Bania & Jacopo (No 2)
[2011] FamCAFC 139
•29 June 2011
FAMILY COURT OF AUSTRALIA
| BANIA & JACOPO (NO. 2) | [2011] FamCAFC 139 |
| FAMILY LAW - APPEAL – PROPERTY – Value of property – Where property comprised two lots of adjoining land purchased after separation – Whether the Federal Magistrate failed to take into account or properly take into account the value of the combined lots – Whether the Federal Magistrate erred in the exercise of his discretion – Error established – Whether the Federal Magistrate erred in finding the wife made no contribution to the acquisition of one lot of land – Whether the Federal Magistrate failed to take into account or to properly take into account the disparity in financial resources of the parties – Whether the Federal Magistrate erred in taking into consideration questions of delay – No error established. FAMILY LAW - REDETERMINATION – Wife awarded 30% of the value of the land. |
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| GWR and VAR [2006] FamCA 894 House v The King (1936) 55 CLR 499 Manolis and Manolis (No 2) [2011] FamCAFC 105 Wall and Wall (2002) FLC 93-110 |
| APPELLANT: | Ms Bania |
| RESPONDENT: | Mr Jacopo |
| FILE NUMBER: | PAC | 3577 | of | 2009 |
| APPEAL NUMBER: | EA | 121 | of | 2010 |
DATE DELIVERED: | 29 June 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace J |
| HEARING DATE: | 26 May 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 25 August 2010 |
| LOWER COURT MNC: | [2010] FMCAfam 1080 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Givney |
| SOLICITOR FOR THE APPELLANT: | Coleman & Greig Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Gersbach |
| SOLICITOR FOR THE RESPONDENT: | Thurlow Fisher Lawyers & Consultants |
Orders
That the appeal be allowed.
That the orders of Federal Magistrate Donald made on 25 August 2010 be set aside and in lieu thereof it is ordered that:
The husband pay to the wife the sum of $45,000 as follows:-
(a) Forthwith upon the making of these Orders with the payment to be made out of such monies held by his solicitors pursuant to the Interim Orders of this Court.
(b) As to the balance within 28 days of the date of these Orders.
In the event that the husband fails or neglects to pay the sum of $45,000 (or such lesser sum after payment from his solicitors trust account) the husband shall do all acts and things necessary to sell the property situate at and known as 19 (Lots 10 and 11) Station Street, B and in respect of such sale the following shall apply:-
(a) The property shall be sold at the best price reasonably obtainable.
(b) In the event of a dispute as to the best price reasonably obtainable then the parties shall appoint the President for the time being of the Real Estate Institute of New South Wales to assess the best price reasonably obtainable and/or the reserve price at auction.
(c) In the event the property is not subject to a binding agreement for sale within 90 days of the date of these Orders then the wife shall do all acts and things necessary to place the property in the hands of a licensed auctioneer to sell the property by way of public auction at a reserve price agreed between the parties.
(d) Upon sale the then proceeds shall be paid as follows:-
(i)In the payment of agents commission and legal fees occasioned by the sale.
(ii)In payment to the wife of the sum of $45,000 (or such lesser sum after payment from the husband’s solicitors trust account) together with interest from the date of default.
(iii)The balance to the husband.
Each party is declared to be the sole and beneficial owner of any item of household contents and/or motor vehicles in such party’s possession and/or control.
Pending the sale of the B property the husband is restrained from encumbering and/or further encumbering the property.
The wife is at liberty pending compliance with Order 4 to lodge a caveat to protect her entitlement pursuant to these Orders and the husband is restrained from doing any act or thing requiring the removal of the caveat other than for the purpose of compliance with these orders.
Any submissions as to costs on the appeal be submitted within 14 days.
IT IS NOTED that publication of this judgment under the pseudonym Bania & Jacopo is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 121 of 2010
File Number: PAC 3577 of 2009
| Ms Bania |
Appellant
And
| Mr Jacopo |
Respondent
REASONS FOR JUDGMENT
Ms Bania (“the wife”) appeals against a property order in relation to property of her marriage with Mr Jacopo (“the husband”).
