosed stock in the tax returns for the 2006 financial year.

(b) In 2009, as part of Project Wickenby, Mr Gould disclosed to the Australian Taxation Office interest earned on the Hong Kong accounts.

(c) In 2012, as the trial commenced, Mr Gould's solicitors disclosed to the Australian Taxation Office a number of matters relating to the operation of Gould Galleries, including (among other things) the use of offshore funds to purchase paintings, the use of Goldcheck's tax losses and the claiming of deductions.

I am satisfied that prior to 2006, Mr Gould engaged in a significant understatement of stock that significantly undermines the reliability of all of the annual financial statements and tax returns prior to 2006. Mr Gould suggested, irrelevantly, that his accountant, Mr Dunn, advised how he should manage his dealings with the tax office. While I found Mr Dunn to be a distinctly unimpressive witness, Mr Gould is, as he well understands, responsible for the content of financial statements and tax returns. The consequences of this conduct for all those involved in it are matters for investigation by others. There is a sufficient basis in the evidence before me for a referral of a copy of these reasons for judgment to the Australian Taxation Office for further consideration and that will, in due course, occur.

300 Mr Gould's conduct in pre-trial disclosure of the details of the sale of Whiteley's Bather & Garden was reprehensible. I am satisfied that Mr Gould twice deliberately lied when responding to interrogatories about the sale of the Whiteley.

301 Mr Gould also admitted to a scheme, using false names to purchase art at auction and then paying for those purchases from the Hong Kong bank accounts. It is probable that the purpose of this scheme was to repatriate funds that likely belonged to Edrob Nominees Pty Ltd from Hong Kong without declaring that income for taxation. Neither the evidence, nor the issues raised in the proceeding, permit me to make findings about the extent of this scheme, and who might have had knowledge of it, apart from Mr Smith who knew about the false name scheme and suggested artworks that might be purchased in that manner. In his evidence, Mr Smith denied knowledge of the scheme, choosing the inconsequential purchase of a Lloyd Rees painting at a Christie's auction,[86] as his example. I am satisfied that was a false denial. It is probable that Mr Smith, who rarely put his hand in his own pocket, benefitted from overseas travel, and perhaps in other ways, funded from the Hong Kong accounts.

302 In approximately 1997, Mr Smith was researching the life and art of Russell Drysdale, during the course of his employment at the NGV. He met Drysdale's niece Mrs Alice Rouse. Mrs Rouse owned Drysdale's portrait of herself as a child named 'Alice'. In 2005, Mrs Rouse wished to sell the painting privately and sought Mr Smith's opinion. Mr Smith recommended Gould Galleries, and Mrs Rouse duly consigned Alice with Mr Gould.

303 Mrs Rouse required a minimum of $250,000 net for the painting. Sometime after consignment, Mrs Rouse sought to withdraw the painting for sale and Mr Gould informed her that he had a client who was willing to buy it but at a price which would return to her $220,000 net. Mrs Rouse was not informed, 'because of industry practice', who the buyer was. It is more likely that Mr Gould did not identify the buyer because it was Edrob Nominees Pty Ltd.

304 Six months later, Gould Galleries on-sold Alice earning a profit of about $180,000 on the sale. Mrs Rouse sued on learning of the subsequent sale and the dispute was settled before trial. When questioned about his involvement with Mrs Rouse, Mr Gould claimed that Mrs Rouse was a 'strange woman' and that there had been a confusion between them, namely that he thought he was entitled to buy the painting himself under the terms of the consignment agreement that Gary Singer had drafted. If this was so there would have been no need to tell Mrs Rouse that the buyer was an anonymous client.

305 Although he denied it, Mr Smith received, via Goldcheck, a $12,000 commission for arranging the introduction of Mrs Rouse, an amount Mr Smith nominated. It was in this context of post separation transactions and payments between them that the circumstances of the Alice consignment were revealed. This commission was not reconciled to the transaction commercially. The evidence constrains me to regard it as an isolated incident, and I do, but I am satisfied that Mr Smith was under no illusions about his commission.

306 Despite the significance of these matters in evaluating the credibility of a witness, which I have carefully considered, I observed frankness in Mr Gould's responses when questioned on his oath in the witness box about these matters. Mr Gould either made pre-emptive disclosure or readily confessed to this conduct when asked to explain it. He did so, not just mindful of the prospect of my judgment, but in the glare of considerable media interest in his evidence and, I expect, some concern that his commercial interests might suffer in the future. Mr Gould presented as a witness whose conduct out of court was of a kind that engenders deep suspicion of a witness's commitment to the truth. However, as most of these matters had been flagged before he gave evidence I took particular note of his demeanour and of the consistencies and probabilities inherent in the circumstances about which he gave evidence. I am satisfied that Mr Gould was more reliable when deposing to his dealings and relationship with Mr Smith than in, say, his dealings with regulatory authorities. His version of those dealings, at least about the operation of the gallery, was broadly corroborated by other witnesses in a position to observe Mr Smith's contribution to the gallery's operation. For these reasons, when, as often happened, the conflict in the evidence was between Mr Smith and Mr Gould about their private dealings without any independent corroboration, I largely prefer Mr Gould's account of it. In other circumstances, I prefer the evidence of the gallery employees to that of Mr Smith.

307 There is a further, significant reason for doing so. Mr Smith was himself an unsatisfactory witness, but in different respects. As with Mr Gould, counsel in final address was sharply critical of Mr Smith's credibility, and I will touch on the nature and quality of Mr Smith's evidence when making findings about the circumstances of contribution he alleges. In general terms, I can explain my approach to Mr Smith's evidence with some examples.

308 This proceeding commenced when Mr Smith, concerned that the sale of Bather & Garden demonstrated that Mr Gould proposed to sell off the private collection, sought an interlocutory injunction restraining sales of artworks. The application was resolved with an undertaking not to sell art, limited to a specific list, which comprised many, but not all, of what is now alleged to be the private collection. As he did at trial, Mr Gould maintained that the artwork at Park Street was Gould Galleries stock and Bather & Garden was sold by Gould Galleries. Mr Gould also believed that a property settlement had been agreed, even if not fully implemented. It is likely that Mr Smith knew from the start that Mr Gould was lying to him about the sale of Bather & Garden. Clearly, interlocutory preservation, in specie, of the artwork comprising the collection pending the determination of a proceeding, was a matter of significance to Mr Smith.

309 However, Mr Smith had possession of several artworks from the private collection as I have noted. He also had enjoyed possession of artworks from Gould Galleries stock since moving into 3/31 Marne Street. When cross-examined about whether there was a settlement agreement, Mr Smith said he believed these paintings were on loan to him, pending a property settlement. Explaining away apparent acts in performance of a settlement agreement in this way was not opened to me by Mr Smith's counsel and was inconsistent with Mr Smith's answers to interrogatories. I thought it a recently invented explanation to fob-off the thrust of cross-examination. Mr Smith then admitted to selling several of the loaned paintings at auction, but through Goldcheck rather than in his name. I have already referred to this evidence, above at [51] and following. When pressed to explain the fact and manner of these sales, Mr Smith could not readily identify his reason or his authority to sell paintings he believed were on loan to him, finally suggesting his motivation was 'because Rob had sold Bather & Garden'.

310 Animosity, even vindictiveness, are known emotional responses between parties to a failed personal relationship. I am satisfied that there is evidence of such responses by each man. The difference is that Mr Gould more readily conceded the nature of his behaviour when giving evidence, while Mr Smith maintained denials in the witness box that ultimately were not sustained. Another example that I have discussed above is Mr Smith's evidence about the Hong Kong bank accounts and the art purchases in false names. This is one general reason why I have largely preferred Mr Gould's evidence when it becomes necessary to consider conflict between their recollections of private, uncorroborated, matters between them.

311 Further, and generally, I formed the view that Mr Smith's testimony carried a general flavour of exaggeration, enhancement of his role, and the fortuitous adoption of circumstance. This tendency, evident in different ways that I will note when dealing with specific matters, caused me to prefer Mr Gould's evidence. Each man used the royal 'we' extensively and that usage was, of itself, the subject of comment on both sides in final addresses. For example, Mr Smith stated that 'Rob and I had a gallery' in Sydney. A possessive sentiment, identifiable in many other aspects of his testimony by his use of 'we' and 'our', pushed his involvement in Gould Galleries well beyond what the employees of Gould Galleries contemporaneously witnessed. Mr Smith was on occasions demeaning of Mr Gould's operation of the gallery, suggesting a want of competence on Mr Gould's part in matters such as writing, administration, and record keeping and even suggesting plagiarism in the preparation of a magazine article.

312 Another example was that Mr Smith, somewhat preciously, contended that he and Mr Gould were establishing a private collection of art that was known as the 'Gould-Smith Collection' and which was a significant collection because it did not just incorporate the masters of modern Australian art but included examples from the best of their artistic endeavour that demonstrated the artist's standing. Mr Smith suggested the collection displayed his scholarship and special skills, however no witnesses testified to the existence of such a named collection or corroborated Mr Smith's intentions, nor did any document refer to such a collection. There was no assessment that independently evaluated whether the collection was pre-eminent, or showed any scholarship or special skill in its selection. Attempting to demonstrate his scholarship, Mr Smith often volunteered information that was not directed to answering the question asked of him, sometimes appearing to skite or boast. In any event, I am satisfied that there was not a Gould-Smith Collection in this, or any other sense. I am also satisfied that Mr Smith had no role in Mr Gould's buy-out of his mother. Further examples are found in Mr Smith's evidence of participation in specific art purchases and sales.

313 The difficulty became that I could not identify concrete circumstances that support Mr Smith's contentions, because lengthy speeches to expose his expertise to the court, gave little or no specific evidence of actual conversations with Mr Gould. Mr Smith's evidence was littered with phrases like 'we discussed' and 'we agreed' but rarely did Mr Smith recount the dialogue of any of these discussions or expose the basis of the agreement. For this reason, Mr Smith's evidence lacked a concrete basis for evaluation against conflicting evidence or the probabilities of human behaviour in many respects. In contrast, Mr Gould attempted to give particular answers as to the degree of involvement of the plaintiff, frankly accepting those matters on which the plaintiff had provided assistance.

314 Another reason, for generally preferring Mr Gould's evidence has been discussed above. I am not satisfied that Mr Smith was frank with the court about matters concerning his relationship with Mr Singer. Further, concerning Mr Singer, as Mr Smith's partner he is in Mr Smith's camp. Mr Singer was a friend to both men before June 2004 and once was Mr Gould's solicitor. He seems, to borrow an art metaphor, to have attended virtually every 'exhibition opening' of the Smith-Gould relationship. Mr Singer had a major role in the property investment transactions between the parties as well as the alleged settlement negotiations between the parties after they separated. His company Goldcheck also had a complex relationship with the commercial activities of Gould Galleries, particularly art acquisition and sales and commissions. His evidence might be thought crucial to substantially corroborating Mr Smith's allegations in this proceeding. I have throughout these reasons noted circumstances where inferences adverse to Mr Smith have more readily been drawn because Mr Singer was not called by Mr Smith to give evidence, applying the principles in Jones v Dunkel.[87]

315 I have noted that Mr Singer has been, on Mr Smith's admission, his personal partner since late 2004. There are further reasons for finding that Mr Singer was in Mr Smith's camp and a witness that Mr Smith might naturally be expected to have called to support his claim.

316 Mr Smith met Mr Singer through Mr Gould in approximately 1990. Mr Singer and his then partner Mr Grady were close friends with both Mr Gould and Mr Smith. They spent social time together, including holidays, and further, Mr Singer acted as a solicitor for each of them.

317 In 1997 during the renovations at Park Street, Mr Smith and Mr Gould lived at Mr Singer and Mr Grady's apartment in St Kilda Road. From 1997 Mr Singer and Mr Smith spent most Saturdays in each other's company investigating potential investment properties for purchase, and visiting art galleries. Mr Gould worked all day Saturday at Gould Galleries.