On 25 August 2010 Federal Magistrate Donald made an order that the husband pay $10,000 to the wife.
Background
Much of the background of the parties was undisputed and will be included in this judgment to the extent necessary to consider the grounds of appeal. None of the Federal Magistrate’s findings of fact was challenged on the appeal.
The parties began to live together in about 1979 and married in 1982. There were two children of their relationship, X born in September 1982 and N born in June 1984. X was killed tragically in an accident some years after the parties separated.
The parties separated in 1993 and divorced in 1996. In 2009 the wife started proceedings for property orders against the husband having first obtained a grant of leave pursuant to s 44(3) of the Family Law Act 1975 (Cth) (“the Act”).
The Federal Magistrate found that the parties had little in the way of assets at the date they started living together.
After they began living together the husband bought a block of land at J and in about 1982 the parties began to live on this land in a caravan. The husband established a separate bathroom building on the land. The funds necessary to purchase the land were borrowed from the husband’s father.
The parties lived on the land until it was sold in 1993 at separation. After payment of joint debts, an amount of about $52,000 was available to the parties. The husband retained $47,000 and the wife received $5,000.
Not long after separation the husband bought a block of land at B in NSW for about $15,000 (referred to as “Lot 10” in the proceedings). The Federal Magistrate found that a further sum of $4,500 was used to connect the electricity to the land and other sums were expended on the land.
In 1999 the husband purchased a block of land next to Lot 10 (referred to as “Lot 11”). The purchase price was $8,000 and the husband borrowed funds from acquaintances to buy it.
The two blocks were identified as 19 Station Street, B.
It was accepted that the husband moved the caravan and bathroom block from the J property onto Lot 11.
In about 2005 the husband’s mother died and the husband received an inheritance of about $200,000. The Federal Magistrate found that of that sum, unspecified amounts were used by the husband in improvements to the home on Lot 11, to repay the debt for the land’s purchase and to connect a sewerage system to the home. At the date of hearing the husband had about $84,500 of that money.
His Honour adopted an “asset by asset” approach to a consideration of the parties’ various entitlements. He listed the assets of the parties and each of them at paragraph 23 of the reasons and found the total value of them to be $237,585. The major assets identified were the property at B and the balance of the husband’s inheritance. The Federal Magistrate found the value of 19 Station Street to be $150,000.
During the marriage the wife worked as a caterer until she was injured in 1981 and in 1983 the parties purchased a transport business. Both of them worked in that business, the husband driving and operating the business, the wife working from home as the receptionist. The business was seasonal, in that it was busiest during the winter, snow season. His Honour found that outside the snow season the husband went to Sydney in search of work and the wife remained in J and operated and drove the vehicle herself. That business was sold in 1989 and his Honour found that the proceeds were used to discharge debts of the parties.
The husband was injured in a work accident when he was aged 33 years old which resulted in him eventually becoming entitled to a disability pension.
After separation the children remained in the care of the husband. At the time the parties separated he was in receipt of that pension. In 1995 the husband and the children moved to B. His Honour found that “about two or three years later” the wife too moved to B and one of the children (accepted to be the younger, N) moved in to live with her in 1997 and the other child, X, thereafter spent more time in her company.
His Honour found (at paragraph 10 of the reasons) that while the children were in the care of the husband, the wife made no financial contribution to their support. After N moved in with the wife, she applied for and received “minimal child support contribution” from the husband.
19 Station Street, B
His Honour made findings about the parties’ contributions at paragraph 26 of the reasons and following. He found at paragraph 28:
It follows that the wife’s contribution prior to separation was significant given that I accept she had almost entire responsibility as homemaker and parent, and also contributed her labours to the business …
When he came to consider the post separation contributions, his Honour did not accept (at paragraph 30 of the reasons) that in the period when the children were living with the husband and the wife saw them on weekends and school holidays, her “involvement in the life of the children during this period constituted any form of significant contribution by her”.
As to the wife’s contribution to the property at B he said:
34. … It is [the husband’s] submission that any contribution asserted by the wife can only relate to the first lot of land purchased by him using funds which had originated with the sale of the [J] property. The second lot purchased by him was purchased a significant time after the divorce of the parties using funds borrowed by him. It is his submission that in using the asset by asset approach agreed between the parties, only the value of the first lot should be taken into account when considering contribution and that the value of the second lot and the value of the now combined property should be excluded.
35. It is [the husband’s] submission that the wife did not and could not have contributed to the greater value of the combination of the lands, which took place in the absence of the wife and without any knowledge by her. I accept that submission. Accordingly, the value of the land to be considered in this matter is the value ascribed to the first lot, Lot 10, by the wife’s valuer. This value is $20,000. As to that contribution I note that the funds used to purchase this asset can be directly linked to the sale of the [J] property. It will be recalled that the [J] property was the major asset of the parties as at the date of separation, and that it was sold for approximately $100,000. Approximately $5,000 was given to the wife. Neither party was able to inform the court as to what happened with the additional sum of $7,514 received as the remainder of the deposit that had been placed on the property by the purchaser.
36. What is clear is that the husband received approximately $47,000 as against the $5,000 received by the wife. The balance, on the evidence of the husband, was used to meet liabilities. The husband then used the significant part of the $47,000 to purchase Lot 10 at [B] and to finance the purchase, various establishment costs and the removal, as required by the purchaser, of the temporary house from [J]. It was the husband who found and purchased Lot 10. It was he that made all the arrangements for improvements to that land and it is he, only, who has been living on that land and maintaining it.
37. I also note that the assets of the parties at separation were not great. Whilst the husband kept most of the net proceeds of the sale of the [J] property, it must also be remembered that he was the sole carer for both children for the four years after separation and that he did so whilst having an income derived only from a disability pension. He received no financial support from the wife and continued to be the primary carer for one child even after the wife moved to [B] and became the primary carer of the other child.
38. Given the significant contribution, however, made by the wife prior to separation and her lesser contribution as homemaker and parent after separation, essentially to one child once she moved to [B], I am satisfied that the wife’s contribution to this asset must be ranked equally to that of the husband.
39. Given that it is only to Lot 10 that this contribution was made, and that the value of that land is $20,000, it follows that the wife is entitled on a contribution basis to $10,000 …
His Honour indicated that no further adjustment would be made to that amount to take into account the $5,000 previously retained by the wife from the sale of the J property and continued:
40. As detailed earlier, I do not accept that the wife has made any contribution to the second lot purchased by the husband, nor to the value of the consolidated lands given that the second lot was purchased so long after separation and using funds borrowed by the husband. As to the consolidation and increased value flowing from that step, this occurs solely through the efforts of the husband.
Grounds of Appeal
Five grounds of appeal were asserted in the appeal. Counsel for the appellant did not press ground 5. He argued the grounds in a different order to the Notice of Appeal and I will consider the grounds in that order.
Ground 2
The Federal Magistrate was in error in finding that the only property that the wife had contributed to was Lot 10 being part of the land comprising 19 Station Street, [B] in that:-
2.1. Lot 11 would never be sold unless sold in conjunction with Lot 10.
2.2. Even if it were the case the wife made no contribution to Lot 11, the mere fact that Lot 10 would be sold with Lot 11 substantially increased the value of Lot 11.
2.3. It is doubtful no matrimonial monies were paid towards the purchase of Lot 11 in that it was purchased 12 months after the purchase of Lot 10.