318 From 1999 Mr Singer and Mr Smith were involved in property developments together, but always in co-ownership arrangements with Mr Gould or others. However, several years later the close relationship between Mr Smith and Mr Singer became even more solidified when Mr Smith took on a fiduciary role to Mr Singer by becoming the trustee over a property held for Mr Singer. Mr Singer ended his relationship with Mr Grady in late 2000 or early 2001, with Mr Grady suspicious of Mr Singer's fidelity to Mr Grady and his relationship with Mr Smith. On 1 March 2001, Mr Smith replaced Mr Grady as bare trustee of 6/128 Toorak Road West, South Yarra, a property held for Mr Singer. The shares in Pacemake Pty Ltd, one of Mr Singer's companies, are held by Mr Smith and Mr Dunn and his wife. Mr Dunn stated that Mr Smith shares were held on trust for Mr Singer, transferred by him from Mr Singer's former partner.

319 In July 2001, Mr Smith and Mr Singer travelled to New York together in circumstances related to the Nolan litigation that I have already referred to. In the Nolan v Nolan litigation, Mr Smith acted as an independent expert witness for Jinx Nolan while Mr Singer acted as her solicitor.

320 Mr Smith made two wills during the period of his relationship with Mr Gould, on 28 August 1994 and 21 January 2001. By the 2001 will apparently drawn by Mr Singer, Mr Smith gave Mr Singer Howard Arkley's Triple Fronted. Mr Smith also left to Mr Singer other personal items, gold cufflinks, pearl cufflinks, his collection of first edition Patrick White books, art books and the Gwyn Hansen-Piggott painting 'Mirror'. Mr Gould was the major remainder beneficiary but if Mr Gould did not survive Mr Smith, subject to some family legacies, Mr Singer was to be the remainder beneficiary. Mr Gould claimed that he had no knowledge of this will.

321 By November 2002, with 'Scotsforth' in Elizabeth Bay, New South Wales, Mr Singer and Mr Smith were purchasing property together. Mr Gould was not offered an opportunity to participate in this investment and claimed to have no knowledge of it. Mr Singer purchased 6 Avoca Street, South Yarra in October 2003, and on settlement in April 2004, Mr Smith was the registered proprietor although, as elsewhere discussed, he claimed no beneficial interest in it.

322 Goldcheck Pty Ltd, affiliated with Mr Singer and Mr Dunn,[88] played a significant, but largely unexplained, role in Mr Gould and Mr Smith's affairs. I have mentioned its participation in their property investments. Goldcheck was involved in buying and selling artwork and made available to Mr Gould and his entities access to accumulated tax losses, an opportunity that Mr Gould's solicitors referred to the ATO in the communication at the start of the trial that I have elsewhere mentioned.

323 Mr Dunn confirmed that Goldcheck had significant tax losses. Mr Gould claimed that Mr Dunn and Mr Singer proposed a scheme whereby Gould Galleries, and Mr Smith and Mr Gould personally, could trade artwork or other assets through Goldcheck, which took a commission of 5%, setting off profits or gains for their mutual advantage. Mr Gould was rather vague in his evidence about this arrangement, but estimated that approximately $1,000,000 in commissions was paid to Goldcheck between 1999 to 2004. Mr Gould explained his inability to give detail because Mr Singer processed the transaction through accounts that he controlled, taking Goldcheck's commission in the process.

324 An example given by Mr Gould was his purchase of a half share (with John Playfoot, another art dealer) in Nolan's Wounded Bushranger. Mr Gould stated that the purchase was processed through Goldcheck, but denied that his half interest was for Gould Galleries. It was for himself. Mr Gould ultimately bought out Mr Playfoot's share in the painting again using the funds processed through Goldcheck to achieve this.

325 Mr Smith also sold artworks through Goldcheck after he separated from Mr Gould. For example, after separation Mr Gould gave Mr Smith a sculpture by Gwyn Hansen-Piggott, Shore. Mr Smith asked Mr Singer to 'look after' that artwork. Shore was later consigned for sale to Christine Abrahams Gallery by Goldcheck and sold. Mr Smith could not account to Mr Gould for the proceeds of the sale of that sculpture. The evidence showed that other artworks were sold by Mr Smith through Goldcheck with no apparent accounting to Mr Gould or Gould Galleries, including Boyd's Potter's Wife (1969) and Browne's North Head (2002).

326 Goldcheck's accounts also appeared to be used to pay commissions to Mr Smith that may not have been declared as income. Mr Smith denied this accusation. It is not a matter about which I need make any finding. Mr Gould claimed that he paid Goldcheck on behalf of Mr Smith a total of $54,000 in commissions between August and September 2005 in order to refute suggestions that Mr Smith was continuing to assist in the business of Gould Galleries after the separation date. I am not satisfied that there was any relevant assistance provided by Mr Smith to Gould Galleries after June 2004 that was not separately compensated.

327 Mr Smith contended that, over the period 1990 to 1995 at the latest, he became an eminent expert in twentieth century Australian art, with particular expertise in Charles Blackman, Arthur Boyd, Russell Drysdale, Sidney Nolan, John Perceval, Arthur Streeton, Albert Tucker, and Fred Williams. Mr Smith contended that his standing and expertise in modern Australian art was a 'special factor' or the application of 'special skills' to the accumulation of assets by Mr Gould during the course of the relationship. Mr Smith contended that the court should consider that contribution 'to be above the normal range', entitling Mr Smith to recognition of an 'extra' or special contribution. It is the existence of 'special factors' or 'special skills' that attracts the added weight to a contribution which would not otherwise be qualitatively assessed, but left to be considered to be in the normal range.

328 Mr Smith contended that the issue of a 'special' or 'extra' contribution by the domestic partner is a question of fact. I have discussed above the principles emerging from the Act and from the cases that found my approach to this issue. The determination of such a contribution is not dependent upon the size of the pool achieved by the parties, a proposition I would not be disposed to dispute[89] if it arose in the present circumstances. Rather, the proper focus of the inquiry is not as Mr Smith contends. It may be sacrilege to equate practising in art as a public curator of the nation's artistic heritage with practising in art commercially for profit, perhaps a comparison sufficiently odious to force a sharp intake of breath and a whispered 'tut tut' in the corridors of the great museums and public galleries. Counsel for Mr Smith contended that any attempt to equate the role and status of a curator of art at the NGV with that of a gallery operator who has no formal training in art ignores the significance and prestige of the position of curator and the erudition of the position holder. However, this case is about making money selling art. It is not about collecting or curating the nation's artistic heritage. This distinction was not always maintained, particularly by Mr Smith.

329 I was not persuaded that Mr Smith has attained the recognition, respect, or distinction as an expert in twentieth century Australian art that warranted the epithets 'eminent' or 'distinguished'. That is a particularly high standard and I decline his counsel's invitation to so find. Mr Smith called witnesses, including Mr Ron Wilson and Mrs Isobel Rogers, described as prominent private art collectors, who gave Mr Smith glowing references as a curator of Australian art. However, because it is in the commercial pursuits, improving the profitability of a commercial gallery, that Mr Smith principally seeks recognition in this proceeding, and it is with that issue in mind that I have examined the evidence of Mr Smith's expertise and whether he has made a 'special or extra' contribution. There is little point in attempting to more particularly evaluate Mr Smith's academic standing and expertise in public art.

330 During the domestic relationship Mr Smith was a public servant, an employee of the National Gallery of Victoria, Victoria's premier state funded gallery and a pre-eminent national institution. It is significant that the prestige of that position came to the benefit of Gould Galleries, but the benefit for Mr Gould's commercial activities dawned slowly. Mr Smith was appointed as a curatorial assistant to the Director of the NGV in December, 1990 when still a student, a position which seemed to me to be no more than an opportunity for a prospective talent. Melbourne University conferred a Bachelor of Arts degree, with honours, on Mr Smith at the end of 1992 and in September 1993 Mr Smith was appointed as Assistant Curator, Australian Art. In December 1995, Mr Smith was appointed Senior Curatorial Assistant of Australian Art, in March 1997, Curator of 20th Century Australian Art. Mr Smith was so employed at the date of separation. At the NGV, Mr Smith was involved in curating many exhibitions and in research to source and locate important work. He advised the NGV about acquisition of major Australian paintings.

331 In 1995, the NGV exhibited a major Streeton retrospective exhibition. Streeton was Mr Smith's first love. Major paintings from every period of Streeton's career were assembled for the exhibition and the NGV published as a book, the catalogue of the exhibition, which demonstrates Mr Smith's research skills. Later, Mr Smith jointly curated, with the artist's grandson Oliver Streeton, exhibitions at the Mornington Peninsula Regional Gallery: Arthur Streeton: The Passionate Gardener in December 2002 and Arthur Streeton and the Australian Coast in December 2004.[90]

332 In 1997, Mr Smith curated the first major retrospective exhibition of Russell Drysdale and the NGV published as a book, the catalogue of the exhibition with Mr Smith's introductory essay, which further demonstrates Mr Smith's research. His capacity to locate works in private collections that had not been exhibited since they were painted was apparent.

333 In 2003, the NGV staged Sidney Nolan: Desert and Drought. Mr Smith was its curator and it was a significant achievement. The exhibition, the first major loan exhibition at the Ian Potter Centre, presented specifically that part of Nolan's work produced between 1949 and 1953 celebrating Australia's inland landscape, Burke & Wills, religion and environmental concerns. The NGV published the catalogue of the exhibition as a book, and the exhibition, with the accompanying text, demonstrates Mr Smith's research. This appears to be a substantial work and Mr Smith's research is based, in part, on his analysis of the 'Cynthia Nolan Papers' held by the National Library of Australia and assisted by his acquaintance with Jinx Nolan who provided other material. There would be another assessment of Mr Smith's research skills on this project.

334 There were other examples, including the exhibition Beyond Belief, Modern Art and the Religious Imagination.

335 Mr Smith contributed to Lou Klepac's, James Gleeson: Beyond the Screen of Sight[91] that was published in conjunction with an NGV exhibition in late 2004 of which Mr Smith was the co-ordinating curator. In 2006, with Felicity St John Moore, Mr Smith jointly curated Charles Blackman: Alice in Wonderland for the NGV and the NGV published as a book, the catalogue of the exhibition, with essays from each of the curators, again demonstrating Mr Smith's scholarly curating skills. These exhibitions happened after the separation date. Mr Smith also referred to a major exhibition in 2007, and its accompanying publication, Australian Expressionism, that acknowledges Mr Smith's contribution.

336 There were other publications. Mr Smith referred to a number of short articles published in the NGV's Gallery magazine.[92] An essay on James Gleeson appears to have been published after separation.[93]

337 This evidence demonstrated that Mr Smith developed academic and research skills as a curator in a public gallery that were recognised, principally by his employer. It appears he was a fervent researcher and collector of information and material regarding Australian artists and their works in his professional and personal time. Mr Smith is the repository of substantial information about modern Australian art including matters such as the correct title information, dates, places where the works were made, exhibition history, biographical information, and provenance of artworks, and literature that reproduced or referred to the works. His skill in tracking down significant artworks in private hands for exhibitions has been publically acknowledged. I am satisfied that his training, study and experience in modern Australian art as it is purchased, managed and exhibited by public galleries impressed many observers and was capable of being of value in the pursuit of commercial returns marketing art.

338 Further, although the evidence was limited, the person employed as the NGV's Curator of Modern Australian Art may be regarded as informed and influential by customers of commercial galleries that are promoting quality artworks by artists whose work is sought or held by public museums. In this sense the role and status of an NGV curator of art, because of the significance and prestige of the position and irrespective of the erudition of the position holder, could be deployed to the advantage of a commercial gallery operator. Taken collectively, and as a general comment, the Public Service Code of Conduct, the NGV's Financial Code of Practice or the NGV Enterprise Agreement suggest that a real risk of conflict of interest for NGV curators is perceived. I should add that I have not been concerned to examine relations between Mr Smith and the NGV, limiting my inquiry to the nature of the special skill or extra contribution that Mr Smith brought to Gould Galleries via his domestic relations with Mr Gould.

339 By 2006, and following Mr Smith's application for an injunction, Mr Smith and the NGV parted company. One issue that was referred in this proceeding, and arose with the NGV at that time, was Mr Smith's archive. Mr Smith now has a very extensive archive of information, images, catalogues and like material that constitutes a substantial research resource. He started collecting materials for his archive when a student and by the time he parted company with the NGV it was, apparently, some 60 folders of materials. His ownership of it, vis-à-vis the NGV, was an issue resolved in his favour when he resigned from the NGV.