2.4. The wife was making contributions as a homemaker and parent prior to and after the purchase of Lot 11.
Broadly, the argument on this ground devolved to two submissions. First, the Federal Magistrate, having found the value of the parcel of land in B to be $150,000, erred in sequestrating Lot 10 and apportioning to it a value of $20,000 and in failing to take into account the effect of Lot 10 on the value of Lot 11 and on the valuation of the lots taken as a whole.
Secondly it was argued that his Honour fell into error by limiting the wife’s contributions to Lot 10 to direct financial contributions and did not take into account her further contribution as homemaker and parent after separation when he considered the acquisition of Lot 11.
Value of the property at 19 Station Street, B
A valuation of 19 Station Street was obtained by the wife. This valuation was added with leave to the appeal books. The valuer, Mr T, valued the whole of the land (the two lots) at $150,000. He separately valued Lot 10 at $20,000 and Lot 11 at $25,000. He described the property (in the executive summary to the valuation report) thus:
2 adjoining lots situated on the northern fringe of [B] within the Rural 1(a) zoning. Site improvements include a galvanised iron hut under renovation, free-standing bathroom/laundry, caravan with glass annex, transportable site shed providing additional sleeping accommodation, double carport/store shed, aged machinery shed/workshop and numerous storage sheds.
At p 9 of the valuation report Mr T said:
… Council verbally advise that Development approval was granted in 2008 for the construction of a dwelling on the subject property. Condition 28 of that consent requires the consolidation of the 2 lots into a single lot with single title. Council further advises that the individual lots would not qualify for a dwelling entitlement in their own right.
The highest and best (optimum) use of the subject property is for consolidation of the 2 lots and construction of a single residence.
At p 14 of his report Mr T said:
Individually, the blocks are considered to have a nominal value as they cannot be utilised for residential purposes …
At p 18 of the valuation, Mr T asserts a value of the whole of the land, excluding improvements at $130,000 and assigned $20,000 to the improvements.
In his oral evidence, Mr T said that the value of Lot 11 was $35,000 and said that the difference in valuations between the two individual lots rested on Lot 11 having “more substantial improvements” that he described as “a hut, a carport and there are some sundry other improvements” and, as a result he increased the value of Lot 11 from $20,000 to $35,000.
Mr T was asked (and responded) in cross-examination:
But in terms of lot 10 the thing that gives value to lot 10 is the fact that lot 11 has been subsequently acquired being the adjoining block to give the opportunity or the prospect of consolidating them and thereby obtaining council approval to erect a dwelling, would that be right?---Yes, you need the two blocks together to do the development.
Although the property at 19 Station Street was comprised of the two blocks of land, the evidence before the Federal Magistrate (paragraph 20 of the husband’s affidavit sworn on 27 October 2009) was that the lots were amalgamated and, at about the date of the hearing the husband had obtained the relevant permission to live on the property and develop it although it appears that the formal process of consolidating the two lots under one title had not taken place.
His Honour accepted the valuation and at paragraph 23 of the reasons found the value of 19 Station Street to be $150,000.
It was argued for the husband that the land should be viewed as two separate lots because, at the date of the hearing they had not been consolidated under one certificate of title and, further that until that occurred, the value of Lot 10 was $20,000.
It was submitted at paragraphs 25 and 26 of the husband’s “summary submissions” that:
Lot 10 only has a value more than $20,000 if consolidated with Lot 11 (or possibly Lot 9). That greater value arises only because the husband has since separation acquired the adjoining Lot 11, using, as his Honour found, his own separate resources. The increased combined value arises solely by reason of contributions made by the husband making the unique contribution of acquiring the adjoining lot and applying for and obtaining permission to consolidate the two lots.
The valuation of the lots together at $150,000 is conditional upon the consolidation happening. That requires additional steps and additional expenditure.
It was suggested to Mr T and he agreed that before permission to develop a residential dwelling on the property could be obtained, the consolidation into one title must occur.
The husband said in his oral evidence that he had received permission from the council to occupy the land in the course of developing the property and that he had a permit to start building on the land.
There was no indication that the husband did not plan to do other than develop the land to include a residence.
The wife argued that while individually Lot 10 might have a value of $20,000, his Honour did not take into account the effect of Lot 10 on the value of the land as a whole, or on Lot 11.
A helpful exposition of the law relating to valuation of land is found in GWR and VAR [2006] FamCA 894 in which the Full Court (Bryant CJ, Finn and Coleman JJ) said at paragraph 54 and following (citations and footnotes omitted):
The principle of “highest and best use” finds repeated expression throughout the authorities relevant to the valuation of real property ... The principle was succinctly stated in Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor (2003) 129 LGERA 65 at paragraphs 18 and 19:
The test of market value is well known. It is what the hypothetical purchaser desiring to purchase the land would have had to pay for it on the date of resumption to a hypothetical vendor willing to sell it for a fair price but not desirous to sell.
Regard must be had to every element of value which the land possess. Every such element must be taken into consideration insofar as they increase the value to the owner of the land. In short regard should be had to the highest and best use of the subject land, meaning the most advantageous use of the subject and having regard to planning and all other relevant factors affecting its present and future potential.
It is to be observed that Mr T’s valuation makes direct reference to this principle in determining the value of the land to be $150,000.
Indeed, his Honour found the valuation of 19 Station Street to be $150,000.
The argument by the husband that the value of the parcel of land of $150,000 is solely attributable to the husband’s efforts in buying the adjacent property misunderstands the effect of the valuation evidence which is that without the other, each property has only “nominal value” because neither is suitable for residential development without the other.
The evidence of the valuer, Mr T, was that individually, both blocks had “nominal value” and he ascribed a value of $20,000 to Lot 10 and $35,000 to Lot 11. The valuation of the parcel was reflective of the lots being together because he said (at p 14 of his report), “individually, the blocks are considered to have a nominal value as they cannot be utilised for residential purposes”.
Thus, although it was the husband who purchased the second lot, it was not in accordance with Mr T’s evidence to find that the value of the two lots resulted from the husband’s efforts alone because it ignores the evidence of the obvious impact of Lot 10 in increasing the size of the parcel to make it suitable for residential purposes. The thrust of this can be readily seen in Mr T’s evidence that the value of Lot 11 was $35,000, $15,000 of which related to the “improvements” on it. As to those improvements, the caravan and bathroom facilities were those in which the parties lived in J and were moved by the husband to the B lot.
His Honour’s attribution of the value of the whole of the land as accepted by him solely to the husband’s efforts in purchasing the second lot was not open to him on the evidence. I accept the argument that his Honour’s reasoning was in this respect flawed and that he erred in failing to take into account or properly into account the value of the combined lots.
This error so permeated his Honour’s reasoning and determination that, of itself, requires the appeal to be upheld.
Wife’s contribution to Lot 11
It was argued that his Honour was in error in finding that the wife made no contribution to the acquisition of Lot 11.
It was submitted that after the wife moved to live in B she made contributions as homemaker and parent at a time when the husband purchased Lot 11.
There is no doubt that after the wife moved to B she made a contribution to the welfare of the family through having the care of N and from her support of X, as his Honour noted at paragraph 31 of the reasons. His Honour took it into account (at paragraph 38 of the reasons) in assessing her contributions.
However, as his Honour had found that the wife could have made no contribution to the second lot, nor to the value of the parcel of land, her post separation contributions were only considered by him in dealing with Lot 10.
I therefore find his Honour’s approach to the land and its value to be flawed, as too was his restriction of the wife’s contributions of all kinds.
It was argued, albeit faintly, that it was “doubtful no matrimonial monies” were used to purchase Lot 11. The Court was not taken to any evidence that demonstrated that Lot 11 was, contrary to the trial Judge’s findings at paragraphs 12 and 32 of the reasons, purchased using funds from the sale of J. There is little force in this part of the argument.