340 For the purposes of this proceeding, Mr Smith established this archive in his own time and it is his personal property. I am satisfied that he spent significant time adding to and maintaining his collection of materials and while it was a particularly significant resource for Mr Smith in his employment with the NGV, its role in the present dispute is less clear. The archive is comprised of folders, loose papers, photocopied material, and handwritten notes that is in an inaccessible form, although it may be very valuable to Mr Smith. Mr Gould was tempted to contend that it was part of the pool during the trial, but abandoned that claim for want of both discovery about it and evidence, particularly of its value. Mr Gould did not claim any adjustment of interests in Mr Smith's name in this proceeding.

341 Its relevance is that Mr Smith contends, and Mr Gould disputes, that Gould Galleries had the benefit of access to his archive, in the sense that his research informed the content of catalogues and thus contributed to sales. This proposition was not illustrated in any specific way, by reference to sales of particular paintings, but there was much debate about who wrote catalogues and other information that was presented generally to customers. I shall return to this debate.

342 Mr Smith sought to demonstrate his expertise in other ways. He referred to having given expert evidence in this court on prior occasions being Nolan v Nolan[94], First East Auction Holdings Pty Ltd v Mimi Ange[95] and Blackman & Ors v Gant & Anor.[96] I have referred above to the first of these cases in another context that reveals that Mr Smith's standing as an independent expert was challenged by reference to his association with Mr Singer and Mr Gould. The present issue concerns his expertise rather than his independence.

343 In Nolan v Nolan, Jinx Nolan claimed ownership, against Lady Mary Nolan, of three paintings. Jinx Nolan was claiming through her mother Cynthia Nolan. Mr Smith's evidence was that in the course of his preparation for the exhibition Sidney Nolan: Desert and Drought in 2003, his research into the life and art of Sidney Nolan included the provenance of Nolan paintings. Mr Smith discovered information that Jinx Nolan claimed had alerted her, once informed of Mr Smith's discoveries, to her mother's entitlement to those paintings.

344 Mr Smith gave evidence of research in the 'Cynthia Nolan Papers' held by the National Library of Australia. Mr Smith in 2001 was in regular communication with Jinx Nolan and in July 2001 visited her at her residence in Boston. Jinx Nolan made her own records available to Mr Smith and apprised him of other possible sources of documents. Mr Smith told the court he had located certain documents and catalogues which led him to believe that 'Italian Crucifix' 1955 (the title of a painting which had belonged to Cynthia Nolan but had been sold by the Australian trustees) was in fact a different painting of similar title, which had also been given by Sidney Nolan to Cynthia Nolan. Mr Smith formed the belief, based on certain documents, that Cynthia Nolan had also owned 'Hare in Trap' 1946 and 'Royal Hotel' 1948. In the course of his investigations and research, Mr Smith had advised Jinx Nolan of his findings and of his opinion that there was evidence of Cynthia Nolan's ownership of 'Hare in Trap' 1946, 'Royal Hotel' 1948, and 'Italian Crucifix' 1955. This research was of some significance as both Nolan and his former wife were deceased.

345 Dodds-Streeton J was critical of Mr Smith's research concluding that neither the 'Cynthia Nolan Papers' as a collection, nor Mr Smith's search of it in October 2002, could safely be considered comprehensive. The dispute turned on the reliability of documents and despite the criticisms made by counsel for Lady Mary Nolan of Mr Smith's search of the Cynthia Nolan Papers, his role in the proceeding, Mr Gould's financial dealings with Jinx Nolan and some irregularities in Mr Singer's conduct of the matter at trial, the court declined to exercise a discretion to exclude the documents. The court's analysis of the issues in the proceeding accepts Mr Smith's identification of Nolan's handwriting but is otherwise a documentary analysis, not based in his evidence. On appeal, the judgment in favour of Lady Nolan was affirmed on different grounds, but the Court of Appeal did not accept the basic premise of Mr Smith's evidence, concluding that the evidence, once subject to a rigorous analysis, did not justify concluding that the paintings had been given to Cynthia Nolan. This decision does not, in my view, demonstrate acceptance by this court of Mr Smith as having the scholarly research skills of an eminent or distinguished art expert.

346 In First East Auction Holdings Pty Ltd v Mimi Ange[97] the plaintiff, trading as 'Bonhams and Goodman' where Mr Smith was then employed, sought relief from Ms Ange, who had withdrawn paintings consigned to it for auction. Mr Smith was a witness to events that gave rise to the consignment and the breach. Mr Smith also gave expert evidence that was accepted by the court, of the value of a McCubbin painting.[98]

347 In Blackman & Ors v Gant & Anor,[99] Charles Blackman's trustees and Robert Dickerson sought relief against a gallery owner and art valuer for selling fake artworks by those artists. The key question was whether three artworks were genuine. Three apparent art experts, Professor Robyn Sloggett, Felicity St John Moore and Mr Smith gave evidence that in their opinions the artworks in question were not genuine works of Charles Blackman. The court accepted that Mr Smith and the two other experts were qualified to express opinions about the work of Blackman[100] and accepted that the works were fakes.[101]

348 There was one occasion referred to in evidence when Mr Smith questioned the authenticity of artwork sold by Gould Galleries, but that circumstance does not show that Mr Smith's skill in detecting fake paintings or paintings of dubious provenance contributed to the success of the gallery.

349 Mr Gould contended that in the context of their relationship, with both domestic partners being skilled and knowledgeable about art, there was nothing special about Mr Smith's knowledge and skills. This submission has considerable force. Mr Gould provided reciprocal contributions to Mr Smith: he provided research and material for his archive, assistance with his exhibitions, assistance with locating art works, and assistance proofreading of his writings. Mr Gould had much greater experience in marketing art than Mr Smith and it is in that field of the arts that Mr Smith now operates. Mr Gould is a successful commercial gallery operator and at the separation date had approximately 25 years' experience. Mr Smith's exposure to the operations of a commercial gallery during his relationship with Mr Gould may have contributed to his present success in the secondary art market where he now operates.

350 These matters might warrant greater consideration if Mr Gould was seeking to adjust property interests in art based assets held by Mr Smith. I do not think that the contributions of Mr Smith to Gould Galleries are to be primarily evaluated as based in special skills, referring to the principles that I have discussed above at [258]. Mr Smith's contributions are non-financial contributions to the improvement of the value of Mr Gould's shares in Dukville or to the acquisition, conservation, or improvement of the financial resources available to Mr Gould. An adjustment of the interests on the property of Mr Gould in favour of Mr Smith will be just and equitable not just because Mr Smith is especially skilled in the manner described above and in a relationship with Mr Gould, but because Mr Smith has applied himself and contributed to Mr Gould's financial resources in the relevant sense.

351 The essence of Mr Smith's contention about the existence of a private collection was that there was, by agreement between the two men, a joint private collection at Park Street, referred to as the 'Gould-Smith Collection', which was distinct from Gould Galleries stock. It included works privately owned by each of them, which I have identified. Mr Smith contended that the greater part of the joint private collection was artwork, which although acquired by Gould Galleries, hung at Park Street because Mr Gould agreed with Mr Smith that the works were significant examples by great modern Australian painters that would not be sold except to be replaced by a better example to improve the quality of the collection. Mr Smith appeared to envisage that the significance of the works would be enhanced because chosen as part of their collection and, ultimately, would be donated to the NGV.

352 The mutual agreement for a joint private collection was not directly identified by Mr Smith as arising from any particular conversation. It is a matter for inference. The approach that is to be adopted in determining whether the ultimate fact, of which there is no direct evidence, can be inferred from other established facts, is to consider the combined or cumulative effect of all of the evidence, that is, aspects of the evidence are not examined in isolation but all of the established facts are viewed in their totality.[102] I will note some more significant aspects of the evidence demonstrating why I prefer the view that there was not a joint private collection comprised of the works identified in the table at [193], but in reaching that conclusion I have had regard to the totality of the evidence, not just these matters.

353 I am satisfied that the concept of a jointly owned collection, called the 'Gould-Smith Collection', probably developed by Mr Smith after separation.

(a) Mr Smith does not allege that Mr Gould directly acknowledged to him in a conversation that all of the works identified earlier as the alleged private collection were not Gould Galleries stock. Although some witnesses who had viewed the art hanging at Park Street referred to it as 'a collection', it was never acknowledged by either Mr Gould or Mr Smith as their private collection. Not one witness, from five art collectors, an art dealer, five employees and two expert art valuers, including, in particular, Mrs Dita Gould and a long time gallery employee Ms Pamela Axe, gave evidence of knowing of a jointly owned private collection, or, irrespective of ownership, a collection known as the 'Gould-Smith Collection'. When used, the term 'collection' was used loosely.

(b) There is no reference in any document to a jointly owned collection, let alone one called the 'Gould-Smith Collection'. When compiling check lists for art books and exhibition catalogues, curators and authors note when works were, or had been, held in private collections. For example, in his book, Russell Drysdale 1912-81, Mr Smith records, concerning the provenance of Tractor-face Jackson, its purchase by the 'Agapitos Wilson Collection'. Messrs Agapitos and Wilson were known to both Mr Smith and Mr Gould. Neither Mr Smith nor any other author has referred to the 'Gould-Smith Collection' in relation to any artwork said to be part of it. That descriptive title was not used in any private document, prior to Mr Smith's affidavit seeking an injunction in this proceeding.

(c) In particular, no document from Edrob Nominees Pty Ltd, Dukville, Gould Galleries, or the E&R Gould Unit Trust supports an assertion that artwork, which makes up approximately two thirds of the alleged collection, is no longer gallery stock. On the other hand, the insurance records point to Edrob Nominees Pty Ltd claiming ownership, not just of the two thirds of the list that represents Gould Galleries stock, but to all of the artworks comprising the private collection. There may be other reasons for the impression created by the insurance records.

(d) The art at Park Street was Gould Gallery stock or owned by Mr Smith or Mr Gould personally. What is absent is evidence of any agreement with, or conduct involving, the owner of individual artworks that altered proprietary rights. As the analysis above demonstrates, based on the evidence in this proceeding, the art works that might be recovered by a liquidator of Dukville or a trustee in bankruptcy for either Mr Smith or Mr Gould are identifiable.

(e) Mr Smith suggested that particular paintings, for example Nolan's Hartz Range, were purchased for the private collection, and never offered for sale but the evidence is otherwise. Rape of Europa, Large Head, Bather & Garden, Swamp Grasses Kew Billabong, Jockeys Returning, Mounting, Intruder and Parrots, Antipodean Head, Wounded Bushranger, Outlaw, Fisherman's Sights Williamstown are other examples. Because the provenance of both Gould Gallery's stock records and Mr Smith's schedule 3B is not reliable, no inference can safely be drawn from the fact that some but not all of the stock at Park Street was allocated a stock number.

(f) I prefer Mr Gould's explanations for the retention of Gould Galleries stock at Park Street. Mr Gould referred to the desirability of displaying in his home a collection of the best works available to excite the interest of collector clients. It is nonsensical to think that museum quality artworks will languish in a stockroom. Mr Gould referred to living with an artwork for a period to appreciate it fully. That he does so is not evidence of an appropriation from Gould Galleries to Mr Gould. I accept that there is a practice of resting artworks from the market after purchase at public auction or after unsuccessfully offering the work for sale at an exhibition. There were a couple of occasions when Mr Gould told Mr Smith an artwork was 'coming home, we are going to keep it'. On the other hand, Mr Smith tried to explain away the stock concept by suggesting that individual artworks in the private collection would be 'traded up' by sale through the gallery from time to time. While feasible, Mr Smith did not evidence this proposition in operation with specific decisions to trade up works.

(g) It is unsurprising that there was art at Park Street that was individually owned, or that Mr Gould's art remained there after the separation date. The explanation for Arkley's OYO Flats remaining at Park Street was that it was too large to hang at 3/31 Marne Street.