Ground 1
The learned Federal Magistrate in providing that the wife receive $10,000 and the husband receive $227,585.98 out of a total pool of $237,585.98 is a result that is outside an acceptable range and is not a result that is just and equitable.
This ground challenges the exercise of the Federal Magistrate’s discretion. The principles relevant to such a challenge are well known. In House v The King (1936) 55 CLR 499, Dixon, Evatt and McTiernan JJ said at 504 - 505:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or effect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The wife argued that, taking into account the findings of the Federal Magistrate about the contributions of the wife during the marriage and after separation, and those of the husband, the result is such that it is plainly unjust and unreasonable.
The husband’s written submissions argued that the Court must take into account: “that his Honour had the unique advantage as the tribunal of fact in seeing and hearing the parties and other witnesses” and it was observed that the Federal Magistrate recorded that his findings were based on his observation of the witnesses. It is difficult to understand the relevance of this submission when there was no challenge to the findings of fact (and, pertinently to this appeal, none rested on a credit finding to any material degree). The challenge is to the exercise of the discretion based on those found facts. However, it was otherwise argued that the determination was within the proper exercise of his Honour’s discretion.
Essentially, the wife contends that when his Honour came to consider the “fourth step” in the analytical process incumbent on a determination pursuant to s 79 of the Act his discretion miscarried.
In Manolis and Manolis (No 2) [2011] FamCAFC 105 the Full Court considered the requirement imposed by s 79(2) and said at paragraphs 65 and 66:
The exercise of power pursuant to s 79 of the Act remains subject to the overarching requirement of justice and equity imposed by s 79(2) until it is exhausted …
… The section does however oblige the court to “stand back” from its preliminary determination, and consider its impact. So doing may inform the terms of the orders appropriate to produce a just and equitable outcome in those terms. It may result in a re-consideration of s 79(4) and or s 75(2) factors, and a different outcome …
Taking into account the contributions found by the trial Judge to have been made by the wife both during and after separation and, even in the context of the matters that his Honour found favoured the husband, it is difficult to see how a proper “standing back” could have resulted in an order that provided the wife with $10,000 (in addition to that which she otherwise had) from the property identified by the Federal Magistrate.
This challenge is made out.
Ground 3
The Federal Magistrate was in error in not making an adjustment pursuant to section 75(2) in favour of the wife due to the significant discrepancy between the asset holding of the parties after consideration of the contribution based entitlement.
The thrust of the challenge was that when his Honour came to consider s 75(2)(b), the income, property and financial resources of the parties, at paragraphs 46 to 47 of the reasons, he failed to take into account or properly into account, the significant disparity in financial resources of the parties. It was further argued that his Honour made inconsistent findings about the wife’s capacity to work in the future.
His Honour found at paragraph 45 of the reasons that the wife, “… is in reasonable health and currently self-employed … I do note that the wife has been working in her profession as a [physical therapist] and has expressed a desire to grow her business. I have no reason to believe that she will not be able to be so employed for the foreseeable future.”
At paragraphs 46 and 47 of the reasons his Honour turned to the income and financial resources of the parties and said:
46. Again I note that the husband is aged 73 years and when only 33 years of age suffered a workplace back injury for which he did not receive any compensation. He ceased working in about 1989 or 1990 when he was accepted for a permanent disability pension. I accept that, given the age of the husband, he now lacks the capacity for gainful employment even without reference to his disability.
47. The wife is aged 54 years and is able to work. She is qualified as a [physical therapist] and is attempting to establish a business. She is likely to be able to earn an income for the foreseeable future.
As can be observed, his Honour made no reference to the disparity between the husband and wife in terms of their financial resources. However, at paragraph 61 of the reasons his Honour said under the heading “Conclusions”:
At first blush a further adjustment could be made in favour of the husband. This would, however, ignore the fact that the income of the wife is not high, she does not have the resources of the husband, and although significantly younger than the husband she does not have much longer in the workforce and, importantly, as I have indicated, she does not have the resources constituted by the husband’s property and cash. In those circumstances I decline to make any further adjustment.
His Honour’s reasons when read as a whole, do not support the contention that he failed to take any account of the financial disparity between the parties. Further, it seems that a reasonable reading of the reasons does not support the argument that his Honour made inconsistent findings about the wife’s capacity to work. When paragraph 61 is read in conjunction with paragraph 47, it is apparent that his Honour was mindful that the wife does not have much longer in the workforce, consistent with her age.
This ground of appeal fails.
Ground 4
The Federal Magistrate’s approach was flawed in that his Honour took into consideration questions of delay which were not pertinent to the task of assessing contributions.
When considering matters relevant to s75(2)(o) of the Act his Honour said:
57. This is a matter in which application for property division has only been made a significant period after the divorce of the parties in 1996. True it is that leave has been granted for the wife to commence proceedings, but the significant delay is a factor that I do take into account. The husband is 73 years of age and has altered his life based upon his expectation that those funds available to him are his. This was a reasonable expectation.
58. The wife has asserted that she has now brought these proceedings because in the past she was too scared to do so. I reject that assertion. I accept that she has now brought these proceedings – or I suspect that she has now brought these proceedings because she is aware of the inheritance received by the husband and because she has an economic need.
It was argued for the wife that issues relating to delay in bringing proceedings were resolved once leave to commence proceedings was given. I do not accept that submission. The discretion to grant leave to commence proceedings notwithstanding that the time limit prescribed by the Act has elapsed contemplates, inter alia, the effect of the delay on the husband as part of the balancing of factors operating to inform the discretion. That leave has been granted does not mean that the delay becomes irrelevant, merely that other facts have prevailed to favour the leave. It was not submitted that the facts of the case did not permit his Honour to make that finding, but that it was impermissible in the circumstances of leave being granted. This challenge to the decision fails.
It was not said that his Honour was not entitled on the evidence to reject the wife’s explanation for her delay in bringing an application for property orders. It is difficult with respect to his Honour to see the relevance of what appears to be clear speculation about the wife’s motives. However, it was not said that any finding flowed from or rested on his Honour’s speculation as to motive and so this challenge too must fail.
The appellant having succeeded in the challenges to the Federal Magistrate’s findings raised in Grounds 1 and 2, the appeal is to be allowed.
Both counsel were asked about disposition of the matter should the appeal succeed and each indicated that the court should in the exercise of its discretion determine the matter and not remit the matter for re-hearing. That course is clearly a most sensible one given the ambit of the application and the assets to be considered. Neither party wished to rely on further evidence.
Determination
There was no challenge to the extent of the property and other assets of the parties as disclosed in the Federal Magistrate’s reasons and I propose to adopt the schedule of those assets (at paragraph 23 of the reasons) including the value of the parcel of land at B of $150,000:
Assets
19 Station Road, B (H) $150,000
Bendigo Bank (H) $64,493
Prepaid legal fees (H) $20,000
Commonwealth Bank (H) $452
Ford Utility (H) $240
Ford Festiva (H) $200
Household contents (H) $200
Ford Laser (W) $1,000
Household contents (W) $1,000
TOTAL $237,585
It is appropriate and it was common ground between the parties that a consideration of the matter be on an “asset by asset” basis as opposed to a global approach.
In circumstances where there was virtually no challenge to the Federal Magistrate’s findings of fact, I propose to adopt his findings about the circumstances and contributions of the parties during the marriage and since separation.
Turning to the assessment of the contributions of the parties to the land at B, there was no dispute that the wife made a direct financial contribution to the acquisition of Lot 10, not limited to the purchase price. The unchallenged evidence was that the husband used the funds from the J property to purchase Lot 10 and to pay for incidental expenses such as the connection of electricity to the Lot.
The husband retained the balance of the funds to the exclusion of the wife and should be seen as a contribution by her.
It was undisputed that after separation, the husband did work on the land, effecting some improvements.