(h) Much was made of the terms of the wills made by each of Mr Smith and Mr Gould. By his 2001 will, which was his last will at the separation date, Mr Smith left the Arkley Triple Fronted to Mr Singer. That gift is consistent with his ownership of the painting, but inconsistent with his assertion that his art works had, like Mr Gould's artworks and the Gould Galleries stock, been donated into a jointly owned private collection. Mr Gould's last will at the separation date was made in December 2003. Mr Smith was the executor and residual beneficiary. Annexed to the will was a schedule of 31 artworks and the will provided that Mr Gould could substitute another list of artworks for that schedule if he desired. The artworks in the schedule were given to Mr Smith for his life and on his death to the NGV. Mr Gould also directed that these works when displayed by the NGV carry the inscription 'donated by Robert Gould and Geoffrey Smith'. The schedule included 13 art works that I have found were Mr Gould's personal property, three artworks that are not said to be part of the private collection and were not explained in evidence,[103] and 15 artworks that I have found were Gould Galleries stock. It represents about half of the works that Mr Smith contends makes up the private collection. In the witness box, Mr Gould explained that his will was made when he and Mr Smith 'were still a couple'. Giving Mr Smith a life interest in those works would permit him to enjoy them through his life, but they would not be his to sell. Mr Gould also stressed his opportunity to change the schedule as Gould Galleries stock was sold or acquired by him. Possibly, as the residual beneficiary receiving Mr Gould's shares in Dukville, Mr Smith may have been able to sell works belonging to Gould Galleries, which Mr Gould could not, in any event, gift as proposed. What might be the correct position is not an issue I need pause to consider. I do not think that this will evidences the joint private collection for which Mr Smith contends. The will was drawn by Mr Singer and there was no mutual will made by Mr Smith. Mr Singer's evidence about the life gift to Mr Smith would not, I infer, have helped Mr Smith.

(i) If a joint private collection had not been recognised in December 2003, it is unlikely to have been agreed to during the early part of 2004. In fact, there was no mention of a private collection when as the relationship was crumbling, Mr Smith was seeking art to hang in Marne Street and acknowledgement of his contribution. Yet later still, when the settlement arrangements were being discussed, there is no suggestion that Mr Smith ever raised any demand for his share of a private collection. The settlement agreement, in the sense that Mr Gould now contends for it, contradicts the existence of any private collection, jointly owned by the parties.

(j) Finally, as I have elsewhere explained, Gould Galleries, after the separation date, sold Whiteley, Bather & Garden, which is consistent with his assertion that the painting was stock. Mr Smith sold Williams Swamp Grasses, Kew Billabong, which is inconsistent with his assertion that Mr Gould should be restrained from selling any artwork that was part of the joint private collection.

It is probable that the concept of the Gould-Smith Collection first developed shortly prior to and for the purposes of Mr Smith's application for an injunction and the commencement of this proceeding.

354 Mr Smith contends that outside of his role at the NGV he was providing a 'special contribution' to Gould Galleries in the various ways identified above at [293]-[296]. As a preliminary observation to my analysis of the contributions made, I am satisfied that Mr Smith and Mr Gould continuously discussed all aspects of the art world, especially art auctions and the art market both here and overseas, the conduct and operation of the gallery, the activities in and around the NGV, and not just the desirability of acquiring particular artworks but how that objective might be achieved. Such conversation was engendered by their friendship and mutual interests.

355 I do not accept Mr Smith's contention that he played any meaningful role in Mr Gould's buy-out of his mother's interest in Dukville. That was, as Mr Gould explained, his own idea and although Mrs Dita Gould may have been initially reluctant about the timing, she was keen to hand over the business to her son and appreciated the opportunity to explore other interests. Mr Smith contended that after Mrs Gould was bought out he consulted and agreed with Mr Gould a vision for the direction of Gould Galleries. I do not doubt that Mr Smith and Mr Gould discussed most of the commercial activities of the gallery but Mr Smith has not persuaded me that those discussions can fairly be characterised as consultations in which he gave advice. The substance of Mr Smith's evidence, and the form in which conversations were recalled or recounted by Mr Smith, are consistent only with general or casual conversations. It is unsurprising that these two men mostly talked about art and the business of art.

356 Mr Smith contended that as an assistant curator at the NGV some three to four years out of university he provided a vision to Mr Gould that the latter accepted for the operation of the gallery. Mr Smith did not identify a specific or detailed vision for the direction of Gould Galleries that was discussed and agreed to by Mr Gould. Unsurprisingly, Mr Gould rejected the suggestion. In substance, Mr Smith's vision was that Gould Galleries move away from dealing in 'decorative' art and actively market the work of modern top Australian artists that the gallery could acquire through the secondary market.

357 I do not doubt that the focus of the gallery changed over time. Gould Galleries started trading in 1980. Initially the choice of stock reflected his mother's tastes. Mr Gould described his early influences on the business direction of the gallery led to exhibitions of art by Milan Todd, Jean Elder, Norman Lindsay, and John Glover. Mr Gould described these exhibitions as very successful. Stock was supplied by represented artists, consignment, purchased directly by the gallery and arrangements with other art dealers.

358 In 1988, Mr Gould held a substantial Perceval exhibition. John Perceval was then a significant Australian artist who had not painted or exhibited for a long time because of health issues. Mr Gould secured the opportunity for Gould Galleries to represent Mr Perceval for an exhibition of new paintings. Mr Gould arranged for Albert Tucker to open the exhibition, which attracted front-page media coverage and large crowds. It was by any measure a significantly successful exhibition. In that context Mr Gould wrote an article 'Perceval the Prince of Colour' that Mr Smith disparaged as paraphrase, lacking in original insight. Although it is clear that Mr Smith is a far more accomplished writer about art, I am satisfied that Mr Gould's commercial insights from the Perceval exhibition were significant. Mr Gould appreciated that the market in the works of modern Australian artists was an important opportunity but the euphoria of the interests in buying art that followed the stock market crash of 1987 was soon depressed by the economic downtown that followed in 1989-1991. It would be some years before economic conditions would permit the commercial realisation of Mr Gould's vision for the gallery. When that opportunity arose, Mr Smith, fresh out of university and in his first job, somewhat opportunistically asserts that he contributed significantly to the direction in which Gould Galleries then moved.

359 An early example is found in the concept of Hong Kong exhibitions. Contrary to Mr Smith's assertions in evidence, I am satisfied that Mr Gould developed the concept of the Hong Kong exhibitions with his friend Sue Grieve who alerted him to the marketing opportunity provided by cashed up expatriate residents. Mr Gould appreciated the opportunity to offer afresh, away from the depressed Melbourne market, paintings that might be thought, in marketing terms, to be stale. I accept that Mr Smith took a limited interest in the exhibitions but I am satisfied that Mr Gould and his staff, with assistance in Hong Kong from Ms Grieve, organised the initial exhibition in 1991 and those in following years through to 1997.

360 Mr Ian Rogers, an art dealer, described the change in focus that he observed from when he worked for Mr Gould in 1987 before the Perceval exhibition. In the late 1980's the range of works that he saw in the gallery were by artists from the 1920's and 1930's. About a decade later the focus was on modern artists, naming Nolan, Drysdale, Boyd and Whiteley. Gratuitously, he announced that Gould Galleries in the late 1980's did not have the standing of Joseph Brown, Lorraine Diggins, Australian Galleries, or Tolarno Galleries. Mr Rogers deals regularly with Sotheby's, which is Mr Smith's business, and had not discussed with Mr Gould why the direction of the business of the gallery may have changed. His exposure to Gould Galleries in 1987 was quite limited and his observations about its subsequent development did not establish any direct connection to Mr Smith's activities. Mr Rogers commented on the improvement in the quality of catalogues of exhibitions by Gould Galleries from about 1995 and I will say more about catalogues in due course.

361 Mr Ray Wilson, an art collector, had been the partner of Mr James Agapitos. Mr Wilson gave Mr Smith, in general terms, a glowing reference as an art curator. Mr Wilson also suggested that Gould Galleries was not in the same league as Chris Deutscher and Joseph Brown when he was first introduced to it. Messrs Wilson and Agapitos became friends with Messrs Smith and Gould and, after the renovations, would stay at Park Street when visiting Melbourne. Mr Wilson described being impressed by the collection of art hanging there. They has limited business dealings with Gould Galleries. Mr Wilson noticed a general and progressive improvement, both in quality and in value, of the art at the gallery, commenting that it was always well displayed.

362 Another collector, Mrs Isobel Reynolds, who met Mr Smith through the NGV and later met Mr Gould, also gave Mr Smith, in general terms, a glowing reference as an art curator. Mrs Reynolds saw the art hanging at Park Street on social occasions, but there was no evidence that she had any business dealings with Gould Galleries. Mr Smith also called Mr Bryan Netto and Ms Dur-E-Dara but I did not gain any assistance from their evidence on the matters in issue in the proceeding.

363 Mr Smith did not give evidence of any particular conversations in which he made significant contribution to the future vision for the Gould Galleries business model. In that sense, there was no advice or consultation, no specifically identifiable contribution. Mr Smith was around, in a relationship with Mr Gould, as the business at Gould Galleries developed. I think it probable that a major driver to a change in the stock in which the gallery dealt was Mr Gould's early experiences representing John Perceval and the opportunities arising from the buy-out of his mother. Mr Gould's intimate relationship with a talented NGV curator with like interests in art was probably subliminally beneficial for him. I do not find that the direction in which Gould Galleries has developed since the mid-1990's directly followed on from that influence. Having watched Mr Smith giving evidence, I think it likely that he infected Mr Gould with his enthusiasm for modern Australian art in a manner that was a positive benefit for Gould Galleries. It is only in that sense that Mr Smith contributed to a 'vision'. I am satisfied that Mr Gould considered many other factors, such as the profitability and operation of the gallery, how art purchases could be funded, how stock was turning over, to name some considerations, that in a concrete way, defined the realisation of his own vision of his business.

364 I accept that, especially on the evening of the arrival of a new auction catalogue, Mr Smith and Mr Gould would discuss the artworks being offered for sale. These conversations were described as occurring after working hours at dinner or late at night in bed. Mr Smith was claiming companionable conversation with his partner at the end of the evening as the application of a special skill in the development of a business asset. While I accept that Mr Smith brought particular knowledge and skill to these discussions, I accept also that Mr Gould was knowledgeable and experienced in assessing what paintings should be purchased as stock for Gould Galleries. When added to the want of detail about Mr Smith's advice, the informal setting for these conversations is relevant in preferring the view the extent of this contribution to the value of Gould Galleries was quite limited, perhaps no more than, for Mr Gould, a sub-conscious, unacknowledged, influence in selection of artworks.

365 Mr Gould contended that he made his own decisions about stock purchases. The two of them did not sit together at auctions to preserve appearances for Mr Smith as an NGV curator. Despite considerable time being taken to establish the stock as at June 2004, and comprehensive schedules being available, Mr Smith's evidence was mostly general assertion. It is, however, probable that Mr Smith did voice his opinions. Purchasing art at auction was an activity of interest to him and there is no reason why Mr Gould would not have discussed purchasing opportunities. It is probable that in discussions the inherent quality of artwork available for purchase, value, and possible attractiveness to commercial buyers were canvassed.

366 What is difficult to assess is whether Mr Smith's contributions in these conversations provided any material benefit to Gould Galleries. Both men had considerable experience in attending commercial art auctions. Mr Smith had been taken to auctions as a youth by his uncle and he asserted he had always been a keen student of the value of artworks. I doubt that Mr Gould was less experienced in art auctions and I rather suspect that his interest was more consistently focussed on the opportunity for commercial profit. Although Mr Smith now demonstrates a like ability, his eye for the commercial profit in art purchased on the secondary market has probably developed either during, and with the benefit of, his relationship with Mr Gould, or since their separation. I will shortly examine the specific purchases that Mr Smith refers to in support of his contentions.

367 Mr Smith asserted that most Saturdays he visited art galleries and dealers and would advise Mr Gould of works that might be of interest to Gould Galleries or its clients. Mr Smith regularly spent his Saturdays in the company of Mr Singer, as Mr Grady confirmed. There was one example that Mr Smith gave of an artist that he introduced to Gould Galleries. Howard Arkley was represented by Tolarno Galleries. In November 1994, Mr Smith previewed an Arkley exhibition at Tolarno Galleries that he thought an extraordinary exhibition. The NGV did not act on Mr Smith's recommendation that it should acquire an Arkley and Mr Smith reserved a painting called Actual Fractual. Mr Smith informed Tolarno of his interest in Arkley. I have already referred to Mr Smith's personal acquisition of Arkley works and I accept his evidence that he was quick to recognise the significance of Arkley as a modern Australian painter. I am satisfied that he introduced Mr Gould to Arkley's work and that Gould Galleries dealt extensively in Arkley works. There are 77 Arkleys listed in schedule 3B. Gould Galleries sold Arkley's works before and after his death in 1999. Hugely successful exhibitions of his work in Sydney and Melbourne were held in 2001 and 2002.

368 Mr Smith identified specific examples, mostly particular artworks that formed part of the alleged private collection, which Gould Galleries would not have purchased but for his advice to Mr Gould. There was other evidence touching on stock selection. For the first Hong Kong exhibition, a Streeton painting was purchased. It was sold on the last day of the exhibition with other paintings in a package worth $120,000. Mr Smith asserted that his special expertise in Streeton's art materially contributed to the acquisition and sale of that Streeton and to the profit that was made in Hong Kong, which provided funds for future art purchases. Mr Smith claimed that he alerted Mr Gould that Christies was offering a Streeton, Cremorne Point, Sydney Harbour at auction in 1991. Mr Smith said he identified through his research that this painting was correctly titled The Gentleness of Heaven is on the Sea, painted in 1896 when Streeton was living in Mosman. Following Streeton's return to Melbourne, the painting was offered for sale in an exhibition called 'Sydney Sunshine Exhibition' under that title. Mr Smith said that when the painting did not sell at auction, he persuaded a reluctant Mr Gould to make an offer. Gould Galleries acquired the painting for $50,000 including buyers' premium.

369 Mr Gould, whose evidence I prefer, told me that he saw that the painting was available at auction on an estimate of $90,000, which he thought was too high. After the auction when the painting was passed in, Mr Gould inspected the painting with his restorer and determined that the painting could be cleaned up and reframed. In the poor economic conditions then prevailing, Christies accepted Mr Gould's offer of $50,000 all in and the painting was cleaned, reframed and taken to Hong Kong.

370 Streeton's Cremorne Point, Sydney Harbour sold under that title on the last day of the exhibition. Mr Gould negotiated the sale to a purchaser who also acquired a Norman Lindsay and a Pro Hart. Mr Gould did not dispute that Mr Smith's research may have established the correct title and provenance of that painting. However, none of that information was available prior to or at the time of the Hong Kong exhibition and did not influence the fact of sale or the price achieved. Mr Smith's book on Streeton was published in 1995.

371 Soon after that sale, Pugh's Rape of Europa, was purchased at an auction in London. Mr Smith claimed that he identified to Mr Gould that this was a Pugh of particular significance, as it had been included in a 1961 exhibition of Australian artists in Whitechapel Gallery in London. Disputing that he had been persuaded by Mr Smith to purchase Rape of Europa, Mr Gould produced from his library a copy of Traudi Allen's biography of Pugh Patterns of a Lifetime and Noel Macainsh's Australian Art Monograph, Clifton Pugh. There is nothing unique in searching academic writings about artists for information about the significance, or location, of paintings and Mr Gould collected an extensive library of art books that he regularly consulted. I accept that Mr Gould was independently aware that Rape of Europa or Europa and the Bull (1959) was a significant Pugh work. Mr Smith enjoyed regular access to the Gould Gallery library. No doubt Mr Smith had access to significant research resources at the NGV as well.

372 In a like way Mr Smith sought to correlate his special skills with the acquisition of two Arthur Boyd 'Bride Series' paintings in Philadelphia USA that was discussed earlier. Mr Smith's proprietorial claim to the knowledge ascertainable from such books appears opportunistic in each case.

373 Mr Smith claimed to have been present with Mr Gould at a Christie's auction in New York in 1999 when Gould Galleries purchased Nolan's Kelly (1955), a matter that, of itself, is insignificant. The painting was, unsurprisingly, hung at Park Street, but was later offered for sale by Gould Galleries and used on the cover of an exhibition catalogue. The painting then sold in advance of the exhibition. Mr Gould took a call from a buyer in London on his mobile. Mr Smith was in the car listening to Mr Gould's phone conversation and claimed that he provided Mr Gould with important information answering the buyer's questions about the painting, which was bought sight unseen. I accept Mr Gould's evidence that he sold the painting, without assistance from Mr Smith, to an enthusiastic buyer in a private conversation.

374 Mr Smith curiously claimed to have fortuitously spotted in an interior photograph of a property in the Dandenongs that was advertised for sale in the Saturday newspaper, an Albert Tucker painting on the wall. He said he encouraged Mr Gould to inspect the property, and they found Robert Dickerson's Man in a Street was also hanging there. Mr Smith said that with Mr Gould, he negotiated the purchase of both paintings by Gould Galleries. Mr Smith also claimed his research established its unbroken provenance and its true title 'Boy in a Street'. I reject this account of the purchase. Mr Gould had purchased the Tucker and the Dickerson on his credit card from Linden Gallery in the Dandenongs, producing the receipt. Both paintings were sold by Gould Galleries. Mr Gould could not remember if Mr Smith's claims of discovering the true title of the painting were known to him when he sold the painting, but he doubted that it would have mattered what the painting was called to the purchaser in Tokyo.

375 Whiteley's, Bather & Garden was located in the UK by John Playfoot, an art dealer and colleague of Mr Gould. Mr Playfoot, in partnership with Gould Galleries, purchased the work for $450,000. It featured on the cover of a Gould Galleries exhibition catalogue in July 2002. It did not sell at that exhibition. Mr Smith said he discussed at length with Mr Gould the importance of the painting and that, as both of them loved it, Mr Gould decided to buy it for their home collection. John Playfoot was paid out and the painting hung at Park Street. Mr Gould explained, and I accept, that he often engaged in mutual dealings, such as joint purchases of significant works, with John Playfoot. Mr Gould didn't recall any discussions with Mr Smith about the acquisition. The purchase was for resale but when it didn't sell it was hung at Park Street, primarily resting from the market but hardly an artwork likely to gather dust in a stockroom. Mr Playfoot was bought out at a value agreed between them, a common practice as the two dealers adjusted the stock holdings of interest to each of them. The painting later sold and, although that sale became controversial in the relationship as I have noted, the sale was consistent with its status as Gould Galleries stock. I do not accept that Mr Smith played any material role in its acquisition or that Mr Gould bought out Mr Playfoot for any reason other than as part of their mutual dealings.

376 Mr Smith claimed that in the early 1990's he encouraged Mr Gould's interest in Andy Warhol, who was 'very out of fashion'. Mr Gould disagreed, countering that he was always interested in Warhol and has unsuccessfully bid on 8 to 10 Warhols. When in London in January 2001 Mr Smith saw two Warhols, Portrait of a Woman Black, and Portrait of a Woman Red for auction at the London Christie's contemporary art exhibition, Mr Smith inspected the paintings. Mr Gould agreed that Mr Smith discussed the paintings with him, and Mr Gould decided to bid for them. Mr Smith may have done the bidding, but Gould Galleries paid for the works. Gould Galleries sold Portrait of a Woman Black, which was used on the invitation for one exhibition. Portrait of a Woman Red has never been offered for sale and has always hung at Park Street. Mr Smith contends it forms part of the private collection and is the painting listed as Society Portrait 1985. This contention is not contradicted by the use of the painting since its acquisition.

377 Mr Smith stressed his contribution to catalogues and exhibitions, while suggesting that he contributed in other ways as well. The gallery appeared to hold two major catalogue exhibitions per year that would also travel to Sydney. This was a small part of the gallery's annual activities. Mr Smith contended for a major role in selection of art works for exhibitions, but this evidence was of a general character, when specific instances of how Mr Smith improved a particular exhibition by recommending that other artworks be exhibited could have been given had that occurred. I prefer the evidence of gallery employees such as Mr Gaynor and Ms Oliver, which I will come to below, that exhibitions were designed and planned by Mr Gould.

378 Mr Smith suggested the success of the gallery was assisted by catalogue information (including provenance, exhibition history, location, date, name of art works) that he provided for art works being exhibited, and his research advisory services to the clients of Gould Galleries. Part of the debate at trial concentrated on who contributed what to catalogues and on the importance of catalogues to art investors, but no link was drawn between any such activities and the financial success of the gallery. As a curator and academic, Mr Smith stressed the importance of catalogues as a record, but their role as a marketing tool is what is relevant. Primarily, Mr Smith's claimed contributions to catalogues were directed to the former role, that is, ensuring an accurate record. A related claim was that Mr Smith lent to Gould Galleries the benefit of his archive. I am not persuaded that the contribution that he asserted, even if considered as established, improved sales, sale prices, or the pace of stock movement for the gallery. I accept that detailed catalogues may have influenced some buyers, but there is no evidence of any significant impact on the gallery's cash flow.

379 Mr Smith suggested that Gould Galleries did not publish catalogues before his encouragement that it do so in 1995. He dismissed the 1989 John Perceval catalogue in a way that failed to acknowledge that the exhibition was of new paintings from a single artist. He appeared to have overlooked the 1994 Larwill catalogue. The catalogues that followed from 'From Bunny to Boyd' in 1995 to 'Twentieth Century Australian Art: A Major Collectors' Exhibition' in 1999 contained basic information. Of course such catalogues cannot be compared with NGV publications, particularly as the NGV is not a commercial organisation and the artwork is not for sale. It is probable that Mr Smith generally suggested to Mr Gould that modelling Gould Galleries catalogues on NGV catalogues would help to position the gallery towards the upper end of the market. Making that self-evident suggestion is not if itself a contribution of any significance to the financial success of Gould Galleries.

380 It appears that the work of preparing catalogues was done by Mr Gould and his staff. Mr Smith identified some specific instances of his catalogue contributions but mostly referred vaguely to debates, collaboration, and discussions. He asserted that he 'predominantly' provided the descriptive detail, and provenance and exhibition history, for catalogues, but mostly that information came with the artworks, from vendors and auction houses. Mr Smith denigrated Mr Gould's abilities to design and develop catalogues that his own witnesses described as significantly improved over the period from 1995 to 2004. In due course I will refer to the evidence, which I accept, of Gould Gallery's employees about their contributions and that of Mr Gould to catalogues. At times, this debate became facile. Mr Smith suggested he deserved credit for the exhibition title 'Bunny to Boyd', an obvious alliteration suggested by the artwork in the exhibition derived from an idea that had been previously employed internationally. At the suggestion of James Mollison, Mr Gould became a valuer approved under the Taxation Incentive for the Arts Scheme. Although no attempt was made to demonstrate that such certification improved the profitability of the gallery, Mr Smith contended that he persuaded Mr Gould to do so.[104]

381 Mr Smith claimed credit for the appearance of the unconditional guarantee of authenticity in Gould Gallery catalogues, relating the addition of this guarantee to his role in the discovery of fake paintings in 1998. Mr Gould brought these particular paintings to Mr Smith's attention, but in any event, fake and forged art is a well-recognised concern. Mr Smith who may well have the expertise to identify unauthentic works by some modern Australian artists, particularly Streeton, Nolan, and Blackman, did not contribute, by any activity on his part, to the guarantee of authenticity.

382 Moreover, Mr Gould acknowledged a contribution by Mr Smith to the text of catalogues and general proofreading.[105] I am not persuaded that Mr Smith made any more than a limited and indirect contribution to the catalogues, which were mostly prepared by Mr Gould and his employees.

383 Mr Smith suggested wall labels for displayed artwork that identified artist, artwork title, date, provenance, and like information, clearly a suggestion emanating from his NGV experience, and Mr Gould introduced and persevered with it. He discontinued the practice as it discouraged conversation about artworks between customers and sales staff.