The husband asserted in his affidavit sworn on 27 October 2009 (at paragraph 24) that, “… Of the remaining inheritance the sum of approximately $115,500.00 was used for materials on my home, getting the sewerage done on the block …”, in repayment of the loan to purchase Lot 11 and other debts and on a holiday.
He was challenged on the asserted spending on the property and the following evidence was given:
It is just that if we look at the costs of the sewage and the garage and the water tank that you have just evidence about and made concessions that amounts to $10,200 ?---I don’t know
So it is a long way short, isn’t it at $115,500?---115,000 was used for materials in my home, getting sewage done and well it doesn’t look like but I mean I bought a lot of machinery and equipment and all other materials that are still I have stored over there … so I don’t know this was just a blind guess.
Just a guess?---yes …
But you have $50,000 worth of equipment on your property, have you?---Probably not.
It seems that whatever the husband has spent from his inheritance on the property (comprised of both lots), the amount falls short of the asserted $115,500. Such improvements as are present on Lot 11 account for the different value of Lot 10. Mr T ascribed an additional $15,000 to Lot 11 to take into account the improvements. However, it was unchallenged that the husband had spent money from his inheritance on discharging the debts incurred in the purchase of Lot 11 and in making some improvements to it.
It was undisputed that the husband had the sole care of the children of the parties for several years after separation. After the wife moved to live in the B area, N moved in with her and she spent more time with X who, it seemed, came to her house every day to shower. Both made a contribution to the welfare of the family after separation.
The husband has sought and obtained permission to develop the land to include a residence. It was undisputed that when the two lots are to be consolidated under one certificate of title, additional expense will be incurred.
In considering assessment of the parties’ contributions, I have taken into account that the husband received the lion’s share of the assets of the parties on separation; the long time between separation and property division; the receipt by the husband of the inheritance and the parties’ different contributions over time, both before and after separation.
I am mindful too of what was said by Mason and Deane JJ in Norbis v Norbis [1985-1986] 161 CLR 513 at 518 apropos discretionary findings:
Because these assessments call for value judgements in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, the making of the order involves the exercise of a judicial discretion.
The assessment of the value of contributions in this case is difficult and I accept that reasonable minds might well differ as to how that assessment is quantified.
I am of the view that in terms of contributions, the circumstances favour the husband. I assess the wife’s contribution to the parcel of land, considered as a whole, to be 30%.
Turning to a consideration of the matters referred to in s 75(2). The wife has a continuing capacity to earn an income from her work as a physical therapist, her financial affidavit deposes to a weekly income of $500. She is 54 years old, the husband 73 years old. It was unchallenged that the husband has no capacity for paid work. The husband however has the advantage of savings in the order of $84,000. The wife has no resources of any consequence. Although there is a disparity of resources between the parties, I find that no further adjustment is warranted.
Section 79(2) requires that I “stand back” and consider whether the overall result achieved is just and equitable. I find that it is. The wife while 54 has the capacity to earn a modest living for the next little while and she will have as a result of the orders a small capital sum. The husband is older and has no capacity to work, the effect of the orders leave him with the property and he has the ability to pay her the ordered sum from funds presently available to him while still retaining some of that fund. I note in this regard that he has pre-paid his legal expenses. I have also taken into account that the wife received $5,000 on the sale of the J property.
I will therefore order that the husband pay to the wife $45,000 being an amount equivalent to 30% of the value of the B parcel of land and failing that, the land be sold and the wife’s entitlement be paid to her from the net proceeds of sale.
Costs
As is usual, counsel were invited to make submissions as to costs. Counsel for the respondent sought to agitate the question of costs after the determination of the appeal. I will therefore order that within 14 days of delivery of judgment in this matter any party wishing to make a submission as to the costs of appeal deliver those submissions in writing to the Appeals Registrar.
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I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 29 June 2011.
Associate:
Date: 29 June 2011
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