384 Opening nights for exhibitions are attended by invited clients, particularly interested investors, and collectors of the work on exhibition. Mr Smith usually attended. As has been mentioned elsewhere, the opportunity for a gallery owner to tease the interest of a half committed purchaser in the artwork being admired with an exposition from the occupier of a significant and prestigious office in Australian art would seem capable of providing a commercial advantage. From my observations of Mr Smith in the witness box, I have no doubt he talked enthusiastically about paintings on exhibition at openings. If his conduct was then directed to the success of the gallery, some examples of particular successful sales might have been given. Some specific paintings were referred to - Blackman, Skipping Girl; Gascoigne, Wattle and Daub; Fairweather, Cyclops; Blackman, Hoardings; and Perceval, Woman Chastising Girl in a Carlton Street. In each case I preferred the specific explanation offered by Mr Gould about the circumstances of the particular sale. There was no evidence of any significant sales, or sales volume, advanced by Mr Smith for Gould Galleries as an art salesman with special skills.

385 Mr Robert Piaggio gave evidence that Mr Smith, who he met through Mr Gould, was his advisor about his art collection. Mr Piaggio was also a close friend of both of them, and of Mr Singer. As I have noted, Mr Piaggio was involved in the property investments. Although Mr Piaggio stressed that it was Mr Smith's opinion about art, not that of Mr Gould, that he valued, he was not a collector whose purchases had any capacity to affect the profitability of the gallery and so it was with other collectors identified by Mr Smith.

386 Mr Smith contended that his involvement in the day to day business of the gallery in both Melbourne and Sydney was significant. He consulted with Mr Gould about client interests, framing or conservation issues, about how exhibitions should be hung. Mr Smith asserted a significant role in the selection of stock for exhibition. In particular, Mr Smith noted that he often took phone calls from individuals who were considering purchasing artwork from Gould Galleries, answering their queries regarding the importance, relevance, or value of the artwork in question. Mr Smith also attended exhibition openings. I consider his description of his involvement in gallery activities to be overstated.

387 I do not accept Mr Smith's claims that he made any significant contribution to packing and unpacking for Hong Kong exhibitions, the planning for those exhibitions or that he actively assisted in sales work in Hong Kong. I am not persuaded that Mr Smith played any role in the selection of stock for Hong Kong exhibitions.

388 It is clear that Mr Smith was rarely at the gallery when it was open. Overwhelmingly, the gallery was operated by Mr Gould, and the employees who worked under his supervision. Mr Smith contended that he assisted in employing gallery staff, and while he might have taken an interest in what Mr Gould was doing when employing staff, I am not satisfied that he made any material contribution on employment activities or to profitability of the gallery business by doing so. It was clear that Mr Smith's general practice was to go to the gallery when he finished his day at the NGV, often finding Mr Gould still working. Mr Gould continued with gallery business until they went to dinner at a nearby restaurant. I accept that on occasions when Mr Smith went to the gallery and found Mr Gould rehanging the display or setting up an exhibition, he would help him. Mr Smith helped with some administration, probably as there was little else to do and he was content to pitch in, but I do not find that Mr Smith's activities in this regard made any significant contribution to the operation or profitability of the gallery business.

389 Former employees of Gould Galleries who gave evidence were Ms Pamela Axe, Mr Vasili Kaliman, Ms Dallas Moore, Mr Andrew Gaynor and Ms Rebecca Oliver. I prefer the evidence of these witnesses to that of Mr Smith about his participation in the activities of the gallery.

390 Ms Axe was employed at Gould Galleries from 1994 to 2004 and she explained the administrative processes of the gallery. Ms Axe also dealt with customers and attended openings. She knew Mr Smith as Mr Gould's partner and would see him at openings, or arriving to see Mr Gould as she left for the day. She was aware that Mr Smith and Mr Gould often spoke by phone during the day, but saw no evidence of Mr Smith's involvement in the activities of the gallery. She did not think there were great changes in the services offered to clients over her time at the gallery, although she thought the quality and value of the stock improved as did the catalogues. She knew gallery stock was held at Park Street, as she managed the records of the business. Ms Axe had been to Park Street on several occasions and was taken on a tour of the art that hung there. Nothing had been said to her about a collection or that a collection was being assembled.

391 Mr Vasili Kaliman was the Sydney gallery manager until 2001, involved in the day to day running of the gallery, selling the work and supervising other staff members. Mr Kaliman attended auctions in Sydney with Mr Gould. He regularly visited the Melbourne gallery for meetings with Mr Gould and Melbourne employees. He never saw Mr Smith at the gallery on those occasions or at those meetings. Mr Kaliman could not recall Mr Smith being involved in any administrative or artistic decision for the Sydney Gallery. Mr Kaliman explained that stock for Sydney was controlled through Melbourne, apart from consignments from Sydney based clients, and that Mr Gould selected the stock for Sydney exhibitions. He had no knowledge of whether Mr Smith was involved with Mr Gould in exhibition and catalogue planning in Melbourne. Mr Kaliman occasionally saw Mr Smith at the Sydney gallery with Mr Gould, usually when Mr Smith was in Sydney on NGV business. Mr Gould, on the other hand, regularly attended at the Sydney gallery usually for a week at a time.

392 Ms Dallas Moore followed Mr Kaliman as Sydney gallery manager. Corroborating what Mr Kaliman said, she described how Mr Gould maintained a hands-on presence in the Sydney gallery, but Mr Smith was seen there very infrequently and usually in association with NGV business. She could not recall Mr Smith attending an exhibition opening in Sydney.

393 Mr Andrew Gaynor was employed as the director's assistant at Gould Galleries from 2000 to 2002. He is now that acting CEO of the Australian Commercial Galleries Association with a solid academic background, a Bachelor of Fine Art and a Masters in Art History. He described himself as an independent curator and researcher by occupation. After he started at Gould Galleries, coming over from Western Australia, he learned that Mr Gould's partner was the assistant curator in Australian art. Mr Gaynor suggested that any Victorian in the 'art world' would have known that Mr Smith worked at the NGV. Mr Gaynor described one of his roles at Gould Galleries to be to greet clients and start sales off, introducing clients to important works in stock or on exhibition. He also did research and administration for Mr Gould and managed the stock room. Mr Gaynor never found Mr Smith at the gallery to assist with work to be done, but he attended, often with Mr Singer, on Saturdays. Mr Gaynor did acknowledge Mr Smith as a Streeton expert in 2000 and an authority on Nolan, adding that Mr Smith is now, potentially in his view, a major authority on Nolan. Mr Gaynor observed that at exhibitions Mr Smith would speak to attendees about the paintings and the aesthetic of paintings. Mr Gaynor suggested that art buyers who decline the opportunity to talk to someone who is knowledgeable about art are fools. He claimed that, during his period at the gallery, he contributed research to catalogues and copied research materials at the State Library at Mr Gould's request. Mr Gaynor had been to Park Street and seen the art hanging there. He said he had seen a lot of that art in the gallery at one point or another and had assumed the art was Gould Galleries stock.

394 Ms Rebecca Oliver was employed at Gould Galleries in Melbourne from 2003 until 2007 as a gallery manager. She observed that Mr Smith visited the gallery from time to time, often with Mr Singer. She described how, at Mr Gould's request, she researched provenance in books and catalogues both at the State Library and in the substantial library of books and catalogues at Gould Galleries. She was not aware that Mr Smith contributed to catalogues, describing the extensive work of Mr Gould in selecting the exhibition, researching the information for the catalogue, and mocking it up for printing and production. Ms Oliver's work on catalogues was as a proofreader.

395 In Kardos v Sarbutt,[106] Brereton J stated that, when assessing a fair and equitable adjustment of property interests, the court is not required to undertake a reductionist process analogous to the taking of partnership accounts. It does not examine every alleged 'contribution' with a view to putting a monetary value on each, in order to reach an accounting balance one way or the other, then to be eliminated by the requisite financial adjustment. Rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind. However, mathematical calculations, while not determinative, are of use in guiding and testing conclusions about what is just and equitable, and in promoting transparency and consistency in decision-making.

396 In Giller v Procopets, Neave JA analysed the differing views expressed in the cases on the extent to which the court could take into account factors other than contributions to assets (s 285(1)(a) considerations), and contributions to welfare (s 285(1)(b) considerations), and whether the inquiry was limited to those matters. Neave JA noted that, in New South Wales, the conflict of judicial opinion was resolved in Evans v Marmont.[107] The majority view in that case was that the provisions relating to contributions constituted:

the focal points by reference to which the discretionary judgment as to what seems just and equitable must be made. They are not merely two matters, or groups of matters, which take their place amongst any other relevant considerations. It is by having regard to those matters that the court may adjust property interest in a just and equitable manner.[108]

The majority held that, although the factors set out in [the analogous provision to s 285 of the Act][109] were fundamental, other matters might also be relevant. It concluded[110] that considering the plaintiff's contributions and nothing else cannot conceivably lead to any view on what is just and equitable in the circumstances. Other factors can only have independent bearing if relevant to the question: what is just and equitable having regard to the plaintiff's contributions?

397 Some other factors will be relevant in this way in all cases. For example, have the contributions of the plaintiff been sufficiently compensated? The relevance of this question is confirmed by the terms of [s 17 of the NSW] Act. This in turn requires the court to reach some view of the value of the contributions of the plaintiff, and some view of the value of what the plaintiff has received in return.

398 On the other hand, Victorian judges have expressed a variety of views.[111] The Court of Appeal in Giller[112] expressed its preference for the approach in Evans v Marmont that does not confine the range of discretionary considerations. In Evans v Marmont, the court stated that in most cases, the present financial circumstances of the parties will be relevant, usually because it is necessary for the court to ascertain what the property of the parties comprises at the time of the hearing, to be subject to any adjustments of interest have to be made. Further, in most cases the needs and means of the parties will have general relevance, as subsidiary factors, to the question of what is just and equitable having regard to the plaintiff's contributions. However, that limited context is the extent of the relevance of this factor and, in particular, the court cannot say that because the defendant has extensive assets, and the plaintiff has very little, if that were the case, for that reason alone it is just and equitable to make an adjustment. Other circumstances which may be relevant include such matters as the length of the relationship, any promises or expectations of marriage (at present this consideration, as expressed, applies only to mixed gender relationships), and opportunities lost to the plaintiff due to the plaintiff's contributions.[113]

399 This list is by no means intended to be exhaustive. I do not think any limit can be set on what circumstances may be relevant, remembering always that the relevance must be to the question, what is just and equitable having regard to the plaintiff's contributions. In Evans v Marmont, Gleeson CJ and McLelland CJ in Eq added the following observation:

It would be unrealistic to attempt to evaluate [financial, non-financial and homemaker and parent contributions] for the purpose of determining what is just and equitable, having regard to those contributions, in isolation from the nature and incidents of the relationship as a whole, relevant aspects of which may well include factors of the kind mentioned by Hodgson J.[114]

Conclusions about contributions to the art sub-pool

400 Taking all of the above matters into account and considering Mr Smith's whole contribution to Gould Galleries, I am not persuaded to accept Mr Gould's submission that Mr Smith's contribution is limited to a 'back-room effort' of casual conversations with his personal partner in the evenings that does not warrant recognition in Mr Smith's favour of an interest in Dukville. Equally I have not been persuaded by Mr Smith that he made either a special or a substantial contribution to the business of Gould Galleries, and thus to the value of the shares of Dukville, warranting recognition of a half interest in Mr Smith's favour in Dukville.

401 The court's evaluation is holistic and broad based, drawing on the context of the relationship between the parties and my assessment of the respective contributions both financial and non-financial that are directly or indirectly made by or on behalf of each partner and directed to determining what adjustment is ultimately just and equitable.

402 On the basis of my assessment of the various aspects in which contribution was asserted, set out above and following, I have determined that Mr Smith's contribution to the value of the art sub-pool was modest, but not minimal, and I assess his contribution to the growth in value of the art sub-pool over the course of the relationship at 10%.

Mr Smith's contributions to the other assets sub-pool

403 The remaining two categories of assets are superannuation account balances and Mr Gould's bank accounts. The respective superannuation account balances principally reflect the age and financial opportunities of each of Mr Smith and Mr Gould. Apart from contending for a global 50% interest in the whole pool, Mr Smith did not suggest any particular contribution to Mr Gould's superannuation balance. I do not consider that any ground exists for eroding that asset by any adjustment in favour of Mr Smith. In this respect, I am mindful that as a younger man Mr Smith has full opportunity to accumulate suitable superannuation and cannot contend that his opportunity to do so has been affected by his attention to Mr Gould's welfare or financial resources. There was no evidence about how the funds held in bank accounts by Mr Gould at the separation date were accumulated. Assuming the funds were drawn from the business as wages or the like, Mr Smith has not demonstrated any further relevant contribution to that asset distinct from his contributions to the gallery.

404 Mr Gould contended that the love and support he provided to Mr Smith must be viewed in the context of Mr Smith's long-term intimate relationship with his current partner, Mr Singer. This circumstance caused Mr Gould to be unhappy and gave rise to a want of reciprocity in the contributions of Mr Smith to Mr Gould's welfare. In submissions, counsel emphasised the effect of Mr Gould's suspicions of a relationship and Mr Smith's false denials, the secret dealings in property and shares between Mr Smith and Mr Singer, and the apparently engineered, by Mr Smith and Mr Singer, separation from Mr Gould. These contextual matters, it was submitted, increase the significance of Mr Gould's contribution to Mr Smith's welfare.

405 Section 285(b) of the Act directs that welfare contributions, in the sense that I have discussed above at [267] and following, be taken into account. There is ordinarily no warrant from the statute to take into account a want of due attention to the welfare of the other party to the relationship. There may be special circumstances, such as domestic violence or particular issues with children of the relationship, which are not relevant in this case. However, in my view, what Mr Gould contends for is nothing more than an irrelevant notion of fault. As I have noted, there is no relevant concept of fault, the Act directs attention to contributions. Mr Gould chose to remain in this relationship despite his strong suspicions about Mr Smith's conduct with Mr Singer. Why each man behaved as he did in this context is not a matter for this court.

406 The welfare contributions are relevantly much narrower in compass and I am satisfied that Mr Gould made a greater contribution that Mr Smith to the welfare of the other. I am satisfied that Mr Smith made some contributions towards expenses before he became involved in property investment and that he made some contributions to travel expenses. But these contributions were insignificant compared with the costs of their travel and their lifestyle. Mr Smith contended, and I agree, that the gallery business, that is, Edrob Nominees Pty Ltd substantially contributed to the lifestyle that Mr Smith and Mr Gould enjoyed. In this respect, Edrob Nominees Pty Ltd was contributing to the welfare and financial resources of Mr Smith and that is a matter that to be balanced against the adjustment that Mr Smith now seeks for his contribution to the profitability and success of Gould Galleries.

407 The evidence concerning household, entertainment, and travel expenses overwhelmingly favours Mr Gould. Mr Smith did not dispute that the vast majority of all domestic and entertainment expenditure, including overseas travel, was paid by Mr Gould or Edrob Nominees Pty Ltd. That such expenses may have been deductible to Edrob Nominees Pty Ltd is not to the point and not a matter about which I can make any finding. There was a real benefit to Mr Smith. His income from his NGV job became wholly his to invest, as he did, in property and art.

408 In no sense can it be said that Mr Smith has been held back from his own financial destiny by contributing to the welfare of Mr Gould. Towards the end of 2006 Mr Smith left his employment at the NGV and took up a position at First East Auction Holdings Pty Ltd, who traded as Bonhams & Goodman. Mr Smith is now Chairman of Sotheby's Australia, drawing a six-figure salary. It cannot be suggested that he has not been successful in his occupation or his career pursuits. More particularly, it is not the case that Mr Smith's career and financial resources have been diminished or restrained by providing for the welfare of Mr Gould. The evidence of Mr Smith's current financial position was far from complete, and may be intertwined to some extent with that of Mr Singer. It was not suggested by Mr Smith that he has any need for residential real estate and no inventory of his present collection of artworks was given.

409 I am satisfied that Mr Gould has also contributed to Mr Smith's welfare by providing Mr Smith with the opportunity to observe closely the commercial side of art dealing over a 14 year period, which Mr Smith has now married with his academic and curatorial experience. Mr Gould had paid Mr Smith's domestic upkeep and expenses, while he was completing his studies and moving up the chain of success at the NGV. Mr Smith observed that Gould Galleries supported what his counsel described as a 'lavish lifestyle'. Mr Gould assisted Mr Smith with his work at the NGV, his writings generally and the development of his archive. These matters were, in themselves, benefits for Mr Smith for which he made little or no contribution but for the contributions he made to Gould Galleries.

Indirect contribution to Mr Gould's financial resources

410 Having approached the assessment of contributions by reference to sub-pools requires that I consider the interaction of sub-pool contributions. On the one hand, Mr Smith contends that, having contributed to the value of Dukville and the art sub-pool, he has provided an indirect advantage to Mr Gould who draws his financial resources from the business. There is no practical way, as the evidence was presented to me, to value whether there was any effect on the drawings made by Mr Gould from the business in order to identify and quantify that advantage. Moreover, that task is made more difficult by the approach adopted on valuation, which does not allow for thorough analysis of the financing of artwork purchases and tracking of cash outflows. On the other hand, it seems clear that the business provided significant support to Mr Smith throughout the course of the relationship, in the provision of the welfare benefit that I have found he received and in assisting in financing Mr Smith into property development. I have allowed for the indirect assistance to Mr Gould of Mr Smith's contribution to Gould Galleries in assessing the balance of welfare contributions and Mr Smith's contribution to their investment activities, as I described above.

411 Bearing these considerations in mind, I do not think any further adjustment is required, and in reaching that conclusion I bear in mind that I have not specifically apportioned Mr Gould's cash at bank on separation.

Conclusions as to a just and equitable adjustment by sub-pool

412 I have concluded that Mr Smith has no entitlement to an adjustment of the residential sub-pool in his favour and has received both a welfare contribution from it and a direct financial contribution to his post relationship financial resources from it. I have concluded that the just and equitable distribution of the investment property sub-pool is that Mr Gould and Mr Smith should share it equally. Further, Mr Smith should have an adjustment in his favour of 10% of the value of the art sub-pool. There will be no adjustment in the other assets sub-pool. In the following table the 'total' column shows the assessed total value of the sub-pool and the columns for Mr Gould and Mr Smith show what monetary value of the sub-pool after adjustment consequent on my findings of entitlements at the separation date, is being allowed

Subject to remaining observations, to arrive at a just and equitable adjustment, so assessed, Mr Smith was entitled at the separation date to a share of the divisible pool totalling $2,920,259.

413 Although the above analysis is warranted by the different nature of contributions to the several sub-pools, it may appear mathematical. Considering all of the matters discussed above afresh, and from a broad holistic perspective, uninfluenced by any reductionist process, I consider that a just and equitable entitlement in favour of Mr Smith, from a divisible pool accumulated over a 14 year period, when Mr Smith's contribution was not by equity or capital but was principally as advice, knowledge or research effort, is in a range from $2,500,000 to $3,000,000. In so doing, I have considered again the settlement offered by Mr Gould in 2004. I have already noted that Mr Gould did not press the settlement agreement he alleged to forestall the exercise by the court of its broad jurisdiction under Part IX. Rather, Mr Gould relied on those arrangements as evidence of the parties' respective views of Mr Smith's entitlements at the time. Mr Gould in submissions valued his offer at just over $4 million but using different, and higher, values than I have adopted and I have not thought it useful to revalue that arrangement. I consider that Mr Gould took a generous view when dealing with Mr Smith in 2004, possibly the result of an over-inflated view of the totality of the divisible pool.

414 Bearing in mind the comparative correlation of my global and sub-pool approaches, I fix Mr Smith's share of the divisible pool of assets of the relationship between Mr Smith and Mr Gould between April 1990 and June 2004 at $3,000,000.

415 I now turn to consider the appropriate orders to effect a proper adjustment of the interests of the parties. The first consideration is the adjustments that since separation have already been made or paid.

416 The most significant adjustment is that Mr Gould purchased 3/31 Marne Street for Mr Smith. The value of this property has been agreed at $388,254 but it can only be regarded as an adjustment for Mr Smith if he received the funds held in the solicitor's trust account and, as compensation for having been held out of that adjustment since 2006, the interest that has accrued on the sum in trust since that time.

417 Part of the settlement arrangement included a forgiveness of a debt due from Mr Smith to Mr Gould that Mr Gould put at $90,000. This forgiveness of debt was disputed by Mr Smith and it turns on the entries in the 'Geoffrey Trading' document. I am not satisfied about that debt and will not find that any forgiveness of it was a post separation adjustment. Further, Mr Gould offered $100,000 cash, but Mr Smith elected to receive that offer in the form of particular paintings that he nominated. The cost of those paintings to Mr Gould was $96,000 and they included Harris, The Face, Marburg's Fright and Fly Lightly and Tucker Swans at Metung. Those paintings are a post separation adjustment in favour of Mr Smith.

418 Next, there have been sales of investment properties. Mr Smith has received $946,202, and he retains an interest on the title to 3/35 Marne Street that is valued as $303,333. The title interest in 3/35 Marne Street is a matter that could require an order to discharge the duty under s 284 of the Act, that is, to bring finality in the financial dealings between the parties to the domestic relationship. However, as it has not become appropriate to order the transfer of this interest one way or the other to effect a fair adjustment, it may need to be sold, unless one party can, by agreement, buy out the other. Without the co-proprietors as parties to the proceeding, orders for a sale of the property are not presently contemplated.

419 Finally, there was the artwork that was provided to hang in 3/31 Marne Street. There were 33 artworks and, of them, five were sold for a total of $329,000. Mr Gould submitted that these 33 artworks are valued at $1,438,600 by a combination of sales and agreed values or, in the absence of agreement, values determined by Mr Abdallah. This group of artworks includes the paintings provided by Mr Gould at a cost of $96,000. I have revisited Mr Abdallah's valuation of these paintings reducing the assessed value on the same basis that I used to determine the value of other artworks. Mr Dwyer did not value these artworks. Applying a discount of 8.3%, I assess the value of the artwork received from the divisible pool by Mr Smith at $1,319,200.

420 The total value of the adjustments made in Mr Smith's favour following separation is $2,956,989.

421 Finally, I record that Mr Smith contended, alternatively, a constructive trust claim that his counsel described as a secondary claim, to be considered should the statutory claim fail. As that has not occurred, it is not necessary that I say any more about this alternative basis, save that had I done so, I would not have been satisfied that Mr Smith established such a claim to an extent that might have resulted in a better or preferable remedy being available to him by that cause of action. At the heart of such a claim is the notion that equity relieves against conduct by a defendant that has unconscionably caused detriment to the plaintiff by a remedial constructive trust.[115] I do not accept that, at any stage, Mr Smith acted to his detriment in, or in the conduct of, his relationship with Mr Gould. On the other hand, by reason of the adjustment that I will order pursuant to the statutory claim, Mr Gould will not be unconscionably benefitting from the contributions that Mr Smith made to his assets and financial resources.

422 The value of the post separation adjustments from the pool of divisible assets received by Mr Smith almost matches what I have determined to be the payment required from Mr Gould to Mr Smith to effect a just and equitable adjustment of their interests in the divisible pool. Me Me Me Pty Ltd and Mr Smith each retains an interest in 3/35 Marne Street, valued at $303,333. Subject to any submission as to the form of the orders that I propose, I will make orders for that adjustment to be made as follows.

(a) I declare that Mr Smith was, at the separation date, justly entitled to an adjustment of the divisible property of the relationship to the value of $3,000,000;

(b) The value of the adjustments in the divisible property of the relationship since separation is $2,956,989;

(c) The funds held back in a solicitors trust account from the sale of 3/31 Marne Street, including all accrued interest, are to be forthwith paid to Mr Smith;

(d) Mr Gould shall forthwith pay to Mr Smith the sum of $43,011. I do not propose to direct that this payment be satisfied by any transfer of artworks_, in specie_. If that is a matter that can be agreed, that is as to both the artwork and the value being allowed for it, I will make orders accordingly;

(e) Pursuant to s 278 of the Act and for the avoidance of doubt in the future, I will declare that each of Mr Smith and Mr Gould is, as against the other, the owner of such of the divisible property of the relationship, particularly artworks, as is now in his possession, free of any prior demands, interests or title rights claimed in such property by the other. This declaration is not intended to affect and does not extent to effecting any adjustment of title rights or interests as between Mr Gould on the one hand and Edrob Nominees Pty Ltd or Dukville Pty Ltd on the other.

423 I will hear from counsel on the form of final orders, particularly concerning 3/35 Marne Street, and on costs.

[3] [2011] VSCA 307.

[4] [2006] NSWCA 11; (2006) 34 Fam LR 550.

[5] [2008] VSCA 236; (2008) 24 VR 1.

[6] [2011] VSCA 307.

[7] [2006] QCA 555; [[2006] QCA 555; 2007] 2 Qd R 138.

[8] [2011] QCA 65.

[9] [2006] NSWCA 11; (2006) 34 Fam LR 550, 558 [29]. The three-step process is a simplification or refinement of a four-step approach identified in earlier cases.

[10] For convenience I will refer to contributions of the type identified in s 285(10)(a) as property contributions and contributions of the type identified in s 285(1)(b) as welfare contributions.

[11] [2010] FamCA 748, see also KQ v Hae [2006] QCA 489, [2007] Qd R 32, [18]; Jonah v White [2011] FamCA 221, [47]; Smyth & Pappas [2011] FamCA 434, [6]-[13]; Vaughan & Bele [2011] FamCA 436, [11]; and Ricci & Jones [2011] FamCAFC 222.

[12] Section 4AA and Part VIIIAB of the Act.

[13] Marriage of Falk (1977) FLC 90-247, following Pavey and Pavey (1976) FLC 90-051.

[14] It is unnecessary to state and consider the contentions advanced by Mr Gould prior to that concession, save that I was not disposed to accept that the domestic relationship had terminated at an earlier time.

[15] Nolan v Nolan [2003] VSC 121, (2003) 10 VR 626.

[16] Such a characterisation would not have been correct and had it occurred would have required Mr Smith to declare the mortgage repayments as income.

[17] DW v GT [2005] FamCA 161; (2005) 191 FLR 305.

[18] excluding, as agreed, the Frankston property.

[19] Originally Mr Smith's mother Wendy Smith held a one third interest in this property that she sold to Mr Smith in November 2003.

[20] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 523-524.

[21] [2008] VSCA 236; (2008) 24 VR 1 [283].

[22] See also Apostolidis v Kalenik [2011] VSCA 307 [12]; Kenyon v Akeroyd [2008] VSCA 277 [10]; Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550 [51]-[53].

[23] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550 [49]; Giller v Procopets [2008] VSCA 236; (2008) 24 VR 1 [286]; Flood v Dockerty [2010] VSC 233 [7].

[24] [2006] NSWCA 11 [54].

[25] Giller v Procopets [2008] VSCA 236; (2008) 24 VR 1, 75 [318].

[26] This agreement involved an agreement during the trial that Keelboat's loan liability of $456,800 shown in the plaintiff's schedule of 'Other Assets' in the pool [Exhibit P23] should be deleted from that schedule and substituted for the agreed Keelboat loan liability of $300,055, shown in the plaintiff's schedule of 'Real Estate held as at June 2005' [Exhibit P17].

[27] Smith v Gould (Ruling No 1) [2012] VSC 210 (18 May 2012).

[28] See In the Marriage of Lenehan [1987] FamCA 8; (1987) 11 Fam LR 615; FLC 91-814; In the Marriage of Dean (1988) 12 Fam LR 633; FLC 91-982; S O'Ryan, 'Valuation of Property in the Family Law Context', (1989) 3 AJFL 251.

[29] [1984] HCA 21; (1984) 9 Fam LR 449.

[30] Ibid, 457, see also Mason J at 464.

[31] Citing Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, 362 and Gregory v Federal Commissioner of Taxation [1971] HCA 2; (1971) 123 CLR 547, 564.

[32] Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, 373-4.

[33] [1984] HCA 21; (1984) 9 Fam LR 449, 464.

[34] In the family law context there are numerous examples. See (in addition to Mallett and Lenahan, cited above) In the Marriage of Gamer (1988) 12 Fam LR 73; FLC 91-932; In the Marriage of Dah and Hull (1983) 9 Fam LR 241; Sapir v Sapir (No 2) (1989) 13 Fam LR 362; FLC 92-047; and In the Marriage of Elsey (1996) 21 Fam LR 249; FLC 92-727.

[35] The latter period commences when Mr Gould acquired the interests of his mother in the gallery.

[36] Exhibit P41 has 243 entries with 18 duplicate listings included. In addition to agreed duplicates 30, 49, 114, and 124, I am satisfied that the following entries are duplicates: 96, 131, 133, 136, 246-255.

[39] Exhibit P41, 54, 71-74, 113, 120, 147, 162.

[42] Most of these 9 artworks were not valued for Mr Gould by his expert art valuer.

[43] Exhibit P41, 26, 42, 69, 101, 102, 112, 131, 144, 150, 166, 167, 180, 188.

[44] These artworks are the remaining entries in the schedule that comprises Exhibit P41 numbered 4-7, 8-24, 27-29, 31-36, 39-41, 43-46, 48, 50-51, 53-59, 61-64, 66-68, 70-76, 78-100, 103-105, 107, 109-111, 113, 115-121, 123, 125-130, 132-141, 143, 145-149, 151-155, 157-158, 160-165, 168-179, 181-187, 189-190, 192-214, and 237-241 (Note: not every number in the Schedule represents an artwork).

[45] Exhibit P41 2, 3, 8, 25, 27, 37, 38, 42, 47, 52, 60, 65, 77, 106, 108, 122, 142, 144, 150, 156, 159, 191.

[46] (1722) 1 Str 505; [1722] EWHC KB J94; 93 ER 664.

[47] [2011] NSWCA 337 [148]-[161], with Macfarlane JA agreeing.

[48] LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (No 2) (1989) 24 NSWLR 499 and Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46.

[49] [2004] HCA 3; (2004) 216 CLR 388 [74].

[50] 178 F 2 d 182 (1949) at 189.

1. [52] [1999] HCA 25; (1999) 199 CLR 413, 436 [49]-[50]; [1999] HCA 25. (Citations omitted). See also Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 242 ALR 383; [2008] HCA 5, [51].

[53] In the Marriage of Dunbar (1987) 11 Fam LR 901, 911; FLC 91-846 (FC).

[54] In Family Court proceedings, the parties may reach agreement on the value of their assets, but, where the value of assets is in issue, the court is required to determine the value of the assets: see In the Marriage of Lenehan [1987] FamCA 8; (1987) 11 Fam LR 615; FLC 91-814.

[55] The figure identified was $4,488,698 for a total of $8,970,951.

[56] This painting was offered for sale by Gould Galleries on two occasions before being given to Mr Smith.

[57] This painting was offered for sale by Gould Galleries in March - May 2004 before being given to Mr Smith.

[58] Blackman's Girl and Flowers (1960) was offered for sale at Gould Galleries in November to December 2000 and February to March 2001 in two difference exhibitions. Blackman produced a number of paintings named 'Girl and Flowers' or 'Girl with Flowers' and it is improbable the painting offered for sale is the painting Girl with Flowers (1959).

[59] Philipp, Franz, (1967), Arthur Boyd, (Thames & Hudson, London) at 258.

[60] meaning excluded from Gould Galleries stock.

[61] There is one additional artwork in the list for insurance - Waller, Spoils of War - that was later sold by Gould Galleries.

[62] I make no finding to this effect as this issue was not explored in evidence.

[63] The name Hymie Lashinski was used in a like manner to purchase Rupert Bunny, The Pink Dress, Freda Rhoda Robertshaw, Orchids, Norman Lindsay Nude with Hat, and Head Study, Arthur Boyd, Evening in Wimmera, Hillside, Bride (1962) and Berwick Landscape 1, Dobell, Charles Lloyd Jones, and Sali Herman, Old Houses, Paddington.

[64] Mr Smith contended that the account balance at 25 February 2004 was HKD6,542,828.19, which was AU$1 million. I have applied the same exchange rate to the account balance at 30 June 2004, which was HKD6,071,052.97.

[65] The balance of that trust account on 30 June 2004 was $1,442.

[67] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 561 [35] and the cases there cited.

[68] Bilous v Mudaliar (2006) 65 NSWLR 615.

[69] In the Marriage of Ferraro [1992] FamCA 64; (1992) 16 Fam LR 1, 30-50.

[70] [2000] FamCA 1353.

[71] In the sense in which that phrase was used in McLay (1996) 20 Fam LR 239.

[72] (2002) Fam LR 544.

[73] (2002) Fam LR 544 [134].

[74] (1992) FLC 92-304.

[75] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 568-9 [65]-[66]. See also Giller v Procopets [2008] VSCA 236; (2008) 24 VR 1, 63 [279]-[287].

[76] [1998] FamCA 74; (1998) 24 Fam LR 377 (FC).

[77] Bilous v Mudaliar (2006) 65 NSWLR 615, 625 [56].

[78] Ibid, 626-628 with Giles and McColl JJA agreeing.

[79] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 567 [64]-[69].

[80] Black v Black (1991) 15 Fam LR 109, Kardos v Sarbutt [2006] NSWCA 11, (2006) 34 Fam LR 550, 561 [35], Giller v Procopets [2008] VSCA 236; (2008) 24 VR 1, 77 [330]-[331].

[81] [1984] HCA 21; (1984) 156 CLR 605, 635-636 Wilson J, see also Mason J, 623-625, Deane J, 639-641 and Dawson J, 645-646.

[84] Giller v Procopets [2008] VSCA 236; (2008) 24 VR 1 [330].

[85] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 560 [34].

[86] Mr Smith knew what to look for in the records of Sotheby's once they were his to examine and it was the purchase of artworks that he alleged form part of the private collection that were his focus, not the Lloyd Rees.

[87] [1959] HCA 8; (1959) 101 CLR 298.

[88] Mr Dunn confirmed that he is a director of Goldcheck with a 'very, very minor shareholding' that was not quantified by Mr Dunn or Mr Smith. No current company extract for Goldcheck was tendered, and Mr Dunn continues to prepare Goldcheck's accounts.

[89] JEL and DDF [2000] FamCA 1353 [130].

[90] This exhibition postdates separation.

[91] The Beagle Press, in association with the NGV, 2004.

[92] February 2000. Albert Tucker in the NGV Collection, April 2000 Modern Australian Landscape Painting: Boyd, Drysdale, Nolan, Perceval, Williams.

[93] Art & Australia magazine. Publication date not revealed in the evidence.

[94] [2003] VSC 121l; (2003) 10 VR 626.

[95] [2010] VSC 72.

[96] [2010] VSC 229.

[97] [2010] VSC 72.

[99] [2010] VSC 229.

[102] Nolan v Nolan [2004] VSCA 109 [119]-[121].

[103] Andrew Browne, Moon and Trees (2001), Kitti Kantilla, Untitled, and Ron Robertson Swann, Vault.

[104] Another instance was the claim that accreditation logos were reproduced in catalogues at Mr Smith's suggestion.

[105] Mr Gould also proofread Mr Smith's work.

[106] Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 561 [36]; and see Davey v Lee (1990) 13 Fam LR 688.

[107] [1997] NSWSC 331; (1997) 42 NSWLR 70.

[110] approving the view expressed by Hodgson J, as the trial judge in Dwyer v Kaljo (1987) 11 Fam LR 785.

[111] Neave JA referred to Conn v Martusevicius (1991) 14 Fam LR 751, 754; Robertson v Austin [2003] VSC 80, [38]-[40]; and Findlay v Besley (2004) V Conv R 54-688 [56].

[112] [2008] VSCA 236; (2008) 24 VR 1, 80 [341]-[349].

[113] Evans v Marmont [1997] NSWSC 331; (1997) 42 NSWLR 70, 75.

[115] Moshinski v Dodds [1985] HCA 78; (1985) 160 CLR 583; Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137; Green v Green (1989) 17 NSWLR 343.